-----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, FfJR17J0UEMqhrvmEBk4KwhYeuVfFnDcCfhMXrFD1Qd2bkNGPzMy0LhNDi5R1KxA OsH+RfS6YGno2xMx7G3hvA== 0000950152-94-001148.txt : 19941117 0000950152-94-001148.hdr.sgml : 19941117 ACCESSION NUMBER: 0000950152-94-001148 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OGLEBAY NORTON CO CENTRAL INDEX KEY: 0000073918 STANDARD INDUSTRIAL CLASSIFICATION: 4400 IRS NUMBER: 340158970 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00663 FILM NUMBER: 94559309 BUSINESS ADDRESS: STREET 1: 1100 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2598 BUSINESS PHONE: 2168613300 MAIL ADDRESS: STREET 1: 1100 SUPERIOR AVENUE CITY: CLEVELAND STATE: OH ZIP: 44114-2598 10-Q 1 OGLEBAY NORTON 10-Q 1 Sequential Page 1 of 12 Pages 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 Quarter Ended September 30, 1994 Commission File number 0-663 ------------------ ----- OGLEBAY NORTON COMPANY --------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 34-0158970 ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1100 Superior Avenue Cleveland, Ohio 44114-2598 --------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 216 861-3300 ------------ None --------------------------------------------------------------- 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 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Shares of Common Stock outstanding at October 31, 1994: 2,491,226 --------- Index on sequential page 2. 2 OGLEBAY NORTON COMPANY AND SUBSIDIARIES INDEX SEQUENTIAL PAGE NUMBER ----------- PART I. FINANCIAL INFORMATION - - ------------------------------ Consolidated Condensed Balance Sheet (Unaudited) - September 30, 1994 and December 31, 1993 3 Consolidated Condensed Statement of Operations (Unaudited) - Three Months Ended September 30, 1994 and 1993 and Nine Months Ended September 30, 1994 and 1993 4 Consolidated Condensed Statement of Cash Flows (Unaudited) - Nine Months Ended September 30, 1994 and 1993 5 Notes to Consolidated Condensed Financial Statements 6 - 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 11 PART II. OTHER INFORMATION 12 --------------------------- 3 PART I. FINANCIAL INFORMATION OGLEBAY NORTON COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)
ASSETS SEPTEMBER 30 December 31 1994 1993 ------------ ------------ CURRENT ASSETS Cash and cash equivalents $ 14,386,831 $ 21,243,064 Investments 6,880,775 -0- Accounts receivable, less allowances (1994-$320,000; 1993-$2,082,000) 32,790,350 28,291,306 Inventories Raw materials and finished products 3,763,366 4,354,120 Operating supplies 2,208,746 2,305,719 ------------ ------------ 5,972,112 6,659,839 Deferred income taxes 2,280,185 3,801,985 Prepaid insurance and other expenses 5,415,559 2,191,166 ------------ ------------ TOTAL CURRENT ASSETS 67,725,812 62,187,360 INVESTMENTS 10,957,347 14,871,623 PROPERTIES AND EQUIPMENT 311,557,816 319,392,610 Less allowances for depreciation and amortization 154,167,601 156,962,679 ------------ ------------ 157,390,215 162,429,931 PREPAID PENSION COSTS AND OTHER ASSETS 21,410,193 20,228,456 ------------ ------------ $257,483,567 $259,717,370 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY SEPTEMBER 30 December 31 1994 1993 ------------ ------------ CURRENT LIABILITIES Current portion of long-term debt $ 11,476,450 $ 11,189,664 Accounts payable 5,203,051 4,021,985 Payrolls and other accrued compensation 4,743,508 4,828,016 Accrued taxes and other expenses 18,315,367 12,772,672 Income taxes 935,779 733,414 Reserve for capacity rationalization 6,312,600 6,312,600 ------------ ------------ TOTAL CURRENT LIABILITIES 46,986,755 39,858,351 LONG-TERM DEBT, less current portion 52,986,688 69,344,025 POSTRETIREMENT BENEFITS OBLIGATION 31,298,022 30,285,278 OTHER LONG-TERM LIABILITIES 23,385,192 30,958,323 DEFERRED INCOME TAXES 20,689,153 19,398,153 STOCKHOLDERS' EQUITY Preferred stock, without par value, authorized 5,000,000 shares; none issued -0- -0- Common stock, par value $1 per share, authorized 10,000,000 shares; issued 3,626,666 shares 3,626,666 3,626,666 Additional capital 8,988,043 8,988,043 Unrealized gains 2,954,155 -0- Retained earnings 97,802,289 88,773,915 ------------ ------------ 113,371,153 101,388,624 Treasury stock, at cost - 1,135,440 and 1,122,740 shares at respective dates (28,970,258) (28,681,694) Unallocated Employee Stock Ownership Plan shares (2,263,138) ( 2,833,690) ------------ ------------ 82,137,757 69,873,240 ------------ ------------ $257,483,567 $259,717,370 ============ ============ See notes to consolidated condensed financial statements.
