-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LCWXMybT4/2oSR1N8yl8JrvrZvPeo0LgRDmekUsvisDLS6oCzqpvruTMa3FBon8R YQ8frWiWIAgltV7TqwsPAQ== 0000950152-00-002836.txt : 20000413 0000950152-00-002836.hdr.sgml : 20000413 ACCESSION NUMBER: 0000950152-00-002836 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000229 FILED AS OF DATE: 20000412 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE PICHER HOLDINGS INC CENTRAL INDEX KEY: 0001059364 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [3711] IRS NUMBER: 133989553 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-49957-01 FILM NUMBER: 599562 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: 250 E FIFTH ST STREET 2: STE 500 CITY: CINCINNATI STATE: OH ZIP: 45201-0779 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE PICHER INDUSTRIES INC CENTRAL INDEX KEY: 0000030927 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 310268670 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-49957 FILM NUMBER: 599563 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 STREET 2: P O BOX 779 CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: 250 E FIFTH ST STREET 2: STE 500 CITY: CINCINNATI STATE: OH ZIP: 45201-0779 FORMER COMPANY: FORMER CONFORMED NAME: EAGLE PICHER CO DATE OF NAME CHANGE: 19660921 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAISY PARTS INC CENTRAL INDEX KEY: 0001059567 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 381406772 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-49957-02 FILM NUMBER: 599564 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 STREET 2: C/O EAGLE PICHER INDUSTRIES INC CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: C/O EAGLE PICHER INDUSTRIES INC STREET 2: P O BOX 779 CITY: CINCINNATI STATE: OH ZIP: 45202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE PICHER DEVELOPMENT CO INC CENTRAL INDEX KEY: 0001059568 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 311215706 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-49957-03 FILM NUMBER: 599565 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 STREET 2: C/O EAGLE PICHER INDUSTRIES INC CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: C/O EAGLE PICHER INDUSTRIES INC STREET 2: P O BOX 779 CITY: CINCINNATI STATE: OH ZIP: 45202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE PICHER FAR EAST INC CENTRAL INDEX KEY: 0001059570 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 311235685 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-49957-04 FILM NUMBER: 599566 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 STREET 2: C/O EAGLE PICHER INDUSTRIES INC CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: C/O EAGLE PICHER INDUSTRIES INC STREET 2: P O BOX 779 CITY: CINCINNATI STATE: OH ZIP: 45202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE PICHER MINERALS INC CENTRAL INDEX KEY: 0001059572 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 311188662 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-49957-06 FILM NUMBER: 599567 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 STREET 2: C/O EAGLE PICHER INDUSTRIES INC CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: C/O EAGLE PICHER INDUSTRIES INC STREET 2: P O BOX 779 CITY: CINCINNATI STATE: OH ZIP: 45202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HILLSDALE TOOL & MANUFACTURING CO CENTRAL INDEX KEY: 0001059573 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 380946293 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-49957-07 FILM NUMBER: 599568 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 STREET 2: C/O EAGLE PICHER INDUSTRIES INC CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: 250 E FIFTH ST STREET 2: STE 500 CITY: CINCINNATI STATE: OH ZIP: 45202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MICHIGAN AUTOMOTIVE RESEARCH CORP CENTRAL INDEX KEY: 0001059575 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 382185909 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-49957-08 FILM NUMBER: 599569 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 STREET 2: C/O EAGLE PICHER INDUSTRIES INC CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: C/O EAGLE PICHER INDUSTRIES INC STREET 2: 250 E FIFTH ST ST CITY: CINCINNATI STATE: OH ZIP: 45202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE PICHER TECHNOLOGIES LLC CENTRAL INDEX KEY: 0001059576 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 311587660 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-49957-09 FILM NUMBER: 599570 BUSINESS ADDRESS: STREET 1: 250 EAST FIFTH STREET, SUITE 500 STREET 2: C/O EAGLE PICHER INDUSTRIES INC CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 1: C/O EAGLE PICHER INDUSTRIES INC STREET 2: P O BOX 779 CITY: CINCINNATI STATE: OH ZIP: 45202 10-Q 1 EAGLE PICHER HOLDINGS, INC. & CO-FILERS 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended February 29, 2000 Commission file number 333-49957-01 ------------- EAGLE-PICHER HOLDINGS, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 13-3989553 - --------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 250 East Fifth Street, Suite 500, Cincinnati, Ohio 45202 - -------------------------------------------------------------------------------- (Address of principal executive offices) Zip Code Registrant's telephone number, including area code 513-721-7010 ------------------------------ (Not Applicable) - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report 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 twelve months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark whether the additional registrant, Eagle-Picher Industries, Inc., has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes X No ----- ----- 625,001 shares of Class A common capital stock, $.01 par value each, were outstanding at April 11, 2000. 374,999 shares of Class B common capital stock, $.01 par value each, were outstanding at April 11, 2000. 1 2 TABLE OF ADDITIONAL REGISTRANTS
Jurisdiction of IRS Employer Incorporation or Commission File Identification Name Organization Number Number ---- ------------ ------ ------ Eagle-Picher Industries, Inc. Ohio 333-49957 31-0268670 Daisy Parts, Inc. Michigan 333-49957-02 38-1406772 Eagle-Picher Development Co., Inc. Delaware 333-49957-03 31-1215706 Eagle-Picher Far East, Inc. Delaware 333-49957-04 31-1235685 Eagle-Picher Minerals, Inc. Nevada 333-49957-06 31-1188662 Eagle-Picher Technologies, LLC Delaware 333-49957-09 31-1587660 Hillsdale Tool & Manufacturing Co. Michigan 333-49957-07 38-0946293 EPMR Corporation (f/k/a Michigan Automotive Research Corp.) Michigan 333-49957-08 38-2185909
2 3 TABLE OF CONTENTS Page Number ------ PART I. FINANCIAL INFORMATION Item 1. Financial Statements............................................ 4 Condensed Consolidated Statements of Income (Loss)(Unaudited)....... 4 Condensed Consolidated Balance Sheets (Unaudited)................... 5 Condensed Consolidated Statements of Cash Flows (Unaudited)......... 7 Notes to Condensed Consolidated Financial Statements (Unaudited).... 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 18 Item 3. Quantitative and Qualitative Disclosures About Market Risk...... 26 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K................................ 27 Signatures............................................................... 28 Exhibit Index............................................................ 37 3 4 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. EAGLE-PICHER HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)(UNAUDITED) (Dollars in thousands, except per share amounts)
Three Months Ended February 29(28) 2000 1999 ---- ---- Net Sales $221,843 $194,443 ------- -------- Operating Costs and Expenses: Cost of products sold (exclusive of depreciation) 177,568 151,746 Selling and administrative 19,214 18,264 Depreciation 12,312 10,112 Amortization of intangibles 4,137 4,020 Proceeds from insurance settlement (16,000) -- Gain on sales of divisions (9,976) -- Gain on sales of assets (162) (34) ------- -------- 187,093 184,108 ------- -------- Operating Income 34,750 10,335 Interest expense (13,022) (11,342) Other income(expense) (131) 169 ------- -------- Income (Loss) Before Taxes 21,597 (838) Income Taxes 11,000 300 ------- -------- Net Income (Loss) $10,597 $ (1,138) ======= ======== Income (Loss) Applicable to Common Shareholders $ 7,637 $ (3,632) ======= ======== Income (Loss) per Common Share $ 7.64 $ (3.63) ======= ======== Comprehensive Income Loss $ 9,579 $ (2,109) ======= ========
See accompanying notes to the condensed consolidated financial statements. 4 5 EAGLE-PICHER HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in thousands)
February 29 November 30 ASSETS 2000 1999 ---- ---- CURRENT ASSETS Cash and cash equivalents $ 11,528 $ 10,071 Receivables, less allowances 120,920 122,499 Inventories: Raw materials and supplies 48,355 46,448 Work in process 29,122 27,669 Finished goods 17,341 16,382 -------- -------- 94,818 90,499 Net assets of operations to be sold 28,206 64,201 Prepaid expenses 9,795 7,063 Deferred income taxes 14,565 16,665 -------- -------- Total current assets 279,832 310,998 -------- -------- PROPERTY, PLANT AND EQUIPMENT 323,021 319,778 Less accumulated depreciation 76,513 67,318 -------- -------- Net property, plant and equipment 246,508 252,460 -------- -------- EXCESS OF ACQUIRED NET ASSETS OVER COST, net of accumulated amortization of $30,153 and $26,212, respectively 207,961 205,565 -------- -------- OTHER ASSETS 70,935 72,977 -------- -------- Total Assets $805,236 $842,000 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 50,911 $ 50,588 Long-term debt - current portion 74,009 86,318 Income taxes 10,817 2,291 Other current liabilities 71,073 63,869 -------- -------- Total current liabilities 206,810 203,066 LONG-TERM DEBT - less current portion 408,683 457,761 DEFERRED INCOME TAXES 10,086 10,086 OTHER LONG-TERM LIABILITIES 22,811 23,820 -------- -------- Total Liabilities 648,390 694,733 -------- -------- 11-3/4% CUMULATIVE REDEEMABLE EXCHANGEABLE PREFERRED STOCK; authorized 50,000 shares; issued and outstanding 14,191 shares 100,916 97,956 -------- --------
5 6 EAGLE-PICHER HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in thousands)
February 29 November 30 2000 1999 ---- ---- SHAREHOLDERS' EQUITY Class A Common stock, authorized 625,001 shares, $.01 par value each; issued and outstanding 625,001 shares 6 6 Class B Common stock, authorized 374,999 shares, $.01 par value each; issued and outstanding 374,999 shares 4 4 Additional paid-in capital 99,991 99,991 Deficit (42,265) (49,902) Other comprehensive income (1,806) (788) -------- -------- Total Shareholders' Equity 55,930 49,311 -------- -------- Total Liabilities and Shareholders' Equity $805,236 $842,000 ======== ========
See accompanying notes to the condensed consolidated financial statements. 6 7 EAGLE-PICHER HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in thousands)
Three Months Ended February 29(28) 2000 1999 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $10,597 $(1,138) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 17,257 14,826 Gain on sales of divisions (9,976) -- Changes in assets and liabilities, net of effect of acquisitions and divestitures: Receivables 4,634 2,691 Inventories (3,100) (5,494) Accounts payable 10 (2,442) Accrued liabilities (3,696) (1,547) Other 6,694 (6,377) ------- ------- Net cash provided by operating activities 22,420 519 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of divisions 52,543 12,400 Acquisition (6,758) -- Capital expenditures (6,443) (8,753) Other 1,088 (220) ------- ------- Net cash provided by investing activities 40,430 3,427 ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Reduction of long-term debt (3,657) (10,977) Net borrowings (repayments) under revolving credit agreements (57,224) 3,886 Other (512) (211) ------- ------- Net cash used in financing activities (61,393) (7,302) ------- -------
7 8 EAGLE-PICHER HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in thousands)
