<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, 1995 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 12, 1995.
1
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EAGLE-PICHER INDUSTRIES, INC.
QUARTERLY REPORT - FORM 10-Q - FOR THE QUARTER ENDED MAY 31, 1995
TABLE OF CONTENTS
<TABLE>
<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 6. Exhibits and Reports on Form 8-K........................ 15
Signature........................................................ 16
Exhibit Index.................................................... 17
</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 Six Months Ended
May 31 May 31
------------------ ----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C>
Net Sales $225,378 $196,994 $422,981 $374,748
------- ------- ------- -------
Operating Costs and Expenses:
Cost of products sold 186,658 160,816 349,946 307,199
Selling and administrative 19,573 18,641 38,775 36,231
------- ------- ------- -------
206,231 179,457 388,721 343,430
------- ------- ------- -------
Operating Income 19,147 17,537 34,260 31,318
Interest expense (500) (455) (987) (909)
Other income 21 72 406 238
------- ------- ------- -------
Income Before Reorganization
Items and Taxes 18,668 17,154 33,679 30,647
Reorganization items (331) (923) (756) (2,005)
------- ------- ------- -------
Income Before Taxes 18,337 16,231 32,923 28,642
Income Taxes 1,561 1,562 3,115 2,934
------- ------- ------- -------
Net Income $ 16,776 $ 14,669 $ 29,808 $ 25,708
======= ======= ======= =======
Income per Share $1.52 $1.33 $2.70 $2.33
======= ======= ======= =======
</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 May 31 Nov. 30
1995 1994
-------- --------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 96,834 $ 92,606
Receivables, less allowances 117,668 109,130
Income tax refund receivable 2,373 2,246
Inventories:
Raw materials and supplies 49,525 47,777
Work in process 20,705 19,444
Finished goods 17,052 14,761
-------- --------
87,282 81,982
Prepaid expenses 14,730 10,295
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Total current assets 318,887 296,259
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PROPERTY, PLANT AND EQUIPMENT 420,368 408,018
Less accumulated depreciation 276,064 263,369
-------- --------
Net property, plant and equipment 144,304 144,649
DEFERRED INCOME TAXES 53,424 43,924
OTHER ASSETS 52,097 36,275
-------- --------
Total Assets $ 568,712 $ 521,107
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 43,199 $ 43,691
Long-term debt - current portion 1,628 1,726
Income taxes 7,846 5,223
Other current liabilities 39,443 35,321
-------- --------
Total current liabilities 92,116 85,961
-------- --------
LIABILITIES SUBJECT TO COMPROMISE 1,657,017 1,657,265
LONG-TERM DEBT - less current portion 19,059 19,896
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 21,736 21,070
OTHER LONG TERM LIABILITIES 2,711 3,608
-------- -------
Total liabilities 1,792,639 1,787,800
--------- ---------
</TABLE>
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EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
<TABLE>
<CAPTION>
May 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 2,971 2,054
Unrealized gain on investment 12,041 -
Accumulated deficit (1,287,310)(1,317,118)
--------- ---------
(1,222,014)(1,264,780)
Cost of 84,068 common treasury shares (1,913) (1,913)
-------- --------
Total Shareholders' Equity (Deficit) (1,223,927)(1,266,693)
--------- ---------
Total Liabilities and Shareholders' Equity
(Deficit) $568,712 $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>
Six Months Ended
May 31
------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 29,808 $ 25,708
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 14,572 12,917
Changes in assets and liabilities:
Receivables (8,538) (6,356)
Inventories (5,300) (1,075)
Deferred taxes (9,500) (8,000)
Accounts payable (492) (129)
Accrued liabilities 4,122 3,422
Other (6,139) (2,182)
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Net cash provided by operating
activities before changes in
liabilities subject to compromise 18,533 24,305
Changes in liabilities subject
to compromise (255) (97)
------- --------
Net cash provided by
operating activities 18,278 24,208
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (13,978) (16,257)
Other 908 472
------- --------
Net cash used in
investing activities (13,070) (15,785)
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of long-term debt (980) (1,363)
------- --------
Net cash used in
financing activities (980) (1,363)
</TABLE>
6
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EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
May 31
------------------
1995 1994
---- ----
<S> <C> <C>
