<PAGE> 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 the quarter ended May 31, 1994 Commission file number 1-1499
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EAGLE-PICHER INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
OHIO 31-0268670
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
580 Walnut Street, P. O. Box 779, Cincinnati, Ohio 45201
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code 513-721-7010
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(Not Applicable)
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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 twelve months, and (2) has been subject
to such filing requirements for the past 90 days. Yes X No
---- ----
11,040,932 shares of common capital stock, par value
$1.25 per share, were outstanding at July 8, 1994.
1
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<TABLE>
EAGLE-PICHER INDUSTRIES, INC.
QUARTERLY REPORT - FORM 10-Q - FOR THE QUARTER ENDED MAY 31, 1994
TABLE OF CONTENTS
<CAPTION>
Page
Number
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PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements.................................... 3
Consolidated Statement of Income............................ 3
Consolidated Balance Sheet.................................. 4
Consolidated Statement of Cash Flows........................ 6
Notes to Consolidated Financial Statements.................. 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings....................................... 15
Item 3. Defaults Upon Senior Securities......................... 15
Item 5. Other Information....................................... 16
Item 6. Exhibits and Reports on Form 8-K........................ 16
Signature........................................................ 17
Exhibit Index.................................................... 18
Exhibits......................................................... 19
</TABLE>
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<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
May 31 May 31
------------------ ---------------
1994 1993 1994 1993
------ ------ ------ ----
<S> <C> <C> <C> <C>
Net Sales $196,994 $176,366 $374,748 $323,337
------- ------- ------- -------
Operating Costs and Expenses:
Cost of products sold 160,816 144,600 307,199 266,825
Selling and administrative 18,641 17,666 36,231 34,022
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179,457 162,266 343,430 300,847
------- ------- ------- -------
Operating Income 17,537 14,100 31,318 22,490
Interest expense (455) (545) (909) (964)
Other income 72 183 238 738
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Income Before Reorganization
Items, Taxes and Cumulative
Effect of Accounting Change 17,154 13,738 30,647 22,264
Reorganization items (923) (1,065) (2,005) (2,387)
------- ------- ------- -------
Income Before Taxes and Cumulative
Effect of Accounting Change 16,231 12,673 28,642 19,877
Income Taxes 1,562 1,158 2,934 1,958
------- ------- ------- -------
Income Before Cumulative
Effect of Accounting Change 14,669 11,515 25,708 17,919
Cumulative Effect of Change
in Accounting for Postretirement
Benefits - - - (12,598)
------- ------- ------- -------
Net Income $ 14,669 $ 11,515 $ 25,708 $ 5,321
======= ======= ======= =======
Income per Share:
Income Before Cumulative Effect of
Accounting Change $ 1.33 $ 1.04 $ 2.33 $ 1.63
Cumulative Effect of Change in
Accounting for Postretirement
Benefits - - - (1.14)
------- ------- ------- -------
Net Income $ 1.33 $ 1.04 $ 2.33 $ .49
======= ======= ======= =======
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
<CAPTION>
ASSETS May 31 Nov. 30
1994 1993
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<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 91,634 $ 84,574
Receivables, less allowances 103,942 97,586
Income tax refund receivable 1,949 3,275
Inventories:
Raw materials and supplies 36,547 35,168
Work in process 16,871 20,193
Finished goods 15,963 12,945
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69,381 68,306
Prepaid expenses 12,216 8,283
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Total current assets 279,122 262,024
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PROPERTY, PLANT AND EQUIPMENT 390,432 375,732
Less accumulated depreciation 252,751 241,331
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Net property, plant and equipment 137,681 134,401
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DEFERRED INCOME TAXES 37,924 29,924
OTHER ASSETS 32,688 33,011
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Total Assets $487,415 $459,360
