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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1995
COMMISSION FILE NUMBER 1-1499
EAGLE-PICHER INDUSTRIES, INC.
AN OHIO CORPORATION
I.R.S. EMPLOYER IDENTIFICATION
NO. 31-0268670
580 BUILDING, 580 WALNUT STREET, P. O. BOX 779, CINCINNATI, OHIO 45201
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 513-721-7010
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
TITLE OF CLASS
Common Capital Stock,
Par Value $1.25 per Share
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 Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of February 23, 1996 was $1,313,029 based upon the average of
the bid and asked prices as of such date. On February 23, 1996, 11,040,932
shares of the registrant's Common Stock were outstanding. The registrant had and
has no other classes of stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Excerpts from registrant's Annual Report for the fiscal year ended November
30, 1995 -- Incorporated in Part I and Part II.
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NOTE
This copy of Eagle-Picher's Form 10-K for 1995 includes only Exhibits 13,
21, 23, 24(a), 24(b), 27 and 99.
In accordance with SEC requirements, copies of the following exhibits will
be furnished upon payment of a fee of ten cents per page. Please remit the
proper amount with your request to:
James A. Ralston, Vice President,
General Counsel and Secretary
Eagle-Picher Industries, Inc.
P. O. Box 779
Cincinnati, Ohio 45201.
Exhibits not included in this Form 10-K for 1995 have the following number
of pages (see list of Exhibits in Part IV, Item 14(a)(3)):
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3. (i) -- 10 4. (a) -- 99 10. (a) -- 6
(ii) -- 12 (b)(i) -- 120 (b) -- 6
(b)(ii) -- 5 (c) -- 9
(d) -- 4
</TABLE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
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<C> <S> <C>
PART I
1. Business........................................................................... 3
2. Properties......................................................................... 5
3. Legal Proceedings.................................................................. 6
4. Submission of Matters to a Vote of Security Holders................................ 13
PART II
5. Market for the Registrant's Common Equity and Related Stockholder Matters.......... 14
6. Selected Financial Data............................................................ 14
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations......................................................................... 14
8. Financial Statements and Supplementary Data........................................ 14
9. Changes In and Disagreements with Accountants on Accounting and Financial
Disclosure......................................................................... 14
PART III
10. Directors and Executive Officers of the Registrant................................. 15
11. Executive Compensation............................................................. 18
12. Security Ownership of Certain Beneficial Owners and Management..................... 21
13. Certain Relationships and Related Transactions..................................... 21
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K................... 22
Signatures............................................................................... 23
Exhibit Index............................................................................ 24
</TABLE>
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PART I
ITEM 1. BUSINESS.
General Development of Business.
Eagle-Picher Industries, Inc. (the "Company") was incorporated in 1867
under the laws of the State of Ohio as an outgrowth of a business enterprise
founded in Cincinnati in 1843. It conducts its business through unincorporated
operating divisions and separately incorporated subsidiaries, both of which are
referred to herein as divisions.
On January 7, 1991, 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"). The chapter 11 filings were the consequence of a
cash shortfall resulting from the Company's inability to satisfy certain
immediate asbestos litigation liabilities. See Item 3.(a) below.
Financial Information About Industry Segment.
The Company's major industry segments are:
1. Industrial;
2. Machinery; and
3. Automotive.
Industry Segment Data is incorporated herein by reference to Exhibit 13, the
Company's Annual Report for the fiscal year ended November 30, 1995, pages
29-30.
Narrative Description of Business.
The Industrial Group, which is composed of three divisions and operations
in three other divisions, produces a variety of products for industrial markets,
principally manufacturers of consumer products. The Minerals Division mines and
refines diatomaceous earth products used for high purity filtration primarily by
the food and beverage industry and also for general industrial applications. The
Fabricon Products Division produces printed packaging materials for the dairy
and confectionery industries. The Specialty Materials Division refines rare
metals, such as high purity germanium and gallium compounds, and is a major
source of boron isotopes for nuclear applications. This Division also produces a
wide range of super-clean containers, which meet strict EPA protocols, for
environmental sampling. Other products manufactured in the Industrial Group
include custom designed cast plastic parts, injection molded rubber parts and
industrial chemicals.
The methods of distribution and competitive positions of the divisions of
the Industrial Group vary widely. For example, the Minerals Division is second
to the Alleghany Corporation in the sale of certain filter aid products which
are sold both directly and through distributors to many large and small
customers. By contrast, the Fabricon Products Division conducts its sales
through sales personnel and competes against many other firms in a highly
price-sensitive market. Other products are sold under competitive conditions
which vary widely from plant to plant.
The Machinery Group consists of five divisions, which are involved in
manufacturing products for various industrial markets. The Construction
Equipment Division produces earthmoving equipment for Caterpillar Inc. and a
line of heavy-duty industrial forklift trucks. The Electronics Division is a
leading supplier of sophisticated special purpose batteries for aerospace and
defense applications. The Cincinnati Industrial Machinery Division produces
specialized high-volume metal cleaning and finishing systems. The Ross Aluminum
Foundries Division manufactures complex aluminum castings in sand and plaster.
Transicoil Inc. manufactures sophisticated electronic components for aerospace,
shipboard, ground-based, and industrial applications.
The principal products manufactured by the Machinery Group are distributed
through various methods and in a variety of competitive environments. The
Electronics Division bids competitively for numerous fixed price government
contracts for special purpose batteries. The Division is a recognized leader in
this business
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and has a few competitors for some highly technological products, but many large
and small competitors for other products. The Construction Equipment Division is
the sole supplier of four lines of earthmoving equipment to its longstanding
largest customer, Caterpillar Inc. The forklift trucks are distributed through a
dealer network.
The Automotive Group consists of ten divisions, which are involved largely
in the production and sale of mechanical, structural and trim parts for
passenger cars, trucks, vans, and recreational and sport utility vehicles. The
Hillsdale Tool Division specializes in the manufacture of precision-machined
aluminum and steel parts. Typical machined products include torsional vibration
dampers and a variety of castings and forgings. The Division also produces the
entire front pump assembly for Ford Motor Co.'s electronic four-speed overdrive
transmission primarily used on one-half and three-quarter ton pick-up trucks,
vans and sport utility vehicles. The Plastics Division is a major supplier of
fiberglass reinforced molded plastic parts to automotive and other customers.
The Division also produces the fiberglass reinforced plastic roof panels for
General Motors Corporation's all-plastic body, all-purpose vehicle. The
Wolverine Gasket Division coats steel and aluminum with elastomeric compounds
and produces materials which are particularly suitable for high compression
applications. The International Operations Division includes Eagle-Picher
Industries Europe GmbH, with responsibility over three plants in Europe which
manufacture sealing and insulating products, elastomeric extrusions, and
injection molded parts for the European automotive market. The Division also
includes a sales and engineering office in Japan that serves the Asian market.
The Trim Division manufactures automotive interior trim including headliners,
rear package trays, spare tire covers and door panels. The Michigan Automotive
Research Corporation Division offers vehicle and vehicle system manufacturers a
comprehensive range of testing programs for engines, power trains and power
train components. The Rubber Molding Division manufactures small rubber
precision-molded parts. The Suspension Systems Division, which was formerly part
of the Rubber Molding Division, manufactures engineered rubber and rubber-to-
metal products. The department of the Orthane Division which produces
injection-molded plastic parts for automotive and industrial applications was
sold in January 1996. Certain assets of the Orthane Division, related to the
elastomeric extrusion process, were transferred to the new Fluid Systems
Division.
The Automotive Group distributes its products primarily to the "Big Three"
automotive manufacturers, or to other suppliers to those manufacturers, directly
through internal sales personnel. With respect to the hundreds of products
manufactured by the Automotive Group, competition varies widely as to the number
and type of competitors, the methods of competition and the Group's competitive
positions. Divisions producing precision-machined parts, such as Hillsdale Tool
Division, tend to have a few strong competitors (including among others the
automotive manufacturers themselves) and compete on the basis of quality and
price. Divisions such as Trim and Wolverine Gasket tend to have many competitors
of varying sizes and compete primarily on the basis of price. Generally,
competitive conditions for this Group are characterized by a decreasing number
of competitors, an increasing amount of foreign competition (particularly from
the Far East), an increased emphasis on quality and intense pricing pressures
from major customers.