Net increase (decrease) in cash and cash equivalents 4,228 7,060
Cash and cash equivalents, beginning of period 92,606 84,574
-------- --------
Cash and cash equivalents, end of period $ 96,834 $ 91,634
======== ========
Supplemental cash flow information:
Cash paid during the year:
Interest paid $ 955 $ 880
Income taxes paid (net of refunds received) $ 10,119 $ 8,819
Cash paid during the quarter:
Interest paid $ 462 $ 339
Income taxes paid (net of refunds received) $ 9,478 $ 8,488
</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 in the Company's chapter 11 case,
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. Since the filing of the Plan, the Company has continued to pursue its
goal of achieving a plan of reorganization which has the support of the UCC and
the ESC, as well as the support of the ICC and the RFC. To date, however,
little progress has been made toward achieving this goal and there is no
assurance that it will ever be achieved. 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 Bankruptcy
Court has not set a date to consider approval of the Disclosure Statement.
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"). 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 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
(approximately 91 percent of each of the foregoing types of consideration will
be distributed to the PI Trust). The Company estimates that, based upon the
provisions of the Plan and the Company's estimate of the total amount of
allowed claims, each holder of an allowed pre-petition unsecured claim that is
not channeled to the PI Trust will ultimately receive consideration having a
value equal to approximately 42.5% of its allowed claim. These estimates
assume that the Plan will become effective on or about November 30, 1995 and
also are determined based upon the projected book value of the common stock of
the reorganized Company as of such date. The recoveries to creditors may
differ, however, should the total amount of allowed claims or the value of the
Company differ from the Company's estimates or should the Plan not become
effective on or about November 30, 1995. At this time, it is not possible for
the Company to estimate when a plan of reorganization will be confirmed and
become effective.
The Plan provides further 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 public comment and 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 as a pre-petition unsecured claim of approximately $43.0
million under the Plan. 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
pursuant to a confirmed plan of reorganization in the Company's chapter 11
case.
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,
1995 1994
---- ----
<S> <C> <C>
Asbestos liability $1,500,000 $1,499,993
Long-term debt (unsecured portion) 62,004 62,004
Accounts payable 41,209 41,074
Accrued and other liabilities 53,804 54,194
--------- ---------
$1,657,017 $1,657,265
========= =========
</TABLE>
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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, 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 Six Months
Ended Ended
May 31 May 31
----------------- ----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C>
Professional fees and other
expenses directly related
to bankruptcy $ 1,563 $ 1,624 $ 3,078 $3,296
Interest income (1,232) (701) (2,322) (1,291)
------ ------ ----- -----
$ 331 $ 923 $ 756 $2,005
====== ====== ===== =====
</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 holds certain equity securities having no cost basis,
but which had a fair value of approximately $5.4 million as of the date of
adoption. On a prospective basis, this amount has been included as an
unrealized gain on investments in a separate component of shareholders' equity.
The fair value of these investments, included in Other Assets in the
Consolidated Balance Sheet, was approximately $12.0 million at May 31, 1995,
resulting in an increase in net unrealized gains on investments of $6.6
million. Substantially all of these investments were sold in June, 1995 for
$11.5 million.
C. LITIGATION
As discussed in Note K to the Consolidated Financial Statements included
in the Company's Annual Report and 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.
10
<PAGE> 11
Many of the asbestos-related claims filed in the chapter 11 case 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. 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 Plan filed with the Bankruptcy
Court on February 28, 1995, which is discussed in footnote A, is in the best
interests of the Company.
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. 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 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.