Three Months Ended February 29(28) 2000 1999 ---- ---- Net increase (decrease) in cash and cash equivalents 1,457 (3,356) Cash and cash equivalents, beginning of period 10,071 13,681 ------- -------- Cash and cash equivalents, end of period $11,528 $ 10,325 ======= ======== Supplemental cash flow information: 2000 1999 ---- ---- Cash paid during the three months ended February 29(28): Interest paid $ 7,385 $ 6,201 Income taxes paid, net $ 271 $ 4,778
See accompanying notes to the condensed consolidated financial statements. 8 9 EAGLE-PICHER HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) A. BASIS OF REPORTING FOR INTERIM FINANCIAL STATEMENTS The accompanying unaudited consolidated financial statements of Eagle-Picher Holdings, Inc. (the "Company") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and notes thereto included for the fiscal year ended November 30, 1999 presented in the Company's Form 10-K filed with the SEC on February 28, 2000. The financial statements presented herein reflect all adjustments (consisting of normal and recurring accruals) which, in the opinion of management, are necessary to fairly state the results of operations for the three months ended February 29, 2000 and February 28, 1999. Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year. Certain prior year amounts have been reclassified to conform with current year financial statement presentation. B. BASIC EARNINGS PER SHARE The calculation of net income (loss) per share is based upon the average number of common shares outstanding, which was 1,000,000 in the three months ended February 29,2000 and February 28, 1999. The net loss applicable to common shareholders represents the net income reduced by, or the net loss increased by, accreted dividends on preferred stock of $3.0 million and $2.5 million for the three months ended February 29(28), 2000 and 1999, respectively. No potential common stock was outstanding during the three months ended February 29(28), 2000 or 1999. C. ACQUISITIONS AND DIVESTITURES On December 1, 1999, the Company acquired the assets of the depleted zinc business of Isonics Corporation ("Isonics") for $8.2 million; $6.7 million of which was paid upon closing and $1.5 million of which consists of contingent cash payments over three years. In addition, the Company negotiated a warrant to acquire four million shares of common stock of Isonics in exchange for materials to be delivered in 2000. This acquisition, which was financed from the revolving credit facility under the Company's credit agreement, was accounted for as a purchase. Effective March 15, 2000, the Company elected to exercise its warrant using a "cashless exercise" feature where the Company will acquire fewer than four million shares of stock and pay for such shares by surrendering a portion of the warrant. The number of shares the Company will receive is currently being negotiated; however, it is expected to be in excess of 3.1 million shares. On September 1, 1999, the Board of Directors approved a plan to explore the sale of several smaller divisions in order to focus on core businesses. In the first quarter of 2000, the Company sold the assets of the Ross Aluminum Foundries Division ("Ross Aluminum") and the Michigan Automotive Research Corporation ("MARCO") and its interest in the common stock of both units of the Fluid Systems Division in three separate transactions. The aggregate proceeds, which were approximately $52.5 million, were used to reduce outstanding debt. The aggregate net gain of these transactions was approximately $10.0 million. Subsequent to the sale of the assets of MARCO, the corporate name of Michigan Automotive Research Corporation was changed 9 10 to EPMR Corporation. The Company continues to explore the sale of other smaller divisions, which are expected to take place in 2000. D. INSURANCE PROCEEDS On February 24, 2000, the Company settled claims against a former insurer regarding environmental remediation costs for $16.0 million. The Company received payment of this amount on February 28, 2000. E. LEGAL MATTERS For other information on legal proceedings, see Item 3 of the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 1999. In addition, the Company is involved in routine litigation, environmental proceedings and claims pending with respect to matters arising out of the normal course of business. In management's opinion, the ultimate liability resulting from all claims, individually or in the aggregate, will not materially affect the Company's consolidated financial position, results of operations or cash flows. F. SEGMENT REPORTING The Company has two reportable segments: automotive and industrial products. The method for determining what information to report is based on the way management organizes the operating segments within the company for making operational decisions and assessing performance. The operations in the Automotive Segment provide mechanical and structural parts for passenger cars, vans, trucks and sport utility vehicles for original equipment manufacturers and replacement markets. The operations in the Industrial Products Segment produce a variety of products for the aerospace, nuclear, telecommunications electronics, food and beverage and construction industries. The accounting policies used to develop segment information correspond to those disclosed in the Company's consolidated financial statements for the year ended November 30, 1999 included in Form 10-K. Sales between segments are not material. The Company does not allocate certain corporate expenses to its segments. Information about reported segment income or loss is as follows for the three months ended February 29(28), 2000 and 1999:
Three Months Ended February 29 (28) ---------------- 2000 1999 ---- ---- (In thousands of dollars) Net Sales Automotive $142,793 $108,757 Industrial 79,050 85,686 ------- ------- Total $221,843 $194,443 ======= ======= Income (Loss) Before Taxes: Automotive $10,308 $2,507 Industrial (2,156) (946) Corporate 13,445 (2,399) ------ ------ Total $21,597 $ (838) ====== =====
10 11 As previously mentioned, the Company sold its Ross Aluminum, MARCO and Fluid Systems Divisions in the first quarter of 2000. All were included in the Automotive Segment. The net assets of these divisions, which were included in the caption "Net assets of operations to be sold," were $35.1 million as of November 30, 1999. G. SUPPLEMENTAL GUARANTOR INFORMATION The indebtedness of the Company's wholly-owned subsidiary, Eagle-Picher Industries, Inc. ("Subsidiary") includes a syndicated secured loan facility ("Credit Agreement") and $220.0 million in senior subordinated notes ("Subordinated Notes"). Both the Credit Agreement and the Subordinated Notes are guaranteed on a full, unconditional and joint and several basis by the Company and certain of the Subsidiary's wholly-owned domestic subsidiaries ("Subsidiary Guarantors") including Carpenter Enterprises Ltd., which was acquired in 1999, and Eagle-Picher Acceptance Corporation, which was formed in 1999. Management has determined that full financial statements and other disclosures concerning the Subsidiary or the Subsidiary Guarantors would not be material to investors and such financial statements are not presented. The following supplemental condensed combining financial statements present information regarding the Subsidiary, the Subsidiary Guarantors and the subsidiaries that did not guarantee the debt. The Subsidiary and the Subsidiary Guarantors are subject to restrictions on the payment of dividends under the terms of both the Credit Agreement and the Indenture supporting the Subordinated Notes, both of which were filed with the Company's Form S-4 Registration Statement No. 333-49957-01 filed on April 11, 1998 and both of which were incorporated by reference to the Company's Form 10-K filed on February 28, 2000. 11 12 EAGLE-PICHER HOLDINGS, INC. SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF INCOME (LOSS) (UNAUDITED) THREE MONTHS ENDED FEBRUARY 29, 2000
GUARANTORS --------------------------- NON-GUARANTORS EAGLE-PICHER SUBSIDIARY FOREIGN ISSUER HOLDINGS, INC. GUARANTORS SUBSIDIARIES ELIMINATIONS TOTAL -------- -------------- ---------- ------------- ------------ -------- (IN THOUSANDS OF DOLLARS) Net Sales Customers $ 44,166 $ -- $141,971 $35,706 $ -- $221,843 Intercompany 4,165 -- 2,555 2,417 (9,137) -- Operating Costs and Expenses: Cost of products sold (exclusive of depreciation 36,914 -- 116,081 33,658 (9,085) 177,568 Selling and administrative 10,008 5 6,176 3,063 (38) 19,214 Intercompany charges (3,394) -- 3,393 (37) 38 -- Depreciation 2,809 -- 8,040 1,463 -- 12,312 Amortization of intangibles 1,155 -- 2,742 240 -- 4,137 Proceeds from insurance settlement (16,000) -- -- -- -- (16,000) (Gain) loss on sales of divisions 2,360 -- (3,976) (8,360) -- (9,976) (Gain) loss on sales of assets -- -- (192) (3) 33 (162) -------- ------- -------- ------- -------- -------- Total 33,852 5 132,264 30,024 (9,052) 187,093 -------- ------- -------- ------- -------- -------- Operating Income (Loss) 14,479 (5) 12,262 8,099 (85) 34,750 Other Income (Expense) Interest expense (4,666) -- (7,455) (1,507) 606 (13,022) Other income (expense) 229 -- 526 (280) (606) (131) Equity in earnings of consolidated subsidiaries 9,114 10,602 351 -- (20,067) -- -------- ------- -------- ------- -------- -------- Income (Loss) Before Taxes 19,156 10,597 5,684 6,312 (20,152) 21,597 Income Taxes 8,118 -- 2,285 597 -- 11,000 -------- ------- -------- ------- -------- -------- Net Income (Loss) $ 11,038 $10,597 $ 3,399 $ 5,715 $(20,152) $ 10,597 ======== ======= ======== ======= ======== ========
12 13 EAGLE-PICHER HOLDINGS, INC. SUPPLEMENTAL CONDENSED COMBINED BALANCE SHEETS (UNAUDITED) AS OF FEBRUARY 29, 2000
GUARANTORS -------------------------- NON-GUARANTORS EAGLE-PICHER SUBSIDIARY FOREIGN ISSUER HOLDINGS, INC. GUARANTORS SUBSIDIARIES ELIMINATIONS TOTAL --------- -------------- ---------- -------------- ------------ --------- (IN THOUSANDS OF DOLLARS) ASSETS Cash and cash equivalents $ 4,370 $ 1 $ 571 $ 6,649 $ (63) $ 11,528 Receivables, net 11,005 -- 94,246 15,669 -- 120,920 Intercompany accounts receivable 4,173 -- 10,974 323 (15,470) -- Inventories 25,558 -- 60,717 9,861 (1,318) 94,818 Net assets of operations to be sold 22,698 -- -- 5,508 -- 28,206 Prepaid expenses 2,233 -- 6,024 1,577 (39) 9,795 Deferred income taxes 14,565 -- -- -- -- 14,565 --------- --------- --------- --------- --------- --------- Total current assets 84,602 1 172,532 39,587 (16,890) 279,832 Property, Plant & Equipment, net 39,797 -- 179,929 26,815 (33) 246,508 Investment in Subsidiaries 117,900 158,656 7,183 -- (283,739) -- Excess of Acquired Net Assets Over Cost, net 49,696 -- 145,791 12,474 -- 207,961 Other Assets 54,464 -- 16,786 4,210 (4,525) 70,935 --------- --------- --------- --------- --------- --------- Total Assets $ 346,459 $ 158,657 $ 522,221 $ 83,086 $(305,187) $ 805,236 ========= ========= ========= ========= ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 11,064 $ -- $ 35,506 $ 4,341 $ -- $ 50,911 Intercompany accounts payable 179 -- -- 8,958 (9,137) -- Long-term debt - current portion 17,491 -- 54,000 3,018 (500) 74,009 Income taxes 10,410 -- -- 407 -- 10,817 Other current liabilities 43,103 -- 22,420 6,132 (582) 71,073 --------- --------- --------- --------- --------- --------- Total current liabilities 82,247 -- 111,926 22,856 (10,219) 206,810 Long-term Debt - less current portion 406,260 -- 5,701 2,423 (5,701) 408,683 Deferred Income Taxes 10,086 -- -- -- -- 10,086 Other Long-Term Liabilities 21,162 10 1,000 639 -- 22,811 --------- --------- --------- --------- --------- --------- Total Liabilities 519,755 10 118,627 25,918 (15,920) 648,390 Intercompany Accounts (321,105) -- 302,315 33,492 (14,702) -- 11 3/4% Cumulative Redeemable Exchangeable Preferred Stock -- 100,916 -- -- -- 100,916 Shareholders' Equity 147,809 57,731 101,279 23,676 (274,565) 55,930 --------- --------- --------- --------- --------- --------- Total Liabilities and Shareholders' Equity $ 346,459 $ 158,657 $ 522,221 $ 83,086 $(305,187) $ 805,236 ========= ========= ========= ========= ========= =========
