-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, HYZco4rRJPt/eVn6HbjN9PEEEuToHl+hBNnp4aHxx3HiKlFQsHiLEhQd+/+N9TD4 ug7QJrrJ8MClDQ1E0bNT1A== 0000950152-94-000713.txt : 19940722 0000950152-94-000713.hdr.sgml : 19940722 ACCESSION NUMBER: 0000950152-94-000713 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940531 FILED AS OF DATE: 19940714 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE PICHER INDUSTRIES INC CENTRAL INDEX KEY: 0000030927 STANDARD INDUSTRIAL CLASSIFICATION: 3714 IRS NUMBER: 310268670 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01499 FILM NUMBER: 94538823 BUSINESS ADDRESS: STREET 1: 580 WALNUT ST STREET 2: P O BOX 779 CITY: CINCINNATI STATE: OH ZIP: 45201 BUSINESS PHONE: 5137217010 MAIL ADDRESS: STREET 2: 580 WALNUT ST PO BOX 779 CITY: CINCINNATI STATE: OH ZIP: 45201 FORMER COMPANY: FORMER CONFORMED NAME: EAGLE PICHER CO DATE OF NAME CHANGE: 19660921 10-Q 1 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 May 31, 1994 Commission file number 1-1499 ------ EAGLE-PICHER INDUSTRIES, INC. - - ----------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) OHIO 31-0268670 - - --------------------------------- -------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 580 Walnut Street, P. O. Box 779, Cincinnati, Ohio 45201 - - ----------------------------------------------------------------------------- (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 ---- ---- 11,040,932 shares of common capital stock, par value $1.25 per share, were outstanding at July 8, 1994. 1 2 EAGLE-PICHER INDUSTRIES, INC. QUARTERLY REPORT - FORM 10-Q - FOR THE QUARTER ENDED MAY 31, 1994 TABLE OF CONTENTS
Page Number ------ PART I. FINANCIAL INFORMATION Item 1. Financial Statements.................................... 3 Consolidated Statement of Income............................ 3 Consolidated Balance Sheet.................................. 4 Consolidated Statement of Cash Flows........................ 6 Notes to Consolidated Financial Statements.................. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......................... 13 PART II. OTHER INFORMATION Item 1. Legal Proceedings....................................... 15 Item 3. Defaults Upon Senior Securities......................... 15 Item 5. Other Information....................................... 16 Item 6. Exhibits and Reports on Form 8-K........................ 16 Signature........................................................ 17 Exhibit Index.................................................... 18 Exhibits......................................................... 19
2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. EAGLE-PICHER INDUSTRIES, INC. CONSOLIDATED STATEMENT OF INCOME (Dollars in thousands except per share amounts)
Three Months Ended Six Months Ended May 31 May 31 ------------------ --------------- 1994 1993 1994 1993 ------ ------ ------ ---- Net Sales $196,994 $176,366 $374,748 $323,337 ------- ------- ------- ------- Operating Costs and Expenses: Cost of products sold 160,816 144,600 307,199 266,825 Selling and administrative 18,641 17,666 36,231 34,022 ------- ------- ------- ------- 179,457 162,266 343,430 300,847 ------- ------- ------- ------- Operating Income 17,537 14,100 31,318 22,490 Interest expense (455) (545) (909) (964) Other income 72 183 238 738 ------- ------- ------- ------- Income Before Reorganization Items, Taxes and Cumulative Effect of Accounting Change 17,154 13,738 30,647 22,264 Reorganization items (923) (1,065) (2,005) (2,387) ------- ------- ------- ------- Income Before Taxes and Cumulative Effect of Accounting Change 16,231 12,673 28,642 19,877 Income Taxes 1,562 1,158 2,934 1,958 ------- ------- ------- ------- Income Before Cumulative Effect of Accounting Change 14,669 11,515 25,708 17,919 Cumulative Effect of Change in Accounting for Postretirement Benefits - - - (12,598) ------- ------- ------- ------- Net Income $ 14,669 $ 11,515 $ 25,708 $ 5,321 ======= ======= ======= ======= Income per Share: Income Before Cumulative Effect of Accounting Change $ 1.33 $ 1.04 $ 2.33 $ 1.63 Cumulative Effect of Change in Accounting for Postretirement Benefits - - - (1.14) ------- ------- ------- ------- Net Income $ 1.33 $ 1.04 $ 2.33 $ .49 ======= ======= ======= ======= See accompanying notes to consolidated financial statements.