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 various factual and
legal defenses available to it.
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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 six month periods ended May 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 second quarter ended May 31, 1995 were $225.4 million
compared with $197.0 million for the second quarter of 1994. Operating income
increased to $19.1 million from $17.5 million for the same period last year.
Net income for the second quarter of 1995 was $16.8 million or $1.52 per share
compared with $14.7 million or $1.33 per share in the second quarter of 1994.
In the Automotive Group, which represented 53% of the Company's sales for
the first half of 1995, the Wolverine Gasket Division experienced an excellent
quarter. Wolverine is a leading supplier of gasket and brake materials to the
worldwide automotive market. An expansion of the Division's Blacksburg,
Virginia facility is underway because of the Division's continued market
penetration. Hillsdale Tool Division also enjoyed an excellent quarter. This
Division benefitted from its strong position as a supplier of components to the
light truck, van, and sport utility vehicle segment of the market. The
Plastics Division experienced improved results for the second quarter. High
inventory levels of the General Motors All-Purpose Van, however, will adversely
affect the Division's operations during the second half of the year. European
operations enjoyed healthy demand for their products and increased their market
share during the second quarter of 1995. Delayed start-ups of new programs and
projected lower production levels for certain vehicle models will adversely
affect some operations in the Automotive Group during the second half of 1995.
This, however, should be offset by broader market penetration.
The improved performance of the Construction Equipment Division accounted
for much of the improvement in the Machinery Group. High levels of shipments
of wheeled tractor scrapers and forklift trucks and continued improvement in
operating efficiencies accounted for the gains. The results for the
Electronics Division were similar to those for the second quarter of 1994.
This Division has been able to develop products for the commercial aerospace
market and also serves those segments of the defense market which have been
less susceptible to funding cuts than others.
In the Industrial Group, the Minerals Division, which manufacturers
diatomaceous earth products primarily for the consumer, non-durable market,
performed well during the quarter. Results of the remaining operations in the
Group were mixed.
Although economic activity generally remained at a high level during the
second quarter, there are indications that certain segments of the business may
not be as strong during the second half of 1995 as they were in the first half.
This is likely to be particularly true for some operations serving the
automotive industry. It is also anticipated that later in the year and
entering fiscal 1996, operations which manufacture earth moving equipment for
the worldwide construction market will see a decline.
Interest expense has increased slightly to $1.0 million in the first six
months of 1995 compared to $0.9 million in the same period in 1994 due to
increases in interest rates. Contractual interest on debt outstanding was $2.3
million and $2.2 million in the second quarters of 1995 and 1994, respectively,
and $4.5 million for the six month periods ended May 31, 1995 and 1994.
Capital expenditures totaled $7.5 million in the second quarter of 1995 and
$14.0 for the six months ended May 31, 1995 compared to $9.0 million and $16.3
million in the respective periods of 1994. The Company currently expects,
however, 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.
13
<PAGE> 14
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. Since the filing
of the Plan, the Company has continued to pursue its goal of achieving a plan
of reorganization which has the support of the Unsecured Creditors' Committee
and the Equity Security Holders' Committee appointed in its chapter 11 case, as
well as the support of the ICC and RFC. To date, however, little progress has
been made toward achieving this goal and there is no assurance that it will
ever be achieved. As has been stated in past reports, 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 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. At this time, it is not
possible for the Company to estimate when a plan of reorganization will be
confirmed and become effective.
Reorganization expenses were $0.3 million in the second quarter of 1995
compared to $0.8 million in the same period of 1994, and these expenses were
$0.9 million and $2.0 million for the first six 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 pursuit of
confirmation thereof. However, any such increase should be offset by the
additional investment income earned on cash balances due to higher interest
rates in 1995.
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<PAGE> 15
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
During the quarter, the Company filed a motion seeking Bankruptcy Court
approval of its settlement with 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 report on Form 10-Q for the quarter ended
February 28, 1995. Several parties publicly commented on the settlement and
have filed objections to it with the Bankruptcy Court. No hearing has yet been
scheduled before the Bankruptcy Court with respect to the Company's motion to
approve the settlement.
