-----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, E946iQAoIvlAZdowFXMRmTTT4iYmJlzCvVnS1Xgwe/OzwI9WXxBJnTu00dQTaz6H Uwrlyo7jXGsHxeOVC09kRg== 0000950152-96-002531.txt : 19960517 0000950152-96-002531.hdr.sgml : 19960517 ACCESSION NUMBER: 0000950152-96-002531 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 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: 96567631 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 1 Sequential Page 1 of 11 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 March 31, 1996 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 April 30, 1996: 2,448,532 Index on sequential page 2. 2 OGLEBAY NORTON COMPANY AND SUBSIDIARIES INDEX
SEQUENTIAL PAGE NUMBER ----------- PART I. FINANCIAL INFORMATION ------------------------------ Consolidated Condensed Balance Sheet (Unaudited) - March 31, 1996 and December 31, 1995 3 Consolidated Condensed Statement of Operations (Unaudited) - Three Months Ended March 31, 1996 and 1995 4 Consolidated Condensed Statement of Cash Flows (Unaudited) - Three Months Ended March 31, 1996 and 1995 5 Notes to Consolidated Condensed Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 9 PART II. OTHER INFORMATION 10 - 11 ---------------------------
3 PART I. ITEM 1. FINANCIAL INFORMATION OGLEBAY NORTON COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)
ASSETS March 31 December 31 1996 1995 ------------- ------------- CURRENT ASSETS Cash and cash equivalents $ 20,761,136 $ 22,660,436 Marketable securities 2,509,050 3,555,550 Accounts receivable, less reserve for doubtful accounts (1996-$571,000; 1995-$511,000) 17,014,919 27,681,413 Inventories Raw materials and finished products 3,045,725 3,456,857 Operating supplies 2,232,130 2,311,529 ------------- ------------- 5,277,855 5,768,386 Deferred income taxes 3,195,281 3,033,075 Prepaid insurance and other expenses 8,578,152 1,775,417 ------------- ------------- TOTAL CURRENT ASSETS 57,336,393 64,474,277 INVESTMENTS 10,314,497 10,519,241 PROPERTIES AND EQUIPMENT 301,218,196 304,828,977 Less allowances for depreciation and amortization 150,878,957 153,235,099 ------------- ------------- 150,339,239 151,593,878 PREPAID PENSION COSTS AND OTHER ASSETS 28,014,624 27,668,477 ------------- ------------- $246,004,753 $254,255,873 ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY March 31 December 31 1996 1995 ------------- ------------- CURRENT LIABILITIES Current portion of long-term debt $ 8,476,450 $ 8,476,450 Accounts payable 4,236,535 6,546,012 Payrolls and other accrued compensation 3,023,588 7,283,660 Accrued expenses 10,621,090 14,219,918 Income taxes 4,145,912 1,311,849 Iron Ore impairment obligations 3,824,995 4,699,996 ------------- ------------- TOTAL CURRENT LIABILITIES 34,328,570 42,537,885 LONG-TERM DEBT, less current portion 43,522,013 43,641,125 POSTRETIREMENT BENEFITS OBLIGATION 31,820,576 31,559,405 OTHER LONG-TERM LIABILITIES 19,838,264 19,922,291 DEFERRED INCOME TAXES 19,975,529 20,329,760 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 9,078,611 9,078,611 Unrealized gains 1,087,927 1,468,476 Retained earnings 114,810,028 113,566,048 ------------- ------------- 128,603,232 127,739,801 Treasury stock, at cost - 1,179,234 and 1,160,790 shares at respective dates (30,534,968) (29,806,819) Unallocated Employee Stock Ownership Plan shares ( 1,548,463) ( 1,667,575) ------------- -------------- 96,519,801 96,265,407 ------------- ------------- $246,004,753 $254,255,873 ============= ==============
See notes to consolidated condensed financial statements. -3- 4 OGLEBAY NORTON COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
Three Months Ended March 31 ------------------------------------ 1996 1995 ---- ---- REVENUES Net sales $ 26,473,249 $ 23,758,964 Operating revenues 412,277 1,326,093 Sales commissions, royalties and management fees 866,781 846,295 ----------- ----------- 27,752,307 25,931,352 COSTS AND EXPENSES Cost of goods sold 22,102,689 20,120,968 Operating expenses 449,688 769,585 General, administrative and selling expenses 4,038,568 4,014,884 ----------- ----------- 26,590,945 24,905,437 INCOME FROM OPERATIONS 1,161,362 1,025,915 Gain on sale of assets 1,615,826 522,481 Interest, dividends and other income 1,158,965 482,692 Interest expense (843,519) (1,234,589) Other expense (530,424) ( 605,234) ----------- ----------- INCOME BEFORE INCOME TAXES 2,562,210 191,265 Income taxes 584,000 54,000 ----------- ----------- NET INCOME $ 1,978,210 $ 137,265 =========== =========== NET INCOME PER SHARE OF COMMON STOCK $ .80 $ .06 =========== =========== DIVIDENDS PER SHARE OF COMMON STOCK $ .30 $ .30 =========== =========== Average number of shares of Common Stock outstanding 2,458,408 2,481,193