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 32,236 $ 32,365
Long-term debt - current portion 2,430 2,737
Income taxes 6,202 5,613
Other current liabilities 37,507 34,085
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Total current liabilities 78,375 74,800
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LIABILITIES SUBJECT TO COMPROMISE 1,656,445 1,656,563
LONG-TERM DEBT - less current portion 20,689 21,712
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 20,723 20,209
OTHER LONG-TERM LIABILITIES 2,427 3,282
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Total liabilities 1,778,659 1,776,566
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SHAREHOLDERS' EQUITY (DEFICIT)
Common shares - par value $1.25 per share
authorized 30,000,000 shares, issued
11,125,000 shares 13,906 13,906
Additional paid-in capital 36,378 36,378
Foreign currency translation 544 290
Accumulated deficit (1,340,159) (1,365,867)
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(1,289,331) (1,315,293)
</TABLE>
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<TABLE>
EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
<CAPTION>
May 31 Nov. 30
1994 1993
---------- -----------
<S> <C> <C>
Less cost of 84,068 common treasury shares $ (1,913) $ (1,913)
-------- --------
Total Shareholders' Equity (Deficit) (1,291,244) (1,317,206)
--------- ---------
Total Liabilities and Shareholders' Equity
(Deficit) $487,415 $459,360
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
<CAPTION>
Six Months Ended
May 31
------------------
1994 1993
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 25,708 $ 5,321
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 12,917 12,369
Cumulative effect of accounting change - 12,598
Changes in assets and liabilities:
Receivables (6,356) (8,899)
Inventories (1,075) (3,469)
Deferred taxes (8,000) (6,000)
Accounts payable (129) 1,178
Accrued liabilities 3,422 (1,473)
Other (2,182) 3,139
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Net cash provided by
operating activities before
reorganization activities 24,305 14,764
Changes in liabilities from
reorganization activities:
Accounts payable (15) 98
Accrued liabilities (82) (156)
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Net cash provided by
operating activities 24,208 14,706
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of fixed assets 600 254
Capital expenditures (16,257) (13,044)
Other (128) (423)
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Net cash used in
investing activities (15,785) (13,213)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt - 146
Reduction of long-term debt (1,363) (2,205)
Issuance of common shares - 156
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Net cash used in
financing activities (1,363) (1,903)
</TABLE>
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<TABLE>
EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
<CAPTION>
Six Months Ended
May 31
--------------------
1994 1993
---- ----
<S> <C> <C>
Net increase (decrease) in cash and cash equivalents 7,060 (410)
Cash and cash equivalents, beginning of period 84,574 78,116
-------- --------
Cash and cash equivalents, end of period $ 91,634 $ 77,706
======== ========
Supplemental cash flow information:
Cash paid during the year:
Interest paid $ 880 $ 884
Income taxes paid (net of refunds received) $ 8,919 $ 5,170
Cash paid during the quarter:
Interest paid $ 339 $ 501
Income taxes paid (net of refunds received) $ 8,488 $ 4,883
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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EAGLE-PICHER INDUSTRIES, INC.
Notes to Consolidated Financial Statements
A. PROCEEDINGS UNDER CHAPTER 11
On January 7, 1991 (the "petition date"), Eagle-Picher Industries, Inc.
(the "Company") and seven of its domestic subsidiaries each filed a voluntary
petition for relief under chapter 11 of the United States Bankruptcy Code
("chapter 11") in the United States Bankruptcy Court for the Southern District
of Ohio, Western Division, in Cincinnati, Ohio (the "Bankruptcy Court"). Each
filing entity is currently operating its business as a debtor in possession in
accordance with the provisions of the Bankruptcy Code.
The chapter 11 filings were the consequence of a cash shortfall resulting
from the Company's inability to satisfy certain immediate asbestos litigation
liabilities. As a result of the chapter 11 filings, substantially all
litigation pending against the Company as of the petition date is stayed and no
party may take any action to recover a pre-petition claim, except pursuant to
further order of the Bankruptcy Court.