No product accounted for more than 7%, and no customer accounted for more
than 10%, of total sales of the Company for fiscal 1993 through fiscal 1995
except Ford Motor Co., for which sales were $166.8 million in 1995, $165.3
million in 1994, and $148.0 million in 1993, and General Motors Corporation, in
1994 and 1993, when sales were $81.4 million and $73.1 million, respectively. In
addition, the Company is not dependent upon any individual raw material source
for a substantial part of its business and believes that its sources of raw
materials are adequate.
In the Machinery Group, order backlog was approximately $182.5 million as
of November 30, 1995, $190.1 million as of November 30, 1994 and $148.1 million
as of November 30, 1993. The decrease from the prior year is due primarily to
softer demand for capital equipment and heavy-duty forklift trucks and better
efficiencies in producing forklift trucks which worked off the prior year
backlog. A substantial portion of the order backlog outstanding at November 30,
1995 is expected to be filled within the current fiscal year. In no other
segment is order backlog of significance, except in the Specialty Materials
Division which had order backlogs of $34.4 million as of November 30, 1995, and
$25.1 million and $19.9 million as of November 30, 1994 and 1993, respectively.
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In fiscal 1995, the Company spent approximately $19.9 million for research
and development and related activities, primarily for the development of new
products or the improvement of existing products. Comparable costs were $21.1
million and $17.1 million for 1994 and 1993, respectively.
The Company owns or is licensed under patents relating to methods and
products in several areas of its business. Although these have been of value and
are expected to be of value in the future, the loss of any individual patent or
group of patents would not materially affect the conduct of the Company's
business.
In the fiscal years 1995, 1994, and 1993, for current operations the
Company spent approximately $10.9 million, $9.6 million and $8.6 million,
respectively, to comply with federal, state and local regulatory provisions
relating to the protection of the environment. This level of expenditures has
had no material effect on the earnings or competitive position of the Company or
its operations during the period described. The Company expects these
expenditures to be approximately $12.3 million in fiscal 1996. See Item 3.(d)
for information with respect to various other environmental proceedings.
As of November 30, 1995, the Company employed approximately 7,500 persons
in its operations, of whom approximately 1,900 were salaried employees and
approximately 5,600 were hourly employees. Approximately 20% of the Company's
hourly employees are represented by eight labor organizations under twelve
separate contracts. The thirteenth contract is currently being negotiated. The
Company believes that its relations with its employees generally are good.
Export sales totaled approximately $92.5 million, $76.9 million and $73.2
million in fiscal 1995, 1994 and 1993, respectively. The revenues generated by
foreign operations do not exceed 10% of consolidated revenues, nor do their
identifiable assets exceed 10% of consolidated total assets.
The Company's debtor-in-possession financing expires on the earlier of
December 31, 1996 or the effective date of a plan of reorganization. Should a
plan not become effective by the end of 1996, the Company would expect to have
the current facility extended as long as necessary.
ITEM 2. PROPERTIES.
Eagle-Picher Industries, Inc. manufactures at 57 locations a wide variety
of products primarily for other manufacturers. Types of manufacturing include,
among others, chemical processing, mining, metal fabricating, aluminum casting,
precision machining, electronic and electrical assembling, and rubber and
plastic molding and extruding.
The plants are fully utilized for the purposes intended and generally have
capacity for expansion of existing buildings on owned real estate. Plants range
in size from 425,000 square feet of floor area to under 50,000 square feet and
generally are located away from large urban centers.
Information on the locations of all manufacturing plants is contained in
Exhibit 99 attached hereto, which is incorporated by reference into this report.
The Company considers the following plants to be its most important
physical properties:
<TABLE>
<CAPTION>
LOCATION GENERAL CHARACTER
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<S> <C> <C>
INDUSTRIAL GROUP
Minerals Division........................... Lovelock, NV Processing facility
MACHINERY GROUP
Electronics Division........................ Joplin, MO Manufacturing plants
(six locations)
Construction Equipment Division............. Lubbock, TX Fabrication and
assembly facility
AUTOMOTIVE GROUP
Hillsdale Tool Division..................... Hillsdale, MI Manufacturing plants
(four locations)
Plastics Division........................... Grabill, IN Manufacturing plant.
</TABLE>
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All of such properties are held in fee and none of them is subject to any
major encumbrances.
ITEM 3. LEGAL PROCEEDINGS.
(a) Chapter 11 Proceedings.
On January 7, 1991 ("petition date"), the Company and seven of its domestic
subsidiaries each filed a voluntary petition for relief under chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy Court for the
Southern District of Ohio, Western Division, in Cincinnati, Ohio ("Bankruptcy
Court"). The subsidiaries that filed chapter 11 petitions are Daisy Parts, Inc.,
Transicoil Inc., Michigan Automotive Research Corporation ("MARCO"), EDI, Inc.,
Eagle-Picher Minerals, Inc., Eagle-Picher Europe, Inc., and Hillsdale Tool &
Manufacturing Co. On November 30, 1991, substantially all of the assets of EDI,
Inc. were sold pursuant to authority granted by the Bankruptcy Court. All of the
chapter 11 cases have been consolidated for procedural purposes only under the
caption: "In re Eagle-Picher Industries, Inc., et al.," Consolidated Case No.
1-91-00100, before the Honorable Burton Perlman, United States Bankruptcy Judge.
The Company and its petitioning subsidiaries, other than EDI, Inc., are
operating their businesses and managing their properties as debtors in
possession, in accordance with the provisions of the Bankruptcy Code.
The filing of a chapter 11 petition operates as an automatic stay of all
litigation against the debtor that was or could have been commenced before the
filing of the chapter 11 petition and of any act to collect or recover a claim
against the debtor that arose before the commencement of the chapter 11 case.
While claimants or the Company may petition the Bankruptcy Court for a
modification of the stay to permit such litigation or claim recovery to proceed,
the Company believes that it is unlikely that the Bankruptcy Court will grant
such permission except in certain limited instances to permit the liquidation of
a pre-petition claim, but not any payment or collection efforts with respect
thereto. Consistent with the provisions of chapter 11, the Company intends to
address all of the pre-petition claims in a plan of reorganization.
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.
At the Company's request, 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 and other than those
arising from any future rejection of executory contracts or unexpired leases in
the chapter 11 cases. The bar date is the date by which claimants who disagree
with the amounts recorded by the Company as owing to such claimants must file a
proof of claim against the Company in the Bankruptcy Court. The Company notified
all known or potential claimants subject to the October 31, 1991 bar date of
their possible need to file a proof of claim with the Bankruptcy Court. Of the
5,600 claims filed pursuant to this bar date, 2,675 were general claims (e.g.
vendor, note holder and other miscellaneous claims), 1,325 were
litigation-related claims and environmental claims, and 1,600 were
asbestos-related claims.
Substantially all of the general claims have been reconciled by the
Company. Such claims, as reconciled, have been allowed as pre-petition claims
against the Company's estate. The impact of these reconciliations on the
Company's financial statements was not material. The Company continues to
attempt to negotiate settlements for the remaining unreconciled general claims.
If they cannot be resolved by a negotiated settlement, the Company intends to
have them resolved by the Bankruptcy Court. The Company does not expect that the
impact of the resolution of these claims will be material. The
litigation-related and environmental claims are discussed in subsections (c) and
(d) respectively, below.
The Bankruptcy Court also established a bar date of September 30, 1992 for
all present asbestos-related claims. Approximately 161,000 asbestos-related
claims were filed with the Bankruptcy Court pursuant to the bar date.
Approximately 1,000 of these claims alleged property damage. The 1,600
asbestos-related claims referred to above filed prior to the October 31, 1991
bar date will be treated in the reorganization cases in the
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same manner as the asbestos-related claims filed in connection with the
September 30, 1992 bar date. The asbestos-related claims are discussed more
fully in subsection (b), below.
The Bankruptcy Court has approved five extensions of the periods during
which the Company has the exclusive right to file and confirm a chapter 11 plan
under section 1121(a) of the Bankruptcy Code ("Exclusive Periods"). The most
recent order of the Bankruptcy Court, entered on May 23, 1995, provides that the
Exclusive Periods are extended until further order of the Bankruptcy Court.