13 14 EAGLE-PICHER HOLDINGS, INC. SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOWS (UNAUDITED) FEBRUARY 29, 2000
GUARANTORS --------------------------- NON-GUARANTORS EAGLE-PICHER SUBSIDIARY FOREIGN ISSUER HOLDINGS, INC. GUARANTORS SUBSIDIARIES ELIMINATIONS TOTAL -------- -------------- ---------- -------------- ------------ -------- (IN THOUSANDS OF DOLLARS) Cash Flows From Operating Activities: Net Income (Loss) $ 10,909 $ 10,597 $ 3,528 $ 5,715 $(20,152) $ 10,597 Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Equity in earnings (loss) of consolidated subsidiaries (9,114) (10,602) (351) -- 20,067 -- Depreciation and amortization 4,669 -- 10,885 1,703 -- 17,257 Gain on sales of divisions 2,360 -- (3,976) (8,360) -- (9,976) Changes in assets and liabilities, net of effect of acquisitions and divestitures 13,241 5 1,087 (7,204) (2,587) 4,542 -------- -------- -------- -------- -------- -------- Net cash provided by (used in) operating activities 22,065 -- 11,173 (8,146) (2,672) 22,420 -------- -------- -------- -------- -------- -------- Cash Flows From Investing Activities: Proceeds from sales of divisions 24,090 -- 10,430 18,023 -- 52,543 Acquisition -- -- (6,758) -- -- (6,758) Capital expenditures (494) -- (3,692) (2,257) -- (6,443) Other 1,142 -- 59 476 (589) 1,088 -------- -------- -------- -------- -------- -------- Net cash provided by (used in) investing activities 24,738 -- 39 16,242 (589) 40,430 -------- -------- -------- -------- -------- -------- Cash Flows From Financing Activities: Reduction of long-term debt (3,657) -- -- -- -- (3,657) Net borrowings (repayments) under revolving credit agreements (38,500) -- (9,750) (8,974) -- (57,224) Other (6) -- -- (506) -- (512) -------- -------- -------- -------- -------- -------- Net cash provided by (used in) financing activities (42,163) -- (9,750) (9,480) -- (61,393) -------- -------- -------- -------- -------- -------- Increase (decrease) in cash and cash equivalents 4,640 -- 1,462 (1,384) (3,261) 1,457 Intercompany accounts (4,334) -- (1,761) 2,945 3,150 -- Cash and cash equivalents, beginning of period 4,064 1 870 5,088 48 10,071 -------- -------- -------- -------- -------- -------- Cash and cash equivalents, end of period $ 4,370 $ 1 $ 571 $ 6,649 $ (63) $ 11,528 ======== ======== ======== ======== ======== ========
14 15 EAGLE-PICHER HOLDINGS,INC. SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF INCOME (LOSS) (UNAUDITED) THREE MONTHS ENDED FEBRUARY 28, 1999
GUARANTORS ---------------------------- NON-GUARANTORS EAGLE-PICHER SUBSIDIARY FOREIGN ISSUER HOLDINGS, INC. GUARANTORS SUBSIDIARIES ELIMINATIONS TOTAL --------- -------------- ---------- -------------- ------------ --------- (IN THOUSANDS OF DOLLARS) Net Sales Customers $ 50,983 $ -- $ 116,749 $ 26,711 $ -- $ 194,443 Intercompany 3,112 -- 2,634 1,879 (7,625) -- Operating Costs and Expenses: Cost of products sold (exclusive of depreciation) 40,406 -- 94,740 24,260 (7,660) 151,746 Selling and administrative 10,417 -- 5,342 2,569 (64) 18,264 Intercompany charges (2,357) -- 2,357 (65) 65 -- Depreciation 2,916 -- 6,046 1,150 -- 10,112 Amortization of intangibles 1,385 -- 2,393 242 -- 4,020 Loss on sales of assets (10) -- (12) (12) -- (34) --------- --------- --------- --------- --------- --------- Total 52,757 -- 110,866 28,144 (7,659) 184,108 --------- --------- --------- --------- --------- --------- Operating Income 1,338 -- 8,517 446 34 10,335 Other Income (Expense) Interest expense (4,738) -- (5,366) (1,238) -- (11,342) Other income (expense) 147 -- 36 (14) -- 169 Equity in earnings of consolidated subsidiaries (590) (1,138) 6 -- 1,722 -- --------- --------- --------- --------- --------- --------- Income (Loss) Before Taxes (3,843) (1,138) 3,193 (806) 1,756 (838) Income Taxes (2,677) -- 2,413 564 -- 300 --------- --------- --------- --------- --------- --------- Net Income (Loss) $ (1,166) $ (1,138) $ 780 $ (1,370) $ 1,756 $ (1,138) ========= ========= ========= ========= ========= =========
15 16 EAGLE-PICHER HOLDINGS, INC. SUPPLEMENTAL CONDENSED COMBINED BALANCE SHEETS (UNAUDITED) AS OF NOVEMBER 30, 1999
GUARANTORS -------------------------- NON-GUARANTORS EAGLE-PICHER SUBSIDIARY FOREIGN ISSUER HOLDINGS, INC. GUARANTORS SUBSIDIARIES ELIMINATIONS TOTAL --------- -------------- ---------- -------------- ------------ --------- (IN THOUSANDS OF DOLLARS) ASSETS Cash and cash equivalents $ 4,064 $ 1 $ 870 $ 5,088 $ 48 $ 10,071 Receivables, net 13,428 -- 92,721 16,350 -- 122,499 Intercompany accounts receivable 8,368 -- 12,255 455 (21,078) -- Inventories 24,211 -- 57,014 10,618 (1,344) 90,499 Net assets of operations to be sold 46,641 -- 6,839 10,721 -- 64,201 Prepaid expenses 1,783 -- 4,355 925 -- 7,063 Deferred income taxes 16,665 -- -- -- -- 16,665 --------- --------- --------- --------- --------- --------- Total current assets 115,160 1 174,054 44,157 (22,374) 310,998 Property, Plant & Equipment, net 42,001 -- 184,295 26,197 (33) 252,460 Investment in Subsidiaries 109,009 148,054 6,834 -- (263,897) -- Excess of Acquired Net Assets Over Cost, net 50,799 -- 142,051 12,715 -- 205,565 Other Assets 49,460 -- 22,859 625 33 72,977 --------- --------- --------- --------- --------- --------- Total Assets $ 366,429 $ 148,055 $ 530,093 $ 83,694 $(286,271) $ 842,000 ========= ========= ========= ========= ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 9,928 $ -- $ 35,837 $ 4,823 -- $ 50,588 Intercompany accounts payable 124 -- -- 7,588 (7,712) -- Long-term debt - current portion 16,374 -- 63,750 6,194 -- 86,318 Income taxes 1,826 -- -- 465 -- 2,291 Other current liabilities 37,870 -- 22,970 3,486 (457) 63,869 --------- --------- --------- --------- --------- --------- Total current liabilities 66,122 -- 122,557 22,556 (8,169) 203,066 Long-term Debt - less current portion 449,534 -- 7,836 8,227 (7,836) 457,761 Deferred Income Taxes 10,086 -- -- -- -- 10,086 Other Long-Term Liabilities 23,047 5 -- 768 -- 23,820 --------- --------- --------- --------- --------- --------- Total liabilities 548,789 5 130,393 31,551 (16,005) 694,733 Intercompany Accounts (344,941) -- 324,500 36,660 (16,219) -- 11 3/4% Cumulative Redeemable Exchangeable Preferred Stock -- 97,956 -- -- -- 97,956 Shareholders' Equity 162,581 50,094 75,200 15,483 (254,047) 49,311 --------- --------- --------- --------- --------- --------- Total Liabilities and Shareholders' Equity $ 366,429 $ 148,055 $ 530,093 $ 83,694 $(286,271) $ 842,000 ========= ========= ========= ========= ========= =========
16 17 EAGLE-PICHER HOLDINGS, INC. SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOWS (UNAUDITED) THREE MONTHS ENDED FEBRUARY 28, 1999
GUARANTORS -------------------------- NON-GUARANTORS EAGLE-PICHER SUBSIDIARY FOREIGN ISSUER HOLDINGS, INC. GUARANTORS SUBSIDIARIES ELIMINATIONS TOTAL -------- -------------- ---------- ------------- ------------ -------- (IN THOUSANDS OF DOLLARS) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (1,166) $ (1,138) $ 780 $ (1,370) $ 1,756 $ (1,138) Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Equity in earnings of consolidated subsidiaries 590 1,138 (6) -- (1,722) -- Depreciation and amortization 4,995 -- 8,439 1,392 -- 14,826 Changes in assets and liabilities, net of effect of divestitures (4,711) -- (5,751) (3,062) 355 (13,169) -------- -------- -------- -------- -------- -------- Net cash provided by (used in) operating activities (292) -- 3,462 (3,040) 389 519 -------- -------- -------- -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of division 12,400 -- -- -- -- 12,400 Capital expenditures (1,615) -- (4,664) (2,474) -- (8,753) Other (585) -- (82) 90 357 (220) -------- -------- -------- -------- -------- -------- Net cash provided by (used in) investing activities 10,200 -- (4,746) (2,384) 357 3,427 -------- -------- -------- -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Reduction of long-term debt (10,977) -- -- -- -- (10,977) Net borrowings (repayments) on revolving credit agreements 805 -- -- 3,081 -- 3,886 Other -- -- -- (211) -- (211) -------- -------- -------- -------- -------- -------- Net cash provided by (used in) financing activities (10,172) -- -- 2,870 -- (7,302) -------- -------- -------- -------- -------- -------- Increase (decrease) in cash and cash equivalents (264) -- (1,284) (2,554) 746 (3,356) Intercompany accounts (2,470) -- 1,444 2,106 (1,080) -- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 7,464 1 712 5,125 379 13,681 -------- -------- -------- -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,730 $ 1 $ 872 $ 4,677 $ 45 $ 10,325 ======== ======== ======== ======== ======== ========
17 18 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS Please refer to Note F. regarding Segment Reporting contained in Item 1. of this report. Net Sales. The Company's net sales were $221.8 million in the quarter ended February 29, 2000, compared to $194.4 million in the comparable period in 1999. The increase of 14.1% is primarily due the acquisition of Carpenter Enterprises Ltd. ("Carpenter"), which occurred in the second quarter of 1999. As previously mentioned, the Company divested itself of the Ross Aluminum, MARCO and Fluid Systems Divisions ("Divested Divisions") in the first quarter of 2000. The Divested Divisions had little impact on the comparability of net sales in the first quarters of 2000 and 1999 for two reasons. First, with the exception of Ross Aluminum, which was sold effective January 1, 2000, these divestitures occurred at or near the end of the quarter. Secondly, certain of the Divested Divisions experienced revenue gains which nearly offset the loss of revenues which occurred when Ross Aluminum was sold. Net sales were down 2.4% when the effects of Carpenter and the Divested Divisions have been considered. Net sales of the Automotive Group increased 31.3% in the first quarter of 2000 compared to the first quarter of 1999, primarily due to the Carpenter acquisition. Excluding the effects of Carpenter and the Divested Divisions (which were included in the Automotive Segment), automotive sales increased 3.0%. In the Automotive Group, the Company is under constant pressure from its customers to reduce prices. In addition, the products it manufactures become obsolete from time to time as customers change product designs and the Company must compete for the replacement business. The North American automotive build continues to be strong; however, the growth of the Company's automotive component sales was tempered primarily by the discontinuation of certain customer programs. At the same time, the acquisition of Carpenter has expanded the Company's precision-machined automotive product lines. In the Industrial Group, sales declined 7.8% in the first quarter of 2000 from the comparable period in 1999. Demand for aerospace products, particularly related to satellites, has been soft as existing satellite programs have struggled. In addition, demand for wheel-tractor scrapers weakened in the first quarter of 2000 compared to the same period in 1999. Declines resulting from these items were somewhat offset by increases resulting from stronger demand for heavy-duty forklift trucks, a large shipment of boron in the first quarter of 2000 and the growth of a newer program where parts are manufactured on a contract basis for the construction equipment industry. The impact of the Isonics acquisition was minimal in the first quarter of 2000; however, it is expected that this business will complement the Company's existing boron business, which serves the nuclear industry, in the future. Cost of Products Sold. Cost of products sold (excluding depreciation expense) was $177.6 million in the three months ended February 29, 2000 and $151.7 million in the comparable period of 1999. The increase is primarily due to the acquisition of Carpenter and the effects of the sales of the Divested Divisions. Selling and Administrative. Selling and administrative expenses were $19.2 million and $18.3 million in the first quarters of 2000 and 1999, respectively. The 4.9% increase in selling and administrative expenses is due to the expenses incurred in the first quarter of 2000 as a result of the Carpenter acquisition and the restructuring of European Operations. 