On June 21, 1995 the Bankruptcy Court approved the settlement resolving
all pending charges of the United States Attorney in Denver, Colorado and the
EPA against the Company's operations in Colorado Springs, Colorado. The
Company previously reported these charges and the tentative settlement thereof
in its Report on Form 10-K for the fiscal year ended November 30, 1994. The
settlement remains subject in part to the approval of the United States
District Court in Denver, Colorado.
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
--------
10 - Eagle-Picher Industries, Inc. Supplemental Executive Retirement
Plan, as amended May 3, 1995.
27 - Financial Data Schedule.
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 July 13, 1995
-----------------
16
<PAGE> 17
EXHIBIT INDEX
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Exhibit No. Description
- ---------- -----------
10 Eagle-Picher Industries, Inc. Supplemental
Executive Retirement Plan, as amended
May 3, 1995
27 Financial Data Schedule (submitted
electronically to the Securities
and Exchange Commission for its
information)
17
<PAGE> 1
EXHIBIT 10
EAGLE-PICHER INDUSTRIES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AS AMENDED MAY 3, 1995
<PAGE> 2
SECTION 1. ESTABLISHMENT OF THE PLAN
1.1 ESTABLISHMENT OF THE PLAN. Eagle-Picher Industries, Inc. (the
"Company") established, effective November 4, 1987, this supplemental
retirement plan for eligible employees of the Company, which plan shall be
known as the EAGLE-PICHER SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (the "Plan").
1.2 DESCRIPTION OF THE PLAN. This Plan has been established as an
unfunded plan in order to provide supplemental retirement benefits for a select
group of management or highly compensated employees and as such the Plan is
exempt from the participation, vesting, funding and fiduciary requirements of
Title I of the Employee Retirement Income Security Act of 1974, as amended.
SECTION 2. DEFINITIONS
2.1 DEFINITIONS. Whenever used in the Plan, the following terms
shall mean:
(a) "Accrued Benefit" means the benefit payable to the Member
under Section 4.1 or Section 4.2 determined as if the Member's
participation under the Plan terminated as of the date the
accrued benefit is being measured.
(b) "Affiliate" means each wholly-owned subsidiary of the Company.
(c) "Board of Directors" means the Board of Directors of
Eagle-Picher Industries, Inc.
(d) "Committee" means the Committee as defined in Section 6.1
hereof.
(e) "Company" means Eagle-Picher Industries, Inc., or any
successor thereto.
(f) "Effective Date" means November 4, 1987.
(g) "Final Average Monthly Salary" means the sum of the Employee's
Salary for the five consecutive calendar years of his service
as a Member of this Plan in which
1
<PAGE> 3
he had the highest Salary during his last ten calendar years
of service as a Member of this Plan divided by 60.
(h) "Other Pension" means the actuarial equivalent life annuity
value of any benefit from any qualified defined benefit or
defined contribution plan maintained by the Company or an
Affiliate (other than the Eagle-Picher Savings Plan) and the
Member's Primary Social Security.
(i) "Participant" means key employees designated by the Board of
Directors.
(j) "Plan" means The Eagle-Picher Industries, Inc. Supplemental
Executive Retirement Plan.
(k) "Plan Year" means the fiscal year of the Company (which
presently ends November 30).
