<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 August 31, 1995 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
- --------------------------------- -----------------------------------------
(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
------------------------------
(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 12, 1995.
1
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EAGLE-PICHER INDUSTRIES, INC.
QUARTERLY REPORT - FORM 10-Q - FOR THE QUARTER ENDED AUGUST 31, 1995
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
------
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......................... 16
Item 6. Exhibits and Reports on Form 8-K........................ 16
Signature........................................................ 17
Exhibit Index.................................................... 18
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
August 31 August 31
------------------ -----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $210,723 $186,191 $633,704 $560,939
------- ------- ------- -------
Operating Costs and Expenses:
Cost of products sold 177,082 153,399 527,028 460,598
Selling and administrative 19,619 18,566 58,394 54,797
------- ------- ------- -------
196,701 171,965 585,422 515,395
------- ------- ------- -------
Operating Income 14,022 14,226 48,282 45,544
Interest expense (459) (437) (1,446) (1,346)
Gain on sale of investment 11,505 - 11,505 -
Other income 558 282 964 520
------- ------- ------- -------
Income Before Reorganization
Items and Taxes 25,626 14,071 59,305 44,718
Reorganization items (132) (979) (888) (2,984)
------- ------- ------- -------
Income Before Taxes 25,494 13,092 58,417 41,734
Income Taxes 2,100 1,359 5,215 4,293
------- ------- ------- -------
Net Income $ 23,394 $ 11,733 $ 53,202 37,441
======= ======= ======= =======
Income per Share $2.12 $1.06 $4.82 $3.39
======= ======= ======= =======
</TABLE>
See accompanying notes to the consolidated financial statements.
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EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
<TABLE>
<CAPTION>
ASSETS Aug. 31 Nov. 30
1995 1994
-------- --------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $100,398 $ 92,606
Receivables, less allowances 115,406 109,130
Income tax refund receivable 764 2,246
Inventories:
Raw materials and supplies 49,991 47,777
Work in process 19,632 19,444
Finished goods 17,870 14,761
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87,493 81,982
Prepaid expenses 21,019 10,295
------- --------
Total current assets 325,080 296,259
-------- --------
PROPERTY, PLANT AND EQUIPMENT 430,296 408,018
Less accumulated depreciation 282,285 263,369
-------- --------
Net property, plant and equipment 148,011 144,649
DEFERRED INCOME TAXES 59,624 43,924
OTHER ASSETS 42,519 36,275
-------- --------
Total Assets $575,234 $521,107
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 41,123 $ 43,691
Long-term debt - current portion 1,531 1,726
Income taxes 6,240 5,223
Other current liabilities 38,956 35,321
-------- --------
Total current liabilities 87,850 85,961
-------- --------
LIABILITIES SUBJECT TO COMPROMISE 1,657,017 1,657,265
LONG-TERM DEBT - less current portion 18,237 19,896
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 22,058 21,070
OTHER LONG-TERM LIABILITIES 2,402 3,608
-------- -------
Total liabilities 1,787,564 1,787,800
---------- ---------
</TABLE>
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EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
<TABLE>
<CAPTION>
Aug. 31 Nov. 30
1995 1994
-------- --------
<S> <C> <C>
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 2,706 2,054
Unrealized gain on investment 509 -
Accumulated deficit (1,263,916)(1,317,118)
--------- ---------
(1,210,417)(1,264,780)
Cost of 84,068 common treasury shares (1,913) (1,913)
-------- --------
Total Shareholders' Equity (Deficit) (1,212,330)(1,266,693)
--------- ---------
Total Liabilities and Shareholders' Equity
(Deficit) $575,234 $521,107
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
5
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EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
August 31
------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 53,202 $ 37,441
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 21,872 19,604
Gain on sale of investment (11,505) -
Changes in assets and liabilities:
Receivables (6,276) (10,064)
Inventories (5,511) (2,750)
Prepaid expenses (10,724) (4,696)
Deferred taxes (15,700) (13,000)