-3- 4 OGLEBAY NORTON COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended September 30 September 30 ---------------------------------- -------------------------------- 1994 1993 1994 1993 ---- ---- ---- ---- REVENUES Net sales $ 28,327,126 $ 21,002,863 $ 86,143,747 $ 58,123,082 Operating revenues 29,171,632 26,943,800 55,258,705 53,332,744 Sales commissions, royalties and management fees 1,188,434 959,987 3,106,347 2,634,786 ------------- ------------- ------------- ------------- 58,687,192 48,906,650 144,508,799 114,090,612 COSTS AND EXPENSES Cost of goods sold 24,688,260 17,985,458 74,819,622 49,593,972 Operating expenses 23,110,120 21,745,777 45,110,636 44,132,754 General, administrative and selling expenses 3,944,686 4,121,061 12,212,704 12,037,425 Reserve for doubtful accounts 90,495 54,674 180,433 1,354,311 ------------- ------------- ------------- ------------- 51,833,561 43,906,970 132,323,395 107,118,462 INCOME FROM OPERATIONS 6,853,631 4,999,680 12,185,404 6,972,150 Gain on sale of assets 528,837 37,215 7,915,080 2,723,661 Interest, dividends and other income 294,297 219,605 880,027 887,860 Other expense (565,257) (434,510) (1,448,322) (1,043,172) Interest expense (1,256,493) (1,754,183) (4,064,917) (5,422,116) ------------- ------------- ------------- ------------- INCOME BEFORE INCOME TAXES 5,855,015 3,067,807 15,467,272 4,118,383 Income taxes 1,778,000 756,000 4,695,000 1,085,000 ------------- ------------- ------------- ------------- NET INCOME $ 4,077,015 $ 2,311,807 $ 10,772,272 $ 3,033,383 ============ ============ ============ ============ NET INCOME PER SHARE OF COMMON STOCK $ 1.64 $ .92 $ 4.32 $ 1.21 ============ ============ ============ ============ DIVIDENDS PER SHARE OF COMMON STOCK $ .30 $ .20 $ .70 $ .60 ============ ============ ============ ============ Average number of shares of Common Stock outstanding 2,491,226 2,512,264 2,491,964 2,512,703 See notes to consolidated condensed financial statements.
-4- 5 OGLEBAY NORTON COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30 ------------------------------------- 1994 1993 ---- ---- OPERATING ACTIVITIES Net income $ 10,772,272 $ 3,033,383 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 10,077,352 9,969,524 Deferred income taxes 1,291,000 1,159,710 Gain on sale of assets ( 7,915,280) (2,723,661) Prepaid pension costs and other assets ( 1,715,284) (1,307,451) Decrease (increase) in accounts receivable ( 4,260,097) (7,045,814) Decrease (increase) in inventories 532,321 ( 757,428) Increase (decrease) in accounts payable ( 203,601) 1,031,630 Other operating activities ( 762,798) (4,227,953) ------------ ------------ NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 7,815,885 ( 868,060) INVESTING ACTIVITIES Proceeds from sale of assets 11,582,894 7,087,768 Purchase of properties and equipment ( 4,830,656) (2,455,115) Investments in Iron Ore ( 2,821,343) (2,811,841) ------------ ----------- NET CASH PROVIDED BY INVESTING ACTIVITIES 3,930,895 1,820,812 FINANCING ACTIVITIES Payments on long-term debt ( 16,570,551) (4,427,160) Dividends paid ( 1,743,898) (1,507,756) Purchase of treasury stock ( 288,564) ( 41,741) ------------- ------------ NET CASH USED IN FINANCING ACTIVITIES ( 18,603,013) (5,976,657) ------------ ----------- Decrease in cash and cash equivalents ( 6,856,233) (5,023,905) CASH AND CASH EQUIVALENTS, JANUARY 1 21,243,064 23,332,342 ------------ ------------ CASH AND CASH EQUIVALENTS, SEPTEMBER 30 $ 14,386,831 $ 18,308,437 ============ ============ See notes to consolidated condensed financial statements.
