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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 August 31, 1994 Commission file number 1-1499
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EAGLE-PICHER INDUSTRIES, INC.
- - -----------------------------------------------------------------------------
(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 October 10, 1994.
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<TABLE>
EAGLE-PICHER INDUSTRIES, INC.
QUARTERLY REPORT - FORM 10-Q - FOR THE QUARTER ENDED AUGUST 31, 1994
TABLE OF CONTENTS
<CAPTION>
Page
Number
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.................................... 3
Consolidated Statement of Income............................ 3
Consolidated Balance Sheet.................................. 4
Consolidated Statement of Cash Flows........................ 5
Notes to Consolidated Financial Statements.................. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings....................................... 14
Item 3. Defaults Upon Senior Securities......................... 14
Item 5. Other Information....................................... 15
Item 6. Exhibits and Reports on Form 8-K........................ 15
Signature........................................................ 16
Exhibit Index.................................................... 17
Exhibits......................................................... 18
</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 Nine Months Ended
August 31 August 31
------------------ ------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $186,191 $162,228 $560,939 $485,565
------- ------- ------- -------
Operating Costs and Expenses:
Cost of products sold 153,399 134,475 460,598 401,300
Selling and administrative 18,566 17,369 54,797 51,391
------- ------- ------- -------
171,965 151,844 515,395 452,691
------- ------- ------- -------
Operating Income 14,226 10,384 45,544 32,874
Interest expense (437) (475) (1,346) (1,439)
Other income (expense) 282 (22) 520 716
------- -------- ------ -------
Income Before Reorganization
Items, Taxes and Cumulative
Effect of Accounting Change 14,071 9,887 44,718 32,151
Reorganization items (979) (813) (2,984) (3,200)
-------- ------- ------- -------
Income Before Taxes and Cumulative
Effect of Accounting Change 13,092 9,074 41,734 28,951
Income Taxes 1,359 1,068 4,293 3,026
------- ------- ------- -------
Income Before Cumulative
Effect of Accounting Change 11,733 8,006 37,441 25,925
Cumulative Effect of Change
in Accounting for Postretirement
Benefits - - - (12,598)
------- ------- ------- -------
Net Income $ 11,733 $ 8,006 $ 37,441 $ 13,327
======= ======= ======= =======
Income per share:
Income Before Cumulative Effect of
Accounting Change $1.06 $0.73 $3.39 $2.36
Cumulative Effect of Change in
Accounting for Postretirement
Benefits - - - (1.14)
----- ----- ----- -----
Net Income $1.06 $0.73 $3.39 $1.22
===== ===== ===== =====
<FN>
See accompanying notes to the consolidated financial statements.
</TABLE>
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<TABLE>
EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
<CAPTION>
ASSETS Aug. 31 Nov. 30
1994 1993
-------- --------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 94,837 $ 84,574
Receivables, less allowances 107,650 97,586
Income tax refund receivable 1,733 3,275
Inventories:
Raw materials and supplies 39,822 35,168
Work in process 15,635 20,193
Finished goods 15,599 12,945
-------- --------
71,056 68,306
Prepaid expenses 14,239 8,283
-------- --------
Total current assets 289,515 262,024
-------- --------
PROPERTY, PLANT AND EQUIPMENT 399,080 375,732
Less accumulated depreciation 259,529 241,331
-------- --------
Net property, plant and equipment 139,551 134,401
-------- --------
DEFERRED INCOME TAXES 42,924 29,924
OTHER ASSETS 33,147 33,011
-------- --------
Total Assets $505,137 $459,360
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 33,904 $ 32,365
Long-term debt - current portion 1,787 2,737
Income taxes 8,021 5,613
Other current liabilities 40,169 34,085
-------- --------
Total current liabilities 83,881 74,800
-------- --------
LIABILITIES SUBJECT TO COMPROMISE 1,656,438 1,656,563
LONG-TERM DEBT - less current portion 20,166 21,712
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 20,950 20,209
OTHER LONG TERM LIABILITIES 2,339 3,282
-------- --------
Total Liabilities 1,783,774 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 1,418 290
Accumulated deficit (1,328,426) (1,365,867)
--------- ---------
(1,276,724) (1,315,293)
Less cost of 84,068 common treasury shares (1,913) (1,913)
-------- --------
Total Shareholders' Equity (Deficit) (1,278,637) (1,317,206)
--------- ----------
Total Liabilities and Shareholders'
Equity (Deficit) $505,137 $459,360
======== ========
<FN>
See accompanying notes to the consolidated financial statements.