Accounts payable (2,568) 1,539
Accrued liabilities 3,635 6,084
Other (3,761) 2,088
------ -------
Net cash provided by operating
activities before changes in
liabilities subject to compromise 22,664 36,246
Changes in liabilities subject
to compromise (248) (97)
------ --------
Net cash provided by
operating activities 22,416 36,149
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investment 11,505 -
Capital expenditures (24,794) (24,365)
Other 559 1,050
------ --------
Net cash used in
investing activities (12,730) (23,315)
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of long-term debt (1,894) (2,571)
------- --------
Net cash used in
financing activities (1,894) (2,571)
</TABLE>
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EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
August 31
-------------------
1995 1994
---- ----
<S> <C> <C>
Net increase (decrease) in cash and cash equivalents 7,792 10,263
Cash and cash equivalents, beginning of period 92,606 84,574
------ ------
Cash and cash equivalents, end of period $100,398 $ 94,837
======== ========
Supplemental cash flow information:
Cash paid during the year:
Interest paid $ 1,422 $ 1,318
Income taxes paid (net of refunds received) $ 18,416 $ 13,243
Cash paid during the quarter:
Interest paid $ 467 $ 438
Income taxes paid (net of refunds received) $ 8,297 $ 4,324
</TABLE>
See accompanying notes to consolidated financial statements.
7
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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, other than EDI, Inc., is currently operating its business as a
debtor in possession in accordance with the provisions of the Bankruptcy Code.
An Unsecured Creditors' Committee ("UCC"), an Injury Claimants' Committee
("ICC"), an Equity Security Holders' Committee ("ESC"), 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 has been 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.
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, and was reached with the
assistance of the mediator appointed by the Bankruptcy Court. As a consequence
of this agreement, 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. The Company also recorded a provision of $41.4 million in
1993 for environmental and other litigation claims in anticipation of
settlement of such claims.
Throughout 1994, the Company, the ICC and the RFC continued to refine the
details of a joint plan of reorganization (the "Plan"). On February 28, 1995,
the Company, in conjunction with the ICC and the RFC, filed the Plan and a
proposed Disclosure Statement in connection with the Plan with the Bankruptcy
Court. The Plan does not have the support of the UCC or the ESC. The
Bankruptcy Court has not set a date to consider approval of the Disclosure
Statement. Implementation of the treatment of claims and interests as provided
in the Plan is subject to confirmation of the Plan in accordance with the
provisions of the Bankruptcy Code.
The Plan is premised on a settlement of the Company's liability for all
present and future asbestos and lead personal injury claims. These claims will
be channeled to and resolved by an independently administered claims trust (the
"PI Trust"), and pursuant to such settlement, the PI Trust will have under the
Plan an allowed pre-petition unsecured claim in the amount of $1.5 billion (the
"PI Trust Claim") on behalf of all present and future asbestos and lead
personal injury claims. The Plan also provides for, and its effectiveness is
conditioned on, the issuance of an order permanently prohibiting and enjoining
all holders of asbestos and lead personal injury claims from asserting or
pursuing such claims against the reorganized Company.
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Pursuant to the Plan, the Company will distribute certain amounts of cash,
debt securities, and common stock of the reorganized Company to the PI Trust
and to holders of allowed unsecured claims on a pro-rata basis proportionate to
the percentage of their claims to the total of the Liabilities Subject to
Compromise. The Plan also provides that priority claims and convenience claims
(general unsecured claims in an amount less than or equal to $500 or which have
been reduced by the claimant to $500 or less) will be paid in full, in cash.
The Plan does not provide for any distribution to shareholders and their equity
will be canceled.
The claims of the federal government and of certain states alleging
pre-petition environmental liabilities are also addressed in the Plan.