An Unsecured Creditors' Committee, an Injury Claimants' Committee ("ICC"),
an Equity Security Holders' Committee, and a Legal Representative for Future
Claimants ("RFC") have been appointed in the chapter 11 cases. An unofficial
asbestos co-defendants' committee has also been participating in the chapter 11
cases. In accordance with the provisions of the Bankruptcy Code, these parties
have the right to be heard with respect to transactions outside the ordinary
course of business. The official committees and the RFC are the primary
parties with whom the Company is negotiating the terms of a plan of
reorganization. In June 1992, a mediator was appointed by the Bankruptcy Court
to assist the constituencies in their negotiations.
The Bankruptcy Court established a bar date of October 31, 1991 for all
pre-petition claims against the Company other than those arising from the sale
of asbestos-containing products. The bar date is the date by which claimants
who disagree with the amounts recorded as owed to them by the Company must file
a proof of claim against the Company. Substantially all of the general claims
filed by vendors, note holders and other miscellaneous parties pursuant to this
bar date have been reconciled by the Company. The reconciled claims have been
allowed as pre-petition claims against the Company's estate. A small number
of such claims remains to be resolved; however, the Company does not expect the
effect of their resolution to be material. In addition, the Bankruptcy Court
established a bar date of September 30, 1992 for all present asbestos-related
claims. See Note C below for further information about asbestos-related
claims.
On November 9, 1993, the Company reached an agreement on the principal
elements of a joint plan of reorganization that provides a basis for the
Company and its subsidiaries to emerge from chapter 11. The agreement is with
the ICC and the RFC, the representatives of the holders of present and future
asbestos-related and other toxic tort claims in the Company's chapter 11 case,
and was reached with the assistance of the mediator appointed by the Bankruptcy
Court.
The agreement contemplates a settlement of the Company's liability for all
present and future asbestos-related personal injury claims. These claims would
be channeled to and resolved by a claims administration trust that would
receive cash, debt securities and substantially all of the common stock of the
reorganized Company under a plan of reorganization (the "Plan"). As a
consequence of the proposed settlement, the Company recorded a provision in the
fourth quarter of 1993 of $1.135 billion to increase the asbestos liability
subject to compromise to $1.5 billion.
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The Company also recorded a provision of $41.4 million in the fourth
quarter of 1993 for environmental and other litigation claims in anticipation
of settlement of such claims.
Liabilities incurred by the Company as of the petition date and subject to
compromise under a plan of reorganization are separately classified in the
Consolidated Balance Sheet and include the following (in thousands of dollars):
<TABLE>
<CAPTION>
May 31, November 30,
1994 1993
---- ----
<S> <C> <C>
Asbestos liability $1,500,008 $1,500,029
Long-term debt (unsecured portion) 62,004 62,004
Accounts payable 43,120 43,135
Accrued and other liabilities 51,313 51,395
--------- ---------
$1,656,445 $1,656,563
========= =========
</TABLE>
The accompanying consolidated financial statements have been prepared on a
going concern basis which contemplates continuity of operations, realization of
assets and liquidation of liabilities in the ordinary course of business. The
liabilities subject to compromise listed above have been reported on the basis
of the expected amount of the allowed claims even though holders of these
claims may receive value of a lesser amount in a plan of reorganization. Upon
confirmation of a plan of reorganization, the Company would utilize the
fresh-start reporting principles contained in the AICPA's Statement of Position
90-7, which would result in adjustments relating to the amounts and
classification of recorded assets and liabilities, determined as of the plan
confirmation date. At this date, because no plan of reorganization has been
filed with the Bankruptcy Court, the Company cannot be certain of the terms and
provisions thereof. However, the Company believes that the ultimate
consideration to be received by the unsecured creditors will be substantially
less than the amounts shown in the accompanying Consolidated Balance Sheet.
