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OGLEBAY NORTON CO /NEW/
10-Q, 2000-08-10
MINING & QUARRYING OF NONMETALLIC MINERALS (NO FUELS)

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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Delaware		34-1888342
(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)

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PART I. FINANCIAL INFORMATION		Page Number
Item 1
Condensed Consolidated Statement of Operations (Unaudited) – Three Months Ended June 30,      2000 and 1999 and Six Months Ended June 30, 2000 and 1999		3
Condensed Consolidated Balance Sheet (Unaudited) - June 30, 2000 and December 31, 1999		4
Condensed Consolidated Statement of Cash Flows (Unaudited) – Six Months Ended June 30,      2000 and 1999		5
Notes to Condensed Consolidated Financial Statements		6 -11
Item 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations		12-21
Item 3
Quantitative and Qualitative Disclosures About Market Risk		21
PART II. OTHER INFORMATION
Item 6
Exhibits and Reports on Form 8-K		22

		Three Months Ended June 30						Six Months Ended June 30
		2000			1999			2000			1999
		(UNAUDITED)
NET SALES AND OPERATING REVENUES		$98,532			$86,657			$146,833			$131,745
COSTS AND EXPENSES
Cost of goods sold and operating expenses		63,918			56,619			96,630			87,590
Depreciation, depletion and amortization		8,882			8,069			14,243			12,985
General, administrative and selling expenses		7,697			5,675			15,358			11,929
		80,497			70,363			126,231			112,504
OPERATING INCOME		18,035			16,294			20,602			19,241
Gain (loss) on disposition of assets		29			( 1	)		173			( 3	)
Interest expense		(8,222	)		(7,982	)		(15,131	)		(15,321	)
Other (expense) income – net		( 202	)		( 87	)		( 228	)		87
INCOME BEFORE INCOME TAXES		9,640			8,224			5,416			4,004
Income taxes		3,148			2,347			1,734			1,142
NET INCOME		$  6,492			$  5,877			$    3,682			$    2,862
NET INCOME PER SHARE – BASIC		$    1.30			$    1.21			$      0.74			$      0.59
NET INCOME PER SHARE – ASSUMING DILUTION		$    1.30			$    1.21			$      0.74			$      0.59
DIVIDENDS PER SHARE OF COMMON STOCK		$    0.20			$    0.20			$      0.40			$      0.40

		(UNAUDITED)
		June 30 2000			December 31 1999
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$      -0-			$      -0-
Accounts receivable, less reserve for doubtful accounts (2000-$1,381; 1999-$1,200)		61,972			46,088
Income tax receivable		1,197			1,197
Inventories		37,064			32.074
Deferred income taxes		2,385			2,384
Prepaid insurance and other expenses		13,138			5,523
TOTAL CURRENT ASSETS		115,756			87,896
PROPERTY AND EQUIPMENT		687,752			565,052
Less allowances for depreciation, depletion and amortization		247,563			211,656
		440,189			353,396
GOODWILL (net of accumulated amortization of $6,873 in 2000 and $3,711in 1999)		65,518			75,138
PREPAID PENSION COSTS		36,845			34,895
OTHER ASSETS		18,672			16,774
TOTAL ASSETS		$676,980			$568,099
LIABILITIES AND STOCKHOLDERS’ EQUITY
		(UNAUDITED)
		June 30 2000			December 31 1999
CURRENT LIABILITIES
Current portion of long-term debt		$    4,395			$    4,991
Accounts payable		17,174			13,208
Payrolls and other accrued compensation		8,371			10,878
Accrued expenses		10,902			10,461
Accrued interest expense		9,425			5,853
Income taxes payable		3,768			3,774
TOTAL CURRENT LIABILITIES		54,035			49,165
LONG-TERM DEBT, less current portion		381,895			296,715
POSTRETIREMENT BENEFITS OBLIGATIONS		38,301			25,856
OTHER LONG-TERM LIABILITIES		19,641			17,550
DEFERRED INCOME TAXES		39,587			37,804
STOCKHOLDERS’ EQUITY
Common stock, par value $1 per share, authorized 10,000 shares; issued 7,253      shares;		7,253			7,253
Additional capital		9,432			9,112
Retained earnings		158,314			156,617
Accumulated other comprehensive expense		( 107	)		( 111	)
		174,892			172,871
Treasury stock, at cost – 2,287 and 2,434 shares at respective dates		(31,371	)		(31,862	)
		143,521			141,009
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$676,980			$568,099