Pursuant to the Plan, these claims will be treated in accordance with a
settlement agreement that has been executed by the Company, the United States
Environmental Protection Agency (the "EPA"), the Department of Interior, and
certain states. This agreement is subject to the approval of the Bankruptcy
Court. Pursuant to the agreement, the Company's liability at 23 specified
Superfund sites and one site resolved with a state has been resolved and is to
be treated under the Plan as a pre-petition unsecured claim of approximately
$43.0 million. The agreement also provides that certain additional sites, for
which the parties have insufficient information to negotiate a meaningful
settlement at this time, may be resolved in the future when such information is
known. Any liability for these additional sites will be satisfied at such
future time essentially with the same type and amount of consideration that
pre-petition general unsecured creditors will receive with respect to their
allowed claims pursuant to a confirmed plan of reorganization in the chapter 11
cases.
During the quarter, the Company filed a motion requesting that the
Bankruptcy Court estimate the Company's aggregate liability on account of
present and future asbestos-related personal injury claims. As set forth in
the motion, the estimate of such aggregate liability would be for the purpose
of determining the appropriate distributions to creditor classes under the Plan
or any other plan that may be proposed in the chapter 11 cases. The hearing on
the motion is expected to be concluded on October 17, 1995. When the
Bankruptcy Court renders its decision with respect to the motion and depending
on what such decision states, it may be necessary to amend the Plan to reflect
such decision. Such an amendment may alter, among other things, the amount of
the allowed PI Trust Claim, the allocation of the consideration to be
distributed under the Plan among the various creditor constituencies, and
therefore the value creditors ultimately will receive. At this time, the
Company is not able to predict when the Bankruptcy Court will render its
decision with respect to the motion or what such decision may be.
In view of the foregoing and the fact that an effective date of November
30, 1995 for a plan of reorganization is no longer achievable, the previous
estimates made by the Company that approximately 91% of the consideration
distributable under the Plan will be distributed to the PI Trust and that each
holder of an allowed pre-petition unsecured claim that is not channeled to the
PI Trust will ultimately receive consideration under the Plan having a value
equal to approximately 42.5% of its allowed claim, may change. At this time,
it is not possible for the Company to estimate when a plan of reorganization
will be confirmed and become effective.
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<PAGE> 10
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>
August 31, November 30,
1995 1994
---- ----
<S> <C> <C>
Asbestos liability $1,500,000 $1,499,993
Long-term debt (unsecured portion) 62,004 62,004
Accounts payable 41,210 41,074
Accrued and other liabilities 53,803 54,194
--------- ---------
$1,657,017 $1,657,265
========= =========
</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 it is expected that
distributions under a plan of reorganization with respect to such claims may be
in lesser amounts. 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, "Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code," which would result in adjustments relating to the
amounts and classification of recorded assets and liabilities, determined as of
the plan confirmation date. Pursuant to the Plan, the ultimate consideration
to be received by the unsecured creditors will be substantially less than the
amounts shown in the accompanying Consolidated Balance Sheet. Until a plan of
reorganization is confirmed, however, the Company cannot be certain of the
final terms and provisions thereof or the ultimate amount creditors will
receive.
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):
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
August 31 August 31
----------------- --------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Professional fees and other
expenses directly related
to bankruptcy $ 1,539 $ 1,961 $ 4,617 $5,257
Interest income (1,407) (982) (3,729) (2,273)
------ ------ ----- -----
$ 132 $ 979 $ 888 $2,984
====== ====== ===== =====
</TABLE>
Interest income is attributable to the accumulation of cash and short-term
investments subsequent to the petition date.
B. INVESTMENTS
-----------
On December 1, 1994, the Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." The Company held certain equity securities having no cost basis,
but which had a fair value of approximately $5.4 million as of the date of
adoption. Substantially all of these investments were sold in June, 1995
resulting in a realized gain of $11.5 million.