The agreement on the principal elements of a joint plan of reorganization
discussed above provides that the Company, the ICC and the RFC will negotiate
with the Unsecured Creditors' Committee and the Equity Security Holders'
Committee with the goal of developing a consensual plan of reorganization. To
date, no substantial progress has been made in these negotiations. If such a
consensual plan cannot be achieved, the agreement provides that a plan will be
filed under which holders of pre-petition unsecured claims, other than
asbestos, lead and silica-related claims, will receive 30% of their allowed
claims in value, and no distribution will be made to the Company's existing
common shareholders, whose shares will be canceled. The Plan will also provide
that "convenience claims," general unsecured claims of $500 or less, will be
paid in full. Under the Bankruptcy Code, shareholders are not entitled to any
distribution under a plan of reorganization unless all classes of pre-petition
unsecured creditors receive satisfaction in full of their allowed claims or
accept a plan which allows shareholders to participate in the reorganized
company or to receive a distribution. Pursuant to the agreement, the treatment
under the Plan of asbestos property damage, lead and silica claims is currently
being negotiated.
Following the negotiations described above, the Company intends to file a
plan of reorganization with the Bankruptcy Court and proceed to confirmation in
accordance with the provisions of the Bankruptcy Code, including soliciting the
requisite creditor and shareholder acceptances. Implementation of the
agreement and the treatment of claims and interests as provided therein is
subject to confirmation of the Plan in accordance with the provisions of the
Bankruptcy Code.
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<TABLE>
The net expense resulting from the Company's administration of the
chapter 11 cases has been segregated from expenses related to ordinary
operations in the accompanying financial statements and includes the following
(in thousands):
<CAPTION>
Three Months Six Months
Ended Ended
May 31 May 31
---------------- ----------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Professional fees and other
expenses directly related
to bankruptcy $ 1,624 $ 1,643 $ 3,296 $ 3,552
Interest income (701) (578) (1,291) (1,165)
------ ------ ------ ------
$ 923 $ 1,065 $ 2,005 $ 2,387
====== ====== ====== ======
</TABLE>
Interest income is attributable to the accumulation of cash and short-term
investments subsequent to the petition date.
B. INVESTMENTS
In 1990, the Company received shares of stock in a Canadian mining concern
in settlement of certain indebtedness owed to the Company. The Company had
previously deemed the investment to be permanently impaired and had recorded a
loss on the investment in the amount of its full book value. The price of the
stock, however, has significantly increased recently and at May 31, 1994, the
shares held by the Company had a fair value of approximately $5.9 million. The
Company has not yet adopted Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities." Upon
adoption, this investment would be recorded at its fair value in the
Consolidated Balance Sheet and any unrealized gains or losses would be reported
in a separate component of shareholders' equity until realized.
C. LITIGATION
As discussed in Note L to the 1993 Consolidated Financial Statements, the
accompanying Consolidated Financial Statements include an estimated liability
related to claims associated with the Company's sale of asbestos-containing
insulation products. Litigation with respect to asbestos-related claims was
stayed by reason of the chapter 11 filing.
Many of the asbestos-related claims filed in the chapter 11 case do not
provide sufficient information to enable the Company to determine definitively
whether or not it has liability for the claim or to definitively value any such
liability. Similarly, the Company is not able to project precisely the number
and value of future claims. The Company, however, is certain that it has
significant liability with respect to the 160,000 proofs of claim which were
filed against the Company pursuant to the September 30, 1992 bar date and which
allege asbestos-related personal injury. The Company also is certain that
there is significant liability with respect to future asbestos-related personal
injury claims. After considering the significant costs that likely would be
incurred in litigating the extent and nature of its asbestos-related personal
injury liability, the uncertainty as to the outcome of such an exercise, the
need to conserve the estate's assets for every creditor, and the benefits that
would accrue to the Company's operations, customers, vendors, employees and
host communities from the Company's timely emergence from chapter 11, the Board
of Directors and management concluded that the settlement contemplated by the
agreement on the principal elements of the Plan discussed in Note A and below
in this footnote is in the best interests of the Company.