		Six Months Ended June 30
		2000			1999
		(UNAUDITED)
OPERATING ACTIVITIES
Net income		$    3,682			$    2,862
Adjustments to reconcile net income to net cash used for operating activities:
Depreciation, depletion and amortization		14,243			12,985
Deferred income taxes		1,783			998
(Gain) loss on disposition of assets		(173	)		3
Increase in prepaid pension costs		(1,950	)		(2,496	)
Deferred vessel maintenance costs		(5,539	)		(5,924	)
Increase in accounts receivable		(10,518	)		(10,190	)
Increase in inventories		(777	)		(110	)
Increase in accounts payable		2,214			1,180
Decrease in payrolls and other accrued compensation		(4,709	)		(3,343	)
Increase (decrease) in accrued expenses		731			(1,431	)
Increase in accrued interest		3,507			184
(Decrease) increase in income taxes payable		(6	)		711
Other operating activities		(2,752	)		(1,108	)
NET CASH USED FOR OPERATING ACTIVITIES		(264	)		(5,679	)
INVESTING ACTIVITIES
Capital expenditures		(16,887	)		( 16,555	)
Acquisition of businesses		( 62,434	)		(13,367	)
Proceeds from the disposition of assets		192			7
NET CASH USED FOR INVESTING ACTIVITIES		(79,129	)		(29,915	)
FINANCING ACTIVITIES
Repayments on long-term debt		(283,324	)		(62,087	)
Additional long-term debt		365,973			98,905
Financing costs		(1,141	)		(746	)
Payments of dividends		(1,986	)		(1,918	)
Purchases of treasury stock		(134	)		(319	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		79,388			33,835
Effect of exchange rate changes on cash and cash equivalents		5			557
Decrease in cash and cash equivalents		-0-			(1,202	)
CASH AND CASH EQUIVALENTS, JANUARY 1		-0-			1,940
CASH AND CASH EQUIVALENTS, JUNE 30		$      -0-			$      738

 

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 Company, however, believes that all adjustments considered necessary for a fair presentation of the results of operations for such periods have been made. Additionally, certain amounts in the prior year have been reclassified to conform with the 2000 condensed consolidated financial statement presentation. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s 1999 Annual Report on Form 10-K.

The condensed consolidated balance sheet at December 31, 1999 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.

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 Company’s business. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the Company’s condensed consolidated financial statements. Actual results could differ from those estimates and assumptions.

3.

In the second quarter of 2000, the Company acquired all of the partnership interests in Michigan Limestone Operations Limited Partnership (“Michigan Limestone”) for: $53,000,000 in cash; $8,247,000 in assumed debt; and contingent payments subject to achieving certain operating performance parameters over the next decade. Of the assumed debt, $6,314,000 was refinanced at closing. The business has two facilities in Michigan that supply high calcium and dolomitic limestone to a wide variety of users including the construction, energy and steel industries. Both facilities have access to the Great Lakes and ship essentially all their output by vessel. The assets and results of operations of Michigan Limestone are included within the Company’s Lime and Limestone segment.

In conjunction with the Michigan Limestone acquisition, the Company entered into a new three-year $118,000,000 Term Loan with its banking group and extended its existing $232,000,000 Senior Credit Facility by two years. Both facilities expire on April 3, 2003 and do not require any amortization of principal. The pricing features and covenants of the new Term Loan are the same as the existing Senior Credit Facility. Both credit facilities are senior to the Company’s $100,000,000 Senior Subordinated Notes issued in 1999.