18 19 Depreciation. Depreciation expense was $12.3 million in the three months ended February 29, 2000, a $2.2 million or 21.8% increase over the comparable period in 1999. The additional depreciation in 2000 is due to the acquisition of Carpenter in 1999. Amortization of Intangibles. Amortization of intangibles increased slightly from $4.0 million in the first quarter of 1999 to $4.1 million in 2000. Excess of acquired net assets over cost (goodwill) and its related amortization increased in the first quarter of 2000 due to the Carpenter and Isonics acquisitions. These increases were partially offset, however, by the decline in goodwill resulting from the write down of impaired goodwill in the fourth quarter of 1999, which related to certain divisions which were held for sale, and the sale of the Divested Divisions. Proceeds from Insurance Settlement. The Company settled claims against a former insurer regarding environmental remediation costs for $16.0 and received such proceeds in the first quarter of 2000. Gain on Sale of Divisions. In the first quarter of 2000, the Company sold the assets of its Ross Aluminum and MARCO Divisions and its interest in the common stock of the units of the Fluid Systems Division. The aggregate net proceeds of and gain on these transactions were approximately $52.5 million and $10.0 million, respectively. Interest Expense. Interest expense was $13.0 million and $11.3 million in the first quarters of 2000 and 1999, respectively. Two factors contributed to this increase. First, the Company's debt level increased significantly in the second quarter of 1999 when Carpenter was acquired and remained at a higher level until the end of the first quarter of 2000 when the proceeds of the sales of the Divested Divisions and the insurance settlement were received and applied to the debt. Second, LIBOR rates, on which most of the Company's debt subject to variable interest is based, were up as much as 75 basis points in the first quarter of 2000 over the comparable period in 1999. Income (Loss) Before Taxes. Income (loss) before taxes was $21.6 million in the three months ended February 29, 2000 compared to $(0.8) million in the same period in 1999. The incremental difference is comprised of basically four items: 1) the receipt of $16.0 million of insurance proceeds in the first quarter of 2000; 2) the $10.0 million gain resulting from the sale of the Divested Divisions; 3) the increase in interest expense of $1.7 million; and 4) the operating contribution of Carpenter in the first quarter of 2000. Income before taxes in the first quarter of 2000 for the Automotive Group was $10.3 million compared to $2.5 million in 1999. The increase is due primarily to the $10.0 million gain on the sale of divisions, which was offset by an aggregate decline in operating income and an increase in interest expense. The decline in operating income was primarily due to the sale of the Ross Aluminum Division and to continued manufacturing inefficiencies at the Fluid Systems Division, which was sold February 29, 2000. This decline was offset by the contribution of Carpenter in 2000 and modest increases in operating income at other operations, which correspond to modest increases in net sales. The increase in interest costs is a result of both the acquisition of Carpenter and the overall increase in interest rates. The Industrial Products Group had net losses before taxes of $(2.2) million and $(0.9) million in the first quarters of 2000 and 1999, respectively, due primarily to the lower volumes of wheel-tractor scrapers, which resulted in poor absorption of fixed overhead. In addition, start-up costs related to the contract manufacturing of parts were heavier than expected. Interest costs increased primarily due to higher interest rates. Corporate income (loss) before taxes was $13.4 million in the three months ended February 29, 2000 compared to $(2.4) million for the three months ended February 28, 1999. If the insurance proceeds of $16.0 million are excluded, the loss before taxes is comparable to that of the three months ended February 28, 1999. These losses result because the Company does not allocate certain corporate expenses to its segments. 19 20 Income Taxes. Income taxes and the effective rate of income tax vary for several reasons, the most significant being the tax deductibility of goodwill. A portion of the goodwill amortization relating to the Company's acquisition of Eagle-Picher Industries, Inc. is deductible, however the amount of goodwill that has tax basis changes as contingent liabilities that existed for tax purposes at the time of that acquisition are resolved. Amortization of the goodwill related to the acquisition of Carpenter is not deductible for tax purposes. Goodwill associated with certain of the Divisions which were divested was not deductible for tax purposes, which resulted in a tax gain in excess of the gain on sales of divisions recognized in the statement of income. Net Income (Loss). Net income was $10.6 million in the three months ended February 29, 2000 compared to a net loss of $(1.1) million in the three months ended February 28, 1999. Factors contributing to the difference (discussed in detail above) include the effects of the acquisition of Carpenter in the second quarter of 1999, the effects of the divestiture of the Ross Aluminum, MARCO and Fluid Systems Divisions, particularly the gain on the sale of those divisions, and increased interest costs resulting from higher interest rates and increased levels of debt. Income applicable to common shareholders was decreased to $7.6 million by dividends accreted on the 11 3/4% Cumulative Redeemable Exchangeable Preferred Stock ("Preferred Stock") of $3.0 million in the three months ended February 29, 2000. The net loss applicable to common shareholders was increased to $(3.6) million by preferred stock dividends of $2.5 million in the three months ended February 28, 1999. LIQUIDITY AND CAPITAL RESOURCES The following are certain financial data regarding earnings before interest, taxes, depreciation and amortization ("EBITDA"), cash flows and earnings to fixed charges and preferred stock dividends:
Three Months Ended February 29(28) --------------- 2000 1999 ---- ---- (In millions of dollars) EBITDA $25.0 $25.1 Cash provided by operating activities 22.4 0.5 Cash provided by investing activities 40.4 3.4 Cash used in financing activities (61.4) (7.3) Preferred stock dividends accreted 3.0 2.5 Earnings/fixed charges and preferred stock dividends 2.14X .76X
EBITDA The Company's EBITDA is defined for purposes hereof as earnings before interest expense, income taxes, depreciation and amortization, certain one-time management compensation expenses and other non-cash items, such as gains and losses on sales of divisions. EBITDA, as defined herein, may not be comparable to similarly titled measures reported by other companies and should not be construed as an alternative to operating income or to cash flows from operating activities, as determined by generally accepted accounting principles, as a measure of the Company's operating performance or liquidity, respectively. 20 21 Funds depicted by EBITDA are not available for management's discretionary use to the extent they are required for debt service and other commitments. The Company's EBITDA for the three months ended February 29, 2000 was $25.0 million, unchanged from the EBITDA of the comparable period in 1999 of $25.1 million. Increases in EBITDA resulting from the Carpenter acquisition and modest sales volume increases of rubber-coated metal products in the Automotive Group were offset by decreases resulting from lower volumes of wheel tractor scrapers and satellite components, start up costs related to contract manufacturing of components for the construction equipment industry, the sale of Ross Aluminum and inefficiencies related to the production of multi-layer fuel transfer systems in Europe. Operating Activities Cash provided by operating activities was $22.4 million and $0.5 million for the three months ended February 29(28), 2000 and 1999, respectively, and consisted of the following:
Three Months Ended February 29(28) 2000 1999 ---- ---- (in millions of dollars) Income (loss) before taxes $21.6 $(0.8) Depreciation and amortization, excluding amortization of deferred financing costs 16.4 14.1 Gain on sales of divisions (9.9) -- Add back interest expense 13.0 11.3 Interest paid (7.4) 6.2) Income taxes paid, net (.3) (4.8) Working capital and other (11.0) (13.1) ----- ----- $22.4 $ 0.5 ===== =====
See "Results of Operations" for discussions concerning income (loss) before taxes, depreciation and amortization, gain on sales of divisions and interest expense. Interest paid increased in 2000 due to the acquisition of Carpenter and higher interest rates. Differences between interest expense and interest paid result from amortization of deferred financing costs and the payment schedule for interest on the Company's Subordinated Notes. The interest payments are due semi-annually on March 1 and September 1; therefore, three months of interest expense was accrued on these notes in the first quarters of both 2000 and 1999, but was not paid until the following quarter. The Company determined that no Federal income tax extension payment was needed in 2000 for the tax year ended November 30, 1999. A portion of the Federal income tax liability associated with the tax year ended November 30, 1998 was paid in fiscal year 1999. Working capital generally increases in the first quarter of the year resulting in a use of cash. Reasons for this include payment of incentives, which had been accrued at the end of the year, and build up of inventories for anticipated sales in the second quarter. Typically, the Company's net sales, particularly in the Automotive Group, are higher in the second and fourth quarters of the fiscal year. 21 22 Investing Activities Cash provided by investing activities was $40.4 million and $3.4 million in the three months ended February 29 (28), 2000 and 1999, respectively. In the first quarter of 2000, the Company sold the Ross Aluminum, MARCO and Fluid Systems Divisions. The aggregate net proceeds of these transactions were $52.5 million. Early in the first quarter of 1999, the Company received $12.4 million in cash relating to the sale of the Trim Division. On December 1, 1999, the Company acquired the assets of the depleted zinc business of Isonics, which required $6.7 million cash at the closing. This acquisition was financed from the Company's revolving credit facility. Additional payments totaling $1.5 million are due over the next three years provided certain contingencies are met. The Company also negotiated a warrant to acquire four million shares of common stock of Isonics in exchange for materials to be delivered in 2000. Effective March 15, 2000, the Company elected to exercise its warrant using a "cashless exercise" feature, where the Company will acquire fewer than four million shares of stock and pay for such shares by surrendering a portion of the warrant. The number of shares the Company will receive is currently being negotiated; however it is expected to be in excess of 3.1 million shares. Capital expenditures were $6.4 million and $8.8 million in the first quarters of 2000 and 1999, respectively. Other than a small plant expansion in 1999, these expenditures generally related to capital needed for new programs and maintenance. Financing Activities Cash used in financing activities was $61.4 million in the first three months of 2000, due primarily to repayments of loans under the various credit agreements. The proceeds of the division sales and the insurance proceeds