3 4 EAGLE-PICHER INDUSTRIES, INC. CONSOLIDATED BALANCE SHEET (Dollars in thousands)
ASSETS May 31 Nov. 30 1994 1993 ---------- ---------- CURRENT ASSETS Cash and cash equivalents $ 91,634 $ 84,574 Receivables, less allowances 103,942 97,586 Income tax refund receivable 1,949 3,275 Inventories: Raw materials and supplies 36,547 35,168 Work in process 16,871 20,193 Finished goods 15,963 12,945 -------- -------- 69,381 68,306 Prepaid expenses 12,216 8,283 -------- -------- Total current assets 279,122 262,024 -------- -------- PROPERTY, PLANT AND EQUIPMENT 390,432 375,732 Less accumulated depreciation 252,751 241,331 --------- -------- Net property, plant and equipment 137,681 134,401 -------- -------- DEFERRED INCOME TAXES 37,924 29,924 OTHER ASSETS 32,688 33,011 -------- -------- Total Assets $487,415 $459,360 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 32,236 $ 32,365 Long-term debt - current portion 2,430 2,737 Income taxes 6,202 5,613 Other current liabilities 37,507 34,085 -------- -------- Total current liabilities 78,375 74,800 -------- -------- LIABILITIES SUBJECT TO COMPROMISE 1,656,445 1,656,563 LONG-TERM DEBT - less current portion 20,689 21,712 POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 20,723 20,209 OTHER LONG-TERM LIABILITIES 2,427 3,282 -------- -------- Total liabilities 1,778,659 1,776,566 --------- --------- SHAREHOLDERS' EQUITY (DEFICIT) Common shares - par value $1.25 per share authorized 30,000,000 shares, issued 11,125,000 shares 13,906 13,906 Additional paid-in capital 36,378 36,378 Foreign currency translation 544 290 Accumulated deficit (1,340,159) (1,365,867) --------- --------- (1,289,331) (1,315,293)
4 5 EAGLE-PICHER INDUSTRIES, INC. CONSOLIDATED BALANCE SHEET (Dollars in thousands)
May 31 Nov. 30 1994 1993 ---------- ----------- Less cost of 84,068 common treasury shares $ (1,913) $ (1,913) -------- -------- Total Shareholders' Equity (Deficit) (1,291,244) (1,317,206) --------- --------- Total Liabilities and Shareholders' Equity (Deficit) $487,415 $459,360 ======== ======== See accompanying notes to consolidated financial statements.
5 6 EAGLE-PICHER INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in thousands)
Six Months Ended May 31 ------------------ 1994 1993 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 25,708 $ 5,321 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 12,917 12,369 Cumulative effect of accounting change - 12,598 Changes in assets and liabilities: Receivables (6,356) (8,899) Inventories (1,075) (3,469) Deferred taxes (8,000) (6,000) Accounts payable (129) 1,178 Accrued liabilities 3,422 (1,473) Other (2,182) 3,139 ------- ------- Net cash provided by operating activities before reorganization activities 24,305 14,764 Changes in liabilities from reorganization activities: Accounts payable (15) 98 Accrued liabilities (82) (156) ------- -------- Net cash provided by operating activities 24,208 14,706 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from disposal of fixed assets 600 254 Capital expenditures (16,257) (13,044) Other (128) (423) ------- -------- Net cash used in investing activities (15,785) (13,213) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of long-term debt - 146 Reduction of long-term debt (1,363) (2,205) Issuance of common shares - 156 ------- -------- Net cash used in financing activities (1,363) (1,903)
6 7 EAGLE-PICHER INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in thousands)
Six Months Ended May 31 -------------------- 1994 1993 ---- ---- Net increase (decrease) in cash and cash equivalents 7,060 (410) Cash and cash equivalents, beginning of period 84,574 78,116 -------- -------- Cash and cash equivalents, end of period $ 91,634 $ 77,706 ======== ======== Supplemental cash flow information: Cash paid during the year: Interest paid $ 880 $ 884 Income taxes paid (net of refunds received) $ 8,919 $ 5,170 Cash paid during the quarter: Interest paid $ 339 $ 501 Income taxes paid (net of refunds received) $ 8,488 $ 4,883 See accompanying notes to consolidated financial statements.