In the first quarter of 1999, the Company’s Lime and Limestone segment acquired the assets of the W.S. Frey Company (“Global Stone Winchester”) for $12,008,000 in cash and shares of the Company’s common stock, issued from treasury, having a guaranteed value of $1,500,000. Consideration for the acquisition also included non-competition and royalty payments of $3,500,000 of which $510,000 was paid at the date of acquisition. Global Stone Winchester operates a high purity limestone quarry and lime works and is located near two other of the Company’s operations. In the fourth quarter of 1999, the Company acquired the assets of Franklin Industries’ Mica business (renamed Oglebay Norton Specialty Minerals, Inc. (“Specialty Minerals”)) for $31,600,000 in cash. The business has two operations in the United States (North Carolina and New Mexico) and consists of mining reserves, production facilities, equipment and other assets used in the mining, processing, and distribution of mica.

All acquisitions were accounted for under the purchase method. The results of operations for these acquired businesses are included in the consolidated financial statements from the respective dates of acquisition. The purchase prices have been or will be allocated based on estimated fair values at the dates of acquisition. Assuming the above acquisitions had taken place at the beginning of 1999, proforma results for 2000 and 1999 would not differ materially from the Company’s actual results.

In the third quarter of 1999, the Company sold in separate transactions the stock of its (i) Global Stone Detroit Lime Company (“Detroit Lime”) and (ii) Global Stone Ingersoll Ltd. (“Ingersoll”) subsidiaries. The sale of Detroit Lime was completed in August 1999 with net proceeds of $15,250,000. The sale of Ingersoll was completed in September 1999 with net proceeds of $45,700,000. The combined net proceeds of $60,950,000 were used to reduce amounts outstanding on the Company’s Senior Credit Facility. The sales of Detroit Lime and Ingersoll were agreed to in principle within one year of their respective acquisition dates thus allowing the Company to record the transaction as an adjustment to the purchase price of Global Stone and reduce goodwill by $23,300,000 for the difference between the sale proceeds and the net book values of Detroit Lime and Ingersoll.

In the third quarter of 1999, the Company sold a dock located in Detroit, Michigan for $1,985,000 in cash. The sale resulted in a pretax gain of $1,642,000 (net gain of $1,067,000 or $0.22 per share, assuming dilution). In the fourth quarter of 1999, the Company sold an inactive coal property for $1,520,000 in cash. The sale resulted in a pretax and net gain of $1,836,000 (or $0.37 per share, assuming dilution).

4.	The following table sets forth the reconciliation of the Company’s net income to its comprehensive income (in thousands):

		Three Months Ended June 30					Six Months Ended June 30
		2000			1999		2000			1999
Net income		$6,492			$5,877		$3,682			$2,862
Other comprehensive income:
Foreign currency translation adjustments		(5	)		425		(18	)		950
Comprehensive income		$6,487			$6,302		$3,664			$3,812

The calculation of net income per share follows (in thousands, except per share amounts):

		Three Months Ended June 30				Six Months Ended June 30
		2000		1999		2000		1999
Net income per share-basic:
Net income		$6,492		$5,877		$3,682		$2,862
Average number of shares outstanding		4,977		4,846		4,968		4,818
Net income per share-basic		$  1.30		$  1.21		$  0.74		$  0.59

		Three Months Ended March 31				Six Months Ended June 30
		2000		1999		2000		1999
Net income per share-assuming dilution:
Net income		$6,492		$5,877		$3,682		$2,862
Average number of shares outstanding		4,977		4,846		4,968		4,818
Dilutive effect of stock plans		33		14		32		14
Adjusted average number of shares outstanding		5,010		4,860		5,000		4,832
Net income per share- assuming dilution		$  1.30		$  1.21		$  0.74		$  0.59

The Company supplies essential natural resources to industrial and commercial customers. Through its three operating segments — Lime and Limestone, Industrial Sands and Marine Services — the Company serves customers, through a direct sales force, in a wide range of industries, including building materials, energy, environmental and industrial.