On June 5, 1992, a mediator was appointed by the Bankruptcy Court to assist
the Company, the ICC, the UCC, the RFC and the ESC in their efforts to negotiate
a consensual plan of reorganization. On November 9, 1993, the Company reached an
agreement ("Agreement") on the principal elements of a joint plan of
reorganization 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. The Agreement was reached with the assistance of the mediator
appointed by the Bankruptcy Court.
As a consequence of the 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.
Throughout 1994, the Company, the ICC and the RFC continued to refine the
details of a joint plan of reorganization. On February 28, 1995, the Company and
its petitioning subsidiaries filed a plan of reorganization and accompanying
disclosure statement with the Bankruptcy Court ("Original Plan"). The Original
Plan was proposed jointly with the ICC and the RFC.
The Original Plan was premised on the settlement of the Company's liability
for all present and future asbestos-related personal injury claims and certain
other tort claims contemplated by the Agreement. Pursuant to the Original Plan,
these claims were to be channeled to and resolved by an independently
administered claims trust ("Trust") and the Bankruptcy Court would issue an
injunction with respect to such claims. The injunction would forever stay,
restrain and enjoin actions against the Company for the purpose of, directly or
indirectly, collecting, recovering, or receiving payment of, on or with respect
to any personal injury claims resulting from exposure to asbestos-containing
products allegedly manufactured or sold by the Company. In 1994, the Bankruptcy
Code was amended to add, among others, new subsections 524(g) and (h), which
authorize the issuance of a permanent injunction to supplement the existing
injunctive relief afforded by section 524 of the Bankruptcy Code in
asbestos-related reorganizations under chapter 11. The new subsections provide
that, if certain specified conditions are satisfied, a court may issue a
supplemental permanent injunction barring the assertion of asbestos-related
claims or demands against the reorganized company and channeling those claims to
an independent trust. The issuance of such a channeling injunction was a
condition precedent to confirmation of the Original Plan.
The Original Plan provided for the distribution of cash, notes, debentures,
and common stock of the reorganized Company ("Plan Consideration") to the Trust
and to holders of allowed unsecured claims on a pro-rata basis proportionate to
their share of the aggregate amount of allowed pre-petition unsecured claims
against the Company and the other debtor entities. The Original Plan also
provided that claims entitled to priority in payment under the Bankruptcy Code
and convenience claims (general unsecured claims of $500 or less or claims that
will be reduced to that amount) would be paid in full, in cash. 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 to receive a
distribution. The Original Plan did not provide that all classes of pre-petition
creditors would receive satisfaction in full of their allowed claims.
Consequently, the Original Plan did not provide for any distribution to
shareholders and their equity interests were to be canceled.
The Original Plan did not have the support of the UCC or the ESC because
neither the UCC or the ESC agreed with the amount of the aggregate asbestos
liability which had been negotiated and which was used in the proposed Plan to
determine the allocation of the consideration to be distributed to the unsecured
creditor and shareholder classes. As a result of the dispute, the Company was
unable to move forward with the Original
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Plan. In order to resolve this dispute, the Company filed a motion in July 1995,
requesting that the Bankruptcy Court estimate the Company's aggregate liability
on account of present and future asbestos-related personal injury claims. The
Bankruptcy Court ruled in December 1995 that the Company's estimated liability
with respect to such claims is $2.5 billion ("Estimation Ruling"). The UCC and
the ESC and two individual members of the UCC have filed notices of appeal of
the Estimation Ruling. The Company does not know whether the appellate court
will hear the appeals or, if it does, when any decision will be rendered.
Following the Estimation Ruling, the Company recorded a provision of $1.0
billion to increase the asbestos liability subject to compromise to the amount
found by the Bankruptcy Court. This resulted in negative shareholders' equity in
excess of $2.2 billion. As a result, the Company filed a motion in the
Bankruptcy Court in December 1995 seeking an order directing the United States
Trustee to disband the ESC on the basis that existing equity holders do not have
an economic interest in the chapter 11 cases. In January 1996, the Bankruptcy
Court ruled that the ongoing activities of the ESC shall be limited to pursuing
its appeal of the Estimation Ruling.
In August 1995, certain entities that had, since the petition date,
purchased claims held by certain trade creditors of Hillsdale Tool &
Manufacturing Co., filed with the Bankruptcy Court a complaint seeking to
preclude the use of substantive consolidation as an element of any plan of
reorganization of the Company and its subsidiaries. Under the principles of
substantive consolidation, the assets of all debtors are used to satisfy claims
against all debtors. In its answer, the Company requested that the Bankruptcy
Court substantively consolidate the estates of the Company and its subsidiaries.
The Company believes that substantive consolidation is warranted in the chapter
11 cases. The Bankruptcy Court has scheduled an evidentiary hearing to commence
on March 4, 1996.
The Company intends to file with the Bankruptcy Court as soon as
practicable an amended plan of reorganization ("Amended Plan") and an
accompanying proposed amended disclosure statement. It is anticipated that the
Amended Plan essentially will modify the Original Plan so as to reflect in the
allocation of the distributions of Plan Consideration the effect of the
Estimation Ruling. More specifically, based upon an aggregate amount of allowed
pre-petition unsecured claims to share in the Plan Consideration of
approximately $2.663 billion, it is anticipated that under the Amended Plan the
Trust would receive approximately 94 percent of the Plan Consideration and the
other unsecured creditors the balance.
Each class of creditors and equity security holders that is impaired under
a plan of reorganization is entitled to vote to accept or reject the plan. The
Bankruptcy Code defines acceptance of a plan by a class of creditors as
acceptance by holders of two-thirds in dollar amount and more than one-half in
number of claims of that class that have timely voted to accept or reject the
plan. The Bankruptcy Code defines acceptance of a plan by a class of equity
security holders as acceptance by holders of equity interests that hold at least
two-thirds in amount of the allowed equity interests in such class who have
timely voted to accept or reject the plan. The Bankruptcy Code further provides
that any class that does not receive a distribution under a plan is deemed to
have rejected the plan, and, accordingly, does not vote. Thus, because the
Amended Plan will not provide for any distribution to the Company's existing
shareholders, that class will not vote on the Amended Plan and will be deemed to
reject the Amended Plan. The Bankruptcy Court will confirm a plan only if all of
the requirements of section 1129 of the Bankruptcy Code are met. Among the
requirements for confirmation of a plan are that the plan is (i) accepted by all
impaired classes of claims and equity interests or, if rejected by an impaired
class, that the plan "does not discriminate unfairly" and is "fair and
equitable" as to such class, (ii) feasible, and (iii) in the "best interest" of
creditors and stockholders impaired under the plan.
Additional information concerning the Original Plan, the Amended Plan and
the chapter 11 cases can be found in Note B to the Consolidated Financial
Statements in the Company's Annual Report for the fiscal year ended November 30,
1995, which is attached as Exhibit 13 to this Form 10-K and which is
incorporated herein by reference. Additional information concerning the chapter
11 proceedings can be found in subsections (b) through (d), inclusive, of this
Item 3.
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(b) Asbestos.
Prior to its chapter 11 filing, the Company had been named as a
co-defendant in a substantial number of lawsuits alleging personal injury from
exposure to asbestos-containing insulation products. As of the petition date,
there were approximately 67,800 asbestos-related claims outstanding against the
Company. The claims, which were pending in 48 states, British Columbia, Guam,
the Virgin Islands, and the District of Columbia, alleged, in general, that the
Company and other defendant manufacturers failed to warn of the potential hazard
to health from the inhalation of asbestos fiber contained in their products. As
a result of the chapter 11 filing by the Company, all of such litigation was
automatically stayed pursuant to section 362 of the Bankruptcy Code and
additional suits were not allowed to be filed against the Company.
Since the first asbestos case was filed in 1966, the Company has disposed
of approximately 73,500 claims through trial, dismissal or settlement. On
average, the Company spent approximately $7,800 per claim, including attorneys'
fees and other defense costs, to dispose of these claims.