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C. LITIGATION
----------
As discussed in Note K to the Consolidated Financial Statements included
in the Company's Annual Report, which Statements are also incorporated in the
Company's Report on Form 10-K for the fiscal year ended November 30, 1994, 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 cases do not
provide sufficient information to enable the Company to determine 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. As discussed in footnote A in this Report, the Company filed a motion
requesting that the Bankruptcy Court estimate the Company's aggregate liability
on account of present and future asbestos-related personal injury claims.
Utilizing information available from the Company and from other sources, the
Company's expert and the experts retained by the committees and the RFC
appointed in the chapter 11 cases have given opinions as to this liability in
the hearing before the Bankruptcy Court on the motion. Although the hearing on
the motion is expected to conclude on October 17, 1995, the Company is not able
to predict when the Bankruptcy Court will render its decision on this motion or
what such decision may be.
There are forty lawsuits pending, but stayed, against the Company,
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. At least three of the pending cases have been
certified as class actions and one was conditionally certified. Class
certification was sought by the plaintiffs in two other cases. One of such
cases has been dismissed; the other is still pending. Prior to filing its
chapter 11 petition, the Company settled seven asbestos- related property
damage cases for less than $22,000 in the aggregate.
The Plan currently provides for procedures to resolve and discharge
asbestos-related property damage claims. These procedures will require, among
other things, that such claimants prove by application of a scientific protocol
that the asbestos-containing insulation products for which they are seeking
damages were manufactured by the Company.
In addition, the Company is a defendant in various other litigation which
was pending as of the petition date, which was discussed in Note L to the
Consolidated Financial Statements for the fiscal year ended November 30, 1994.
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 will be resolved in the context of
a plan of reorganization in the chapter 11 cases. 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.
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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. 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 other litigation claims discussed herein
cannot be reasonably predicted due to numerous uncertainties that are inherent
in the reorganization process. The Company believes, however, that its
provision for these claims is adequate. In addition, the Company may have
insurance coverage for certain of these claims and may have factual and legal
defenses available to it.
D. 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, 1994.
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, 1995 and 1994. Results of
operations for interim periods are not necessarily indicative of results 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, 1995 were $210.7 million
compared with $186.2 million for the third quarter of 1994. Operating income
declined to $14.0 million from $14.2 million for the same period last year.
Net income for the third quarter of 1995 was $23.4 million or $2.12 per share
compared with $11.7 million or $1.06 per share for the same period of 1994.
This increase is a result of the Company's realization of a pretax gain of
$11.5 million on the sale of securities during the quarter.
Generally, the economy continued to perform at a reasonably high level.
However, profitability was adversely affected in the Automotive Group due to
difficulty in recovering from customers increases in raw material costs. This
is a concern, particularly if a decline in automotive production should occur.
Profitability was also impacted by product development costs for new programs
which are expected to come on-line during the next two fiscal quarters. These
new programs have also contributed to increased deferred tooling costs
reflected primarily in the prepaid expenses and other asset captions in the
Consolidated Balance Sheet. These costs should be recovered from customers
throughout the fourth quarter of 1995 and into early 1996. European operations,
particularly those in Germany, continued to experience high levels of demand
throughout the third quarter of 1995. After the close of the third quarter,
the Company announced its intention to sell the injection molding and
microcellular portions of the Orthane Division's business.
Further improvements by the Construction Equipment Division accounted
for much of the gain in the Machinery Group during the period. Shipments of
wheeled tractor scrapers and forklift trucks were at a high level and continued
improvement in operating efficiencies accounted for much of this gain in
profitability. It is anticipated, however, that production schedules for
wheeled tractor scrapers in the fourth quarter and the beginning of 1996 will
be reduced.
In the Industrial Group, the Minerals Division, which manufactures
diatomaceous earth products, experienced increases in sales and earnings over
the third quarter of 1994 due to a stronger demand for absorbent and filter-aid
products. The Specialty Materials Division, a manufacturer of germanium,
boron, and gallium compounds used in the electronics and nuclear industries,
introduced a relatively successful new boron product line in 1994. This new
product line, along with strong demand for boron products used in
semiconductors, has contributed to increased sales and profitability.
