0000950152-95-001790.txt : 19950815 0000950152-95-001790.hdr.sgml : 19950815 ACCESSION NUMBER: 0000950152-95-001790 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OGLEBAY NORTON CO CENTRAL INDEX KEY: 0000073918 STANDARD INDUSTRIAL CLASSIFICATION: WATER TRANSPORTATION [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: 95562844 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 June 30, 1995 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 July 31, 1995: 2,471,976 --------- Index on sequential page 2. 2 OGLEBAY NORTON COMPANY AND SUBSIDIARIES INDEX
SEQUENTIAL PAGE NUMBER ----------- PART I. FINANCIAL INFORMATION ------------------------------ Consolidated Condensed Balance Sheet (Unaudited) - June 30, 1995 and December 31, 1994 3 Consolidated Condensed Statement of Operations (Unaudited) - Three Months Ended June 30, 1995 and 1994 and Six Months Ended June 30, 1995 and 1994 4 Consolidated Condensed Statement of Cash Flows (Unaudited) - Six Months Ended June 30, 1995 and 1994 5 Notes to Consolidated Condensed Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 10 PART II. OTHER INFORMATION 11 - 12 ---------------------------
3 PART I. FINANCIAL INFORMATION OGLEBAY NORTON COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)
ASSETS JUNE 30 December 31 1995 1994 ------------ ------------ CURRENT ASSETS Cash and cash equivalents $ 2,541,611 $ 17,720,419 Investments 5,429,250 5,772,650 Accounts receivable, less allowances (1995-$433,000; 1994-$440,000) 30,974,741 32,035,408 Inventories Raw materials and finished products 3,910,813 3,846,094 Operating supplies 2,159,852 2,261,747 ----------- ------------ 6,070,665 6,107,841 Deferred income taxes 2,262,246 2,213,246 Prepaid insurance and other expenses 8,118,903 2,237,793 ----------- ------------ TOTAL CURRENT ASSETS 55,397,416 66,087,357 INVESTMENTS 10,647,467 10,563,835 PROPERTIES AND EQUIPMENT 319,557,706 314,843,362 Less allowances for depreciation and amortization 161,593,872 156,886,610 ------------ ------------ 157,963,834 157,956,752 PREPAID PENSION COSTS AND OTHER ASSETS 26,943,287 26,205,459 ----------- ------------ $250,952,004 $260,813,403 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY JUNE 30 December 31 1995 1994 ------------ ------------ CURRENT LIABILITIES Current portion of long-term debt $ 8,476,450 $ 8,476,450 Accounts payable 6,362,502 4,569,067 Payrolls and other accrued compensation 4,520,559 7,057,615 Accrued taxes and other expenses 12,314,001 16,013,208 Income taxes 1,317,476 2,270,951 Reserve for capacity rationalization 3,500,000 6,312,600 ------------ ------------ TOTAL CURRENT LIABILITIES 36,490,988 44,699,891 LONG-TERM DEBT, less current portion 52,879,350 57,117,575 POSTRETIREMENT BENEFITS OBLIGATION 31,679,236 31,071,022 OTHER LONG-TERM LIABILITIES 22,661,845 24,019,063 DEFERRED INCOME TAXES 19,679,931 19,152,931 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 9,043,251 9,035,841 Unrealized gains 2,184,805 2,278,273 Retained earnings 104,198,026 101,173,484 ------------ ------------ 119,052,748 116,114,264 Treasury stock, at cost - 1,154,690 and 1,143,540 shares at respective dates (29,586,294) (29,217,318) Unallocated Employee Stock Ownership Plan shares (1,905,800) ( 2,144,025) ------------ ------------ 87,560,654 84,752,921 ------------ ------------ $250,952,004 $260,813,403 ============ ============ See notes to consolidated condensed financial statements.