All persons with a pre-petition asbestos-related claim were required to
file a proof of claim by the September 30, 1992 bar date. Approximately 160,000
proofs of claim were filed alleging personal injury. The Company believes that
approximately 11,000 of these claims are duplicates or were filed by persons
whose lawsuits were previously disposed of through trial, dismissal or
settlement. The Company expects that additional asbestos-related personal injury
claims will arise for several decades into the future. Such future claims were
not subject to the September 30, 1992 bar date.
The Company recorded a provision in the fourth quarter of 1993 of $1.135
billion to increase the asbestos liability subject to compromise on its books to
$1.5 billion, as a consequence of the proposed settlement discussed in
subsection (a), above. In July 1995, 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 motion was filed
because the UCC and the ESC appointed in the Company's chapter 11 cases had not
agreed with the amount of such liability previously negotiated for settlement
purposes among the Company, the ICC and the RFC. 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 gave
opinions as to this liability at the hearing before the Bankruptcy Court on this
matter. In December 1995, the Bankruptcy Court ruled that the Company's
estimated liability for such claims is $2,502,511,000. Specifically, the
Bankruptcy Court found the value of the asbestos-related personal injury claims
asserted prior to the petition date to be $478,000,000 and the value of future
such claims, claims which will be filed after the petition date, to be
$2,024,511,000. Appeals have been filed by certain creditors, the UCC and the
ESC, seeking to have the Bankruptcy Court's ruling overturned. The Company does
not know whether the appellate court will hear the appeals or, if it does, when
any decision may be rendered.
The Company, and numerous others, also were sued in both state and federal
courts by various entities that own or operate commercial properties and public
buildings, such as school districts, counties, cities, states, libraries and
hospitals, based on allegations that asbestos or asbestos-containing products
are or may be in the buildings. The typical demand in such suits is that the
defendants compensate the plaintiffs for any costs incurred in identifying,
repairing, encapsulating or removing the asbestos-containing products, or that
defendants perform such remedial action. Many suits seek an injunction requiring
abatement and punitive damages on the basis that the defendants allegedly knew
of the hazards and, in concert with one another, concealed and misrepresented
the dangers. Many such suits also seek indemnification from the defendants for
all claims for personal injury brought against plaintiffs resulting from the
presence of asbestos-containing products in plaintiffs' buildings. These suits
too have been stayed as against the Company as a result of the commencement of
the chapter 11 cases.
One hundred forty-nine such lawsuits were instituted against the Company
prior to the filing of its chapter 11 petition, including two which were
certified as class actions. Two of such suits were consolidated into one. One
hundred and one were disposed of through dismissals by the court following
rulings on pre-trial motions, or voluntarily by the plaintiffs. The Company
settled seven of these cases for less than $22,000 in the aggregate, prior to
filing its chapter 11 petition. Forty of such suits remain pending, but have
been stayed as a consequence of the chapter 11 filing.
9
<PAGE> 10
The class actions that were certified pre-petition are a national school
class action consisting of all public and private elementary and secondary
school systems in the United States that have not excluded themselves from the
suit; and a Michigan school class action consisting of all public and private
elementary and secondary school systems in Michigan that have excluded
themselves from the national school class action and included themselves in the
state class action. In four lawsuits, class certification petitions were pending
pre-petition. One of these suits has since been dismissed; one suit has been
suspended; and the remaining two suits, one involving a class of colleges and
universities and the other a class of buildings leased to the government, have
been certified as class actions. Many of the claimants which voluntarily
dismissed their individual claims as set forth above did so to pursue them in
one of the certified class actions.
Approximately 1,000 proofs of claim alleging asbestos property damage were
filed in the chapter 11 cases pursuant to the bar date. Certain of these claims
have been withdrawn by the claimants or disallowed by the Bankruptcy Court. The
remaining, approximately 930 proofs of claim assert claims in the aggregate
amount of approximately $11.5 billion. These claims include most of those
asserted in the lawsuits described above that were pending as of the petition
date.
It is anticipated that the Amended Plan will provide for the establishment
of a second trust to resolve asbestos-related property damage claims and
alternative mechanisms relating to such trust. More specifically, if the class
of asbestos-related property damage claimants votes to accept the Amended Plan,
the Company will fund the trust with $3 million in cash, the trustees for the
trust will be selected by the representatives of the claimants, and such
trustees will develop claims resolution procedures. If such class votes to
reject the Amended Plan, but the Amended Plan is nevertheless confirmed, the
trust will be funded with its pro rata share of the Plan Consideration, based
upon an estimate of the aggregate value of asbestos-related property damage
claims by the Bankruptcy Court, and such claims will be resolved and discharged
pursuant to claims resolution procedures contained in the Amended Plan. These
procedures will require such claimants to 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 February 1996, after the close of the fiscal year, the hospital members
of the American Hospital Association, which filed asbestos-related property
damage claims against the Company in the alleged approximate amount of $300
million ("Hospitals"), filed a motion in the Bankruptcy Court seeking an order
(a) estimating the aggregate value of all asbestos-related property damage
claims against the Company, and (b) temporarily allowing such claims for
purposes of voting on a plan of reorganization. The motion states that the
relief requested is not intended to be a determination by the Bankruptcy Court
of the Company's liability, if any, on account of such claims or to assign a
permanently fixed value for such claims, but is sought in order to determine the
appropriate distribution to creditor classes under a plan of reorganization.
Because the motion was just filed, the Company has not yet made a determination
as to how it intends to respond. On February 15, 1996, however, the Company
filed with the Bankruptcy Court an objection on various grounds to the allowance
of many asbestos-related property damage claims, including the claims filed by
the Hospitals.
Additional information concerning the asbestos litigation can be found in
Note K to the Consolidated Financial Statements in the Company's Annual Report
for the fiscal year ended November 30, 1995, which is attached as Exhibit 13 to
this Form 10-K and which is incorporated herein by reference.
(c) Other.
In June 1989, the City of New York filed suit against the Company and
others in New York state court seeking indemnity for costs New York had incurred
and would incur because residents of housing owned by the city were allegedly
injured by ingesting paint in that housing. Counts in this suit alleging
negligence and strict product liability have been dismissed. Certain other
counts are still pending. The City of New York did not file a proof of claim in
the Company's chapter 11 case with respect to the claims asserted in such
lawsuit by the 1991 bar date. In November 1993, however, it filed three proofs
of claim with respect to the litigation each seeking $50 million in damages. The
Company's objection to these claims, seeking to have them disallowed on the
basis that they were filed after the bar date, was sustained in November 1994,
and the claims were disallowed. As a result, and given the voluntary withdrawal
of three other lead-related property damage
10
<PAGE> 11
claims, the Company has disposed of all lead-related property damage claims that
were asserted in its chapter 11 case.
In addition to the foregoing, late in 1987, litigation was initiated
against the Company and numerous other defendants, which alleged claims for
personal injuries resulting from ingestion of lead-containing paint. Such suits
have been stayed as to the Company as a consequence of the filing of the chapter
11 cases.
One hundred twenty-eight (128) non-duplicative proofs of claim were timely
filed in the Bankruptcy Court asserting liability for personal injuries from
lead chemicals allegedly manufactured and sold by the Company. Four of such
claims have been voluntarily withdrawn at the Company's request. One of such
claims was dismissed by the Bankruptcy Court. The Company filed objections with
the Bankruptcy Court to seven of such claims. Pursuant to the objections, the
Company sought an order of the Bankruptcy Court disallowing such claims because
the claimants' lawsuits asserting similar claims against other defendants which
were not in bankruptcy had been dismissed. Prior to the filing of its chapter 11
case, the Company also had been a defendant in these lawsuits. In June 1995, the
Bankruptcy Court disallowed all seven of such claims. Currently, there are 113
remaining timely-filed, lead-related personal injury claims that have not been
resolved.