(l) "Primary Social Security" means the monthly benefit which a
retired Member or a terminated Member receives or would be
entitled to receive at his 62nd birthday, or in the case of a
Member who terminates employment after age 62, at the date his
Benefit Service terminates as a primary insurance amount under
the U.S. Social Security Act, as amended, whether he applies
for such benefit or not, and even though he may lose part or
all of such benefit for any reason. The amount of such
Primary Social Security to which the retired or terminated
Member is or would be entitled shall be estimated and computed
by the Company for the purposes of the Plan as of the January
1 of the calandar year of retirement or termination on the
following basis:
(1) For a Member whose Benefit Service terminates on or
after his Normal Retirement Age, on the basis of the
U.S. Social Security Age as amended
2
<PAGE> 4
and in effect, and the rate in effect, on the
January 1 coincident with or next preceding his
Normal Retirement Date (regardless of any
retroactive changes made by legislation enacted
after said January 1).
(2) For a Member whose Benefit Service
terminates prior to his Normal Retirement Age, on the
basis and at the rate of the U.S. Social Security Act
as amended and in effect on the January 1 coincident
with or next preceding the date of termination of his
Benefit Service (regardless of any retroactive
changes made by legislation enacted after said
January 1), and, assuming that he will continue to
have each year until he reaches age 62, annual
compensation in covered employment under the Act at
least equal to the maximum earnings which are
considered compensation subject to tax under the Act.
In the case of a Member whose projected Benefit Service at
age 62 will be less than 25 years, the amount of the Member's
Primary Social Security will be prorated based on Benefit
Service projected to age 62 (maximum 25 years) divided by
25 years. If a Member's Benefit Service terminates after age
62 and is less than 25 years, his Primary Social Security
will be prorated based on actual years of Benefit Service
(maximum 25 years) divided by 25 years.
(m) "Normal Retirement Age" means a Member's age when he
has attained his 62nd birthday
and has completed ten years of Vesting Service.
(n) "Normal Retirement Date" means the
first day of the calendar month coincident with or
next following a Member's Normal Retirement Age.
(o) "Salary" means a Member's total
aggregate calendar year compensation before any
deferral under the Eagle-Picher Savings Plan or the
Eagle-Picher Flex Plan,
3
<PAGE> 5
including bonuses, commissions, overtime pay and
severance pay, but excluding fringe benefits
(including but not limited to automobile allowances,
imputed income from group term life insurance,
relocation allowances, income from the exercise
of non-qualified stock options or disposition
of incentive stock option stock, interest
reimbursements, and income from annuity purchases
under Section 5.1 or tax reimbursements under
Section 5.2 of this Plan). Bonuses accrued after
1984 shall be included in Salary for the calendar
year of accrual if actually paid by January 15th of
the following year. All other bonuses shall be
included in Salary for the calendar year in which
paid.
2.2 GENDER REFERENCE. Any words in this Plan document (or
amendments to it) which are used in one gender shall be read and construed to
mean or include the other sender wherever they would so apply.
SECTION 3. MEMBERSHIP AND SERVICE
3.1 MEMBERSHIP. A person will become a Member upon designation by
the Board of Directors. A Member's participation in the Plan may be terminated
by action of the Board of Directors if the Member's position with the Company
is changed.
3.2 SERVICE. A Member's Vesting Service and Benefit Service under
the Plan shall be computed in the same manner as they would be computed under
the Eagle-Pitcher Salaried Plan; provided, however, that the Executive
Committee of the Board of Directors, in its discretion, may grant additional
Vesting Service and Benefit Service to a Member by written notice to the Member
with a copy to the Committee.
SECTION 4. BENEFITS
4.1 TERMINATION ON OR AFTER AGE 62. The monthly benefit payable for
life
4
<PAGE> 6
commencing at age 62 for an individual who terminates employment with
the Company or an Affiliate on or after attainment of age 62 with at least 10
years of Vesting Service shall be equal to:
(1) .024 multiplied by the Member's Final Average Monthly Salary
and multiplied by his Benefit Service (maximum 25 years)
(2) minus any Other Pension payable at that date.