The following table sets forth the operating segment information as of and for the three months ended June 30, 2000 and 1999 (in thousands):

		Lime and Limestone		Industrial Sands			Marine Services		Total Segments			Corporate and Other			Consolidated
2000
Identifiable assets		$377,114		$63,505			$145,568		$586,187			$90,793			$676,980
Depreciation, depletion and amortization expense		5,058		1,290			2,262		8,610			272			8,882
Capital expenditures		4,430		1,558			2,438		8,426			292			8,718
Net sales and operating revenues		$  49,200		$16,183			$  29,081		$  94,464			$  4,068			$  98,532
Intersegment sales							1,610		1,610			(1,610)
Total net sales and operating revenues		$  49,200		$16,183			$  30,691		$  96,074			$  2,458			$  98,532
Operating income (loss)		$  10,661		$  3,902			$    3,871		$  18,434			$    (399	)		$  18,035
(Loss) gain on disposition of assets		(4	)	14					10			19			29
Interest expense												(8,222	)		(8,222	)
Other expense – net												(202	)		(202	)
Income (loss) before income taxes		$  10,657		$  3,916			$    3,871		$  18,444			$(8,804	)		$ 9,640
1999
Identifiable assets		$339,920		$56,082			$146,203		$542,205			$53,762			$595,967
Depreciation, depletion and amortization expense		4,648		1,156			2,223		8,027			42			8,069
Capital expenditures		6,045		948			2,357		9,350			79			9,429
Net sales and operating revenues		$  43,998		$12,789			$  29,870		$  86,657						$  86,657
Operating income (loss)		$    7,549		$  2,523			$    7,126		$  17,198			$    (904	)		$  16,294
Loss on disposition of assets				(1	)				(1	)					(1	)
Interest expense												(7,982	)		(7,982	)
Other expense – net												(87	)		(87	)
Income (loss) before income taxes		$    7,549		$  2,522			$    7,126		$  17,197			$(8,973	)		$    8,224

The following table sets forth the operating segment information as of and for the six months ended June 30, 2000 and 1999 (in thousands):

		Lime and Limestone			Industrial Sands		Marine Services		Total Segments		Corporate and Other			Consolidated
2000
Identifiable assets		$377,114			$63,505		$145,568		$586,187		$  90,793			$676,980
Depreciation, depletion and amortization expense		8,528			2,535		2,292		13,355		888			14,243
Capital expenditures		9,303			2,927		4,245		16,475		412			16,887
Net sales and operating revenues		$  78,499			$28,802		$  31,559		$138,860		$    7,973			$146,833
Intersegment sales							1,610		1,610		(1,610	)
Total net sales and operating revenues		$  78,499			$28,802		$  33,169		$140,470		$    6,363			$146,833
Operating income (loss)		$  13,562			$  5,457		$    3,660		$  22,679		$  (2,077	)		$  20,602
(Loss) gain on disposition of assets		(4	)		13				9		164			173
Interest expense											(15,131	)		(15,131	)
Other expense – net											(228	)		(228	)
Income (loss) before income taxes		$  13,558			$  5,470		$    3,660		$ 22,688		$(17,272	)		$    5,416
1999
Identifiable assets		$339,920			$56,082		$146,203		$542,205		$  53,762			$595,967
Depreciation, depletion and amortization expense		8,353			2,310		2,244		12,907		78			12,985
Capital expenditures		10,810			1,732		3,855		16,397		158			16,555
Net sales and operating revenues		$  76,038			$23,260		$  32,447		$131,745					$131,745
Operating income (loss)		$  10,349			$  3,903		$    7,150		$  21,402		$  (2,161	)		$  19,241
Gain (loss) on disposition of assets					22				22		(25	)		(3	)
Interest expense											(15,321	)		(15,321	)
Other income – net											87			87
Income (loss) before income taxes		$  10,349			$  3,925		$    7,150		$  21,424		$(17,420	)		$    4,004

        Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain statements concerning certain trends and other forward-looking information, within the meaning of the federal securities laws. Such forward-looking statements are subject to uncertainties and factors relating to the Company’s operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company. The Company believes that the following factors, among others, could affect its future performance and cause actual results to differ materially from those expressed or implied by forward-looking statements made by or on behalf of the Company: (1) unfavorable weather conditions and/or the continuation of lower water levels; (2) fluctuations in oil prices; (3) a decline in steel production; (4) changes in the demand for the Company’s products or services due to changes in technology; (5) a decline in Great Lakes, Mid-Atlantic and California construction activity; (6) the outcome of negotiations of labor agreements; (7) the loss or bankruptcy of major customers; and (8) changes in environmental laws. Fluctuations in oil prices have both a positive and negative impact on the Company. High oil prices generally result in more drilling activity, positively impacting our Industrial Sands business segment, while at the same time increasing the Marine Services fleet’s operating costs.         Due to the seasonal nature of certain aspects of the Company’s business, the operating results and cash flows for the first six months of the year are not necessarily indicative of the results to be expected for the full year.         In the second quarter of 2000, the Company acquired all of the partnership interests in Michigan Limestone Operations Limited Partnership (“Michigan Limestone”) for: $53,000,000 in cash; $8,247,000 in assumed debt; and contingent payments subject to achieving certain operating performance parameters over the next decade. Of the assumed debt, $6,314,000 was refinanced at closing. The business has two facilities in Michigan that supply high calcium and dolomitic limestone to a wide variety of users including the construction, energy and steel industries. Both facilities have access to the Great Lakes and ship essentially all their output by vessel. The assets and results of operations of Michigan Limestone are included within the Company’s Lime and Limestone segment.         In conjunction with the Michigan Limestone acquisition, the Company entered into a new three-year $118,000,000 Term Loan with its banking group and extended its existing $232,000,000 Senior Credit Facility by two years. Both facilities expire on April 3, 2003 and do not require any amortization of principal. The pricing features and covenants of the new Term Loan are the same as the prior Senior Credit Facility. Both credit facilities are senior to the Company’s $100,000,000 Senior Subordinated Notes issued in 1999.         In December 1999 the Company acquired the assets of Franklin Industries’ Mica business (subsequently renamed Oglebay Norton Specialty Minerals Inc. (“ Specialty Minerals”)) for a purchase price of $31,600,000. Specialty Minerals is included with “Corporate and Other” in operating segment information. Also in 1999, the Company acquired the assets of the W.S. Frey Company (“Global Stone Winchester”) for $12,008,000 in cash and shares of the Company’s common stock, issued from treasury, having a guaranteed value of $1,500,000. Consideration for the Global Stone Winchester acquisition also included non-compete and royalty payments of $3,500,000, of which $510,000 was paid at the acquisition date and the balance deferred. Global Stone Winchester is part of the Lime and Limestone segment.

        The above acquisitions were accounted for as business combinations applying the purchase method of accounting. Assuming the above acquisitions had taken place at the beginning of 1999, proforma results for 2000 and 1999 would not differ materially from the Company’s actual results. The purchase price allocations for Specialty Minerals were finalized in the second quarter of 2000 and the purchase price allocations for Michigan Limestone will be finalized in 2000 after the asset and liability valuations are completed.   

       During 1999, the Company sold in separate transactions the stock of its (i) Global Stone Detroit Lime Company (“Detroit Lime”) and (ii) Global Stone Ingersoll Ltd. (“Ingersoll”) subsidiaries to affiliates of Carfin S. A., a Belgian corporation and member of the Carmeuse Group. The sale of Detroit Lime netted proceeds of $15,250,000 in August 1999, while net proceeds of $45,700,000 were received on the sale of Ingersoll in September 1999. The combined net proceeds of $60,950,000 were used to reduce amounts outstanding on the Company’s Senior Credit Facility. The sales of Detroit Lime and Ingersoll were agreed to in principle within one year of their respective acquisition dates thus allowing the Company to record the transaction as an adjustment to the purchase price of Global Stone and reduce goodwill by $23,300,000 for the difference between the sale proceeds and the net book values of Detroit Lime and Ingersoll.