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There were forty-one lawsuits pending against the Company at the end of
fiscal 1991 resulting from the presence of asbestos-containing products in
buildings. The pending lawsuits typically named numerous defendants, were
filed in both state and federal courts, and were brought by school districts,
cities, states, counties, universities, hospitals, a public library and
commercial building owners. The lawsuits typically demanded compensation for
any costs incurred in identifying, repairing, encapsulating or removing
asbestos-containing products, or sought to have the defendants do these things
directly. Many lawsuits also sought punitive damages. Three of the pending
cases have been certified as class actions, and one has been conditionally
certified. Class certification had been sought by the plaintiffs in two other
cases, one of which has been dismissed. Prior to filing its chapter 11
petition, the Company settled seven building-related cases for less than
$22,000 in the aggregate.
Approximately 1,000 proofs of claim alleging such property damage claims
were filed in the chapter 11 cases pursuant to the bar date. These claims
include most of the lawsuits described above that were pending on the petition
date. Many of the other claims also appear to be asserted by claimants similar
to those which had commenced pre-petition lawsuits.
The agreement on the principal elements of the Plan provides that the
treatment under a plan of reorganization of the asbestos property damage claims
asserted against the Company, including both the pre-petition lawsuits and the
proofs of claim filed pursuant to the bar date, will be the subject of further
negotiation.
In addition, the Company is a defendant in various other litigation which
was pending as of the petition date, which was discussed in Note M to the 1993
Consolidated Financial Statements. The Company intends to defend all
litigation claims vigorously in the manner permitted by the Bankruptcy Code and
applicable law. All pre-petition claims against the Company arising from
litigation must be liquidated or otherwise addressed in the context of the
chapter 11 cases, and will be resolved in a plan of reorganization. During the
pendency of the chapter 11 cases, any unresolved litigation with respect to
pre-petition claims can proceed against the Company only with the express
permission of the Bankruptcy Court.
The Company has resolved most of the litigation claims that were asserted
pursuant to the October 31, 1991 bar date for claims other than those arising
from the sale of asbestos-containing products. However, certain large
litigation claims, environmental claims, and certain lead chemical claims are
still unresolved. The Company has filed objections to certain of these
litigation-based claims which have not been resolved, seeking to reduce the
amount of such claims or eliminate them entirely. The Company anticipates
filing additional objections to other such claims if they cannot be resolved
through negotiation. These objections will be vigorously litigated by the
Company pursuant to the provisions of the Bankruptcy Code and applicable law.
The eventual outcome of the environmental and other litigation claims
described herein cannot be reasonably predicted due to numerous uncertainties
that are inherent in the reorganization process. However, negotiations
concerning environmental claims and attempts to negotiate settlements of other
litigation claims progressed to a point that enabled the Company to record a
provision of $41.4 million for these claims in the fourth quarter of 1993 as
discussed in Note A. In addition, the Company may have insurance coverage for
certain of these claims and may have various factual and legal defenses
available to it.
D. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
During the fourth quarter of 1993, the Company adopted Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," retroactively to December 1,
1992. Besides the cumulative after tax charge of $12.6 million, this
accounting change reduced previously reported income in the second quarter of
1993 by $254,000 or 2 cents per share. Previously reported income for the
first six months of 1993 was reduced by $508,000 or 4 cents per share.
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E. BASIS OF REPORTING FOR INTERIM FINANCIAL STATEMENTS
The unaudited financial statements included herein have been prepared by
the Company pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations,
although the Company believes that the disclosures are adequate to make the
information presented not misleading. These financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's Annual Report and Form 10-K for the fiscal year ended November
30, 1993.
The financial statements presented herewith reflect all adjustments
(consisting of normal and recurring accruals) which, in the opinion of
management, are necessary to fairly state the results of operations for the
three month and six month periods ended May 31, 1994 and 1993. Results of
operations for interim periods are not necessarily indicative of results to be
expected for an entire year.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Sales for the second quarter ended May 31, 1994 were $197.0 million,
operating income was $17.5 million, and net income was $14.7 million or $1.33
per share. In the second quarter of 1993, sales were $176.4 million, operating
income was $14.1 million, and net income was $11.5 million or $1.04 per share.