were used to repay outstanding debt. Cash used in financing activities was $7.3 million for the comparable period in 1999. The Company made regularly scheduled debt payments and the 1998 excess cash flow payment required by the Credit Agreement in that period. Earnings to Fixed Charges and Preferred Stock Dividends The ratio of earnings to fixed charges and preferred stock dividends for the three months ended February 29(28) was 2.14x in 2000 and .76x in 1999. In 1999, earnings were insufficient to cover fixed charges and preferred stock dividends by $3.3 million. The increase in 2000 is due primarily to the receipt of insurance proceeds and the gain on sales of divisions. If these items were excluded from income before taxes, the ratio of earnings to fixed charges and preferred stock dividends would have been .55X and earnings would have been insufficient to cover fixed charges and preferred stock dividends by $7.3 million. The resulting decrease from .76X to .55X is due to increased interest resulting from the Carpenter Acquisition and higher interest rates coupled with flat or declining operating results as discussed in "Results of Operations." Liquidity and Capital Resources The revolving facility under the Credit Agreement of $220.0 million is available for both borrowings and the issuance of letters of credit. At February 29, 2000 the Company had outstanding borrowings and letters of credit under the Facility of $97.5 million and $52.1 million, respectively, leaving the Company with available borrowing capacity of $70.4 million. The receipt of the insurance proceeds and the proceeds of the division sales improved the Company's liquidity since November 30, 1999. In addition, the borrowings outstanding on the Company's European lines of credit were substantially reduced with the proceeds of the sale of the Fluid Systems Division. The sale of the Fluid 22 23 Systems Division resolved the situation where the Company had to obtain a waiver from a lender because a financial covenant to one of the European credit agreements had not been met. The Company was in compliance with the covenants of its Credit Agreement and Subordinated Notes at February 29, 2000. The Company has an accounts receivable loan agreement ("Receivables Agreement") which has a term of 364 days and which is expected to be renewed over the term of the Credit Agreement. Excluding the Receivables Agreement, scheduled debt repayments are $12.3 million in the remaining nine months of 2000. The Credit Agreement, as amended, requires the Company to make mandatory repayments of 50% of annual cash flow as defined by the Credit Agreement, the net proceeds from sales of assets (subject to certain conditions), the proceeds of new debt issued and 50% of the net proceeds of any equity issued. No excess cash flow payment is due in 2000 for the year ended November 30, 1999, and the proceeds from the sales of the Divested Divisions are not required to be used to repay debt if such proceeds are used to purchase assets within the period specified in the Credit Agreement. Scheduled debt payments under the Credit Agreement and the industrial revenue bonds for 2001 and 2002 are $20.8 million and $25.6 million, respectively. In addition to the sale of the Ross Aluminum, MARCO, and Fluid Systems Division, the Company continues to explore the sale of other small divisions which are expected to take place in 2000. Any proceeds resulting from the eventual sales of the other divisions will be applied to reduce debt or to fund future growth. The Subsidiary has reached an agreement in principle to settle the last remaining claim from its chapter 11 reorganization. It is anticipated the second and final bankruptcy distribution of approximately $11.3 million will be made in 2000, after the settlement of this last claim is final. Cash and cash equivalents were $11.5 million at February 29, 2000. The Company estimates that it needs approximately $10.0 million to $12.0 million in cash for operations. The Company's liquidity needs are primarily for debt service and capital maintenance. The Company believes that its cash flows from operations and available borrowings under its bank credit facilities will be sufficient to fund its anticipated liquidity requirements for the next twelve months. In the event that the foregoing sources are not sufficient to fund the Company's expenditures and service its indebtedness, the Company would be required to raise additional funds. YEAR 2000 READINESS DISCLOSURE The Company completed its Year 2000 readiness project as scheduled, including addressing leap year calendar date calculation concerns. The Company did not experience any significant disruptions in its operating or business systems during the transition from 1999 to 2000 or on February 29, 2000. Based on operations since January 1, 2000, the Company does not expect any impact to its ongoing business as a result of the Year 2000 issue. The Company has spent approximately $5.2 million (including capital and internal resources that were redeployed) to assess, remediate and test its computer hardware, software and embedded systems. EURO CONVERSION On January 1, 1999, eleven members of the European Union adopted the euro as their common legal currency and established fixed conversion rates between their existing local currencies and the euro. During the transition period, which runs from January 1, 1999 through December 31, 2002, transactions may take place using either the euro or a local currency. However, conversion rates will no longer be computed directly from one local currency to another, but be converted from one local currency into an amount denominated in euro, then be converted from the euro denominated amount into the second local currency. On July 1, 2002, the local currencies will no longer be legal tender for any transactions. 23 24 The Company has both operating divisions and domestic export customers located in Europe. In 1999, combined revenues from these sources were approximately 11% of total revenues. The Company has operations in Germany and Spain, which are participating in the euro conversion, and the United Kingdom, which has elected not to participate at this time. Certain of our European operations have adopted the euro as their reporting currency, although many transactions, such as payroll, some billing and vendor invoicing, still occur in local currencies. The remaining operations located in the participating countries plan to make the euro the functional currency sometime during the transition period. The costs associated with the conversion to date have not been material. The Company is currently assessing the competitive impact of the euro conversion on the Company's operations, both in Europe and in the United States. In markets where sales are made in U.S. dollars, there may be pressures to denominate sales in the euro, however, exchange risks resulting from these transactions could be mitigated through hedging. Pressures to price products in euros may be more urgent for operations located in the United Kingdom, particularly in the automotive industry, as the European automotive industry is somewhat dominated by German companies. The currency risk to the operations located in the United Kingdom could also be hedged, however the risk is greater on a regional level that the hedging could result in additional costs that could harm the cost competitiveness of those operations. RECENTLY ISSUED ACCOUNTING STANDARDS In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," which addresses the accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. The accounting for gains and losses resulting from changes in the fair value of a derivative depends on the its intended use and the resulting designation. In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133." Based on the new effective date, the Company will adopt the provisions of this statement in the first quarter of the fiscal year ending November 30, 2001. The Company has not yet determined the impact this statement will have on its financial position or the results of its operations. Other accounting standards issued by the FASB since June 1998 are not applicable to the Company. RESTRICTIONS ON PAYMENT OF DIVIDENDS The Subsidiary and the Subsidiary Guarantors are subject to restrictions on the payment of dividends and other forms of payment in both the Credit Agreement and the Indenture for the Subordinated Notes. Those restrictions generally prohibit the payment of dividends to the Company either directly by the Subsidiary or indirectly through any Subsidiary Guarantor. Certain limited exceptions are provided allowing for payments to the Company. Specifically, the Subsidiary is authorized to make payments to the Company in amounts not in excess of any amounts the Company is required to pay to meet its consolidated income tax obligations. Additional payments from the Subsidiary to the Company are permitted commencing September 1, 2003 in amounts not in excess of the Company's obligations to make any cash dividend payments required to be paid under the Company's Preferred Stock and to make any cash interest payments required to be paid under any debentures issued by the Company in exchange for the Company's Preferred Stock ("Exchange Debentures"). 24 25 FORWARD-LOOKING STATEMENTS This Form 10-Q contains statements which, to the extent that they are not recitations of historical fact, constitute "forward looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. The words "estimate," "anticipate," "project," "intend," "believe," "expect," and similar expressions are intended to identify forward-looking statements. Forward looking statements in this report include, but are not limited to (1) statements regarding the impact of the acquisition of Isonics under "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations;" (2) statements regarding the Company's anticipated ownership interest in Isonics under "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Investing Activities;" (3) statements regarding the anticipated sale of other small divisions in 2000 under "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources;" (4) statements regarding the anticipated final bankruptcy distribution in 2000 under "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources;" (5) statements regarding the ability of the Company to fund its anticipated liquidity requirements for the next twelve months under "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources;" (6) statements regarding the future impact of the Year 2000 issues under "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Year 2000 Readiness Disclosure;" and (7) statements regarding the potential costs associated with hedging currency risks to the operations and the impact on the competitiveness of operations in the United Kingdom under "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Euro Conversion." Such forward-looking information involves important risks and uncertainties that could materially alter results in the future from those expressed in any forward-looking statements made by, or on behalf of, the Company. These risks and uncertainties include, but are not limited to, the ability of the Company to maintain existing relationships with customers; the ability of the Company to successfully implement productivity improvements, cost reduction initiatives, facilities expansion; and the ability of the Company to develop, market and sell new products and the ability of the Company to continue to comply with environmental laws, rules and regulations. Other risks and uncertainties include uncertainties relating to economic conditions, acquisitions and divestitures, government and regulatory policies, technological developments and changes in the competitive environment in which the Company operates. Persons reading this Form 10-Q are cautioned that such forward-looking statements are only predictions and that actual events or results may differ materially. In evaluating such statements, readers should specifically consider the various factors which could cause actual events or results to differ materially from those indicated by such forward-looking statements. 