        The Company’s operating activities used cash of $264,000 in the first six months of 2000 compared with $5,679,000 used in the same period in 1999. The decrease in operating cash used resulted from the timing of interest payments and the improvement of earnings. Despite the relative comparability of interest expense in 2000 and 1999, the Company made less interest payments in 2000 as the result of the timing of payments on the new Term Loan. The other factors increasing cash are the increase in net income, which is up $820,000, coupled with an increase in non-cash charges for depreciation, which are $1,258,000 more in 2000 than 1999. The operating results of the Company’s business segments are discussed in more detail under “RESULTS OF OPERATIONS”.  

        Capital expenditures totaled $16,887,000 in the first six months of 2000 compared with $16,555,000 for the same period in 1999. Expenditures in the first six months of 2000 and 1999 included Marine Services vessel inspection costs of $2,032,000 and $577,000, respectively. Inspections were required on three vessels in 2000, compared with one in 1999. This was partially offset elsewhere in Marine Services, which in 1999 had capital expenditures for the automation of one vessel. Capital expenditures for the Company for 2000 are expected to approximate $30,000,000.  

        In the first six months of 2000 the Company’s additional borrowings exceeded debt repayments by $82,649,000 compared with the first six months of 1999 in which additional borrowings exceeded debt repayments by $36,818,000. Additional borrowings in the first six months of 2000 included the financing of the Michigan Limestone acquisition, while 1999 included additional debt used to fund the Global Stone Winchester acquisition. Additional borrowings exceeded debt repayments in both years because of working capital requirements resulting from the seasonality of Marine Services segment and certain Lime and Limestone operations. The interest rate on the Senior Credit Facility, which approximated 8.8% on June 30, 2000, is based on LIBOR interest rates, plus an applicable margin.

        In conjunction with the Michigan Limestone acquisition, the Company extended the term of its Senior Credit Facility and increased its borrowing capacity by adding a $118,000,000 Term Loan with its existing bank group in the second quarter of 2000. The Company paid $1,141,000 of financing costs in the first six months of 2000 related to this Term Loan and an amendment to its Senior Credit Facility. The Company’s Senior Subordinated Notes, privately placed with multiple purchasers in February 1999, mature in February 2009 and have a fixed interest rate of 10%. The notes were publicly registered in June 1999. The Company paid $746,000 of financing costs in the first six months of 1999 related to the private placement of these notes and an amendment to the Senior Credit Facility.         The Company declared a dividend of $0.40 per share in the first six months of both 2000 and 1999. Dividends paid were $1,986,000 in the first half of 2000 compared with $1,918,000 for the same six months in 1999.         Anticipated cash flows from operations and current financial resources are expected to meet the Company’s needs during 2000. All financing alternatives are under constant review to determine their ability to provide sufficient funding at the lowest possible cost.         The Company’s net sales and operating revenues of $146,833,000 in the first six months of 2000 were 11% greater than net sales and operating revenues of $131,745,000 for the same period in 1999. Operating income for the first half of 2000 was $20,602,000 or 7% more than the $19,241,000 for the same six months in 1999. The Company reported net income of $3,682,000 ($0.74 per share, assuming dilution) for the six months ended June 30, 2000, compared with net income of $2,862,000 ($0.59 per share, assuming dilution) for the same period in 1999. The $15,088,000 increase in net sales and operating revenues is attributable to the April 2000 acquisition of Michigan Limestone, the December 1999 acquisition of Specialty Minerals, and growth in existing industrial minerals operations offset by the 1999 dispositions of the Company’s Global Stone Detroit Lime and Ingersoll operations. The $1,361,000 increase in operating income is primarily attributed to the contribution of the April 2000 Michigan Limestone acquisition and improved performance in the Industrial Sands business offset by lower operating income in the Marine Services business. The $820,000 or 29% increase in net income was the direct result of the increase in operating income.         Operating results of the Company’s business segments for the six months ended June 30, 2000 and 1999 are discussed below.