See notes to consolidated condensed financial statements. -4- 5 OGLEBAY NORTON COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31 ------------------------------------ 1996 1995 ---- ---- OPERATING ACTIVITIES Net income $ 1,978,210 $ 137,265 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,371,925 1,289,514 Deferred income taxes ( 32,000) 41,000 Gain on sale of assets ( 989,078) ( 522,481) Gain on sale of business ( 625,000) Prepaid pension costs and other assets ( 593,122) ( 836,053) Deferred vessel maintenance costs (6,412,998) (4,589,524) Decrease in accounts receivable 10,659,900 14,838,459 Decrease (increase) in inventories 460,631 ( 407,357) (Decrease) increase in accounts payable (2,305,623) 506,544 Decrease in payrolls and other accrued compensation (4,260,072) (3,678,682) Decrease in accrued expenses (3,673,909) (4,504,715) Increase (decrease) in income taxes 2,841,877 (1,679,453) Other operating activities ( 968,482) ( 502,404) ----------- ----------- NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (2,547,741) 92,113 INVESTING ACTIVITIES Purchase of properties and equipment (1,139,859) (2,840,944) Proceeds from sale of assets 1,459,777 534,150 Proceeds from sale of business 1,900,000 Iron Ore and other investments 10,014 (1,462,739) ----------- ----------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 2,229,932 (3,769,533) FINANCING ACTIVITIES Payments on long-term debt ( 119,112) ( 619,113) Dividends paid ( 734,230) ( 744,338) Purchase of treasury stock ( 728,149) ( 61,504) ----------- ----------- NET CASH USED IN FINANCING ACTIVITIES (1,581,491) (1,424,955) ------------ ------------ Decrease in cash and cash equivalents (1,899,300) (5,102,375) CASH AND CASH EQUIVALENTS, JANUARY 1 22,660,436 17,720,419 ----------- ----------- CASH AND CASH EQUIVALENTS, MARCH 31 $ 20,761,136 $ 12,618,044 =========== ===========
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 1996 consolidated condensed financial statement presentation. For further information, refer to the consolidated financial statements and notes thereto included in the Registrant's 1995 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. In 1995, the Financial Accounting Standards Board issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets to be Disposed Of". Adoption of this Statement, which was required in the first quarter of 1996, did not result in any assets considered to be impaired. 4. On February 8, 1996, the Registrant sold its National Perlite Products Company for $1,900,000 in cash. The sale resulted in a $625,000 pretax gain which is included in gain on sale of assets. 5. The Registrant received a state income tax refund of $1,824,000 and related interest of $576,000 in February 1996 for prior tax years. The interest received is included in other income, while the tax refund reduced the Registrant's 1996 annual effective income tax rate. -6- 7 ITEM 2. 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 quarter ended March 31, 1996 are not necessarily indicative of the results to be expected for the full year. FINANCIAL CONDITION ------------------- The Registrant's operating activities used cash of $2,548,000 in the first quarter of 1996 compared to $92,000 provided by operations for the same period in 1995. Accounts receivable declined by $10,660,000 in the first quarter of 1996, compared to $14,838,000 for the same period in 1995. Accounts payable also dropped $2,306,000 in the first quarter of 1996 compared to a $507,000 increase for the same period of 1995. Vessel maintenance costs, deferred and amortized over the Marine Transportation sailing season, were $6,413,000 for the first quarter of 1996, compared to $4,590,000 for the same period in 1995. Cash generated through the collection of receivables in the first quarter of 1996 was not as significant as the same quarter in the prior year, while additional cash was used for the payment of accounts payable and vessel maintenance costs. This change in cash used by operating actvities in the first quarter of 1996 resulted primarily from the Registrant's Marine Transportation business segment. Heavy ice conditions experienced by the Registrant's vessel fleet on the Great Lakes and rivers at the end of 1995 continued through the first quarter of 1996 hampering the start of the sailing season. Operating results of the Company's business segments are discussed in more detail under "RESULTS OF OPERATIONS". Expenditures for property and equipment amounted to $1,140,000 in the first quarter of 1996 compared to $2,841,000 for the same period in 1995. Expenditures in the first quarter of 1995 include vessel inspection costs and improvements of $1,127,000 and $705,000, respectively. No vessel inspections are required in 1996. In the first quarter of 1996, the Registrant received $1,336,000 and $2,024,000 on the sale of marketable securities and certain properties, respectively. Properties sold included the Registrant's National Perlite Products business for $1,900,000 in cash. Undeveloped clay properties in Tennessee were sold in the first quarter of 1995. Total proceeds from the sale of these assets and business were $3,360,000 in the first quarter of 1996 and $534,000 for the same quarter in 1995. The Registrant made long-term debt payments of $119,000 and $619,000 in the first quarter of 1996 and 1995, respectively. The Registrant also made Iron Ore investment advances of $1,406,000 in 1995 to fund its proportionate share of Eveleth Mines debt. Eveleth's debt was fully paid in 1995. The Registrant declared