-5- 6 OGLEBAY NORTON COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore, do not include all information and notes to the consolidated condensed financial statements necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. Management of the Registrant, however, believes that all adjustments considered necessary for a fair presentation of the results of operations for such period have been made. Certain amounts in the prior year have been reclassified to conform with the 1994 consolidated condensed financial statement presentation. For further information, refer to the consolidated financial statements and notes thereto included in the Registrant's 1993 annual report on Form 10-K. 2. Operating results are not necessarily indicative of the results to be expected for the year, due to the seasonal nature of certain aspects of the Registrant's business. 3. On June 24, 1994, the Registrant sold for cash its Ceredo coal handling dock resulting in a $6,518,000 pretax gain. 4. Effective April 1, 1994, the Registrant extended the period by 15 days over which certain fixed costs are amortized for its Marine Transportation segment to approximate the navigation season. These costs were amortized over the period of April 1 through November 30 in the prior year. The change, which will have no impact on annual results, had the effect of reducing operating expenses by $452,000 and $870,000 and increasing net income by $298,000 ($.12 per share) and $574,000 ($.23 per share) in the third quarter and first nine months of 1994, respectively. 5. In 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities". The Registrant adopted the provisions of the new standard, effective January 1, 1994, and increased stockholders' equity by $2,971,792 (net of $1,531,000 in income taxes) to reflect unrealized holding gains on investments reported as available-for-sale. Unrealized holding gains of $2,954,155 (net of $1,522,000 in income taxes) are included in stockholders' equity at September 30, 1994. In accordance with the Statement, prior year financial statements have not been restated for the accounting change. 6. Available-for-sale investments are carried at fair value, based on quoted market prices, and are reported as a current asset in the consolidated condensed balance sheet. Realized gains and losses on the sale of such investments are based on average cost. In 1993, the Registrant reported these investments at the lower of cost or market and as long-term. -6- 7 OGLEBAY NORTON COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED) 7. In June 1993, the Registrant recorded a reserve of $1,200,000 against a coal customer accounts receivable. The Registrant fully reserved for this receivable by recording an additional provision of $500,000 in December 1993. 8. On April 19, 1993, the Registrant sold its unsecured bankruptcy claim against LTV Steel Company, Inc. (LTV) for cash resulting in a $2,653,000 pretax gain. The Registrant would have received certain equities in LTV as settlement of its claim had the sale for cash not been affected. -7- 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Due to the seasonal nature of certain aspects of the Registrant's business, the operating results and cash flows for the first nine months of the year are not necessarily indicative of the results to be expected for the full year. FINANCIAL CONDITION ------------------- At September 30, 1994 the Registrant's net current assets were $20,739,000 as compared to $22,329,000 at December 31, 1993. Net current assets declined from the end of last year primarily as a result of the purchase of properties and equipment, the reduction of long-term debt and other liabilities, the payment of dividends, the purchase of Treasury Stock and the payment of the Registrant's portion of Eveleth Mines debt. This decline was partially offset by the reclassification of available-for-sale investments to current assets. The Registrant purchased 12,700 shares and 2,100 shares of its Common Stock on the open market and placed these shares in treasury in the first nine months of 1994 and 1993, respectively. The Registrant declared and paid dividends of $.30 per share in the third quarter of 1994 and $.70 per share in the first nine months of 1994. The Registrant declared and paid dividends of $.20 per share in the third quarter of 1993 and $.60 per share in the first nine months of 1993. During the second quarter of 1994, the Registrant sold for cash its Ceredo coal handling dock resulting in a $6,518,000 pretax gain. During the second quarter of 1993, the Registrant sold for cash its unsecured bankruptcy claim against LTV Steel Company, Inc. resulting in a $2,653,000 pretax gain. Cash flow from operations in the first nine months of 1994 improved significantly compared to the first nine months