-3- 4 OGLEBAY NORTON COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
Three Months Ended Six Months Ended June 30 June 30 ------------------------------------- --------------------------------- 1995 1994 1995 1994 ---- ---- ---- ---- REVENUES Net sales $ 27,418,927 $ 28,677,654 $ 51,177,891 $ 57,816,621 Operating revenues 29,014,104 24,808,818 30,340,197 26,087,073 Sales commissions, royalties and management fees 1,063,220 965,560 1,909,515 1,917,913 ------------- ------------- ------------- ------------ 57,496,251 54,452,032 83,427,603 85,821,607 COSTS AND EXPENSES Cost of goods sold 22,562,407 25,096,632 42,607,291 50,131,362 Operating expenses 23,728,773 20,865,540 24,498,358 22,000,516 General, administrative and selling expenses 3,929,843 4,056,843 7,944,727 8,268,018 Reserve for doubtful accounts 80,561 31,844 156,645 89,938 ------------- ------------- ------------- ------------ 50,301,584 50,050,859 75,207,021 80,489,834 INCOME FROM OPERATIONS 7,194,667 4,401,173 8,220,582 5,331,773 Gain on sale of assets 456,358 6,984,053 978,839 7,386,243 Interest, dividends and other income 235,604 315,171 718,296 585,730 Other expense ( 815,641) ( 501,920) (1,420,875) ( 883,065) Interest expense (1,148,281) (1,392,442) (2,382,870) (2,808,424) ------------- ------------- ------------- ------------- INCOME BEFORE INCOME TAXES 5,922,707 9,806,035 6,113,972 9,612,257 Income taxes 1,548,000 2,968,000 1,602,000 2,917,000 ------------- ------------- ------------- ------------- NET INCOME $ 4,374,707 $ 6,838,035 $ 4,511,972 $ 6,695,257 ============ ============ =========== ============ NET INCOME PER SHARE OF COMMON STOCK $ 1.77 $ 2.75 $ 1.82 $ 2.69 ============ ============ =========== ============ DIVIDENDS PER SHARE OF COMMON STOCK $ .30 $ .20 $ .60 $ .40 ============ ============ =========== ============ Average number of shares of Common Stock outstanding 2,475,347 2,491,291 2,478,353 2,492,339 See notes to consolidated condensed financial statements.
-4- 5 OGLEBAY NORTON COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30 ------------------------------------------- 1995 1994 ---- ---- OPERATING ACTIVITIES Net income $ 4,511,972 $ 6,695,257 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 5,759,330 5,686,366 Deferred income taxes 526,000 750,000 Gain on sale of assets ( 978,839) (7,386,243) Prepaid pension costs and other assets ( 1,231,778) (1,182,450) Deferred vessel maintenance costs ( 5,684,541) (5,246,827) Decrease (increase) in accounts receivable 1,060,667 (1,054,112) Decrease (increase) in inventories 37,176 ( 447,671) Increase (decrease) in accounts payable 1,793,435 2,198,462 Increase (decrease) in payrolls and other accrued compensation ( 2,537,057) ( 951,154) Increase (decrease) in accrued expenses ( 1,624,687) 991,096 Increase (decrease) in income taxes ( 953,475) 1,057,411 Other operating activities ( 2,345,302) 1,040,545 ------------ ----------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ( 1,667,099) 2,150,680 INVESTING ACTIVITIES Purchase of properties and equipment ( 4,997,006) (3,156,101) Proceeds from sale of assets 1,206,526 10,734,898 Iron Ore and other investments ( 3,126,598) (1,671,180) ------------ ----------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ( 6,917,078) 5,907,617 FINANCING ACTIVITIES Payments on long-term debt ( 4,738,225) (16,201,439) Dividends paid ( 1,487,430) ( 996,551) Purchase of treasury stock ( 368,976) ( 288,564) ------------- ------------- NET CASH USED IN FINANCING ACTIVITIES ( 6,594,631) (17,486,554) ------------ ------------ Decrease in cash and cash equivalents ( 15,178,808) ( 9,428,257) CASH AND CASH EQUIVALENTS, JANUARY 1 17,720,419 21,243,064 ------------ ------------ CASH AND CASH EQUIVALENTS, JUNE 30 $ 2,541,611 $ 11,814,807 ============ ============ 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 1995 consolidated condensed financial statement presentation. For further information, refer to the consolidated financial statements and notes thereto included in the Registrant's 1994 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 the Registrant's Marine Transportation segment which historically does not generate revenues in the first quarter of the year due to weather conditions on the Great Lakes. 