Net Sales and Operating Revenues

 THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO
THREE MONTHS ENDED JUNE 30, 1999

       The Company’s net sales and operating revenues of $98,532,000 in the second quarter of 2000 were 14% greater than net sales and operating revenues of $86,657,000 for the same quarter in 1999. Operating income for the second quarter of 2000 was $18,035,000 or 11% more than the $16,294,000 for the same period in 1999. The Company reported net income of $6,492,000 ($1.30 per share, assuming dilution) for the three months ended June 30, 2000, compared with a net income of $5,877,000 ($1.21 per share, assuming dilution) for the same period in 1999. The increase in net sales and operating revenues is attributable to the April 2000 acquisition of Michigan Limestone, the December 1999 acquisition of Specialty Minerals, and growth in existing industrial minerals operations offset by the 1999 dispositions of Detroit Lime and Ingersoll. The increase in operating income and net income is primarily attributed to the Michigan Limestone acquisition, and the improved performance of the Industrial Sands segment partially offset by lower operating income in the Marine Services business.

        Operating results of the Company’s business segments for the three months ended June 30, 2000 and 1999 are discussed below.         Lime and Limestone:    Net sales for the Company’s Lime and Limestone segment totaled $49,200,000 for the three months ended June 30, 2000, compared with $43,998,000 in the same quarter of 1999, an increase of $5,202,000 or 12%. Michigan Limestone’s added revenues in the second quarter of 2000 more than offset the 1999 combined revenues of the disposed operations of Detroit Lime and Ingersoll.         Industrial Sands:    Net sales for the Company’s Industrial Sands segment totaled $16,183,000 in the three months ended June 30, 2000, an increase of 27% from $12,789,000 for the same quarter of 1999. The increase in net sales is attributable to: increased drilling activity related to the surge in oil prices by the Brady, Texas operation; a change in the product and pricing mix resulting from the addition of a mill that produces a finer grade of sand at the Orange County, California operation; and the continued strong demand in the segment’s Orange County, California operations resulting from the strong construction market in the southwestern United States.         Marine Services:    Operating revenues for the Company’s Marine Services segment increased by $821,000 or 3%, to $30,691,000 for the second quarter of 2000 from $29,870,000 for the second quarter of 1999. The increase in operating revenues was solely the result of fuel surcharges included in vessel revenues.         Corporate and Other:    Net sales and operating revenues totaled $2,458,000 and include the operations of Specialty Minerals, acquired in December 1999, and the elimination of Marine Services intersegment sales.

General, Administrative and Selling Expenses

          Total general, administrative and selling expenses were $7,697,000 for the second quarter of 2000, compared with $5,675,000 for 1999, an increase of $2,022,000 or 36%. The percentage of general, administrative and selling expenses to total net sales and operating revenues increased to 8% in the second quarter of 2000 compared with 7% in the same quarter of 1999. General and administrative expenses were higher as a percentage of sales because of the initial start up of Specialty Minerals, hiring at Industrial Sands to handle growth in this business segment, some non-recurring charges at the corporate office and an increase in the Company’s 2000 net cost for its benefit plans. The second quarter $2,022,000 increase in general, administrative and selling expense also increased due to the acquisition of Michigan Limestone.  

Other    (a)  Exhibits

10.1		Form of Change of Control Agreement entered into by the Registrant in the second quarter 2000, with 9 Executive Officers including:		Filed herewith as Exhibit 10.1
		Ÿ M.F. Biehl
		Ÿ R.J. Compiseno
		Ÿ J.S. Gra y
		Ÿ D.H. Kelsey
		Ÿ M.D. Lundin
		Ÿ K.P. Pavlich
		Ÿ D.R. Shepherd
		Ÿ S.H. Theis
		Ÿ R.F. Wal k
10.2		Amendment, dated June 30, 2000, to Employment Agreement dated December 17, 1997 between Registrant and John N. Lauer		Filed herewith as Exhibit 10.2
10.3		Amendment, dated June 30, 2000, to Special Supplemental Retirement Plan dated as of December 17, 1997		Filed herewith as Exhibit 10.3

OGLEBAY NORTON COMPANY

By:      /s/  David H. Kelsey

David H. Kelsey

Vice President and

Chief Financial Officer

On behalf of the Registrant

By:      /s/  Michael F. Biehl

Michael F. Biehl

Vice President- Finance

And Treasurer

On behalf of the Registrant

as Principal Accounting

Officer

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