of 1993. As a result of its improved cash position, the Registrant repaid a total of $16,571,000 of its debt in the first nine months of 1994 compared with $4,427,000 for the same period in 1993. Included in 1994 is a $10,000,000 reduction in revolving credit debt with no balance presently outstanding. Anticipated cash flows from operations and current financial resources are expected to meet the Registrant's needs during the remainder of 1994. RESULTS OF OPERATIONS --------------------- NINE MONTHS ENDED SEPTEMBER 30, 1994 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1993 The Registrant's consolidated net income for the first nine months of 1994 was $10,772,000 or $4.32 per share on consolidated revenues of $144,509,000 compared to net income of $3,033,000 or $1.21 per share on revenues of $114,091,000 for the first nine months of 1993. Consolidated revenues for the first nine months of 1994 improved 27% compared to the first nine months of 1993. -8- 9 RESULTS OF OPERATIONS (CONTINUED) --------------------- NINE MONTHS ENDED SEPTEMBER 30, 1994 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1993 In 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities". As further described in Notes 5 and 6 to the consolidated condensed financial statements, the Registrant adopted the provisions of the new standard, effective January 1, 1994. Gains on the sale of available-for-sale investments of $449,000 and $1,162,000 are included in the third quarter and first nine months of 1994, respectively. As described in Note 4 to the consolidated condensed financial statements, the Registrant extended the period over which certain fixed costs are amortized for its Marine Transportation segment, effective April 1, 1994. The change reduced operating expenses by $870,000 and increased net income by $574,000 or $.23 per share in the first nine months of 1994. During the second quarter of 1994 the Registrant sold for cash its Ceredo coal handling dock located in West Virginia resulting in a $6,518,000 pretax gain. Net income for the first nine months of 1994 increased $4,302,000 or $1.73 per share as a result of the gain. During the second quarter of 1993 the Registrant sold for cash its unsecured claim against LTV Steel Company, Inc. resulting in a $2,653,000 pretax gain and recorded a $1,200,000 reserve against a coal customer accounts receivable. Net income for the first nine months of 1993 increased $959,000 or $.38 per share related to the gain, partially offset by the accounts receivable reserve. Interest expense declined 25% in the first nine months of 1994, compared to the same period in the prior year, due to the refinancing of a portion of the Registrant's long-term debt in December 1993 and an overall reduction in debt. Operating results of the Registrant's business segments for the nine months ended September 30, 1994 and 1993 are discussed below. It is the policy of the Registrant to allocate certain corporate general and administrative expenses to its business segments. Operating revenues for the Registrant's Marine Transportation segment increased 6% to $53,652,000 for the first nine months of 1994 compared to $50,746,000 for the same period in 1993. The segment's operating profit of $7,648,000 for the first nine months of 1994 increased 18% compared to $6,493,000 for the same period in 1993. The Registrant is currently operating twelve vessels as demand for coal, iron ore and limestone transportation remains high. The solid business conditions for the Registrant's customers in 1994 should extend the navigation season well into December for many of the vessels, if manageable weather conditions persist. Marine Transportation had ten vessels operating at September 30, 1993. -9- 10 RESULTS OF OPERATIONS (CONTINUED) --------------------- NINE MONTHS ENDED SEPTEMBER 30, 1994 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1993 Net sales, royalties and management fees for the Registrant's Iron Ore segment increased to $38,093,000 for the first nine months of 1994 compared to $13,713,000 for the same period in 1993 as a result of additional tonnage requirements by customers. The segment's operating profit for the first nine months of 1994 was $5,272,000 compared to $1,936,000 for the same period in 1993. The improvement was attributable to new spot market sales, increased royalties on higher production, lower interest costs and continued cost containment efforts at the Registrant's Eveleth Mines iron ore operations in Minnesota. Both pellet production lines at Eveleth Mines are now in operation with total 1994 production targeted at 5,000,000 tons compared to 3,100,000 tons in 1993. Net sales for the Registrant's Refractories & Minerals segment amounted to $29,930,000 for the first nine months of 1994, which was a 15% improvement compared