</TABLE>
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<TABLE>
EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
<CAPTION>
Nine Months Ended
August 31
------------------
1994 1993
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $37,441 $ 13,327
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 19,604 18,753
Cumulative effect of accounting change - 12,598
Changes in assets and liabilities:
Receivables (10,064) (239)
Inventories (2,750) (9,769)
Deferred taxes (13,000) (8,394)
Accounts payable 1,539 2,471
Accrued liabilities 6,084 (1,838)
Other (2,608) 2,401
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Net cash provided by
operating activities before
reorganization activities 36,246 29,310
Changes in liabilities from
reorganization activities:
Accounts payable (15) 220
Accrued liabilities (82) (225)
------- -------
Net cash provided by
operating activities 36,149 29,305
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of fixed assets 649 300
Capital expenditures (24,365) (19,887)
Other 401 (1,533)
------- -------
Net cash used in
investing activities (23,315) (21,120)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt - 146
Reduction of long-term debt (2,571) (2,795)
Issuance of common shares - 156
------- -------
Net cash used in
financing activities (2,571) (2,493)
------- -------
(continued)
</TABLE>
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<TABLE>
EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
<CAPTION>
Nine Months Ended
August 31
--------------------
1994 1993
---- ----
<S> <C> <C>
Net increase in cash and cash equivalents 10,263 5,692
Cash and cash equivalents, beginning of period 84,574 78,116
-------- --------
Cash and cash equivalents, end of period $ 94,837 $ 83,808
======== ========
Supplemental cash flow information:
Cash paid during the nine month period:
Interest paid $ 1,318 $ 1,360
Income taxes paid (net of refunds received) $ 13,243 $ 10,869
Cash paid during the quarter:
Interest paid $ 438 $ 476
Income taxes paid (net of refunds received) $ 4,324 $ 5,699
<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 amount of 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):
August 31, November 30,
1994 1993
---- ----
Asbestos liability $1,500,001 $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
--------- ---------
$1,656,438 $1,656,563
========= =========
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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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):
Three Months Nine Months
Ended Ended
August 31 August 31
----------------- -----------------
1994 1993 1994 1993
---- ---- ---- ----
Professional fees and other
expenses directly related
to bankruptcy $ 1,961 $ 1,428 $ 5,257 $ 4,980
Interest income (982) (615) (2,273) (1,780)
------ ------ ------ ------
$ 979 $ 813 $ 2,984 $ 3,200
====== ====== ====== ======
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 August 31, 1994,
the shares held by the Company had a fair value of approximately $5.2 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
assert claims for 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 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 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 at this time. 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 above. In addition, the Company may
have insurance coverage for certain of these claims and may have various
factual and legal defenses available to it.
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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 third quarter of
1993 by $250,000 or 2 cents per share. Previously reported income for the
first nine months of 1993 was reduced by $758,000 or 6 cents per share.
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 nine month periods ended August 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 third quarter ended August 31, 1994 were $186.2 million
compared with $162.2 million for the third quarter of 1993. Operating income
for the quarter increased to $14.2 million from $10.4 million for the same
period last year. Net income for the third quarter was $11.7 million or $1.06
per share, compared with $8.0 million or $0.73 per share for the same period in
1993.
Results of several of the operations in the Automotive Group, particularly
early in the quarter, were adversely affected by customers' plant shutdowns and
vacations, which were much more industry-wide than in past years. Production
for the month of August, however, reached the high levels of the second quarter
of 1994. European operations continued to enjoy excellent results primarily
due to increased market share and, to a lesser extent, a modest recovery
underway in the European automotive industry. The Wolverine Gasket Division
experienced another excellent quarter because its specialized products enjoy a
position of market leadership, are marketed worldwide, and are not dependent on
a single market. Forecasts by the auto industry call for a very high level of
production for the fourth quarter of 1994. Delay in recovering increases in
raw material costs, however, could have an adverse impact on profit margins for
the Automotive Group in the fourth quarter of 1994.
Sales and operating income for the Machinery Group for the third quarter of
1994 were well ahead of the results for the same period last year. Increased
shipments of earth moving machinery and materials handling equipment by the
Construction Equipment Division were positive factors even though the Division
is currently operating well below acceptable profit levels. Shipments of can
washing machinery were also at a high level. Results of the Electronics
Division, a manufacturer of special purpose batteries for aerospace and defense
applications, were ahead of those of the third quarter last year.
In the Industrial Group, the Specialty Materials Division again had a very
good quarter as sales of boron isotope products for the nuclear power industry
and of bulk pharmaceuticals, primarily for medical research, were ahead of such
sales for the third quarter of 1993. Results for the Minerals Division were
virtually equal to those of last year's third quarter, as pricing pressures
continued to be a factor. Costs associated with an aggressive marketing
initiative in the European market also negatively affected the Minerals
Division's performance.
Interest expense has not changed appreciably in 1994 compared to 1993.
Contractual interest on debt outstanding was $2.2 million and $2.3 million in
the third quarters of 1994 and 1993, respectively, and $6.7 million and $6.9
million for the nine-month periods ended August 31, 1994 and 1993,
respectively.
Net reorganization expenses were $1.0 million in the third quarter of 1994
compared to $0.8 million in the same period of 1993. It is anticipated that
the level of costs associated with the administration of the chapter 11 cases
for the remainder of 1994 will increase slightly from that of 1993 as efforts
to achieve a consensual plan of reorganization continue.