The Company believes that it has valid grounds to object to the allowance
of all of the remaining lead-related personal injury claims. However, in
December 1994, the Eighth District Court of Appeals, Cleveland, Ohio, ruled that
the plaintiff in a lawsuit filed in state court in Cuyahoga County, Ohio, may
pursue certain claims against defendants, such as the Company, that manufactured
lead pigment. The trial court had dismissed the plaintiffs' enterprise
liability, market share and alternative liability theories pursuant to a defense
motion to dismiss. The Ohio Appeals Court upheld the dismissal of the enterprise
liability count, but reversed the dismissal as to the market share and
alternative liability counts and remanded the case to the trial court. The case
is currently proceeding before the trial court on the market share and
alternative liability counts. It is not possible to predict how or when the
trial court will rule on these counts or whether its rulings will be appealed.
It is currently contemplated that all lead-related personal injury claims
that were filed that are not disposed of pursuant to an objection filed by the
Company, and all such claims which may be filed in the future, will be channeled
to and resolved by the Trust that will be established under the Amended Plan for
the benefit of holders of asbestos-related and certain other personal injury
claims discussed in subsection (a), above.
On June 18, 1993, the Company, together with its wholly-owned subsidiary,
Transicoil Inc., commenced an adversary proceeding in the Bankruptcy Court
against Blue Dove Development Associates ("Blue Dove"), the landlord for
Transicoil's domestic manufacturing facility in Valley Forge, Pennsylvania, and
against K-Jem, Inc., Blue Dove's general partner. The suit seeks to recover
excess rent that the Company and Transicoil believe has been paid to the
landlord. The landlord filed a counterclaim in the adversary proceeding seeking
a determination that Transicoil has breached the lease and, therefore, the
entire rent through June 30, 2005 should be accelerated and due. The landlord
made similar claims in a suit filed against Transicoil in October 1993, in the
United States District Court for the Eastern District of Pennsylvania
("Pennsylvania Action"). Prosecution of the Pennsylvania Action which seeks
approximately $10.3 million in damages has been enjoined by the Bankruptcy
Court. The parties filed cross motions for Summary Judgment in the adversary
proceeding in the Bankruptcy Court, which the Bankruptcy Court denied in
December 1995. The Company and Transicoil are seeking leave of the United States
District Court for the Southern District of Ohio to appeal the denial of their
Motion for Summary Judgment, which sought as a matter of law and without a trial
an order requiring repayment of the excess rent that was paid, on the grounds
that the Bankruptcy Court misread the lease in denying their Motion. The Company
cannot predict when the District Court will rule on this request for leave to
appeal the Bankruptcy Court's decision. The Company believes that the
counterclaim asserted by the landlord and the claims asserted in the
Pennsylvania Action are without merit and that the resolution of the dispute
with respect to the lease will not have a materially adverse impact on the
financial condition of the Company or Transicoil Inc.
11
<PAGE> 12
Additional information concerning such litigation claims can be found in
Note L to the Consolidated Financial Statements in the Company's Annual Report
for the fiscal year ended November 30, 1995, which is attached as Exhibit 13 to
this Form 10-K and which is incorporated herein by reference.
(d) Environmental.
The Company received 1,102 proofs of claim in its chapter 11 cases alleging
a right to payment because of environmental matters. Many of these claims were
filed in connection with environmental matters reported in Form 10-K reports for
prior fiscal years. These include claims with respect to numerous waste disposal
sites previously discussed. They also include claims with respect to the
Tri-State mining district of Kansas, Missouri and Oklahoma previously disclosed:
Ottawa County, Oklahoma; Cherokee County, Kansas; Jasper County, Missouri; and
the Baxter Springs, Treece, and Galena Subsites in Kansas. The Company has
resolved the majority of these environmental claims through negotiations with
the EPA and the United States Department of Interior. Pursuant to a negotiated
agreement, the agencies and certain states will be granted allowed pre-petition
general unsecured claims in the Company's chapter 11 case aggregating
approximately $43.0 million in full satisfaction of all of the Company's alleged
liability at most of its known Superfund sites, including any liability for any
natural resource damage.
In exchange for these allowed claims, the agencies will release the Company
from liability at such Superfund sites and the Company will be protected from
contribution claims of other parties with potential liability at the sites.
Accordingly, the Company's settlement should completely resolve all claims with
respect to these sites. Further, the agreement provides a process which will
permit any liability, which may arise with respect to a small number of sites as
to which the EPA believes that it does not have sufficient information to
negotiate a meaningful settlement at this time, to be resolved in the future
when additional information is available.
During fiscal 1995, following execution of the settlement agreement by all
parties, the settlement agreement was lodged with the Bankruptcy Court and
notice of it was published in the Federal Register as required by law. In April
and September 1995, respectively, the Company and the United States filed
motions seeking approval of the settlement by the Bankruptcy Court.
Certain parties that may be liable at certain of the sites resolved by the
settlement agreement opposed Bankruptcy Court approval of the settlement. Such
opposition basically seeks increases in the amount of the allowed claims
provided in the settlement agreement attributable to the sites where the
objector may have liability. The UCC also opposed approval of the settlement,
arguing that the potential repeal of the retroactive liability provisions of the
Superfund laws could substantially reduce the Company's pre-petition liability,
and, accordingly, the allowed pre-petition claims of $43.0 million should be
reduced. The Company believes, however, that the terms and provisions of the
settlement agreement are fair and equitable and that the objections raised have
no basis. In November 1995, a hearing was held before the Bankruptcy Court on
the motions seeking the approval of the settlement agreement. The Court has not
yet ruled on the motions.
Additional information concerning the environmental claims can be found in
Note L to the Consolidated Financial Statements in the Company's Annual Report
for the fiscal year ended November 30, 1995, which is attached as Exhibit 13 to
this Form 10-K and which is incorporated herein by reference.
(e) Summary - Environmental And Other Claims.
The Company intends to defend all remaining litigation claims vigorously in
the manner permitted by the Bankruptcy Code and/or 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.
Further, all such claims against the Company will be addressed 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, other than those claims arising from
the sale of asbestos-containing products. The Company has filed objections to
certain of the unresolved litigation-based claims seeking to reduce the amount
of such
12
<PAGE> 13
claims or eliminate them entirely. These objections have not yet been resolved.
The Company anticipates filing additional objections to other such claims if
they cannot be resolved through negotiation. These objections will be litigated
vigorously by the Company pursuant to the provisions of the Bankruptcy Code and
applicable law.
The Company expects that all such claims will be resolved without material
adverse effect on the Company, its operations or its financial condition. In
addition, the Company may have insurance coverage for certain of these claims
and may have factual and legal defenses available to it.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
13
<PAGE> 14
PART II
CROSS REFERENCE SHEET
TO ANNUAL REPORT FOR THE FISCAL YEAR ENDED
NOVEMBER 30, 1995
MARKED AS EXHIBIT 13
EXHIBIT 13
<TABLE>
<CAPTION>
PAGES CAPTIONS
------ --------------------------------------
<S> <C> <C> <C>
ITEM 5. MARKET FOR THE REGISTRANT'S
COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(a) Market Information 18 -- Quarterly Data
(b) Holders of Common Stock -- 5,932 holders of record at February
23, 1996
(c) Dividends 35 -- Selected Financial Data
32-34 -- Management's Discussion and
Analysis of Results of Operations
and Financial Condition
20-21 -- Note B to the Consolidated
Financial Statements
ITEM 6. SELECTED FINANCIAL DATA 35 -- Selected Financial Data
ITEM 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 32-34 -- Management's Discussion and
Analysis of Results of Operations
and Financial Condition
ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA 13 -- Consolidated Statement of Income
(Loss) for the Three Years Ended
November 30, 1995
16 -- Consolidated Statement of Cash
Flows for the Three Years Ended
November 30, 1995
14-15 -- Consolidated Balance Sheet as of
November 30, 1995 and 1994
17 -- Consolidated Statement of
Shareholders' Equity (Deficit) for
the Three Years Ended November 30,
1995
19-29 -- Notes to Consolidated Financial
Statements
32 -- Report of Management
31 -- Independent Auditors' Report
18 -- Quarterly Data
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
14
<PAGE> 15
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) Directors.
The name and age; the positions and offices held with the registrant;
principal occupation during the past five years and present employer; other
boards of directors on which he serves; the year in which he first became a
director of the Company and the committees on which he serves, follow for each
director:
<TABLE>
<CAPTION>
PRESENT
FIRST TERM
BECAME OF OFFICE
DIRECTOR EXPIRES
-------- ---------
<S> <C> <C>
PAUL W. CHRISTENSEN, JR., 71.............................................. 1969 1996
Retired, 1987; Chairman of the Board 1978-87, and President prior thereto,
of The Cincinnati Gear Company, Cincinnati, Ohio, a manufacturer of
custom gears and enclosed drives.