3. On April 13, 1995, the Registrant paid a final installment of $1,406,000 representing its portion of Eveleth Mines debt, originally due on August 1, 1995. 4. On March 2, 1995, the Registrant sold for cash certain undeveloped clay properties located in Tennessee resulting in a $520,000 pretax gain. 5. On June 24, 1994, the Registrant sold for cash its Ceredo coal dock business resulting in a $6,518,000 pretax gain. 6. On July 6, 1995, the Registrant sold for cash the idled vessel S/S Crispin Oglebay resulting in a pretax gain of $1,769,000 which will be included in the Registrant's third quarter results. -6- 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Due to the seasonal nature of the Registrant's Marine Transportation segment, the operating results and cash flows for the first half of the year are not necessarily indicative of the results to be expected for the full year. The Registrant's Marine Transportation segment historically does not generate revenues in the first quarter of the year due to weather conditions on the Great Lakes. FINANCIAL CONDITION ------------------- At June 30, 1995 the Registrant's net current assets were $18,906,000 as compared to $21,387,000 at December 31, 1994. 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 final payments of the Registrant's portion of Eveleth Mines debt. The Registrant purchased 12,150 shares and 12,700 shares of its Common Stock on the open market and placed these shares in treasury in the first half of 1995 and 1994, respectively. The Registrant issued 1,000 shares of its Common Stock from treasury to the Oglebay Norton Company Director Stock Plan in the first half of 1995. The Registrant declared and paid dividends of $.30 per share in the second quarter of 1995 and $.60 per share in the first half of 1995. The Registrant declared and paid dividends of $.20 per share in the second quarter of 1994 and $.40 per share in the first half of 1994. During the first half of 1995, the Registrant sold for cash certain undeveloped clay properties in Tennessee resulting in a $520,000 pretax gain. The Registrant sold current investments resulting in pretax gains of $303,000 and $713,000 during the first half of 1995 and 1994, respectively. During the second quarter of 1994, the Registrant sold for cash its Ceredo coal dock business resulting in a $6,518,000 pretax gain. On July 6, 1995, the Registrant sold for cash the idled vessel S/S Crispin Oglebay resulting in a pretax gain of $1,769,000 which will be included in the Registrant's third quarter results. Cash flow from operations in the first half of 1995 declined $3,818,000 compared to the first half of 1994 mainly due to the payment of liabilities accrued at the end of 1994 related to additional pellet tonnage sold by the Registrant's Iron Ore segment. Expenditures for property and equipment amounted to $4,997,000 and $3,156,000 in the first half of 1995 and 1994, respectively. Capital expenditures include vessel inspection costs of $2,037,000 in the first half of 1995 and $1,303,000 in the first half of 1994. Also included in the first half of 1995 is $1,020,000 of vessel improvements. The Registrant repaid a total of $4,758,000 of its debt in the first half of 1995 compared with $16,201,000 for the same period in 1994. Included in 1994 is a $10,000,000 reduction in revolving credit debt with no balance presently outstanding in 1995. Anticipated cash flows from operations and current financial resources are expected to meet the Registrant's needs during the remainder of 1995. -7- 8 RESULTS OF OPERATIONS --------------------- SIX MONTHS ENDED JUNE 30, 1995 COMPARED TO SIX MONTHS ENDED JUNE 30, 1994 The Registrant's consolidated net income for the first half of 1995 was $4,512,000 or $1.82 per share on consolidated revenues of $83,428,000 compared to net income of $6,695,000 or $2.69 per share on revenues of $85,822,000 for the first half of 1994. Consolidated revenues for the first half of 1995 declined 3% compared to the first half of 1994 due mainly to a 50% decline in revenues for the Registrant's Iron Ore segment as discussed below. During the first half of 1995 the Registrant sold for cash