7 8 EAGLE-PICHER INDUSTRIES, INC. Notes to Consolidated Financial Statements A. PROCEEDINGS UNDER CHAPTER 11 On January 7, 1991 (the "petition date"), Eagle-Picher Industries, Inc. (the "Company") and seven of its domestic subsidiaries each filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code ("chapter 11") in the United States Bankruptcy Court for the Southern District of Ohio, Western Division, in Cincinnati, Ohio (the "Bankruptcy Court"). Each filing entity is currently operating its business as a debtor in possession in accordance with the provisions of the Bankruptcy Code. The chapter 11 filings were the consequence of a cash shortfall resulting from the Company's inability to satisfy certain immediate asbestos litigation liabilities. As a result of the chapter 11 filings, substantially all litigation pending against the Company as of the petition date is stayed and no party may take any action to recover a pre-petition claim, except pursuant to further order of the Bankruptcy Court. An Unsecured Creditors' Committee, an Injury Claimants' Committee ("ICC"), an Equity Security Holders' Committee, and a Legal Representative for Future Claimants ("RFC") have been appointed in the chapter 11 cases. An unofficial asbestos co-defendants' committee has also been participating in the chapter 11 cases. In accordance with the provisions of the Bankruptcy Code, these parties have the right to be heard with respect to transactions outside the ordinary course of business. The official committees and the RFC are the primary parties with whom the Company is negotiating the terms of a plan of reorganization. In June 1992, a mediator was appointed by the Bankruptcy Court to assist the constituencies in their negotiations. The Bankruptcy Court established a bar date of October 31, 1991 for all pre-petition claims against the Company other than those arising from the sale of asbestos-containing products. The bar date is the date by which claimants who disagree with the amounts recorded as owed to them by the Company must file a proof of claim against the Company. Substantially all of the general claims filed by vendors, note holders and other miscellaneous parties pursuant to this bar date have been reconciled by the Company. The reconciled claims have been allowed as pre-petition claims against the Company's estate. A small number of such claims remains to be resolved; however, the Company does not expect the effect of their resolution to be material. In addition, the Bankruptcy Court established a bar date of September 30, 1992 for all present asbestos-related claims. See Note C below for further information about asbestos-related claims. On November 9, 1993, the Company reached an agreement on the principal elements of a joint plan of reorganization that provides a basis for the Company and its subsidiaries to emerge from chapter 11. The agreement is with the ICC and the RFC, the representatives of the holders of present and future asbestos-related and other toxic tort claims in the Company's chapter 11 case, and was reached with the assistance of the mediator appointed by the Bankruptcy Court. The agreement contemplates a settlement of the Company's liability for all present and future asbestos-related personal injury claims. These claims would be channeled to and resolved by a claims administration trust that would receive cash, debt securities and substantially all of the common stock of the reorganized Company under a plan of reorganization (the "Plan"). As a consequence of the proposed settlement, the Company recorded a provision in the fourth quarter of 1993 of $1.135 billion to increase the asbestos liability subject to compromise to $1.5 billion. 8 9 The Company also recorded a provision of $41.4 million in the fourth quarter of 1993 for environmental and other litigation claims in anticipation of settlement of such claims. Liabilities incurred by the Company as of the petition date and subject to compromise under a plan of reorganization are separately classified in the Consolidated Balance Sheet and include the following (in thousands of dollars):
May 31, November 30, 1994 1993 ---- ---- Asbestos liability $1,500,008 $1,500,029 Long-term debt (unsecured portion) 62,004 62,004 Accounts payable 43,120 43,135 Accrued and other liabilities 51,313 51,395 --------- --------- $1,656,445 $1,656,563 ========= =========