Member of Audit, Executive and Stock Option/Compensation Committees.
Chairman of Audit Committee.
MELVIN F. CHUBB, JR., 62.................................................. 1990 (1)
Senior Vice President 1988-96, of Eagle-Picher Industries, Inc.;
Lieutenant General, United States Air Force and Commander of the
Electronic Systems Division at Hanscom Air Force Base, Massachusetts,
1984-88. Director of Empire District Electric Co.
V. ANDERSON COOMBE, 69.................................................... 1974 1996
Chairman of the Board since March 1991, and President prior thereto
(through April 1991), of The Wm. Powell Company, Cincinnati, Ohio, a
valve manufacturer. Director of Star Banc Corp., The Starflo Corp., Union
Central Life Insurance Co. and The Wm. Powell Company.
Member of Audit, Executive and Stock Option/Compensation Committees.
ROGER L. HOWE, 61......................................................... 1986 (2)
Chairman of the Board of U.S. Precision Lens, Inc., Cincinnati, Ohio, a
manufacturer of optics for video projection, instrumentation, and
photographic applications.
Director of Cintas Corporation, Star Banc Corp. and Baldwin Piano & Organ
Co.
Member of Executive and Stock Option/Compensation Committees.
DANIEL W. LEBLOND, 69..................................................... 1965 (2)
Chairman of the Board of LeBlond Makino Machine Tool Company, Cincinnati,
Ohio, a manufacturer of machine tools.
Director of The Ingersoll Milling Machine Company, LeBlond Makino Machine
Tool Company and The Ohio National Life Insurance Co.
Member of Executive and Stock Option/Compensation Committees. Chairman of
Stock Option/Compensation Committee.
POWELL MCHENRY, 69........................................................ 1991 (2)
Of Counsel to Dinsmore & Shohl, a law firm, Cincinnati, Ohio, as of
October 1, 1991; Senior Vice President and General Counsel of The
Procter & Gamble Company, Cincinnati, Ohio, a manufacturer of consumer and
industrial products, 1983-91.
Member of Audit Committee.
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
PRESENT
FIRST TERM
BECAME OF OFFICE
DIRECTOR EXPIRES
-------- ---------
<S> <C> <C>
THOMAS E. PETRY, 56....................................................... 1981 (2)
Chairman of the Board and Chief Executive Officer 1994, Chairman of the
Board, President, and Chief Executive Officer 1992, Chairman of the
Board and Chief Executive Officer 1989, President and Chief Executive
Officer 1982, President and Chief Operating Officer 1981, Group Vice
President 1978, President, Akron Standard Division 1977, Vice President
and Treasurer 1974, of Eagle-Picher Industries, Inc. Director of Cinergy
Corp., Star Banc Corp., Union Central Life Insurance Co. and Insilco Corp.
Member and Chairman of Executive Committee.
EUGENE P. RUEHLMANN, 71................................................... 1991 1996
Of Counsel to Vorys, Sater, Seymour & Pease, a law firm, Cincinnati, Ohio
as of January 1, 1996; Partner of that firm 1989-1996, Chairman,
Hamilton County (Ohio) Republican Central Committee, 1991.
Director of Western-Southern Life Insurance Company.
Member of Audit Committee.
ANDRIES RUIJSSENAARS, 53.................................................. 1994 (2)
President and Chief Operating Officer as of December 1, 1994, Senior Vice
President 1989-94, President, the Ohio Rubber Company Division 1987-89,
Executive Vice President, the Ohio Rubber Company Division 1986-87,
General Manager of the subsidiary, Eagle-Picher Industries GmbH in
Ohringen, Germany 1980-86, of Eagle-Picher Industries, Inc.
</TABLE>
- ---------------
(1) Mr. Chubb retired from the Company's Board of Directors effective February
1, 1996.
(2) Messrs. LeBlond and Petry were elected directors to hold office for terms
expiring at the annual meeting of shareholders in 1994 or when their
successors are elected and qualified. Messrs. Howe and McHenry were elected
directors to hold office for terms expiring at the annual meeting of
shareholders in 1995 or when their successors are elected and qualified. As
the Company did not hold an annual meeting of shareholders in 1994 or 1995,
these directors continue to hold office until their successors are elected
and qualified. Mr. Ruijssenaars was elected director by the incumbent
directors on November 2, 1994 to serve in the same class as Messrs. LeBlond
and Petry, and accordingly will hold office until his successor is elected
and qualified.
(b) Executive Officers.
The name and age, the positions and offices held with the registrant and
employment history with the registrant, term of office as officer and period
during which each has served as such, follow for each executive officer:
<TABLE>
<CAPTION>
YEAR ELECTED
OR ASSUMED
PRESENT
AGE DUTIES
--- ------------
<S> <C> <C> <C>
Thomas E. Petry.......... Chairman of the Board of Directors and Chief
Executive Officer 56 1982
Andries Ruijssenaars..... President and Chief Operating Officer,
Director 53 1994
Melvin F. Chubb, Jr...... Senior Vice President and Director* 62 1988
David N. Hall............ Senior Vice President-Finance 56 1987
Wayne R. Wickens......... Senior Vice President 49 1994
Carroll D. Curless....... Vice President and Controller 57 1984
James A. Ralston......... Vice President, General Counsel and Secretary 49 1982
</TABLE>
- ---------------
* Retired effective February 1, 1996.
16
<PAGE> 17
Thomas E. Petry was first employed by the Company in 1968. He was elected
Assistant Treasurer in 1971, Treasurer in 1973 and Vice President and Treasurer
in 1974. He served as President of the Akron Standard Division from 1977 to
1978. He was elected Group Vice President in 1978, a Director, President and
Chief Operating Officer in 1981, and President and Chief Executive Officer in
1982. He served as President from 1981-89 and from 1992-94. He has been serving
as Chief Executive Officer since 1982 and as Chairman of the Board since 1989.
Andries Ruijssenaars was first employed by the Company in 1980 as General
Manager of Eagle-Picher Industries GmbH in Ohringen, Germany. He served as
Executive Vice President of The Ohio Rubber Company Division from 1986 to 1987
and as President of The Ohio Rubber Company Division from 1987 to 1989. He was
elected Senior Vice President in 1989 and was appointed a Director in November,
1994. He was elected President and Chief Operating Officer effective December 1,
1994 and has been serving in those capacities since December 1, 1994.
Melvin F. Chubb, Jr., was first employed by the Company in 1988 and was
elected and served as Senior Vice President from 1988 until his retirement
effective February 1, 1996. In 1990 Mr. Chubb was elected a Director. Prior to
joining the Company, he completed a career in the United States Air Force,
having attained the rank of Lieutenant General and having served most recently
as commander of the Electronic Systems Division, Air Force Systems Command at
Hanscom Air Force Base.
David N. Hall was first employed by the Company and elected Treasurer in
1977. He was elected Vice President and Treasurer in 1979, and he was elected
and has been serving as Senior Vice President-Finance since 1987.
Wayne R. Wickens was first employed by the Company in 1976 as a management
trainee with the former Fabricon Automotive Division, was promoted to Plant
Manager in 1979, Vice President in 1981 and then President of Fabricon
Automotive in 1986. He was named President of the Wolverine Gasket Division in
1988, Vice President of the Eagle-Picher Automotive Group in 1989, and Division
President of Hillsdale Tool & Manufacturing Co. in 1990. He was elected Senior
Vice President of the Company effective December 1, 1994.
Carroll D. Curless was first employed by the Company in 1964. He was
elected Assistant Controller in 1978 and Controller in 1984. He was elected and
has been serving as Vice President and Controller since 1986.
James A. Ralston was first employed by the Company as an attorney in the
Legal Department in 1979. He was elected Assistant Secretary in 1982, General
Counsel in 1982, Vice President and General Counsel in 1984, and Secretary in
1994. He has been serving as Vice President, General Counsel and Secretary since
1994.