Results from operations continued the trend experienced in the first
quarter with sales increasing by 12% and operating income increasing by 24%
from the second quarter of 1993. Results of operations in the Automotive Group
reflected the strong demand for passenger cars, vans, sport utility vehicles,
and trucks. So far this year, North American car and truck production has
risen by approximately 11% from the same period last year. Nearly all
operations in the Group benefitted from this increase in the automotive build.
Operations in Germany, England, and Spain also experienced improved sales and
profitability, primarily due to new products and increased market penetration.
Sales and operating income of operations in the Machinery Group increased
substantially over the results of the second quarter last year. A major reason
for this improvement was a more than twofold increase in sales of the
Construction Equipment Division. The Division also operated profitably for the
quarter after experiencing losses in 1993 primarily due to start-up costs for a
new product line. The results of the Electronics Division were well ahead of
second quarter 1993 results. This improvement was due to the rebuilding of
weapons inventories reduced by the Gulf War and a high level of activity in the
commercial aerospace market. The backlog for can washing systems manufactured
by Cincinnati Industrial Machinery was at a high level during the quarter, and
this Division experienced increases in sales and operating income for the
quarter.
Results of operations in the Industrial Group were mixed. The Specialty
Materials Division experienced a good quarter as sales of boron isotope
products for the nuclear power industry, sales of bulk pharmaceutical products
used for research, and sales of super clean certified containers for
environmental analysis were ahead of those sales for the second quarter of
1993. The results of the Minerals Division, which manufactures diatomaceous
earth products, however, continued to be adversely affected by industry-wide
pricing pressures.
Interest expense has not changed appreciably for the first six months of
1994 compared to the same period in 1993. Contractual interest on debt
outstanding was $2.2 million and $2.3 million in the second quarters of 1994
and 1993, respectively, and $4.5 million and $4.6 million for the six month
periods ended May 31, 1994 and 1993, respectively.
Reorganization expenses were $0.9 million in the second quarter of 1994
compared to $1.1 million in the same period of 1993. It is anticipated that
the costs associated with the administration of the chapter 11 cases for the
fiscal year 1994 will be consistent with those of 1993 as negotiations to
achieve a consensual plan of reorganization continue.
Capital expenditures totaled $9.0 million in the second quarter of 1994 and
$16.3 million for the six months ended May 31, 1994 compared to $7.5 million
and $13.0 million in the respective periods of 1993.
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In terms of the reorganization effort, the Company's goal continues to be
to achieve a consensual plan of reorganization based upon the agreement on the
principal elements of a joint plan of reorganization reached among the Company,
the Injury Claimants' Committee and the Legal Representative for Future
Claimants. This agreement was reached in November 1993 under the auspices of a
mediator appointed by the U. S. Bankruptcy Court. However, to date, no fully
consensual plan has been achieved and there can be no guarantee that such a
consensual plan will be achieved. Although the Company is in the process of
preparing a plan of reorganization, the precise timing of its filing,
confirmation and consummation cannot be predicted at this time. As the Company
has previously stated, it is anticipated that under any plan of reorganization,
pre-petition unsecured creditors will not receive satisfaction in full of their
allowed claims. Under the Bankruptcy Code, shareholders are not entitled to
any distribution under a plan of reorganization unless all classes of
pre-petition unsecured creditors receive satisfaction in full of their allowed
claims or accept a plan which allows shareholders to participate in the
reorganized company or to receive a distribution.