dividends of $.30 per share in the first quarter of 1996 and 1995. Dividends paid were $734,000 in the first quarter of 1996 compared to $744,000 for the same quarter in 1995. The Registrant purchased 18,444 shares of its Common Stock on the open market for $728,000 in the first quarter of 1996 and 2,000 shares for $62,000 in the first quarter of 1995 and placed these shares in treasury. -7- 8 Anticipated cash flows from operations and current financial resources are expected to meet the Registrant's needs during the remainder of 1996. All financing alternatives are under constant review to determine their ability to provide sufficient funding at the least possible cost. RESULTS OF OPERATIONS --------------------- QUARTER ENDED MARCH 31, 1996 COMPARED TO QUARTER ENDED MARCH 31, 1995 The Registrant's income from operations improved by 13% in the first quarter of 1996 to a level of $1,161,000 on revenues of $27,752,000, compared to $1,026,000 on revenues of $25,931,000 for the same quarter in 1995. Income before income taxes was $2,562,000 for the first quarter of 1996, compared to $191,000 for the first quarter of 1995. Net income for the first quarter of 1996 was $1,978,000 or $.80 per share compared to $137,000 or $.06 per share for the same quarter in 1995. Income before income taxes for the first quarter of 1996 includes gains of $867,000 on the sale of current marketable securities and $749,000 on the sale of properties. Properties sold include National Perlite Products Company, which has not operated over the past two years. A $625,000 nontaxable gain was realized on the sale of this wholly-owned subsidiary. The Registrant received a $1,824,000 state income tax refund and related interest income of $576,000 in the first quarter of 1996 for prior tax years. As a result, the Registrant's 1996 annual effective income tax rate was reduced. Income before income taxes for the first quarter of 1995 included gains of $522,000 primarily on the sale of undeveloped clay properties in Tennessee. Net income, excluding the above gains and tax refund, was $173,000 or $.07 per share for the first quarter of 1996 and a net loss of $208,000 or $.08 per share for the first quarter of 1995. In 1995, the Financial Accounting Standards Board issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets to be Disposed Of". Adoption of this Statement, which was required in the first quarter of 1996, did not result in any assets considered to be impaired. Interest expense declined 32% in the first quarter of 1996, compared to the same period in the prior year, due to an overall reduction in debt and lower interest rates. Operating results of the Registrant's business segments for the first quarter ended March 31, 1996 and 1995 are discussed below. It is the policy of the Registrant to allocate a portion of corporate general and administrative expenses to its business segments. Operating revenues for the Registrant's Marine Transportation segment amounted to $412,000 for the first quarter of 1996 compared to $1,326,000 for the first quarter of 1995. The segment's operating loss was $767,000 for the first quarter of 1996 compared to $218,000 for the first quarter of 1995. The start of the Marine Transportation season was slow and costly with the fleet encountering heavy ice conditions in the rivers and upper Great Lakes regions. These conditions have been as difficult or worse than those encountered at the end of the 1995 sailing season, when year end financial performance was adversely affected. Only seven of the twelve vessels in the fleet operated in the first quarter, and only marginally, compared to the first quarter of 1995 when eleven of twelve operated in extremely favorable conditions. Lower operating revenues and profit for this business segment in the first quarter of 1996 reflect that difference. -8- 9 RESULTS OF OPERATIONS (CONTINUED) --------------------- QUARTER ENDED MARCH 31, 1996 COMPARED TO QUARTER ENDED MARCH 31, 1995 Currently, all twelve vessels are in operation. Tonnage levels for the year should be comparable to the 21,486,000 tons hauled in 1995. Net sales for the Registrant's Industrial Sands segment amounted to $10,367,000 for the first quarter of 1996, an 11% increase over sales of $9,314,000 for the first quarter of 1995. Operating profit of $1,660,000 for the first quarter of 1996 increased by 18% compared to $1,409,000 for the first quarter of 1995. Shipment of 376,000 tons for the first quarter of 1996 represents a 5% increase over the same quarter in 1995, while the average selling price of principal products improved by 9% due to a favorable material mix. Operating results of the segment's California operations improved dramatically in the first quarter of 1996. Record levels were achieved on a healthy demand for industrial sands related to the construction of golf courses and manufacture of building materials. In addition, Texas operations continued the strong pace, established in the prior year, of supplying high quality frac sand to the oil and gas service markets. Net sales, royalties and management fees for the Registrant's Iron Ore