-----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, WIZUVwOjChL4I9JGrcMpXEBRpfJEt+0n3N+7bFDFQyDzhRXXZ5wStMjh2W1SmRAh i1Ll3MmDkW7cK9oFrWTA0w== 0000950152-97-008022.txt : 19971117 0000950152-97-008022.hdr.sgml : 19971117 ACCESSION NUMBER: 0000950152-97-008022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NONE 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: SEC FILE NUMBER: 000-00663 FILM NUMBER: 97718571 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 OGELBAY NORTON COMPANY |QUARTERLY REPORT|FORM 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 Quarter Ended September 30, 1997 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, 1997: 4,752,180 --------- 2 OGLEBAY NORTON COMPANY AND SUBSIDIARIES INDEX
PAGE NUMBER ----------- PART I. FINANCIAL INFORMATION ------------------------------ Condensed Consolidated Balance Sheet - September 30, 1997 (Unaudited) and December 31, 1996 3 Condensed Consolidated Statement of Operations (Unaudited) - Three Months Ended September 30, 1997 and 1996 and Nine Months Ended September 30, 1997 and 1996 4 Condensed Consolidated Statement of Cash Flows (Unaudited) - Nine Months Ended September 30, 1997 and 1996 5 Notes to Condensed Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 11 PART II. OTHER INFORMATION 12
3 PART I. FINANCIAL INFORMATION OGLEBAY NORTON COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS SEPTEMBER 30 DECEMBER 31 1997 1996 ------------- ------------- (UNAUDITED) CURRENT ASSETS Cash and cash equivalents $ 14,888,530 $ 21,850,282 Marketable securities 898,475 Accounts receivable, less reserve for doubtful accounts (1997-$601,000 1996-$512,000) 29,358,575 27,909,834 Inventories Raw materials and finished products 3,406,109 3,003,079 Operating supplies 3,500,425 3,534,003 ------------- ------------- 6,906,534 6,537,082 Deferred income taxes 3,425,573 3,214,573 Prepaid insurance and other expenses 3,464,212 1,650,620 ------------- ------------- TOTAL CURRENT ASSETS 58,043,424 62,060,866 PROPERTIES AND EQUIPMENT 322,522,000 300,074,691 Less allowances for depreciation and amortization 161,389,514 157,473,072 ------------- ------------- 161,132,486 142,601,619 PREPAID PENSION COSTS AND OTHER ASSETS 37,190,336 31,550,923 ------------- ------------- $ 256,366,246 $ 236,213,408 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $ 8,722,545 $ 8,476,450 Accounts payable 4,140,310 7,003,035 Payrolls and other accrued compensation 5,858,814 6,915,055 Accrued expenses 9,948,474 9,485,216 Income taxes 2,134,750 1,620,176 ------------- ------------- TOTAL CURRENT LIABILITIES 30,804,893 33,499,932 LONG-TERM DEBT, less current portion 41,061,242 28,664,675 POSTRETIREMENT BENEFITS OBLIGATIONS 24,418,070 24,675,900 OTHER LONG-TERM LIABILITIES 21,864,867 20,272,081 DEFERRED INCOME TAXES 23,557,821 22,651,821 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 7,253,332 shares 7,253,332 7,253,332 Additional capital 6,214,299 5,849,177 Unrealized gains 410,447 Retained earnings 135,765,305 125,960,692 ------------- ------------- 149,232,936 139,473,648 Treasury stock, at cost - 2,501,152 and 2,417,958 shares at respective dates (33,739,795) (31,833,524) Unallocated Employee Stock Ownership Plan shares (833,788) (1,191,125) ------------- ------------- $ 114,659,353 $ 106,448,999 ------------- ------------- $ 256,366,246 $ 236,213,408 ============= =============
See notes to condensed consolidated financial statements. -3- 4 OGLEBAY NORTON COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended September 30 September 30 ------------------------------ ------------------------------ 1997 1996 1997 1996 ------------- ------------- ------------- ------------- REVENUES Net sales $ 20,968,701 $ 19,032,184 $ 60,257,307 $ 55,922,581 Operating revenues 32,424,231 30,647,498 64,130,740 57,371,256 ------------- ------------- ------------- ------------- 53,392,932 49,679,682 124,388,047 113,293,837 COSTS AND EXPENSES Cost of goods sold 14,641,880 12,742,896 41,636,299 39,401,938 Operating expenses 20,908,107 21,955,205 43,792,081 43,887,370 Depreciation and amortization 3,340,682 4,149,918 7,677,925 9,454,934 General, administrative and selling expenses 4,180,783 3,843,381 12,464,200 11,969,609 Loss on sale of production capacities and shutdown of facilities 1,077,845 1,077,845 ------------- ------------- ------------- ------------- 43,071,452 43,769,245 105,570,505 105,791,696 ------------- ------------- ------------- ------------- INCOME FROM OPERATIONS 10,321,480 5,910,437 18,817,542 7,502,141 Gain on sale of assets 36,700 509,139 826,567 2,387,703 Interest, dividends and other income 242,377 493,175 1,971,065 2,125,763 Other expense (627,320) (465,707) (2,003,080) (1,536,397) Interest expense (849,991) (775,073) (2,094,394) (2,432,842) ------------- ------------- ------------- ------------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 9,123,246 5,671,971 17,517,700 8,046,368 Income taxes 2,476,000 918,127 5,080,000 1,138,213 ------------- ------------- ------------- ------------- INCOME FROM CONTINUING OPERATIONS 6,476,246 4,753,844 12,437,700 6,908,155 Discontinued operations 1,307,494 3,391,880 ------------- ------------- ------------- ------------- NET INCOME $ 6,476,246 $ 6,061,338 $ 12,437,700 $ 10,300,035 ============= ============= ============= ============= Income per share of common stock: Continuing operations $ 1.36 $ .98 $ 2.59 $ 1.41 Discontinued operations .27 .70 ------------- ------------- ------------- ------------- NET INCOME PER SHARE OF COMMON STOCK $ 1.36 $ 1.25 $ 2.59 $ 2.11 ============= ============= ============= ============= DIVIDENDS PER SHARE OF COMMON STOCK $ .20 $ .18 $ .55 $ .48 ============= ============= ============= ============= Average number of shares of Common Stock outstanding 4,763,736 4,865,358 4,793,398 4,889,670
See notes to condensed consolidated financial statements. -4- 5 OGLEBAY NORTON COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30 ---------------------------- 1997 1996 ------------ ------------ OPERATING ACTIVITIES Net income $ 12,437,700 $ 10,300,035 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,677,925 9,454,934 Deferred income taxes 165,000 Gain on sale of assets (826,567) (1,762,702) Gain on sale of business (625,000) Loss on sale of production capacities and shutdown of facilities 1,077,845 Prepaid pension costs and other assets (2,701,976) (2,099,982) Deferred vessel maintenance costs (1,472,923) (2,994,858) (Increase) decrease in accounts receivable (1,448,741) 670,119 (Increase) decrease in inventories (150,549) 942,814 Decrease in accounts payable (2,866,810) (1,140,988) Decrease in payrolls and other accrued compensation (810,326) (2,238,077) Increase in income taxes 514,574 4,792,862 Operating activities of discontinued operations - net (9,760,651) Other operating activities 245,745 401,208 ------------ ------------ NET CASH PROVIDED BY OPERATING ACTIVITIES 10,598,052 7,182,559 INVESTING ACTIVITIES Capital expenditures (25,363,219) (4,733,003) Proceeds from sale of assets 1,363,824 4,783,776 Acquisition of businesses (1,600,000) ------------ ------------ NET CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES (25,599,395) 50,773 FINANCING ACTIVITIES Additional long-term debt 17,000,000 Payments on long-term debt (4,357,338) (4,357,337) Payments of dividends (2,633,087) (2,316,150) Purchases of Treasury Stock (1,969,984) (1,713,791) ------------ ------------ NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 8,039,591 (8,387,278) ------------ ------------ Decrease in cash and cash equivalents (6,961,752) (1,153,946) CASH AND CASH EQUIVALENTS, JANUARY 1 21,850,282 22,660,436 ------------ ------------ CASH AND CASH EQUIVALENTS, SEPTEMBER 30 $ 14,888,530 $ 21,506,490 ============ ============
See notes to condensed consolidated financial statements. -5- 6 OGLEBAY NORTON COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying unaudited condensed consolidated 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 condensed consolidated 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. The accompanying condensed consolidated financial statements have been reclassified to report separately the 1996 operating results of discontinued iron ore operations. Additionally, certain amounts in the prior year have been reclassified to conform with the 1997 condensed consolidated financial statement presentation. For further information, refer to the consolidated financial statements and notes thereto included in the Registrant's 1996 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 August 27, 1997, the Registrant declared a two-for-one stock split in the form of a 100% stock dividend to stockholders of record as of October 10, 1997. This stock split has been recorded as of September 30, 1997 by a transfer, for all periods presented, of $3,627,000 from additional capital to common stock, representing a $1.00 par value for each additional share issued. All references in the accompanying Condensed Consolidated Financial Statements and related Notes and Management's Discussion and Analysis referring to shares and per share amounts have been adjusted retroactively for the stock split. 