25 26 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK On February 26, 1998, the Company entered into a three-year interest rate swap agreement ("Swap Agreement") with its lead bank to partially hedge its interest rate exposure on variable rate loans under the Credit Agreement. Both term loans and revolving credit loans under the Credit Agreement bear interest at a variable rate equal to either (a) the average daily rate on overnight U.S. federal funds transactions, or (b) the London Interbank Offered Rate shown on Telerate Page 3750 for the applicable interest period ("LIBOR"), plus, in either case, an applicable spread. Under this agreement, the Company pays a fixed rate of 5.805% on a notional amount of $150.0 million and receives LIBOR on that amount, effectively fixing the interest rate on $150.0 million of debt outstanding under the Credit Agreement at 5.805% plus the applicable spread. Loans under the Company's accounts receivable loan agreement ("Receivables Agreement") bear interest at a variable rate equal to market rates on commercial paper having a term similar to the applicable interest period. The Company's industrial revenue bonds ("IRB's") bear interest at variable rates based on the market for similar issues. Loans under the Receivables Agreement and the IRB's are not covered by the Swap Agreement. As of February 29, 2000, $175.1 million of revolving and term loans were outstanding under the Credit Agreement, of which interest on $150.0 million is essentially fixed by the Swap Agreement. The interest rate risk on the remaining debt outstanding under the Credit Agreement, as well as the debt outstanding under the Receivables Agreements and the IRB's, which in the aggregate totals $107.5 million, has not been hedged. Accordingly, a 1% increase in the applicable index rates would result in additional interest expenses of $1.1 million per year, assuming no change in the level of borrowing. 26 27 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 3.19 Restated Articles of Incorporation for EPMR Corporation (f/k/a Michigan Automotive Research Corporation) 3.20 By Laws for EPMR Corporation (f/k/a Michigan Automotive Research Corporation) 27.1 Financial Data Schedule (b) Reports on Form 8-K None. 27 28 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EAGLE-PICHER HOLDINGS, INC. /s/ Philip F. Schultz ----------------------------------------- Philip F. Schultz Senior Vice President and Chief Financial Officer (Principal Financial Officer) DATE April 11, 2000 --------------------- 28 29 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EAGLE-PICHER INDUSTRIES, INC. /s/ Philip F. Schultz ----------------------------------------- Philip F. Schultz Senior Vice President and Chief Financial Officer (Principal Financial Officer) DATE April 11, 2000 --------------------- 29 30 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DAISY PARTS, INC. /s/ Gary M. Freytag ----------------------------------------- Gary M. Freytag Vice President and Treasurer (Principal Financial Officer) DATE April 11, 2000 --------------------- 30 31 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EAGLE-PICHER DEVELOPMENT COMPANY, INC. /s/ Gary M. Freytag ----------------------------------------- Gary M. Freytag Vice President and Treasurer (Principal Financial Officer) DATE April 11, 2000 --------------------- 31 32 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EAGLE-PICHER FAR EAST, INC. /s/ Gary M. Freytag ----------------------------------------- Gary M. Freytag Vice President and Treasurer (Principal Financial Officer) DATE April 11, 2000 --------------------- 32 33 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EAGLE-PICHER MINERALS, INC. /s/ Gary M. Freytag ----------------------------------------- Gary M. Freytag Vice President and Treasurer (Principal Financial Officer) DATE April 11, 2000 --------------------- 33 34 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EAGLE-PICHER TECHNOLOGIES, LLC /s/ R. Doug Wright ----------------------------------------- R. Doug Wright Vice President, Controller and Chief Financial Officer DATE April 11, 2000 --------------------- 34 35 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HILLSDALE TOOL & MANUFACTURING CO. /s/ Gary M. Freytag ----------------------------------------- Gary M. Freytag Vice President and Treasurer (Principal Financial Officer) DATE April 11, 2000 --------------------- 35 36 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EPMR CORPORATION (F/K/A MICHIGAN AUTOMOTIVE RESEARCH CORPORATION) /s/ Gary M. Freytag ----------------------------------------- Gary M. Freytag Treasurer (Principal Financial Officer) DATE April 11, 2000 --------------------- 36 37 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 3.19 Restated Articles of Incorporation for EPMR Corporation (f/k/a Michigan Automotive Research Corporation) 3.20 By Laws for EPMR Corporation (f/k/a Michigan Automotive Research Corporation) 27.1 Financial Data Schedule (submitted electronically to the Securities and Exchange Commission for its information.) 37 EX-3.19 2 EXHIBIT 3.19 1 EX-3.19 16 EXHIBIT 3.19 C&S-510 (10/89) 096A#1986 1210 ORG&FI $10.00 - -------------------------------------------------------------------------------- MICHIGAN DEPARTMENT OF COMMERCE -- CORPORATION AND SECURITIES BUREAU - -------------------------------------------------------------------------------- (FOR BUREAU USE ONLY) DATE RECEIVED FILED ----------------- MARCH 15, 2000 MARCH 15, 2000 ----------------- ADMINISTRATOR MI DEPARTMENT OF CONSUMER & INDUSTRY SERVICES ----------------- CORPORATION, SECURITIES & LAND DEVELOPMENT BUREAU - -------------------------------------------------------------------------------- RESTATED ARTICLES OF INCORPORATION FOR USE BY DOMESTIC PROFIT CORPORATIONS (Please read information and instructions on last page) Pursuant to the provisions of Act 264, Public Acts of 1972, the undersigned corporation executes the following Articles: - -------------------------------------------------------------------------------- 1. The present name of the corporation is: Michigan Automotive Research Corporation 2. The corporation identification number (CID) assigned by the Bureau is: 0 2 7 - 3 0 9 3. All former names of the corporation are: 4. The date of filing the original Articles of Incorporation was: November 18, 1977 - -------------------------------------------------------------------------------- The following Restated Articles of Incorporation supersede the Articles of Incorporation as amended and shall be the Articles of Incorporation for the corporation: ARTICLE I - -------------------------------------------------------------------------------- The name of the corporation is: EPMR Corporation - -------------------------------------------------------------------------------- ARTICLE II - -------------------------------------------------------------------------------- The purpose or purposes for which the corporation is formed are: to engage in any activity within the purposes for which corporations may be organized under the Business Corporation Act of Michigan. - -------------------------------------------------------------------------------- SEAL APPEARS ONLY ON ORIGINAL 2 ARTICLE III The total authorized capital stock is: 1. Common shares 25,000, par value $2.00 per share --------------------------------- Preferred shares 5,000, par value $100.00 per share ---------------------------------- 2. A statement of all or any of the relative rights, preferences and limitations of the shares of each class is as follows: The preferred stock shall be non-voting and shall carry and be limited to 15% cumulative preferred dividend and shall be preferred to all classes of stock and limited to par value in liquidation. ARTICLE IV 1. The address of the current registered office is: 30600 Telegraph Road Bingham Farms, Michigan 48025 ----------------------------------------- -------- (Street Address) (City) (ZIP Code) 2. The mailing address of the current registered office if different than above: ----------------------------------------- -------- (P.O. Box) (City) (ZIP Code) 3. The name of the current resident agent is: The Corporation Company 3 ARTICLE VII (Additional provisions, if any, may be inserted here; attach additional pages if needed.) Pursuant to the requirements of Section 1123(a)(6) of the Bankruptcy Code, the Corporation shall not issue nonvoting equity securities, subject, however, to further amendment of these Amended and Restated Articles of Incorporation as and to the extent permitted by applicable law. 5. COMPLETE SECTION (a) IF THE RESTATED ARTICLES WERE ADOPTED BY THE UNANIMOUS CONSENT OF THE INCORPORATORS BEFORE THE FIRST MEETING OF THE BOARD OF DIRECTORS; OTHERWISE, COMPLETE SECTION (b) a.[ ] These Restated Articles of Incorporation were duly adopted on the ______ day of ____________, 19___, in accordance with the provisions of Section 642 of the Act by the unanimous consent of the incorporators before the first meeting of the Board of Directors. Signed this _____ day of ____________________________________, 19 ___ _____________________________________________________________________ _____________________________________________________________________ (Signatures of ALL incorporators: type or print name under each signature) b.[X] These Restated Articles of Incorporation were duly adopted on the 5th day of December, 1996, in accordance with the provisions of Section 642 of the Act and: (check one of the following) [ ] were duly adopted by the Board of Directors without a vote of the shareholders. These Restated Articles of Incorporation only restate and integrate and do not further amend the provisions of the Articles of Incorporation as heretofore amended and there is no material discrepancy between those provisions and the provisions of these Restated Articles. [ ] were duly adopted by the shareholders. The necessary number of shares as required by statute were voted in favor of these Restated Articles. [ ] were duly adopted by the written consent of the shareholders having not less than the minimum number of votes required by statute in accordance with Section 407(1) of the Act. Written notice to shareholders who have not consented in writing has been given. (Note: Written consent by less than all of the shareholders is permitted only if such provision appears in the Articles of Incorporation.) [X] were duly adopted by the written consent of all the shareholders entitled to vote in accordance with Section 407(2) of the Act. Signed this 2nd day of March, 20 00 ------- ------------- -- By /s/ David G. Krall --------------------------------------------------- 4 (Only Signature of: President, Vice-President, Chairperson, Vice-Chairperson) David G. Krall Vice President and Secretary ----------------------------------------------------- (Type or Print Name and Title) (MICH. - 435) SEAL APPEARS ONLY ON ORIGINAL DOCUMENT WILL BE RETURNED TO NAME AND MAILING ADDRESS Name of person or organization INDICATED IN THE BOX BELOW. Include name, street and number remitting fees: (or P.O. Box), city, state and ZIP code. Butzel Long ------------------------------ Marc L. Greenberg, Esq. Eagle-Picher Industries, Inc. ------------------------------ 250 East Fifth Street Preparer's name and business Suite 500 telephone number: Cincinnati, Ohio 45202 Janet C. Finn ------------------------------ (513) 629-2453 ------------------------------