The accompanying consolidated financial statements have been prepared on a going concern basis which contemplates continuity of operations, realization of assets and liquidation of liabilities in the ordinary course of business. The liabilities subject to compromise listed above have been reported on the basis of the expected amount of the allowed claims even though holders of these claims may receive value of a lesser amount in a plan of reorganization. Upon confirmation of a plan of reorganization, the Company would utilize the fresh-start reporting principles contained in the AICPA's Statement of Position 90-7, which would result in adjustments relating to the amounts and classification of recorded assets and liabilities, determined as of the plan confirmation date. At this date, because no plan of reorganization has been filed with the Bankruptcy Court, the Company cannot be certain of the terms and provisions thereof. However, the Company believes that the ultimate consideration to be received by the unsecured creditors will be substantially less than the amounts shown in the accompanying Consolidated Balance Sheet. The agreement on the principal elements of a joint plan of reorganization discussed above provides that the Company, the ICC and the RFC will negotiate with the Unsecured Creditors' Committee and the Equity Security Holders' Committee with the goal of developing a consensual plan of reorganization. To date, no substantial progress has been made in these negotiations. If such a consensual plan cannot be achieved, the agreement provides that a plan will be filed under which holders of pre-petition unsecured claims, other than asbestos, lead and silica-related claims, will receive 30% of their allowed claims in value, and no distribution will be made to the Company's existing common shareholders, whose shares will be canceled. The Plan will also provide that "convenience claims," general unsecured claims of $500 or less, will be paid in full. Under the Bankruptcy Code, shareholders are not entitled to any distribution under a plan of reorganization unless all classes of pre-petition unsecured creditors receive satisfaction in full of their allowed claims or accept a plan which allows shareholders to participate in the reorganized company or to receive a distribution. Pursuant to the agreement, the treatment under the Plan of asbestos property damage, lead and silica claims is currently being negotiated. Following the negotiations described above, the Company intends to file a plan of reorganization with the Bankruptcy Court and proceed to confirmation in accordance with the provisions of the Bankruptcy Code, including soliciting the requisite creditor and shareholder acceptances. Implementation of the agreement and the treatment of claims and interests as provided therein is subject to confirmation of the Plan in accordance with the provisions of the Bankruptcy Code. 9 10 The net expense resulting from the Company's administration of the chapter 11 cases has been segregated from expenses related to ordinary operations in the accompanying financial statements and includes the following (in thousands):
Three Months Six Months Ended Ended May 31 May 31 ---------------- ---------------- 1994 1993 1994 1993 ---- ---- ---- ---- Professional fees and other expenses directly related to bankruptcy $ 1,624 $ 1,643 $ 3,296 $ 3,552 Interest income (701) (578) (1,291) (1,165) ------ ------ ------ ------ $ 923 $ 1,065 $ 2,005 $ 2,387 ====== ====== ====== ======
Interest income is attributable to the accumulation of cash and short-term investments subsequent to the petition date. B. INVESTMENTS In 1990, the Company received shares of stock in a Canadian mining concern in settlement of certain indebtedness owed to the Company. The Company had previously deemed the investment to be permanently impaired and had recorded a loss on the investment in the amount of its full book value. The price of the stock, however, has significantly increased recently and at May 31, 1994, the shares held by the Company had a fair value of approximately $5.9 million. The Company has not yet adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Upon adoption, this investment would be recorded at its fair value in the Consolidated Balance Sheet and any unrealized gains or losses would be reported in a separate component of shareholders' equity until realized. C. LITIGATION As discussed in Note L to the 1993 Consolidated Financial Statements, the accompanying Consolidated Financial Statements include an estimated liability related to claims associated with the Company's sale of asbestos-containing insulation products. Litigation with respect to asbestos-related claims was stayed by reason of the chapter 11 filing. Many of the asbestos-related claims filed in the chapter 11 case do not provide sufficient information to enable the Company to determine definitively whether or not it has liability for the claim or to definitively value any such liability. Similarly, the Company is not able to project precisely the number and value of future claims. The Company, however, is certain that it has significant liability with respect to the 160,000 proofs of claim which were filed against the Company pursuant to the September 30, 1992 bar date and which allege asbestos-related personal injury. The Company also is certain that there is significant liability with respect to future asbestos-related personal injury claims. After considering the significant costs that likely would be incurred in litigating the extent and nature of its asbestos-related personal injury liability, the uncertainty as to the outcome of such an exercise, the need to conserve the estate's assets for every creditor, and the benefits that would accrue to the Company's operations, customers, vendors, employees and host communities from the Company's timely emergence from chapter 11, the Board of Directors and management concluded that the settlement contemplated by the agreement on the principal elements of the Plan discussed in Note A and below in this footnote is in the best interests of the Company. 