4. Current and foreseeable future conditions on the Great Lakes discourage construction of new Great Lakes vessels due to the significant capital costs involved. As a result of the Registrant's preventative maintenance actions, the estimated useful lives for certain vessels in its fleet are longer than the current depreciable lives. Furthermore, recent sales of inactive or older Great Lakes vessels have demonstrated a large demand for such vessels at market values in excess of the current salvage values assigned to these vessels. Therefore, effective January 1, 1997, the Registrant extended the estimated useful lives and increased the estimated salvage values of these vessels. The effect of these changes in estimate reduced depreciation by $1,129,000 and $2,246,000 for the three months and nine months ended September 30, 1997, respectively. The effect of these changes increased net income by $745,000 ($.16 per share) and $1,482,000 ($.31 per share) for the three months and nine months ended September 30, 1997. These changes in estimate will reduce depreciation by $3,178,000 and increase net income by $2,097,000 for the year ending December 31, 1997. 5. On January 2, 1997, the Registrant's Industrial Sands segment acquired certain property and assets of a sand screening plant in Bakersfield, California. The Bakersfield plant buys and screens sand to supply specialty grades and sizes. 6. On March 19, 1997, the Registrant's wholly-owned subsidiary, Oglebay Norton Terminals, Inc., executed an agreement with the Cleveland-Cuyahoga County Port Authority to lease and operate a bulk commodity transfer dock located at the Port of Cleveland, just west of the Cuyahoga River in Cleveland, Ohio. The dock, now known as the Cleveland Bulk Terminal, commenced operations on April 1, 1997. The Registrant intends to use the dock as a transfer point for iron ore pellets, limestone, coal and other commodities and has guaranteed up to $6,075,000 in base rent over the ten-year term of the lease. -6- 7 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 7. On May 22, 1997, the Registrant's Industrial Sands segment acquired certain property and assets of a supplier of blended sand and organic mixes. The new operation, operating as Kurtz Sports Turf, supplies blended sands for end users such as golf courses, playgrounds, parks and sports fields. 8. On June 11, 1997 the Registrant purchased two 630 foot long, self-unloading vessels, the M/V Wolverine and the M/V David Z. Norton for $17,000,000. These vessels had been operated as part of the Company's fleet for over 20 years under lease agreements that were due to expire within the next two years. The acquisitions were initially financed through a $15,000,000 borrowing against the Registrant's Revolving Credit facility. The borrowing against the Revolving Credit facility was replaced with a $17,000,000 fixed rate 7.32% term loan in July 1997. The loan is payable $750,000 (including interest) semiannually beginning January 14, 1998 through July 14, 2002; $1,350,000 (including interest) payable semiannually from January 14, 2003 through January 14, 2007 and a final payment of $7,805,000 (including interest) due on July 14, 2007. 9. In 1997, the Financial Accounting Standards Board (FASB) issued Statement No. 128, "Earnings Per Share" (FAS 128), which is effective for financial statements issued for periods ending after December 15, 1997. FAS 128 establishes new computation and presentation requirements for earnings per share. The Registrant must adopt FAS 128 for 1997 and believes that impact on earnings per share will not be material. In addition, the FASB issued Statement No. 130, "Reporting Comprehensive Income" (FAS 130), and Statement No. 131, "Disclosure about Segments of an Enterprise and Related Information" (FAS 131). FAS 130 establishes standards for reporting comprehensive income and FAS 131 requires reporting certain information about operating segments. These statements, which must be adopted by the Registrant no later than 1998, are not expected to have a material effect on the Registrant's consolidated financial statements. 10. In July 1996, the Registrant's Engineered Materials subsidiary executed agreements to sell its refractory shapes and coatings production capacities. A pretax loss of $1,078,000 was recorded during the third quarter of 1996 to recognize the sale of these production capacities and shutdown the Cleveland facility that manufactured these products. 