Executive officers serve during the pleasure of the Board, or until their
successors are elected and qualified. There are no family relationships existing
between or among the above executive officers and directors of the registrant.
17
<PAGE> 18
ITEM 11. EXECUTIVE COMPENSATION.
The following Summary Compensation Table sets forth for the last three
fiscal years the compensation provided by the Company to the Chief Executive
Officer and each of the other four most highly compensated executive officers
(collectively, "named executive officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------------
OTHER
FISCAL ANNUAL ALL OTHER
NAME AND YEAR COMPENSATION COMPENSATION
PRINCIPAL POSITION ENDED SALARY($) BONUS($) ($)(2) ($)(3)
- ----------------------------------------- --------- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Thomas E. Petry.......................... 11/30/95 575,000 244,000 255,296 285,611
Chairman and 11/30/94 575,000 216,000 150,149 169,763
Chief Executive Officer 11/30/93 575,000 100,000 149,492 178,154
Andries Ruijssenaars..................... 11/30/95 390,000 145,000 87,298 102,571
President and Chief Operating Officer 11/30/94 300,000 100,000 86,033 101,197
11/30/93 275,000 75,000 22,760 31,420
Melvin F. Chubb, Jr...................... 11/30/95 290,000 100,000 129,387 149,692
Senior Vice President(1) 11/30/94 280,000 75,000 326,853 370,313
11/30/93 275,000 45,000 0 4,497
David N. Hall............................ 11/30/95 345,000 110,000 120,284 136,415
Senior Vice President -- Finance 11/30/94 320,000 95,000 193,447 216,177
11/30/93 310,000 65,000 50,133 62,692
Wayne R. Wickens......................... 11/30/95 280,000 85,000 24,377 31,109
Senior Vice President 11/30/94 205,000 60,000 20,272 29,512
11/30/93 195,000 60,000 7,150 25,202
</TABLE>
(1) Mr. Chubb retired effective February 1, 1996.
(2) This column includes nothing for perquisites since in no case did they
exceed the reporting thresholds (the lesser of 10% of salary plus bonuses or
$50,000), but includes amounts for the payment of taxes on purchases of
annuities under the Supplemental Executive Retirement Plan.
(3) ALL OTHER COMPENSATION:
<TABLE>
<CAPTION>
COST OF
ANNUITY UNDER COMPANY
NON-QUALIFIED CONTRIBUTIONS
SUPPLEMENTAL TO EAGLE-PICHER
EXECUTIVE RETIREMENT
YEAR RETIREMENT SAVINGS
ENDED PLAN($) PLAN($) TOTAL($)
--------- ------------- ---------------- --------
<S> <C> <C> <C> <C>
Thomas E. Petry.................. 11/30/95 280,991 4,620 285,611
Andries Ruijssenaars............. 11/30/95 97,951 4,620 102,571
Melvin F. Chubb, Jr.............. 11/30/95 145,072 4,620 149,692
David N. Hall.................... 11/30/95 131,795 4,620 136,415
Wayne R. Wickens................. 11/30/95 26,489 4,620 31,109
</TABLE>
18
<PAGE> 19
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NOTE: Registrant has never granted Stock Appreciation Rights (SARs), so
there are no SARs outstanding. There were no exercises of options by, or grants
of options to, the named executive officers during fiscal 1995.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END(#) YEAR-END($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---------------------------------------- ------------------------- -------------------------
<S> <C> <C>
Thomas E. Petry......................... 0/100,000 **
Andries Ruijssenaars.................... 0/50,000 **
David N. Hall........................... 0/50,000 **
Melvin F. Chubb, Jr.*................... 0/50,000 **
Wayne R. Wickens........................ 0/10,000 **
</TABLE>
* Retired effective February 1, 1996.
** None of the unexercised options held by any of the named executive
officers was "In-the-Money" as of November 30, 1995. Further, the
options were exercisable only if the last selling price per share on the
New York Stock Exchange ("NYSE") or its successor prior to the date on
which the Company received written notice of the exercise was at least
20% above the option price per share. Trading in the Company's shares on
the NYSE was suspended on November 15, 1993, and the NYSE delisted the
Company's shares effective June 9, 1994. All of the unexercised options
are at a price of $2.50 per share.
PENSION BENEFITS
The following table shows the estimated total combined annual benefits to
named executive officers upon retirement at age 62 payable under Social
Security, the Eagle-Picher Salaried Plan, and the Supplemental Executive
Retirement Plan:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------
REMUNERATION 15 20 25 30 35
---------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 250,000................... $ 90,000 $ 120,000 $ 150,000 $ 150,000 $ 150,000
300,000................... 108,000 144,000 180,000 180,000 180,000
350,000................... 126,000 168,000 210,000 210,000 210,000
400,000................... 144,000 192,000 240,000 240,000 240,000
450,000................... 162,000 216,000 270,000 270,000 270,000
500,000................... 180,000 240,000 300,000 300,000 300,000
550,000................... 198,000 264,000 330,000 330,000 330,000
600,000................... 216,000 288,000 360,000 360,000 360,000
650,000................... 234,000 312,000 390,000 390,000 390,000
700,000................... 252,000 336,000 420,000 420,000 420,000
750,000................... 270,000 360,000 450,000 450,000 450,000
800,000................... 288,000 384,000 480,000 480,000 480,000
850,000................... 306,000 408,000 510,000 510,000 510,000
900,000................... 324,000 432,000 540,000 540,000 540,000
950,000................... 342,000 456,000 570,000 570,000 570,000
1,000,000................... 360,000 480,000 600,000 600,000 600,000
</TABLE>
The Eagle-Picher Salaried Plan, a non-contributory defined benefit pension
plan in which the named executive officers are participants, provides benefits
after retirement based on the highest average monthly compensation during five
consecutive years of the last ten years preceding retirement. For purposes of
the
19
<PAGE> 20
Plan, compensation includes base salary, bonuses, commissions, and severance
payments; salary and bonus included are as reported in the Summary Compensation
Table, and commissions and severance payments, if there had been any, would have
been included in that Table. The benefits shown by the Pension Plan Table above
include amounts payable under Social Security and the Company's Supplemental
Executive Retirement Plan as well as those payable under the Eagle-Picher
Salaried Plan. Benefits are computed on the basis of straight-life annuity
amounts.
The estimated credited years of service with the Company for the named
executive officers at age 62 are:
<TABLE>
<S> <C>
Thomas E. Petry............................................ 33
David N. Hall.............................................. 24
Andries Ruijssenaars....................................... 24
Melvin F. Chubb, Jr........................................ 12
Wayne R. Wickens........................................... 32
</TABLE>
SEVERANCE PLAN
On February 6, 1991, the Board of Directors adopted a Severance Plan for
certain employees, including the named executive officers, which was approved by
the Bankruptcy Court on May 13, 1991. Under the Severance Plan, a participant
whose employment is terminated by the Company other than for cause receives: a
Base Severance Benefit of one week's pay for each year of Company service,
payable under general payroll pay practices, but reduced dollar for dollar by
any compensation earned from a subsequent employer during the period such
benefits are being paid; a Supplemental Severance Benefit ranging from three
months' salary up to one year's salary, payable in a lump sum upon termination;
and continuation of certain insurance benefits for up to one week for each year
of service. Currently, the Severance Plan provides that the payment of
Supplemental Severance Benefits will terminate upon confirmation of a plan of
reorganization. It is anticipated, however, that the Amended Plan that the
Company intends to file will provide for the continuation of the Severance Plan
for a period of at least twelve months after the effective date of the Amended
Plan.
COMPENSATION OF DIRECTORS
During fiscal 1995, directors were paid a retainer of $18,000 per year, a
fee of $750 for each Board meeting attended and a fee of $750 for each Board
committee meeting attended. Effective December 1, 1995, this retainer was
increased to $24,000 per year, and the fee for attending a meeting of the Board
or a Board committee was increased to $1,000 for each meeting attended. Board
committee members, excluding committee chairmen, are paid a retainer of $3,000
per year for each committee on which they serve; the chairman of each Board
committee is paid a retainer of $5,000 per year. The Company does not pay
director retainers or attendance fees, or committee retainers or attendance
fees, to directors who are also employees of the Company.