10 11 There were forty-one lawsuits pending against the Company at the end of fiscal 1991 resulting from the presence of asbestos-containing products in buildings. The pending lawsuits typically named numerous defendants, were filed in both state and federal courts, and were brought by school districts, cities, states, counties, universities, hospitals, a public library and commercial building owners. The lawsuits typically demanded compensation for any costs incurred in identifying, repairing, encapsulating or removing asbestos-containing products, or sought to have the defendants do these things directly. Many lawsuits also sought punitive damages. Three of the pending cases have been certified as class actions, and one has been conditionally certified. Class certification had been sought by the plaintiffs in two other cases, one of which has been dismissed. Prior to filing its chapter 11 petition, the Company settled seven building-related cases for less than $22,000 in the aggregate. Approximately 1,000 proofs of claim alleging such property damage claims were filed in the chapter 11 cases pursuant to the bar date. These claims include most of the lawsuits described above that were pending on the petition date. Many of the other claims also appear to be asserted by claimants similar to those which had commenced pre-petition lawsuits. The agreement on the principal elements of the Plan provides that the treatment under a plan of reorganization of the asbestos property damage claims asserted against the Company, including both the pre-petition lawsuits and the proofs of claim filed pursuant to the bar date, will be the subject of further negotiation. In addition, the Company is a defendant in various other litigation which was pending as of the petition date, which was discussed in Note M to the 1993 Consolidated Financial Statements. The Company intends to defend all litigation claims vigorously in the manner permitted by the Bankruptcy Code and applicable law. All pre-petition claims against the Company arising from litigation must be liquidated or otherwise addressed in the context of the chapter 11 cases, and will be resolved in a plan of reorganization. During the pendency of the chapter 11 cases, any unresolved litigation with respect to pre-petition claims can proceed against the Company only with the express permission of the Bankruptcy Court. The Company has resolved most of the litigation claims that were asserted pursuant to the October 31, 1991 bar date for claims other than those arising from the sale of asbestos-containing products. However, certain large litigation claims, environmental claims, and certain lead chemical claims are still unresolved. The Company has filed objections to certain of these litigation-based claims which have not been resolved, seeking to reduce the amount of such claims or eliminate them entirely. The Company anticipates filing additional objections to other such claims if they cannot be resolved through negotiation. These objections will be vigorously litigated by the Company pursuant to the provisions of the Bankruptcy Code and applicable law. The eventual outcome of the environmental and other litigation claims described herein cannot be reasonably predicted due to numerous uncertainties that are inherent in the reorganization process. However, negotiations concerning environmental claims and attempts to negotiate settlements of other litigation claims progressed to a point that enabled the Company to record a provision of $41.4 million for these claims in the fourth quarter of 1993 as discussed in Note A. In addition, the Company may have insurance coverage for certain of these claims and may have various factual and legal defenses available to it. D. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS During the fourth quarter of 1993, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," retroactively to December 1, 1992. Besides the cumulative after tax charge of $12.6 million, this accounting change reduced previously reported income in the second quarter of 1993 by $254,000 or 2 cents per share. Previously reported income for the first six months of 1993 was reduced by $508,000 or 4 cents per share. 