EX-3.20 3 EXHIBIT 3.20 1 EX-3.20 17 EXHIBIT 3.20 BYLAWS OF EPMR CORPORATION ARTICLE I SHAREHOLDERS Section 1. Annual Meeting. The annual meeting of the shareholders shall be held in each year on or before ninety (90) days after the expiration of the fiscal year of the Corporation for the purpose of electing Directors and of transacting such other business as may properly be brought before the meeting. Section 2. Delayed Annual Meeting. If for any reason the annual meeting of the shareholders shall not be held within the period hereinbefore designated, such meeting may be called and held as a special meeting and the same proceedings may be had thereat at an annual meeting. Section 3. Special Meetings. Special meetings of shareholders may be called at any time by the President, by a majority of the Board of Directors, or by shareholders holding together at least one-fourth in number of the total outstanding shares of any class of stock entitled to vote at such meeting. At a special meeting of shareholders, no business shall be transacted and no corporate action shall be taken other than that stated in the notice of the meeting. Section 4. Place of Meetings. Unless and until otherwise provided by the Board of Directors every annual meeting of the shareholders and every other meeting of shareholders shall be held at the registered office of the Corporation, but the Board of Directors may from time to time provide for the holding of any annual or special meeting of shareholders at such other place within or without the State of Michigan, as the Board shall by resolution determine. Section 5. Notice of Meeting. Written notice of the time and place, and in the case of special meetings the purpose 2 or purposes of every such meeting shall be given to each shareholder entitled to vote at the meeting by mailing the same, at least ten (10) days before the meeting, to each shareholder of the Corporation at his address as the same appears on the books of the Corporation. No notice need be given to any shareholder who is present in person or is represented by proxy at the meeting. All notices required to be given by any provision of these By-Laws shall state the authority pursuant to which they are issued, as "by order of", the "President", "Board of Directors" or "shareholders", as the case may be. When a notice is served by mail such notice shall be deemed duly served when the same has been deposited in the United States mail with postage fully prepaid, plainly addressed to the sendee at his, her or its last address appearing upon the stock ledger of the Corporation. Section 6. Quorum. At any meeting of the shareholders, the holders of a majority in number of all of the shares of each class of the capital stock of the Corporation issued and outstanding, presented by proxy, shall constitute a quorum of the shareholders for all purposes. When a quorum exists a majority in number of all of the shares of each class of the capital stock of the Corporation present or represented at the meeting casting votes shall decide any question brought before the meeting unless the question is one upon which, by express provision of law or the Articles of Incorporation, a different vote is required, in which case such express provision shall control the decision of the question. If a quorum shall not be present or represented at any meeting of shareholders, the holders of a majority in number of the shares of each class of the capital stock of the Corporation present in person or by proxy entitled to vote at such meeting may adjourn from time to time without notice, other than by announcement at the meeting, until quorum shall attend in person or by proxy. Any meeting at which a quorum is present may also be adjourned in like manner and for such time with or without call as may be determined by the holders of a majority in number of the shares of each class of the capital stock of the Corporation present in person or by proxy and entitled to vote. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. Section 7. Organization. The President shall call meetings of the shareholders to order and shall act as Chairman of the meeting. In the absence of the President, the holders -2- 3 of a majority in number of the shares of the capital stock of the Corporation present in person or represented by proxy and entitled to vote at such meeting shall elect a Chairman. The Secretary of the Corporation shall act as Secretary of all meetings of the shareholders; but in the absence of the Secretary the Chairman may appoint any person to act as Secretary of the meeting. Section 8. Voting. Each outstanding share of stock shall be entitled to one vote on each matter submitted to a vote at any meeting of shareholders. A shareholder may vote the shares owned of record by him either in person or by proxy executed in writing by the stockholder or by his duly authorized attorney-in-fact. No proxy shall be valid after eleven (11) months from its date unless otherwise provided in the proxy. At all meetings of stockholders, unless the voting is conducted by inspectors, all questions relating to the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided by the Chairman of the meeting. ARTICLE II BOARD OF DIRECTORS Section 1. Number and Term of Office. The business and property of the Corporation shall be managed by a Board of Directors consisting of at least one Director, which number shall be determined from time to time by resolution of the Boards. The initial Board shall consist of three Directors. The Directors need not be shareholders of the Corporations The Directors shall, except as hereinafter otherwise provided for filling vacancies, be elected annually at the annual meeting of shareholders and shall continue in office for one year and until their respective successors shall have been elected and qualified. Members of the Board of Directors named in the Articles of Incorporation shall hold office until their successors shall have been elected and qualified. Section 2. Vacancies and Additional Directors. Vacancies in the Board of Directors may be filled by shareholders at a special meeting, and each person so elected shall be a Director until his successor is elected by the shareholders who may make such election at the next annual meeting of the shareholders, -3- 4 or at any special meeting called for that purpose and held prior thereto. Newly created directorships resulting from any increase in the authorized number of Directors may be filled by the affirmative vote of a majority of the Directors then in office, but the term of any Directors, so elected, shall expire at the next succeeding annual meeting of shareholders. Section 3. Place of Meetings. The meetings of the Board of Directors may be held at such place, in the State of Michigan, or elsewhere as a majority of the Directors may from time to time determine. Section 4. Annual Meeting. The Board of Directors shall meet each year immediately after the annual meeting of the shareholders for the purpose of organization, election of officers, and consideration of any other business that may properly be brought before the meeting. No notice of any kind to either old or new members of the Board of Directors for such annual meeting shall be necessary. Section 5. Special Meetings. Special meetings of the Board of Directors shall be held whenever called by direction of the President, or by a majority of the Directors. Written notice of the time, place and purpose or purposes of every such meeting shall be given each Director by mailing the same to his address as the same shall appear for such purpose on the records of the Corporation at least two days before the meeting. At any meeting at which every Director shall be present, even though without the notice herein provided, any business may be transacted. Section 6. Quorum. Subject to the provisions of Section 2 of this Article II, a majority of the Board of Directors shall be necessary to constitute a quorum for the transaction of business, and the acts of a majority of the Directors present at a meeting at which a quorum is present shall be -4- 5 the acts of the Board of Directors, unless otherwise provided by law, the Articles of Incorporation or the By-Laws. Section 7. Books. The Directors may cause the books of the corporation, except such as are required by law to be kept within the State outside of the State of Michigan, at such place or places as they may from time to time determine. Section 8. Compensation of Directors. Directors shall not receive any salary for their services, but, by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, may be allowed for attending any regular or special meeting of the Board or of any committee thereof; provided, however, that nothing herein contained shall be construed as precluding any Director from serving the Corporation in any other capacity and receiving the compensation therefore. ARTICLE III OFFICERS Section 1. Officers. The Board of Directors of the Corporation shall elect a President, a Secretary and a Treasurer, and may select one or more Vice-Presidents, Assistant Secretaries and Assistant Treasurers. No one of such officers except the President need be a Director but a Vice-President who is not a Director cannot succeed to or fill the office of President. Any two offices, except those of President and Vice-President may be held by the same person but no officer shall execute, acknowledge or verify any instrument in more than one capacity. The Board of Directors may also appoint such other officers and agents as they may deem necessary for the transaction of the business of the Corporation. All officers and agents shall respectively have such authority and perform such duties in the management of the property and affairs of the Corporation as may be delegated by the Board of Directors. The Board of Directors shall have power to fill any vacancies in any office occurring for whatever reason. The Board of Directors may secure the fidelity of any or all of such officers by bond or otherwise. Officers shall serve at the pleasure of the Board of Directors. Section 2. Powers and Duties of the Presidents. The President shall be the chief executive of officer of the Corporation, and subject to the control of the Board of Directors, shall have -5- 6 general charge and control of all its business and affairs and shall supervise the other officers and agents of the Corporation in the performance of their regular duties. He shall preside at all meetings of the shareholders and the Board of Directors. The President may sign certificates for shares of stock and sign and execute contracts in the name and on behalf of the Corporation when so authorized and directed so to do, either generally or in special instances by the Board of Directors. Section 3. Powers and Duties of Vice-Presidents. Vice-Presidents of the Corporation shall have such powers and perform such duties as shall from time to time be assigned by them by these By-Laws or by the Board of Directors. Section 4. Powers and Duties of the Secretary. The Secretary shall keep the minutes of all meetings of the Board of Directors and the minutes of all meetings of the shareholder in books provided for that purpose; he shall attend to the giving or serving of all notices of the Corporation. He may sign with the President or Vice-President, in the name of the Corporation, all contracts when authorized so to do either generally or in special instance by the Board of Directors and, when so ordered by the Board of Directors, he shall affix the seal of the Corporation thereto; he shall have charge of the stock certificate books, transfer books and stock ledgers and such other books and papers as the Board of Directors shall direct, all of which shall at all reasonable times be open to the examination of any Director, and he shall in general perform all the duties incident to the office of Secretary, subject to the control of the Board of Directors. Section 5. Powers and Duties of the Treasurer. The Treasurer shall have custody of all of the funds and securities of the Corporation which may come into his hands; he may endorse on behalf of the Corporation for collection checks, notes and other obligations and shall deposit the same to the credit of the Corporation in such bank or banks or depositary or depositaries as the Board of Directors may designate; he may sign all receipts and vouchers for payment