4.2 TERMINATION BEFORE AGE 62. The monthly benefit payable for life
commencing at age 62 for an individual who terminates employment with the
Company or an Affiliate before age 62 with at least 10 years of Vesting
Service shall be equal to:
(1) .024 multiplied by the Member's Final Average Monthly Salary
and multiplied by his Benefit Service projected to age 62
(maximum 25 years)
(2) minus any Other Pension (projecting service to age 62, using
the Member's current Final Average Monthly Salary and the
Member's Primary Social Security payable at age 62)
(3) multiplied by Benefit Service earned (maximum 25 years)
divided by Benefit Service projected to age 62 (maximum
25 years);
provided, however, that in no event shall the sum of the Member's Other
Pension and the benefit payable under this section be less than .024
multiplied by the Member's Final Average Monthly Salary and multiplied by his
Benefit Service earned (maximum 25 years).
4.3 TERMINATION WITHOUT 10 YEARS OF VESTING SERVICE. A Member who
terminates employment with the Company or an Affiliate before earning ten years
of Vesting Service shall not be entitled to any benefits under this Plan.
4.4 FORM OF BENEFITS. The normal form of benefits payable under
this Plan
5
<PAGE> 7
shall be monthly payments for the life of the Member. To the extent
the Company has purchased annuity contracts for the Member's Accrued Benefit
under the Plan, payments made under the annuity contracts shall satisfy the
Company's obligation hereunder.
SECTION 5. ANNUITY PURCHASES AND TAX REIMBURSEMENT
5.1 ANNUITY PURCHASES. The Company may purchase single premium
annuity contracts from time to time to provide for a Member's Accrued Benefit
under the Plan. Upon a Member's
termination of employment, the Company may distribute the cost of purchasing an
annuity to the Member rather than purchasing an annuity for the portion of his
benefit not otherwise provided for.
5.2 TAX REIMBURSEMENT. The Company will reimburse the Member an
amount calculated to approximate the income and excise tax liability
attributable to any annuity purchase. The Committee shall determine the
federal, state and local tax rates to be used. The Committee's determination
of these tax rates shall be final. The Member will have a basis in the annuity
contract equal to the amount the Company pays for the annuity.
SECTION 6. ADMINISTRATION
6.1 PLAN ADMINISTRATOR AND FIDUCIARY. The Committee shall be the
Plan Administrator and shall be named fiduciary under the Plan. The Committee
shall consist of not less than three persons (who may be Members) who shall be
appointed by the Board of Directors. The number of members on the Committee
may be increased or decreased from time to time provided the total number of
members shall at all times be an odd number and shall not be less than three.
A member of the Committee may resign or he may be removed by the Board of
Directors.
6.2 CHAIRMAN AND SECRETARY. The Committee shall select a Chairman
and
6
<PAGE> 8
may select a Secretary (who need not be a member of the Committee) to keep
its records or to assist it in the performance of any of its functions.
6.3 POWERS AND DUTIES. The Committee shall administer the Plan and
shall have the power and the duty to take all action, and to make all decisions
necessary or proper to carry out the Plan, including, without limitation, the
following:
(a) To interpret the Plan, which interpretations shall be final
and conclusive;
(b) To resolve all questions concerning the Plan;
(c) To compute the benefit to be paid to any person under the Plan.
Provided, however, that the Committee may delegate all or part of its
powers and duties in connection with administering the Plan to a named delegate.
6.4 APPOINTMENT OF AGENTS AND DELEGATION OF DUTIES. The Committee
may appoint such accountants, actuaries, counsel, specialists and other persons
as it shall deem necessary or desirable in connection with the administration
of the Plan. The Committee and any person to whom it may delegate any duty or
power in connection with administering the Plan shall be entitled to rely
conclusively upon, and shall be fully protected in any action taken by them in
good faith in reliance upon, any tables, valuations, certificates, opinions or
reports which shall be furnished to them by any such actuary, counsel or other
specialist.
6.5 ACTION OF COMMITTEE. The Committee may act by a majority of
its members either at a meeting or in writing without a meeting.