certain undeveloped clay properties located in Tennessee resulting in a $520,000 pretax gain. Net income for the first half of 1995 increased $343,000 or $.14 per share as a result of the gain. The Registrant sold current investments resulting in pretax gains of $303,000 and $713,000 during the first half of 1995 and 1994, respectively. As a result of the gains, net income increased $200,000 or $.08 per share and $471,000 or $.19 per share in the first half of 1995 and 1994, respectively. During the second quarter of 1994 the Registrant sold for cash its Ceredo coal dock business located in West Virginia resulting in a $6,518,000 pretax gain. Net income for the first half of 1994 increased $4,302,000 or $1.73 per share as a result of the gain. Excluding these gains, netincome was $3,969,000 or $1.60 per share for the first half of 1995 and $1,922,000 or $.77 per share for the first half of 1994. Interest expense declined 15% in the first half of 1995, 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 1994 and an overall reduction in debt. Operating results of the Registrant's business segments for the six months ended June 30, 1995 and 1994 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 24% to $30,340,000 for the first half of 1995 compared to $24,481,000 for the same period in 1994. The segment's operating profit of $4,268,000 for the first half of 1995 increased 82% compared to $2,340,000 for the same period in 1994. The improved results are due to higher volume and better pricing as demand for iron ore, coal and limestone transportation remains high. As a result of good weather, eleven of the twelve vessels currently in operation began sailing in March of 1995. Due to severe ice conditions on the Great Lakes, the start of the Registrant's 1994 shipping season was delayed into April. -8- 9 RESULTS OF OPERATIONS (CONTINUED) --------------------- SIX MONTHS ENDED JUNE 30, 1995 COMPARED TO SIX MONTHS ENDED JUNE 30, 1994 Net sales, royalties and management fees for the Registrant's Iron Ore segment declined 50% to $13,353,000 for the first half of 1995 compared to $26,516,000 for the first half of 1994. The segment's operating profit for the first half of 1995 declined 46% to $1,959,000 compared to $3,644,000 the first half of 1994. In 1995, the Registrant is limited to its annual allotment of 775,000 gross tons of iron ore pellets under its Eveleth Mines agreements as the other owners have nominated their full contractual tonnage. Additional pellet tonnage was available to the Registrant to sell in 1994, as other owners elected not to claim their full share of Eveleth production. Eveleth Mines plans to produce near its capacity of 5,400,000 tons of pellets in 1995 compared to 5,000,000 tons in 1994. Net sales for the Registrant's Industrial Sands segment amounted to $20,515,000 for the first half of 1995, a 52% increase over sales of $13,466,000 for the first half of 1994. The segment's operating profit of $4,106,000 for the first half of 1995 more than tripled compared to $1,237,000 for the first half of 1994. Tonnage sold increased, principally as a result of the 1994 fourth quarter acquisition of additional sand assets in Texas. Favorable pricing and a beneficial product mix also contributed to the improved results. Net sales for the Registrant's Refractories & Minerals segment amounted to $19,220,000 for the first half of 1995, which was a decrease of 2% compared to $19,515,000 for the first half of 1994. Operating profit for the segment was $140,000 for the first half of 1995 which was 85% less when compared to $908,000 for the first half of 1994. Operating profit for this segment was negatively impacted by a 29% decline in sales of tundish coating products and by increased raw material costs in its ingot hot topping operations. The decline in operating profit was somewhat offset by improved operating results in its metallurgical treatment operations. THREE MONTHS ENDED JUNE 30, 1995 COMPARED TO THREE MONTHS ENDED JUNE 30, 1994 The Registrant's 1995 second quarter consolidated net income was $4,375,000 or $1.77 per share on consolidated revenues of $57,496,000 compared to net income of $6,838,000 or $2.75 per share on revenues of $54,452,000 for the same quarter in 1994. Consolidated revenues for the second quarter of 1995 improved 6% compared to the second quarter of 1994 on higher volume and favorable pricing in the Registrant's Marine Transportation and Industrial Sands segments, partially offset by decreased tonnage in the Registrant's Iron Ore segment. -9- 10 RESULTS OF OPERATIONS (CONTINUED) --------------------- THREE MONTHS ENDED JUNE 30, 1995 COMPARED TO THREE MONTHS ENDED JUNE 30, 1994 As previously discussed, the Registrant sold its Ceredo coal handling dock resulting in a $6,518,000 pretax gain in the second quarter of 1994. Second quarter net income increased $4,302,000 of $1.73 per share as a result of the gain. Excluding this gain, net income was $2,536,000 or $1.02 per share for the second quarter of 1994. Interest expense declined 18% in the second quarter of 1995, 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 1994 and an overall reduction in debt. Operating results of the Registrant's business segments for the second quarter ended June 30, 1995 and 1994 are discussed below. The comments set forth above in the six month comparison generally apply when comparing the second quarter of 1995 to the same period in 1994. Operating revenues for the Registrant's Marine Transportation segment of $29,014,000 for the second quarter of 1995 improved 21% compared to $24,003,000 for the second quarter of 1994. The segment's operating profit of $4,486,000 for the second quarter of 1995 improved 46% compared to $3,067,000 for the second quarter of 1994. Net sales, royalties and management fees for the Registrant's Iron Ore segment declined to $8,030,000 for the second quarter of 1995 compared to $12,446,000 for the second quarter of 1994. The segment's 1995 second quarter operating profit was $1,155,000 compared to $1,452,000 for the second quarter of 1994. Net sales for the Registrant's Industrial Sands segment amounted to $11,200,000 for the second quarter of 1995, a 55% increase from 1994 second quarter sales of $7,232,000. The segment's 1995 second quarter operating profit of $2,697,000 increased 180% from the 1994 second quarter profit of $964,000 due to additional tonnage sold, favorable pricing and a beneficial product mix. Net sales for the Registrant's Refractories & Minerals segment amounted to $9,252,000 for the second quarter of 1995, which was a 6% decline compared to $9,891,000 for the second quarter of 1994 due mainly to lower sales of its tundish coating products. Operating profit for the segment was $29,000 for the second quarter of 1995 compared to $384,000 for the second quarter of 1994. -10- 11 PART II. OTHER INFORMATION --------------------------- ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS ------- ----------------------------------------------------- The Registrant submitted for approval by the shareholders at the annual meeting held April 26, 1995, nominees for election as directors with terms expiring in 1998 the following candidates: Malvin E. Bank, William G. Bares, and John D. Weil. The shareholders voted as follows:
For Withheld --- -------- Malvin E. Bank 2,223,483 3,916 William G. Bares 2,221,452 5,947 John D. Weil 2,225,105 2,294
The Registrant also submitted for approval by the shareholders at the annual meeting the Oglebay Norton Company Director Stock Plan. The Stock Plan was approved by 2,116,883 votes in favor of adopting the Stock Plan. The shareholders voted 87,305 against adoption; 18,212 votes abstained and 4,999 non-votes were recorded, respectively. -11- 12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ------- -------------------------------- (a) Exhibits (27) - Financial Data Schedule (b) Reports on Form 8-K - None 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: August 14, 1995 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 OGLEBAY NORTON 10-Q EX-27
5 1 US DOLLARS 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 1 2,541,611 5,429,250 30,974,741 433,000 6,070,665 55,397,416 319,557,706 161,593,872 250,952,004 36,490,988 52,879,350 3,626,666 0 0 83,933,988 250,952,004 51,177,891 83,427,603 42,607,291 75,207,021 1,420,875 156,645 2,382,870 6,113,972 1,602,000 4,511,972 0 0 0 4,511,972 1.82 1.82