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. This discussion may contain statements concerning certain trends and other forward-looking information affecting or relating to the Registrant that are intended to qualify for the protections afforded "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in such forward-looking statements contained herein because of a variety of factors, including but not limited to: (1) weather conditions affecting Marine Transportation; (2) unanticipated fluctuations in oil prices; (3) unanticipated changes in the demand for the Registrant's products or services due to changes in technology; (4) vessel service availability; (5) continuation of United States cabotage laws; (6) labor unrest; and, (7) loss or bankruptcy of major customers. -7- 8 FINANCIAL CONDITION ------------------- The Registrant's operating activities provided cash of $10,598,000 in the first nine months of 1997 compared with $7,183,000 for the same period in 1996. The increase in cash provided by operating activities resulted primarily from the Registrant's discontinued Iron Ore segment. The operating activities of the iron ore operations, sold at the end of 1996, used cash of $9,761,000 through the first nine months of 1996. Vessel maintenance costs, which are deferred and amortized over the Marine Transportation sailing season, totaled $1,473,000 and $2,995,000 as of September 30, 1997 and 1996, respectively. The decrease in vessel maintenance costs is a result of improved weather conditions during 1997 compared with 1996. During 1996, the Registrant's vessel fleet experienced severe weather and heavy ice conditions on the Great Lakes and connecting rivers causing damage to the vessels, which increased maintenance and repair costs. Accounts receivable increased by $1,449,000 during the nine months ended September 30, 1997 compared with a decrease of $670,000 for the same period of 1996. Accounts receivable balances increased during the first nine months of 1997 due to higher sales and operating revenues experienced during the third quarter of 1997 compared with the third quarter of 1996. Income taxes payable increased by $515,000 during the first nine months of 1997 compared with an increase of $4,793,000 for the same period in 1996. The change in income taxes payable was principally due to the receipt of a state income tax refund received during February 1996. The refund was recognized ratably during 1996 through a lower effective tax rate. No such refund was received during 1997. Operating results of the Registrant's business segments are discussed in more detail under "RESULTS OF OPERATIONS". Expenditures for property and equipment were $25,363,000 through the first nine months of 1997 compared with $4,733,000 for the same period in 1996. As disclosed in note 8 of the Notes To Condensed Consolidated Financial Statements, the Registrant purchased two Marine Transportation vessels in June 1997. Additionally, the Registrant expended $2,260,000 for vessel inspection costs in the first nine months of 1997. No vessel inspections were required in 1996. In the first nine months of 1997, the Registrant received $933,000 on the sale of marketable securities compared with $2,050,000 during the same period of 1996. The Registrant currently holds no marketable securities. Additionally, the Registrant received $2,709,000 on the sale of certain inactive properties during 1996. No such transactions have taken place in the first nine months of 1997. The Registrant made long-term debt payments of $4,357,000 in both the first nine months of 1997 and 1996. During July 1997, the Registrant financed the acquisition of two Marine Transportation vessels with a $17,000,000, fixed rate (7.32%), term loan. The Registrant declared dividends of $.55 during the first nine months of 1997 compared with $.48 during the first nine months of 1996. During the third quarter of 1997 the Registrant's Board of Directors approved a $.025 per share increase in the quarterly dividend to $.20 per share of Common Stock. Dividends paid were $2,633,000 for the first nine months of 1997 compared with $2,316,000 for the same period of 1996. The Registrant purchased on the open market, and placed in treasury, 87,990 shares of its Common Stock for $1,970,000 in the first nine months of 1997 and 82,888 shares for $1,714,000 in the first nine months of 1996. Anticipated cash flows from operations and current financial resources are expected to meet the Registrant's needs during the remainder of 1997. All financing alternatives are under constant review to determine their ability to provide sufficient funding at the least possible cost. -8- 9 RESULTS OF OPERATIONS --------------------- NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1996 The Registrant's income from operations improved in the first nine months of 1997 to a level of $18,818,000 on revenues of $124,388,000, compared with $7,502,000 on revenues of $113,294,000 for the same period in 1996. Income from continuing operations improved 80% to a level of $12,438,000 ($2.59 per share) for the first nine months of 1997 compared with $6,908,000 ($1.41 per share) for the first nine months of 1996. Net income for the first nine months of 1997 was $12,438,000 ($2.59 per share) compared with $10,300,000 ($2.11 per share) for the same period in 1996. Interest expense declined by $338,000, or 14%, in the first nine months of 1997, compared with the same period in the prior year, due to a reduction in debt through June 1997. Interest expense through the first nine months of 1997 includes $266,000 of interest related to the $17,000,000 in new borrowings as described in Note 8 of the Notes to Condensed Consolidated Financial Statements. Operating results of the Registrant's business segments for the nine months ended September 30, 1997 and 1996 are discussed below. It is the policy of the Registrant to allocate a portion of corporate general and administrative expenses to its business segments. Corporate general and administrative expenses for the first nine months of 1996, which were previously allocated to discontinued operations, have been reallocated to the remaining business segments. Operating revenues for the Registrant's Marine Transportation business segment increased 12% to $64,131,000 for the first nine months of 1997 compared with $57,371,000 for the same period in 1996. The segment's operating profit increased to $13,613,000 for the first nine months of 1997 compared with $4,967,000 for the same period in 1996. When compared with the first nine months of 1996, the segment has experienced favorable fuel prices, strong customer demand, more favorable weather conditions and higher water levels, allowing the vessels to carry increased tonnage. The start of the 1996 sailing season was plagued by heavy ice conditions in the rivers and upper Great Lakes region. As a result, the segment's operating profit for the first nine months of 1996 was adversely impacted by increased labor and repair charges. The segment's operating profit for the first nine months of 1997 was also favorably impacted by $2,937,000 resulting from the decrease in depreciation and reduction in charter fees, as discussed in Notes 4 and 8, respectively, of the Notes To Condensed Consolidated Financial Statements. Net sales for the Registrant's Industrial Sands business segment amounted to $37,833,000 for the first nine months of 1997, an 18% increase over sales of $32,135,000 for the first nine months of 1996. The segment's operating profit for the first nine months of 1997 increased 35%, to a level of $8,961,000 compared with $6,659,000, for the same period of 1996. Operating results of the segment's Texas and California operations had very solid performances during the first nine months of 1997. The Texas operations continue to experience strong demand for high-quality frac sand by the oil and gas well service markets. The segment's Orange County operations improved due to strong demand for its products from the construction industry in southern California. The additions of the Bakersfield and Kurtz Sports Turf operations, as disclosed in Notes 5 and 7, respectively, of the Notes To Condensed Consolidated Financial Statements, also enhanced the segment's operating results. -9- 10 RESULTS OF OPERATIONS (CONTINUED) --------------------- NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1996 Net sales for the Registrant's Engineered Materials segment amounted to $22,424,000 for the first nine months of 1997 compared with $23,134,000 with the same period in the prior year. The segment's operating loss for the first nine months of 1997 was $682,000 compared with $63,000 for the same period in the prior year. Metallurgical treatment products sales increased by 38% as a result of the Registrant's acquisition of the Kingsford Heights, Indiana operation late in 1996. Operating profit percentages for this product line declined, however, primarily as a result of higher raw material costs. The increase in metallurgical treatment products sales was offset by reductions in refractory shapes and coatings, and ingot hot top sales of $2,910,000 and $2,685,000 , respectively. Operating profit for the refractory shapes and coatings, and ingot hot top product lines decreased by 47% and 49%, respectively as a result of the decline in volumes. The refractory shapes and coatings production capacities were sold in July 1996. Ingot hot tops volume declined more rapidly than expected, as the Registrant is one of the few remaining suppliers of hot tops to steel producers who have not shifted to the continuous casting process. A decision whether to consolidate the Registrant's hot top operations into one facility is expected by the