to $25,997,000 for the same period in 1993. Operating profit for the segment was $1,180,000 for the first nine months of 1994 which was 37% less when compared to $1,887,000 for the same period in 1993. The segment's operating profit decline was primarily due to a $615,000 inventory adjustment at one plant in the third quarter of 1994. Net sales for the Registrant's Industrial Sands segment amounted to $20,928,000 for the first nine months of 1994, a 3% increase over sales of $20,319,000 for the same period in 1993. The segment's operating profit of $2,450,000 for the first nine months increased 30% compared to $1,888,000 for the same period in 1993. Improved pricing and strong sales in strip, frac and steel sands contributed to the favorable performance. Steps to streamline the segment's management process were implemented in October 1994 and are expected to accelerate long-term productivity gains. THREE MONTHS ENDED SEPTEMBER 30, 1994 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1993 The Registrant's 1994 third quarter consolidated net income was $4,077,000 or $1.64 per share on consolidated revenues of $58,687,000 compared to net income of $2,312,000 or $.92 per share on revenues of $48,907,000 for the same quarter in 1993. Consolidated revenues for the third quarter of 1994 improved 20% compared to the third quarter of 1993. As previously discussed, the Registrant extended the period over which certain fixed costs are amortized for its Marine Transportation segment, effective April 1, 1994. The change had the effect of reducing operating expenses by $452,000 and increasing net income by $298,000 or $.12 per share in the third quarter of 1994. -10- 11 RESULTS OF OPERATIONS (CONTINUED) --------------------- THREE MONTHS ENDED SEPTEMBER 30, 1994 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1993 Interest expense declined 28% in the third quarter of 1994, compared to the same quarter in the prior year, due to the refinancing of a portion of the Registrant's long-term debt in December 1993 and an overall reduction in debt. Operating results of the Registrant's business segments for the third quarter ended September 30, 1994 and 1993 are discussed below. Due to the seasonal nature of certain aspects of the Registrant's business, the comments set forth above in the nine month comparison generally apply when comparing the third quarter of 1994 to the same period in 1993. Operating revenues for the Registrant's Marine Transportation segment of $29,172,000 for the third quarter of 1994 improved 12% compared to $26,128,000 for the third quarter of 1993. The segment's operating profit of $5,308,000 for the third quarter of 1994 improved 23% compared to $4,321,000 for the third quarter of 1993. Net sales, royalties and management fees for the Registrant's Iron Ore segment increased to $11,577,000 for the third quarter of 1994 compared to $5,878,000 for the third quarter of 1993 as a result of additional tonnage requirements by customers. The segment's 1994 third quarter operating profit was $1,628,000 compared to $751,000 for the third quarter of 1993. Net sales for the Registrant's Refractories & Minerals segment amounted to $10,416,000 for the third quarter of 1994, which was a 17% improvement compared to $8,920,000 for the third quarter of 1993. Operating profit for the segment was $273,000 for the third quarter of 1994 which was 60% less when compared to $690,000 for the third quarter of 1993. As previously discussed, the segment's operating profit decline was due to a $615,000 inventory adjustment at one plant in the third quarter of 1994. Net sales for the Registrant's Industrial Sands segment amounted to $7,462,000 for the third quarter of 1994, a 7% increase from 1993 third quarter sales of $6,955,000. The segment's 1994 third quarter operating profit of $1,214,000 increased 86% from the 1993 third quarter profit of $654,000 due to strong sales in strip, frac and steel sands and a favorable product mix. -11- 12 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits - None (b) Reports on Form 8-K - None EXHIBIT 27 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. OGLEBAY NORTON COMPANY DATE: November 14, 1994 By: / s / R. J. Kessler ------------------------------------ R. J. Kessler Vice President - Finance and Development On behalf of the Registrant and as Principal Financial and Accounting Officer -12- EX-27 2 EXHIBIT 27
5 1 U.S. DOLLARS 9-MOS DEC-31-1994 JAN-01-1994 SEP-30-1994 1 14,386,831 6,880,775 32,790,350 320,000 5,972,112 67,725,812 311,557,816 154,167,601 257,483,567 46,986,755 52,986,688 3,626,666 0 0 78,511,091 257,483,567 86,143,747 144,508,799 74,819,622 132,323,395 1,448,322 180,433 4,064,917 15,467,272 4,695,000 10,772,272 0 0 0 10,772,272 4.32 4.32
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