11 12 E. BASIS OF REPORTING FOR INTERIM FINANCIAL STATEMENTS The unaudited financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles 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 in the Company's Annual Report and Form 10-K for the fiscal year ended November 30, 1993. The financial statements presented herewith 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 month and six month periods ended May 31, 1994 and 1993. Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year. 12 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Sales for the second quarter ended May 31, 1994 were $197.0 million, operating income was $17.5 million, and net income was $14.7 million or $1.33 per share. In the second quarter of 1993, sales were $176.4 million, operating income was $14.1 million, and net income was $11.5 million or $1.04 per share. Results from operations continued the trend experienced in the first quarter with sales increasing by 12% and operating income increasing by 24% from the second quarter of 1993. Results of operations in the Automotive Group reflected the strong demand for passenger cars, vans, sport utility vehicles, and trucks. So far this year, North American car and truck production has risen by approximately 11% from the same period last year. Nearly all operations in the Group benefitted from this increase in the automotive build. Operations in Germany, England, and Spain also experienced improved sales and profitability, primarily due to new products and increased market penetration. Sales and operating income of operations in the Machinery Group increased substantially over the results of the second quarter last year. A major reason for this improvement was a more than twofold increase in sales of the Construction Equipment Division. The Division also operated profitably for the quarter after experiencing losses in 1993 primarily due to start-up costs for a new product line. The results of the Electronics Division were well ahead of second quarter 1993 results. This improvement was due to the rebuilding of weapons inventories reduced by the Gulf War and a high level of activity in the commercial aerospace market. The backlog for can washing systems manufactured by Cincinnati Industrial Machinery was at a high level during the quarter, and this Division experienced increases in sales and operating income for the quarter. Results of operations in the Industrial Group were mixed. The Specialty Materials Division experienced a good quarter as sales of boron isotope products for the nuclear power industry, sales of bulk pharmaceutical products used for research, and sales of super clean certified containers for environmental analysis were ahead of those sales for the second quarter of 1993. The results of the Minerals Division, which manufactures diatomaceous earth products, however, continued to be adversely affected by industry-wide pricing pressures. Interest expense has not changed appreciably for the first six months of 1994 compared to the same period in 1993. Contractual interest on debt outstanding was $2.2 million and $2.3 million in the second quarters of 1994 and 1993, respectively, and $4.5 million and $4.6 million for the six month periods ended May 31, 1994 and 1993, respectively. Reorganization expenses were $0.9 million in the second quarter of 1994 compared to $1.1 million in the same period of 1993. It is anticipated that the costs associated with the administration of the chapter 11 cases for the fiscal year 1994 will be consistent with those of 1993 as negotiations to achieve a consensual plan of reorganization continue. Capital expenditures totaled $9.0 million in the second quarter of 1994 and $16.3 million for the six months ended May 31, 1994 compared to $7.5 million and $13.0 million in the respective periods of 1993. 13 14 In terms of the reorganization effort, the Company's goal continues to be to achieve a consensual plan of reorganization based upon the agreement on the principal elements of a joint plan of reorganization reached among the Company, the Injury Claimants' Committee and the Legal Representative for Future Claimants. This agreement was reached in November 1993 under the auspices of a mediator appointed by the U. S. Bankruptcy Court. However, to date, no fully consensual plan has been achieved and there can be no guarantee that such a consensual plan will be achieved. Although the Company is in the process of preparing a plan of reorganization, the precise timing of its filing, confirmation and consummation cannot be predicted at this time. As the Company has previously stated, it is anticipated that under any plan of reorganization, pre-petition unsecured creditors will not receive satisfaction in full of their allowed claims. Under the Bankruptcy Code, shareholders are not entitled to any distribution under a plan of reorganization unless all classes of pre-petition unsecured creditors receive satisfaction in full of their allowed claims or accept a plan which allows shareholders to participate in the reorganized company or to receive a distribution. 