end of the year. THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1996 The Registrant's income from operations improved 75% in the third quarter of 1997 to $10,321,000, on revenues of $53,393,000, compared to $5,910,000, on revenues of $49,680,000 for the same period of 1996. Income from continuing operations was $6,476,000 ($1.36 per share) for the third quarter of 1997 compared with $4,754,000 ($.98 per share) for the same period of 1996. Net income was $6,476,000 ($1.36 per share) compared with net income of $6,061,000 ($1.25 per share) for the same quarter of 1996. The increases in 1997 consolidated revenues and net income can be attributed to the favorable weather conditions and high water levels experienced by the Registrant's Marine Transportation fleet, as well as a strong demand for the Registrant's Industrial Sands products by the oil and gas well service markets in Texas and California and the strong construction market in southern California, as previously discussed. Interest expense increased by $75,000, or 10%, in the third quarter of 1997, compared to the same quarter in the prior year, due to the increase in debt related to the acquisition of the Registrant's Marine Transportation vessels, as described in Note 8 of the Notes To Condensed Consolidated Financial Statements. Operating results of the Registrant's business segments for the third quarter ended September 30, 1997 and 1996 are discussed below. The comments set forth above in the nine months comparison of 1997 with 1996 generally apply, except as noted, when comparing the third quarter of 1997 to the same period in 1996. Operating revenues for the Registrant's Marine Transportation business segment of $32,424,000 for the third quarter of 1997 increased 6% compared with $30,647,000 for the third quarter of 1996. The segment's operating profit was $8,579,000 for the third quarter of 1997 compared with $4,875,000 for the third quarter of 1996. The segment's operating profit for the quarter ended September 30, 1997 was favorably impacted by $1,820,000 due to the decrease in depreciation and reduction in charter fees, as discussed in Notes 4 and 8, respectively, of the Notes To Condensed Consolidated Financial Statements. -10- 11 RESULTS OF OPERATIONS (CONTINUED) --------------------- THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1996 Net sales for the Registrant's Industrial Sands business segment amounted to $13,178,000 for the third quarter of 1997, a 17% increase from 1996 third quarter sales of $11,246,000. The segment's 1997 third quarter operating profit of $2,952,000 increased 6% from the 1996 third quarter profit of $2,789,000. Much of the improvement is attributable to the acquisitions earlier this year of the Bakersfield and Kurtz Sports Turf operations, as described in Notes 5 and 7, respectively, of the Notes to Condensed Consolidated Financial Statements. The addition of these operations resulted in a 16% increase in tons shipped and contributed to the change in the segment's product mix. Net sales for the Registrant's Engineered Materials business segment amounted to $7,791,000 for the third quarter of 1997, which was a 3% increase compared with $7,582,000 for the third quarter of 1996. The segment experienced an operating loss of $179,000 for the third quarter of 1997 compared with operating income of $219,000 for the same period of 1996. The new Warren, Ohio raw material facility, which is expected to improve quality and reduce costs in the production of metallurgical treatments, is in the start-up phase and is expected to be fully operational by the end of the year. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES - ------- ---------------------------------------- ABOUT MARKET RISK ----------------- Not applicable. PART II. OTHER INFORMATION - --------------------------- ITEM 5. OTHER INFORMATION - ------- ----------------- On August 27, 1997, the Registrant's Board of Directors authorized a two-for-one split of its Common Stock, $1.00 par value ("Common Stock"), to be effected by means of a 100% stock dividend distributed on October 30, 1997, to holders of record of its Common Stock on October 10, 1997 ("Stock Split"). The Stock Split also resulted in an adjustment to the rights issued under the Company's Amended and Restated Rights Agreement (the "Rights Agreement"). As a result of the Stock Split, the exercise payable under the Rights Agreement when the rights "flip-in" (as defined in the Rights Agreement) is reduced from $5.00 per share to $2.50 per share. -11- 12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. - ------- --------------------------------- (a) Exhibits (4)(a) - The Registrant