Interest expense has not changed appreciably in 1995. It was $1.4 million
in the first nine months of 1995 compared to $1.3 million in the same period in
1994. Contractual interest on debt outstanding was $2.2 million in the third
quarters of 1995 and 1994, and $6.7 million for the nine month periods ended
August 31, 1995 and 1994.
Capital expenditures totaled $10.8 million in the third quarter of 1995 and
$24.8 for the nine months ended August 31, 1995 compared to $8.1 million and
$24.4 million in the respective periods of 1994. The Company currently expects
that capital expenditures for the 1995 fiscal year will be somewhat higher than
those for 1994 due in part to the expansion of the Blacksburg, Virginia
operation.
On February 28, 1995, the Company filed a plan of reorganization (the Plan)
with the U.S. Bankruptcy Court, Southern District of Ohio, in Cincinnati, Ohio.
The Plan was proposed jointly with the Injury Claimants' Committee ("ICC") and
the Legal Representative for Future Claimants ("RFC"). The ICC represents,
among others, approximately 150,000 persons alleging injury due to exposure to
asbestos-containing products manufactured by Eagle-Picher from 1934 to 1971.
Future personal injury claimants are represented by the RFC. The Plan does not
have the support of either the Unsecured Creditors' Committee or the Equity
Security Holders' Committee appointed in the chapter 11 cases. As has been
stated in past reports, under any
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<PAGE> 14
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 creditors receive
satisfaction in full of their allowed claims or accept a plan which allows
shareholders to participate in the reorganized company or receive a
distribution.
During the quarter, the Company filed a motion requesting that the
Bankruptcy Court estimate the Company's aggregate liability on account of
present and future asbestos-related personal injury claims. The hearing on the
motion is expected to be concluded on October 17, 1995. When the Bankruptcy
Court renders its decision with respect to the motion and depending on what
such decision states, it may be necessary to amend the Plan to reflect such
decision. At this time, the Company is not able to predict when the Bankruptcy
Court will render its decision with respect to the motion or what such decision
may be. The Company also is unable to predict when a plan of reorganization
will be confirmed and become effective.
Reorganization expenses were $0.1 million in the third quarter of 1995
compared to $1.0 million in the same period of 1994, and these expenses were
$1.0 million and $3.0 million for the first nine months of 1995 and 1994,
respectively. It is anticipated that the actual costs associated with the
administration of the chapter 11 cases for the remainder of 1995 will increase
from their current levels due to the filing of the Plan and the filing of the
motion referred to above. However, any such increase should be offset by the
additional interest income earned on cash balances.
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<PAGE> 15
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
(a) Chapter 11 Proceedings.
----------------------
On June 9, 1995, the Bankruptcy Court entered an order disallowing seven
proofs of claim filed in the Company's chapter 11 case in which the claimants
asserted liability for personal injuries from lead chemicals allegedly
manufactured and sold by the Company. These claims were previously discussed
in the Company's Report on Form 10-K for the fiscal year ended November 30,
1994.
During the quarter, the Company filed a motion requesting that the
Bankruptcy Court estimate the Company's aggregate liability on account of
present and future asbestos-related personal injury claims. As set forth in
the motion, the estimate of such aggregate liability would be for the purpose
of determining the appropriate distributions to creditor classes under the plan
which has been filed or any other plan that may be proposed in the chapter 11
cases. The hearing on the motion is expected to be concluded on October 17,
1995. When the Bankruptcy Court renders its decision with respect to the
motion and depending on what such decision states, it may be necessary to amend
the plan which has been filed to reflect such decision. At this time, the
Company is not able to predict when the Bankruptcy Court will render its
decision with respect to the motion or what such decision may be. The Company
also is unable to predict when a plan of reorganization will be confirmed and
become effective.
(b) Environmental.