segment improved 70% to $9,069,000 for the first quarter of 1996 compared to $5,323,000 for the first quarter of 1995. The segment's operating profit for the first quarter of 1996 improved 67% to $1,342,000 compared to $805,000 for the first quarter of 1995. Sales and operating profit were significantly higher for the first quarter of 1996 on accelerated rail shipments at higher market prices to meet a strong spot market demand from the steel industry. Eveleth Mines is expected to produce approximately 5,300,000 tons in 1996, and the Registrant anticipates that it will sell its related contractual allotment of iron ore pellets. At the end of 1995, the Registrant notified the other owners of Eveleth Mines of its decision not to renew its contract as manager and employer of Eveleth Mines beyond the current expiration date of December 31, 1996. Presently, the Registrant intends to continue as an owner of Eveleth and to receive its contractual allotment of iron ore pellets for resale. The owners continue to discuss what the operation and ownership structure of Eveleth Mines might be after 1996. No agreement, however, has been reached regarding a potential restructuring. Net sales for the Registrant's Refractories & Minerals segment amounted to $7,858,000 for the first quarter of 1996, which was a 21% decline compared to $9,948,000 for the first quarter of 1995. The segment had an operating loss of $57,000 for the first quarter of 1996, compared to a $145,000 operating profit for the first quarter of 1995. As anticipated, declining ingot hot top product sales accounted for the majority of the decline in operating results for the first quarter of 1996. The Registrant is one of the remaining suppliers of ingot products to steel producers, who have not shifted to the continuous casting process. Although the sale of metallurgical treatment products in the first quarter of 1996 were below prior year's level, profitability of this product line continues to improve. The Registrant's Refractories & Minerals new management team has recently completed a review of existing product lines, leading to a revised strategic business plan. Steps are now being taken to implement the components of this plan. -9- 10 PART II. OTHER INFORMATION - --------------------------- ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- As previously reported the Registrant's affiliate, Eveleth Mines, is a defendent in a civil action for sexual harassment before the United States District Court, District of Minnesota, Fifth Division, captioned Lois E. Jenson et al vs. Eveleth Taconite Company et al. On March 28, 1996, the Special Master assigned to this matter filed his Report and Recommendation with the Court. He did not recommend an award of punitive damages against Eveleth Mines. He did recommend a total of $214,500 in damages be awarded to the plaintiffs in varying amounts. This award included $32,000 in civil penalties to the State of Minnesota. The plaintiffs have filed a motion to reject and modify the Special Master's Report and Recommendation. Oral arguments on the plaintiffs' motion have been scheduled for June 7, 1996. 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 24, 1996, nominees as directors with terms expiring in 1999 the following candidates: R. Thomas Green, Jr., Ralph D. Ketchum, and Renold D. Thompson. The shareholders voted as follows:
For Withheld --- -------- R. Thomas Green, Jr. 2,127,257 6,166 Ralph D. Ketchum 2,126,370 7,053 Renold D. Thompson 2,119,729 13,694
The Registrant also submitted for approval by the shareholders at the annual meeting the Oglebay Norton Company Long-Term Incentive Plan. The Long-Term Incentive Plan was approved by 1,885,494 votes in favor of adopting the Long-Term Incentive Plan. The shareholders voted 29,100 against adoption; 9,504 votes abstained and 209,325 non-votes were recorded, respectively. -10- 11 ITEM 5. OTHER INFORMATION - ------ ----------------- On April 24, 1996, the Registrant's Board of Directors authorized it to purchase, on the open market or through private purchases, approximately 60,000 shares of Common Stock having an aggregate cost of up to $3,000,000 through April 30, 1997. This new stock repurchase program replaced a similar program authorized in 1989 which enabled the Registrant to purchase Common Stock having an aggregate cost of up to $3,000,000. In total 95,004 shares with an aggregate cost of $2,967,575 were purchased under the 1989 program. 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: May 15, 1996 By: /s/ R. J. Kessler __________________________ R. J. Kessler Vice President - Finance and Planning On behalf of the Registrant and as Principal Financial and Accounting Officer -11- EX-27 2 EXHIBIT 27
5 1 U.S. DOLLARS 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 1 20,761,136 2,509,050 17,014,919 571,000 5,277,855 57,336,393 301,218,196 150,878,957 246,004,753 34,328,570 43,522,013 0 0 3,626,666 92,893,135 246,004,753 26,473,249 27,752,307 22,045,689 26,590,945 530,424 57,000 843,519 2,562,210 584,000 1,978,210 0 0 0 1,978,210 .80 .80
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