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<PAGE> 15
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
(a) CHAPTER 11 PROCEEDINGS. Pursuant to an order of the Bankruptcy Court,
the period provided under the Bankruptcy Code during which the Company has the
exclusive right to file a plan of reorganization expires sixty days after the
Bankruptcy Court is notified by the mediator that the mediation has reached an
impasse. The Bankruptcy Court appointed the mediator in June, 1992, to assist
the constituencies in their efforts to negotiate a consensual plan of
reorganization. Following the close of the quarter, on June 1, 1994, the
Unsecured Creditors' Committee filed a motion in the Bankruptcy Court
requesting termination of the Company's exclusive period for filing a plan of
reorganization, or, in the alternative, modification of the exclusive period to
permit the filing of a reorganization plan by the Unsecured Creditors'
Committee, either alone or jointly with the Equity Security Holders' Committee.
On June 6, 1994, the Equity Security Holders' Committee filed a motion in the
Bankruptcy Court requesting that the Bankruptcy Court declare that the
mediation has reached an impasse.
On July 1, 1994, the Company filed a response in which the Company opposed
the relief requested in each of these motions. The Injury Claimants' Committee
has also filed a response in opposition to these motions. The Bankruptcy Court
has not yet heard oral argument or ruled on these motions.
(b) ASBESTOS. Nothing to report.
(c) OTHER. In the litigation instituted against the Company and three of
its officers by American Imaging Services, Inc., previously discussed in the
Company's Form 10-K report for the fiscal year ended November 30, 1993, two
motions filed by the Company during the quarter were denied by the United
States District Court for the Northern District of Texas following the close of
the quarter. On June 6, 1994, the District Court denied the Company's motion
to dismiss one of the officers for lack of personal jurisdiction. On June 30,
1994, the District Court denied the Company's motion to transfer the litigation
to the United States District Court for the Southern District of Ohio. The
Company and the individual defendants intend to defend these claims vigorously,
and the eventual outcome of these claims cannot be reasonably predicted at this
time.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
The chapter 11 filings constituted a default under substantially all of
the Company's and it affiliates' senior securities. The obligations under the
Company's pre-petition credit facility and other obligations owing to the
lenders who were party to the pre-petition credit facility have been addressed
in the debtor in possession financing agreement approved by the Bankruptcy
Court on May 24, 1991. At that time, certain of such obligations were repaid
and the remaining of such obligations were deemed to be post-petition.
With respect to certain other secured obligations, the Company (or its
affiliates) have been making settlements or "adequate protection" payments
approved by orders of the Bankruptcy Court.
15
<PAGE> 16
ITEM 5. OTHER INFORMATION
On June 21, 1994, the New York Stock Exchange ("NYSE") notified the
Company that the Securities and Exchange Commission had granted the NYSE's
application to remove the Common Stock of Eagle-Picher Industries, Inc. from
listing and registration on the NYSE effective at the opening of the trading
session on June 9, 1994. The Company's Common Stock is, as of June 9, 1994,
now registered under Section 12(g) of the Securities Exchange Act of 1934,
rather than under Section 12(b) of that Act.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS
11 - Calculation of Average Number of Shares
Utilized in Calculating Per-Share Earnings.
16
<PAGE> 17
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.
EAGLE-PICHER INDUSTRIES, INC.
By:/S/ David N. Hall
--------------------------------
David N. Hall,
Senior Vice President - Finance and
Chief Financial Officer
DATE: July 11, 1994
--------------------
17
<PAGE> 18
<TABLE>
EXHIBIT INDEX
-------------
<CAPTION>
Exhibit No. Description Page
- - ----------- ----------- ----
<S> <C> <C>
11 Calculation of Average Number 19
of Shares Utilized in Calculating
Per-Share Earnings
</TABLE>
18
<PAGE> 1
EXHIBIT 11
<TABLE>
EAGLE-PICHER INDUSTRIES, INC.
CALCULATION OF AVERAGE NUMBER OF SHARES
(Shares in thousands)
<CAPTION>
Three Months Ended Six Months Ended
May 31 May 31
------------------ ----------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Average common shares outstanding 11,125 11,125 11,125 11,125
Less average common treasury shares 84 84 84 105
------ ------ ------ ------
Number of shares for net income
per share 11,041 11,041 11,041 11,020
====== ====== ====== ======
</TABLE>
19