6.6 COMPENSATION. Unless otherwise agreed to by the Company,
members of the Committee shall serve without compensation. All expenses of the
Committee shall be paid by the Company.
7
<PAGE> 9
6.7 INDEMNITY FOR LIABILITY. The Company shall indemnify the
Committee, its members and delegates, against any and all claims, losses,
damages, expenses, including counsel fees, incurred by these parties and any
liability, including any amounts paid in settlement with the Committee's
approval, arising from the Committee's, its members' and/or delegates' action
or failure to act, except when the same is judicially determined to be
attributable to the gross negligence or willful misconduct of such Member.
6.8 CLAIMS PROCEDURE.
(a) Claim, Denial and Notice: All claims for benefits shall be in
writing and signed by the Member or Beneficiary. Any Member
or Beneficiary whose written request to the Committee for
benefits has been denied in whole or in part shall be
furnished with written notice of the denial of this claim by
the Committee within sixty (60) days of receipt by the
Committee of the claim. Such notice shall be written in a
manner calculated to be understood by the Member or
Beneficiary and shall contain the specific reasons for such
denial, specific references to pertinent Plan provisions on
which the denial is based, a description of additional
material or information which is needed to complete the claim
and why such is necessary, and an explanation of the Plan's
appeal procedure.
(b) Appeal: Within sixty (60) days after the receipt of a notice
that his claim was denied, the claimant may appeal in writing
the denial of his claim to the Committee stating the reason
for his appeal and submitting any issues or comments for the
Committee's review.
(c) Decision on Appeal: Within sixty (60) days of receipt of an
appeal, the Committee shall mail to the applicant a written
notice of its decision setting forth
8
<PAGE> 10
in a manner calculated to be understood by the applicant the specific
reasons for its decision and specific references to the pertinent Plan
provisions on which the Committee's decision was based.
SECTION 7. AMENDMENT AND TERMINATION
7.1 AMENDMENT AND TERMINATION. Eagle-Picher Industries, Inc.
reserves the right to make any modifications or amendments to the Plan or to
terminate it at any time for any reason. No amendment or termination of the
Plan shall reduce benefits already accrued and vested under the Plan.
SECTION 8. MISCELLANEOUS AND APPLICABLE LAW
8.1 NO GUARANTEE OF EMPLOYMENT. The Plan shall not be deemed a
contract of employment between the Company and any Member, nor shall it impede
the right of the Company to discharge any Member at any time.
8.2 APPLICABLE LAW. The Plan and all rights hereunder shall be
governed by and construed according to the laws of the State of Ohio.
IN WITNESS WHEREOF, this document is executed on May 3, 1995.
EAGLE-PICHER INDUSTRIES, INC.
By: /s/ Thomas E. Petry
--------------------------------
Thomas E. Petry, Chief Executive
Officer and Chairman of the Board
ATTEST:
/s/ James A. Ralston
---------------------------------
James A. Ralston, Secretary
9
<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> 6-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> MAY-31-1995
<EXCHANGE-RATE> 1
<CASH> 96,834
<SECURITIES> 0
<RECEIVABLES> 118,981
<ALLOWANCES> 1,313
<INVENTORY> 87,282
<CURRENT-ASSETS> 318,887
<PP&E> 420,368
<DEPRECIATION> 276,064
<TOTAL-ASSETS> 568,712
<CURRENT-LIABILITIES> 92,116
<BONDS> 82,691
<COMMON> 13,906
0
0
<OTHER-SE> (1,237,833)
<TOTAL-LIABILITY-AND-EQUITY> 568,712
<SALES> 422,981
<TOTAL-REVENUES> 422,981
<CGS> 349,946
<TOTAL-COSTS> 349,946
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 987
<INCOME-PRETAX> 32,923
<INCOME-TAX> 3,115
<INCOME-CONTINUING> 29,808
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,808
<EPS-PRIMARY> 2.70
<EPS-DILUTED> 2.70
</TABLE>