-------------
After the close of the quarter, on September 26, 1995, the United States
District Court in Denver, Colorado accepted the plea agreement between the
Company and the United States resolving all charges of the United States
Attorney in Denver, Colorado against the Company's operations in Colorado
Springs, Colorado. These charges, related compliance issues raised by the EPA,
and the tentative settlement of all such matters were previously reported in
the Company's Report on Form 10-K for the fiscal year ended November 30, 1994.
The Company also reported the Bankruptcy Court's approval of the settlement of
all such matters in its Report on Form 10-Q for the quarter ended May 31, 1995.
With the acceptance of the agreement by the District Court in Denver, Colorado,
all such matters are resolved and the settlement thereof is final.
After the close of the quarter, on September 11, 1995, the United States
filed a motion seeking Bankruptcy Court approval of the settlement among the
Company, the EPA, the Department of Interior and certain states resolving
certain pre-petition claims against the Company based on environmental matters
at most of the Company's known Superfund sites, including any alleged liability
for natural resource damage. This settlement was previously reported in the
Company's Report on Form 10-K for the fiscal year ended November 30, 1994 and
its Reports on Form 10-Q for the quarters ended February 28, 1995 and May 31,
1995. As reported in its Report on Form 10-Q for the quarter ended May 31,
1995, the Company also filed a motion during the second quarter of 1995 seeking
Bankruptcy Court approval of this settlement. Several parties have publicly
commented on the settlement and have filed objections to it with Bankruptcy
Court. The Bankruptcy Court has scheduled a hearing for November 15, 1995, at
which it will consider the motions of the United States and the Company to
approve the settlement.
(c) Other.
-----
Litigation brought by Moltan Company against the Company and its
Eagle-Picher Minerals, Inc. subsidiary has been resolved. This litigation was
previously reported in the Company's Report on Form 10-K for the fiscal year
ended November 30, 1994. Pursuant to the parties' settlement, the preliminary
injunction enjoining Moltan from selling its products with labels
15
<PAGE> 16
containing false and misleading information has been converted into a permanent
injunction. In addition, Moltan has paid $100,000 to the Company and its
subsidiary in settlement of their damage claims against Moltan. Finally, all
claims which Moltan has asserted or could assert against the Company and its
subsidiary have been dismissed with prejudice.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
The chapter 11 filings constituted a default under substantially all of
the indebtedness of the Company and its affiliates. 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 has been
making settlements or "adequate protection" payments approved by orders of the
Bankruptcy Court.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
--------
27 - Financial Data Schedule.
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.
/s/ David N. Hall
-----------------------------
David N. Hall,
Senior Vice President - Finance and
Chief Financial Officer
DATE October 12, 1995
------------------
17
<PAGE> 18
EXHIBIT INDEX
-------------
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule (submitted
electronically to the Securities
and Exchange Commission for its
information)
18
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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>
<CIK>
<NAME> EAGLE-PICHER INDUSTRIES, INC.
<MULTIPLIER> 1,000
<CURRENCY> U S DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> AUG-31-1995
<EXCHANGE-RATE> 1
<CASH> 100,398
<SECURITIES> 0
<RECEIVABLES> 116,840
<ALLOWANCES> 1,434
<INVENTORY> 87,493
<CURRENT-ASSETS> 325,080
<PP&E> 430,296
<DEPRECIATION> 282,285
<TOTAL-ASSETS> 575,234
<CURRENT-LIABILITIES> 87,850
<BONDS> 81,772
<COMMON> 13,906
0
0
<OTHER-SE> (1,212,330)
<TOTAL-LIABILITY-AND-EQUITY> 575,234
<SALES> 633,704
<TOTAL-REVENUES> 633,704
<CGS> 527,028
<TOTAL-COSTS> 527,028
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,446
<INCOME-PRETAX> 58,417
<INCOME-TAX> 5,215
<INCOME-CONTINUING> 53,202
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,202
<EPS-PRIMARY> 4.82
<EPS-DILUTED> 4.82
</TABLE>