14 15 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. (a) CHAPTER 11 PROCEEDINGS. Pursuant to an order of the Bankruptcy Court, the period provided under the Bankruptcy Code during which the Company has the exclusive right to file a plan of reorganization expires sixty days after the Bankruptcy Court is notified by the mediator that the mediation has reached an impasse. The Bankruptcy Court appointed the mediator in June, 1992, to assist the constituencies in their efforts to negotiate a consensual plan of reorganization. Following the close of the quarter, on June 1, 1994, the Unsecured Creditors' Committee filed a motion in the Bankruptcy Court requesting termination of the Company's exclusive period for filing a plan of reorganization, or, in the alternative, modification of the exclusive period to permit the filing of a reorganization plan by the Unsecured Creditors' Committee, either alone or jointly with the Equity Security Holders' Committee. On June 6, 1994, the Equity Security Holders' Committee filed a motion in the Bankruptcy Court requesting that the Bankruptcy Court declare that the mediation has reached an impasse. On July 1, 1994, the Company filed a response in which the Company opposed the relief requested in each of these motions. The Injury Claimants' Committee has also filed a response in opposition to these motions. The Bankruptcy Court has not yet heard oral argument or ruled on these motions. (b) ASBESTOS. Nothing to report. (c) OTHER. In the litigation instituted against the Company and three of its officers by American Imaging Services, Inc., previously discussed in the Company's Form 10-K report for the fiscal year ended November 30, 1993, two motions filed by the Company during the quarter were denied by the United States District Court for the Northern District of Texas following the close of the quarter. On June 6, 1994, the District Court denied the Company's motion to dismiss one of the officers for lack of personal jurisdiction. On June 30, 1994, the District Court denied the Company's motion to transfer the litigation to the United States District Court for the Southern District of Ohio. The Company and the individual defendants intend to defend these claims vigorously, and the eventual outcome of these claims cannot be reasonably predicted at this time. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. The chapter 11 filings constituted a default under substantially all of the Company's and it affiliates' senior securities. The obligations under the Company's pre-petition credit facility and other obligations owing to the lenders who were party to the pre-petition credit facility have been addressed in the debtor in possession financing agreement approved by the Bankruptcy Court on May 24, 1991. At that time, certain of such obligations were repaid and the remaining of such obligations were deemed to be post-petition. With respect to certain other secured obligations, the Company (or its affiliates) have been making settlements or "adequate protection" payments approved by orders of the Bankruptcy Court. 15 16 ITEM 5. OTHER INFORMATION On June 21, 1994, the New York Stock Exchange ("NYSE") notified the Company that the Securities and Exchange Commission had granted the NYSE's application to remove the Common Stock of Eagle-Picher Industries, Inc. from listing and registration on the NYSE effective at the opening of the trading session on June 9, 1994. The Company's Common Stock is, as of June 9, 1994, now registered under Section 12(g) of the Securities Exchange Act of 1934, rather than under Section 12(b) of that Act. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. EXHIBITS 11 - Calculation of Average Number of Shares Utilized in Calculating Per-Share Earnings. 16 17 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. By:/S/ David N. Hall -------------------------------- David N. Hall, Senior Vice President - Finance and Chief Financial Officer DATE: July 11, 1994 -------------------- 17 18 EXHIBIT INDEX -------------
Exhibit No. Description Page - - ----------- ----------- ---- 11 Calculation of Average Number 19 of Shares Utilized in Calculating Per-Share Earnings
18 EX-11 2 EXHIBIT 1 EXHIBIT 11 EAGLE-PICHER INDUSTRIES, INC. CALCULATION OF AVERAGE NUMBER OF SHARES (Shares in thousands)
Three Months Ended Six Months Ended May 31 May 31 ------------------ ---------------- 1994 1993 1994 1993 ---- ---- ---- ---- Average common shares outstanding 11,125 11,125 11,125 11,125 Less average common treasury shares 84 84 84 105 ------ ------ ------ ------ Number of shares for net income per share 11,041 11,041 11,041 11,020 ====== ====== ====== ======
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