made to the Corporation; he shall enter or cause to be entered regularly in the books of the Corporation kept for the purpose full and accurate accounts of all moneys received and paid on account of the Corporation and whenever required by the Board of Directors, shall render statements of such accounts; -6- 7 he shall at all reasonable times exhibit his books and accounts to any Director of the Corporation, and he shall perform all the actions incident to the position of Treasurer, subject to the control of the Board of Directors. Section 6. Compensation of Officers. The President and other officers of the Corporation shall be entitled to receive such compensation for their services as shall from time to time be determined by the Board of Directors. Section 7. Absence of Officers. In the absence of any officer of the Corporation, or for any other reason which the Board of Directors may deem sufficient, the Board of Directors may delegate, for the time being, the powers or duties of any of them, or such officers to any other officer or to any Director or Directors provided a majority of the Board of Directors concur therein. ARTICLE IV CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE Section 1. Record Date. The Board of Directors may fix, in advance, a date as the record date, for the purpose of determining shareholders entitled to notice of, or to vote at any meeting or entitled to receive payment of dividends, or to the allotment of rights or to exercise the rights in respect of any change, conversion or exchange of capital stock. Such date, in any case, shall not be more than forty (40) days, and in the case of a meeting of shareholders, not less than ten (10) days, prior to the date on which a particular action requiring such determination of shareholders is to be taken. Section 2. Closing Books. In lieu of fixing a record date, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed in any case, twenty days preceding the original date fixed for any meeting of shareholders or the date for the allotment of rights or the date for the payment of any dividend or the date when any change or conversion or exchange of capital stock shall go into effect. If the stock transfer books are closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, -7- 8 such book shall be closed for at least ten (10) days immediately preceding such meeting. Section 3. Voting List. The Secretary shall make, at least ten (10) day before such meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of ten (10) days prior to such meeting, shall be kept on file at the registered office of the Corporation and shall be subject to inspection by any shareholder holding two (2%) percent or more of the outstanding capital stock of the Corporation, at any time during the usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original stock transfer books shall be prima facie evidence as to who are the stockholders entitled to examine such list, or Stock Transfer Books, or to vote at any meeting of shareholders. Failure to comply with the requirements of this Section shall not affect the validity of any action taken at such meeting. ARTICLE V CAPITAL STOCK - SEAL - FISCAL YEAR Section 1. Certificates for Shares. The certificates for shares of the capital stock of the Corporation shall be in such form, not inconsistent with the Articles of Incorporation, as shall be approved by the Board of Directors. All certificates shall be signed by the President or Vice-President and shall be signed by the Treasurer, Assistant Treasurer or the Secretary or Assistant Secretary and sealed with the corporate seal and shall not be valid unless so signed and sealed. In case any officer or officers, who shall have signed any such certificate or certificates, shall cease to be such officer or officers of the Corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation such certificate or certificates may nevertheless be adopted by the Corporation and be issued and delivered as though the person or persons who signed such certificate or certificates had not ceased to be such officer of the Corporation. -8- 9 All certificates for shares of stock shall be consecutively numbered as the same are issued. The name of the person owning the shares represented thereby with the number of such shares and the date of issue thereof shall be entered on the Corporation's books. All certificates surrendered to the Corporation for transfer shall be cancelled, and no new certificates shall be issued until former certificates for the same number of shares have been surrendered and cancelled. Except as hereinbefore provided, the Board of Directors shall have the power and authority to make all rules and regulations as the Board shall deem expedient, regulations and issuance, transfer and registration of certificates for shares in this Corporation. Section 2. Transfer of Shares. Title to a certificate and to the shares represented thereby can be transferred only (a) by delivery of the certificate endorsed either in blank or to a specified person by the person appearing by the certificate to be the owner of the shares represented thereby, or (b) by delivery of the certificate and a separate document containing a written assignment of the certificate or a power of attorney to sell, assign or transfer the same or the shares represented thereby, signed by the person appearing by the certificate to be the owner of the shares represented thereby. Such assignment or power of attorney may be either in blank or to a specified person. However, this Corporation will only recognize the person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to, or interest in, such share on the part of any other person, whether or not the Corporation shall have express or other notice thereof, save as may be otherwise provided by statute. Shares of the capital stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof, in person or by his attorney duly authorized in writing, upon surrender and cancellation of certificates for the number of shares to be transferred. Books for the transfer of shares of its capital stock shall be kept by the Corporation or by one or more transfer agents appointed by it. Section 3. Lost Certificates. The Board of Directors may direct a new certificate to be issued in place of any certificate theretofore issued by the Corporation alleged -9- 10 to have been stolen, lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be stolen, lost or destroyed. When authorizing such issue of a new certificate the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such stolen, lost or destroyed certificate or his legal representative to advertise the same in such manner as it shall require and/or to give bonds with sufficient surety, to the Corporation to indemnify it against any loss or claim which may arise by reason of the issuance of a new certificate. Section 4. Corporate Seal. The Board of Directors shall provide a suitable seal, containing the name of the Corporation, which shall be in the charge of the Secretary. If and when so directed by the Board of Directors, a duplicate of the seal may be kept and used by any officer of the Corporation designated by the Board. Section 5. Fiscal Year. The fiscal year of the Corporation shall be determined by the Board of Directors of Directors. ARTICLE VI MISCELLANEOUS Section 1. Records Accounts. All accounts, records and memoranda shall be kept in books and papers supplied by the Corporation and these and all vouchers, documents and other writings, whether in book form or otherwise, whether or not supplied by the Corporation, shall be subject to the control of the Board of Directors. Section 2. Waivers of Notice. Notice of the time, place and purpose of any meeting required to be given under the provisions of these By-Laws may be waived by telegram, radiogram, cablegram or other writing by those not present and entitled to vote thereat either before or after the holding thereof. Section 3. Bank Accounts, Checks, Drafts, Etc. The officers of the Corporation shall establish and maintain bank accounts, in the name of the Corporation, in such banks or depositaries as the Board of Directors shall select. Any moneys, checks drafts and others for the payment of money shall be deposited therein to the credit of the Corporation without undue delays and all payments on behalf of the Corporation shall be made by check on any of such accounts. -10- 11 All notes, checks, drafts and orders for the payment of money issued by this Corporation shall be signed on behalf of the Corporation by such officers or agents of the Corporation as the Board of Directors shall from time to time prescribe. The sale, transfer, assignment and/or conveyance of any of the assets of the Corporation shall be executed in the name of and on behalf of the Corporation by such officers of the Corporation as the Board of Directors shall from time to time prescribe, and in the absence of such specification by the Board of Directors the President may execute the same in the name of and on behalf of this Corporation and may affix the corporate seal thereto, or any Vice-President, and the Secretary, or Assistant Secretary, may execute the same in the name of and on behalf of this Corporation and may affix the corporate seal thereto. ARTICLE VII AMENDMENTS The Board of Directors shall have power to alter, amend, add to and repeal the By-Laws of the Corporation by a vote of a majority of the Board. The shareholders, by the affirmative vote of a majority of the stock issued, outstanding and entitled to vote, may make, alter, amend or add to the By-Laws without notice at any regular meeting, or at any special meeting, if the substance of such amendment be contained in the notice of such special meeting, provided that the Board of Directors shall not make or alter any By-Laws fixing their qualification, classifications or term of office. ARTICLE VIII ACTION BY UNANIMOUS WRITTEN CONSENT Notwithstanding any other provision of these By-Laws, if and when the Directors or stockholders of this Corporation shall severally or collectively consent in writing to any action to be taken by the Corporation, such action shall be as valid a corporate action as though it had been authorized at a meeting of the Board of Directors or stockholders respectively, -11- 12 whether such consent is given before or after the action is taken, and said consent in writing and the action taken thereon shall be evidenced by appropriate memorandum in the minute book of this Corporation, and the execution of said consent in writing by any Directors or stockholders shall constitute a waiver of the notice requirements set forth in the statutes of the State of incorporation of this Corporation, or By-Laws of this Corporation which might otherwise invalidate said action. ARTICLE IX DISALLOWED PAYMENTS TO OFFICERS Any payments made to an officer of the Corporation such as salary, commission, bonus, interest, or rent, or entertainment expenses incurred by him, which shall be disallowed in whole or in part as a deductible expense by the Internal Revenue Service, shall be reimbursed by such officer to the Corporation to the full extent of such disallowance. It shall be the duty of the Directors, as a Board, to enforce payment of each such amount disallowed. In lieu of payment by the officer, subject to the determination of the Directors, proportionate amounts may be withheld from his future compensation payments until the amount owed to the Corporation has been recovered. -12- EX-27.1 4 EXHIBIT 27.1
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND THE CONDENSED CONSOLIDATED BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0001059364 EAGLE PICHER HOLDINGS, INC. 1,000 US DOLLARS 3-MOS NOV-30-2000 DEC-01-1999 FEB-29-2000 1 11,528 0 122,182 1,262 94,818 279,832 323,021 76,513 805,236 206,810 408,683 100,916 0 10 55,920 805,236 221,843 221,843 177,568 177,568 35,663 0 13,022 21,597 11,000 10,597 0 0 0 10,597 7.64 7.64
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