is a party to instruments, copies of which will be furnished to the Securities and Exchange Commission upon request, defining the rights of holders of its long-term debt identified in Note H to the Consolidated Financial Statements to Registrant's Form 10-K for the year ended December 31, 1996 and which also include the $17,000,000 Credit Agreement, dated July 14, 1997 with National City Bank. (10)(i)(1)- Form of Amended and Filed herewith as Restated Director Stock Exhibit (10)(i)(1). Plan (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: November 14, 1997 By: --------------------------------- R. J. Kessler Vice President - Finance and Planning On behalf of the Registrant and as Principal Financial and Accounting Officer -12- EX-10.I.1 2 EXHIBIT 10(I)(1) 1 Exhibit 10(i)(1) OGLEBAY NORTON COMPANY AMENDED AND RESTATED DIRECTOR STOCK PLAN 1. PURPOSE. The Oglebay Norton Company Director Stock Plan (the "Plan") is designed to provide appropriate consideration to Directors and to further align their interests with those of the stockholders of the Company. 2. ELIGIBILITY. All current Directors of the Company (excluding Directors who are employees on the date of distribution of the shares of stock) and each person becoming a Director of the Company (excluding Directors who are employees on the date of distribution of the shares of stock) during the term of the Plan. 3. DIRECTOR STOCK GRANTS. Subject to Section 5, each nominee for election as a Director at the 1995 Annual Meeting of Stockholders elected as a Director and each other Director of the Company (excluding Directors who are employees) in office on the date of such meeting shall, subject to approval by the stockholders at the 1995 Annual Meeting of Stockholders, be granted an initial grant of 100 shares of Common Stock of the Company at the meeting of the Board of Directors immediately following the 1995 Annual Meeting of Stockholders. Each Director (excluding Directors who are employees on the date of distribution of the shares of stock) continuing in office shall thereafter be granted an additional 100 shares of Common Stock of the Company as of the meeting of the Company's Board of Directors next succeeding each Annual Meeting of the Company's Stockholders during the term of the Plan. No action by the Board of Directors or the Compensation and Organization Committee of the Board of Directors of the Company will be required to effect these Director stock grants. 4. COMMON STOCK AVAILABLE FOR DIRECTOR GRANTS. Subject to Section 5, the aggregate number of shares of Common Stock that may be subject to Director stock grants will be 15,000. 5. AMENDMENT AND ADJUSTMENTS. (a) AMENDMENT. The Board of Directors may amend, suspend, or terminate this Plan at any time, except that no amendments may be made more than once every six months, other than to comport with changes in the Internal Revenue Code, as amended, the Employee Retirement Income Security Act, or the rules thereunder and other relevant laws, rules and regulations. Stockholder approval for any such amendment will be required only to the extent necessary to preserve the exemption provided by Rule 16b-3 under the Securities and Exchange Act of 1934, as amended, for this Plan. 2 - 2 - (b) ADJUSTMENT. In the event that, subsequent to the date of the 1995 Annual Meeting of Stockholders, the outstanding shares of Common Stock are changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of any recapitalization, reclassification, stock split-up, stock dividend, or combination of shares, or the like, the number of shares of Common Stock granted annually pursuant to Section 3 of this Plan and the maximum number of shares set forth in Section 4 which may be subject to the Plan shall be adjusted accordingly from time to time as the Board of Directors, the Compensation and Organization Committee of the Board of Directors, or the officers of the Company shall deem appropriate. 6. EFFECTIVE AND TERMINATION DATES. This Plan will become effective on the date it is approved by holders of a majority of the shares of Common Stock of the Company present or represented, and entitled to vote at the 1995 Annual Meeting of Stockholders and will continue in effect until December 31, 2004. Amendment effective September 29, 1997 EX-27 3 EXHIBIT 27
5 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 14,888,530 0 29,358,575 601,000 6,906,534 58,043,424 322,522,000 161,389,514 256,366,246 30,804,893 41,061,242 0 0 7,253,332 107,406,021 256,366,246 60,257,307 124,388,047 41,636,299 105,570,505 2,003,080 0 2,094,394 17,517,700 5,080,000 12,437,700 0 0 0 12,437,700 2.59 2.59
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