Capital expenditures totaled $8.1 million in the third quarter of 1994 and
$24.4 million for the nine months ended August 31, 1994 compared to $6.9
million and $19.9 million in the respective periods of 1993.
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The Company's goal in the reorganization case continues to be to achieve a
consensual plan of reorganization. To date, no such 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 timing of its filing, confirmation and consummation cannot
be predicted at this time. As 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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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
(a) CHAPTER 11 PROCEEDINGS. By order entered July 27, 1994, the
Bankruptcy Court denied the motions filed by the Unsecured Creditors' Committee
and the Equity Security Holders' Committee related to the Company's exclusive
period for filing a plan of reorganization, previously discussed in the
Company's Form 10-Q report for the quarter ended May 31, 1994. Specifically,
the Bankruptcy Court denied the Motion of the Unsecured Creditor's Committee
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.
The Bankruptcy Court also denied the Motion of the Equity Security Holders'
Committee requesting that the Bankruptcy Court declare that the mediation,
previously ordered by the Bankruptcy Court, had reached an impasse. The
Bankruptcy Court appointed a mediator in June, 1992 to assist the
constituencies in their efforts to negotiate a consensual plan of
reorganization. The period during which the Company has the exclusive right to
file a plan of reorganization remains extended pursuant to the Bankruptcy Court
Order entered August 29, 1992 until sixty (60) days after the mediator notifies
the Bankruptcy Court that the mediation has reached an impasse.
(b) OTHER. On July 12, 1994, American Imaging Services, Inc. and its
president and minority shareholder (collectively, "AISI") filed a motion for
partial summary judgment in their action pending in the United States District
Court for Northern District of Texas. The action is against the Company and
three officers of the Company, and is discussed in the Company's Form 10-K
report for the fiscal year ended November 30, 1993 and Form 10-Q report for the
quarter ended May 31, 1994. In the motion, AISI requests that the Court rule
favorably on certain of its claims against the Company and the officers without
a trial. The Company and the officers have filed a response opposing the
relief requested in AISI's motion. Additionally, following the close of the
quarter, on September 7, 1994, the Company and the officers filed with the
Court two motions for partial summary judgment which, if granted by the Court,
would result in a dismissal of all of the claims asserted by AISI without a
trial. The Court has not yet heard oral argument or ruled on any of these
motions.
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 were 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.
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<PAGE> 15
ITEM 5. OTHER INFORMATION
As previously reported, 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.
(a) Exhibits
--------
11 - Calculation of Average Number of Shares
Utilized in Calculating Per-Share Earnings.
27 - Financial Data Schedule (submitted electronically
to the Securities and Exchange Commission for its
information).
(b) Reports on Form 8-K. None filed during this quarter.
-------------------
15
<PAGE> 16
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.
/s/ David N. Hall
-------------------------------
David N. Hall,
Senior Vice President - Finance and
Chief Financial Officer
DATE October 14, 1994
------------------
16
<PAGE> 17
EXHIBIT INDEX
-------------
Exhibit No. Description Page
- - ----------- ----------- ----
11 Calculation of Average Number 18
of Shares Utilized in Calculating
Per-Share Earnings
27 Financial Data Schedule (submitted
electronically to the Securities and
Exchange Commission for its information)
17
<PAGE> 1
<TABLE>
EXHIBIT 11
EAGLE-PICHER INDUSTRIES, INC.
CALCULATION OF AVERAGE NUMBER OF SHARES
(Shares in thousands)
<CAPTION>
Three Months Ended Nine Months Ended
August 31 August 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 98
------ ------ ------ ------
Number of shares for net income
per share 11,041 11,041 11,041 11,027
====== ====== ====== ======
</TABLE>
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statement of income and the consolidated balance sheet and is
qualified in its entirety by reference to such financial statements
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-START> DEC-01-1993
<PERIOD-END> AUG-31-1994
<EXCHANGE-RATE> 1
<CASH> 94,837
<SECURITIES> 0
<RECEIVABLES> 108,924
<ALLOWANCES> 1,274
<INVENTORY> 71,056
<CURRENT-ASSETS> 289,515
<PP&E> 399,080
<DEPRECIATION> 259,529
<TOTAL-ASSETS> 505,137
<CURRENT-LIABILITIES> 83,881
<BONDS> 83,957
<COMMON> 13,906
0
0
<OTHER-SE> (1,292,543)
<TOTAL-LIABILITY-AND-EQUITY> 505,137
<SALES> 560,939
<TOTAL-REVENUES> 560,939
<CGS> 460,598
<TOTAL-COSTS> 460,598
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,346
<INCOME-PRETAX> 41,734
<INCOME-TAX> 4,293
<INCOME-CONTINUING> 37,441
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,441
<EPS-PRIMARY> $3.39
<EPS-DILUTED> $3.39
</TABLE>