Directors who are not also employees of the Company who retire with ten or
more years of service as members of the Board are paid an annual advisory fee
for life in an amount equal to the annual retainer paid to active directors at
the time of their retirement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1995, Messrs. LeBlond (Chairman), Christensen, Coombe and
Howe, directors of the Company, constituted the Stock Option/Compensation
Committee.
During fiscal 1995 and as of February 23, 1996, Mr. Petry, Chairman and
Chief Executive Officer of the Company, served as a director and as a member of
the compensation committee of The Wm. Powell Company. During fiscal 1995 and as
of February 23, 1996, Mr. Coombe was Chairman of the Board of The Wm. Powell
Company.
20
<PAGE> 21
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
As of February 23, 1996, beneficial ownership of the Company's Common Stock
by all directors; each of the named executive officers (except Mr. Chubb who
retired effective February 1, 1996); and all directors and executive officers as
a group, was:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
OWNERSHIP OF CLASS
----------- ---------
<S> <C> <C>
DIRECTORS
Paul W. Christensen, Jr....................................... 38,000(1) *
V. Anderson Coombe............................................ 3,480(1) *
Roger L. Howe................................................. 0 *
Daniel W. LeBlond............................................. 0 *
Powell McHenry................................................ 1,000 *
Thomas E. Petry............................................... 129,102(2)(3) 1.17%
Eugene P. Ruehlmann........................................... 1,000 *
Andries Ruijssenaars.......................................... 52,433(2)(3) *
NAMED EXECUTIVE OFFICERS
David N. Hall................................................. 62,482(3) *
Wayne R. Wickens.............................................. 10,000(3) *
DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (12 PERSONS)...... 369,027(4) 3.34%
</TABLE>
- ---------------
* Less than 1%.
(1) The following persons disclaim beneficial ownership as to the following
numbers of shares included herein which are beneficially owned by family
members: Mr. Christensen -- 13,000 shares; Mr. Coombe -- 1,520 shares.
(2) Messrs. Petry and Ruijssenaars are also executive officers of the Company;
their holdings of Company stock are listed here and not duplicated under the
Named Executive Officers individual listing immediately below.
(3) Includes shares subject to options to purchase within 60 days: Mr. Petry --
100,000; Mr. Ruijssenaars -- 50,000; Mr. Hall -- 50,000; Mr. Wickens --
10,000. The terms of the option grants make the options exercisable if the
last selling price per share on the New York Stock Exchange or its successor
is at least $3.00 on the day prior to the date on which the Company receives
written notice of the exercise.
(4) This figure includes 270,000 shares subject to options to purchase within 60
days on the same terms as set forth in footnote (3), above.
All shares shown above as owned were directly owned except as footnoted.
Directors and executive officers are considered control persons of the Company.
There were as of February 23, 1996 no beneficial owners of more than 5% of
the Company's Common Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Board of Directors has no knowledge of any significant transaction or
proposed significant transaction to which the Company or any subsidiary and any
director, officer or nominee for director, or any associate of such director,
officer, or nominee, were or are to be parties.
21
<PAGE> 22
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
<TABLE>
<C> <S>
(a) 1. All Financial Statements
Eagle-Picher Industries, Inc. (Incorporated by reference to the Company's Annual
Report for the fiscal year ended November 30, 1995, Exhibit 13 -- See Part II
above)
Independent Auditors' Report -- Incorporated by reference to Exhibit 13, page 36
3. Exhibits (numbers keyed to Item 601, Regulation S-K).
* 3.(i) Amended Articles of Incorporation as adopted May 1, 1985 and amended May 28,
1986. Incorporated by reference to Exhibit 1 to Form S-8 Registration Statement
No. 33-45179 for the Registrant's Stock Option Plan of 1990.
* (ii) Code of Regulations of Eagle-Picher Industries, Inc., last amended March 26,
1985. Incorporated by reference to Exhibit 3(b) to Report on Form 10-K of
Registrant for the fiscal year ended November 30, 1992.
* 4.(a) Form of Indenture relating to the $50,000,000 Eagle-Picher Industries, Inc.
9 1/2% Sinking Fund Debentures due March 1, 2017, dated as of March 1, 1987,
between Eagle-Picher Industries, Inc. and The Bank of New York. Incorporated by
reference to Report on Form 8-K of Registrant dated March 5, 1987 (on file with
the SEC; SEC File No. 1-1499).
* (b)(i) Credit and Agency Agreement (debtor-in-possession financing agreement) dated as
of November 5, 1992. Incorporated by reference to Exhibit 4(b) to Form 10-K of
Registrant for the fiscal year ended November 30, 1992.
* (ii) First Amendment to Credit Agreement dated as of August 29, 1994 incorporated by
reference to Exhibit 4(b)(ii) to Report on Form 10-K of Registrant for the
fiscal year ended November 30, 1994.
*10.(a) Eagle-Picher Industries, Inc. Stock Option Plan of 1983, as amended.
Incorporated by reference to Exhibit 28 to Post Effective Amendment No. 1 dated
April 10, 1990 and Appendix 2 dated May 30, 1991 to Registrant's Form S-8
Registration Statement No. 33-5792.
* (b) Eagle-Picher Industries, Inc. Stock Option Plan of 1990. Incorporated by
reference to Appendix A to Registrant's Proxy Statement for Annual Meeting of
Shareholders, March 27, 1990 (on file with the SEC; SEC File No. 1-1499).
* (c) Eagle-Picher Supplemental Executive Retirement Plan. Incorporated by reference
to Report on Form 10-Q of Registrant for the quarter ended May 31, 1995.
* (d) Eagle-Picher Industries, Inc. Severance Plan dated as of June 25, 1991.
Incorporated by reference to Report on Form 10-K of Registrant for the fiscal
year ended November 30, 1994.
13. Excerpts from Eagle-Picher Industries, Inc. Annual Report for the fiscal year
ended November 30, 1995.
21. Subsidiaries of the Registrant.
23. Independent Auditors' Consent.
24.(a),(b) Powers of Attorney.
27. Financial Data Schedules (submitted electronically to the SEC for its
information).
99. Plants and Locations.
</TABLE>
(b) Reports on Form 8-K.
* (i) December 7, 1995 - Reporting December 4, 1995 decision of the U.S.
Bankruptcy Court presiding over chapter 11 cases of the Company and
seven of its domestic subsidiaries that the Company's estimated
aggregate liability on account of present and future asbestos-related
personal injury claims is $2,502,511,000.
* Incorporated by reference.
22
<PAGE> 23
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Eagle-Picher Industries, Inc.
By /s/ THOMAS E. PETRY
Thomas E. Petry
Chairman of the Board
and Chief Executive Officer
Date: February 27, 1996
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<S> <C>
/s/ THOMAS E. PETRY Date: February 27, 1996
Thomas E. Petry, Chairman of the
Board and Chief Executive Officer
/s/ David N. Hall Date: February 27, 1996
David N. Hall, Senior Vice President-Finance
(Principal Financial Officer)
/s/ Carroll D. Curless* Date: February 27, 1996
Carroll D. Curless, Vice President
and Controller (Principal Accounting Officer)
/s/ Paul W. Christensen, Jr.* Date: February 27, 1996
Paul W. Christensen, Jr., Director
/s/ V. Anderson Coombe* Date: February 27, 1996
V. Anderson Coombe, Director
/s/ Roger L. Howe* Date: February 27, 1996
Roger L. Howe, Director
/s/ Daniel W. LeBlond* Date: February 27, 1996
Daniel W. LeBlond, Director
/s/ Powell McHenry* Date: February 27, 1996
Powell McHenry, Director
/s/ Eugene P. Ruehlmann* Date: February 27, 1996
Eugene P. Ruehlmann, Director
/s/ Andries Ruijssenaars* Date: February 27, 1996
Andries Ruijssenaars, Director
* By /s/ James A. Ralston
James A. Ralston
Attorney-in-fact
</TABLE>
23
<PAGE> 24
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ---------------------------------------------------------------------------------------------
<C> <S>
3(i) -- Articles of Incorporation*
3(ii) -- Code of Regulations*
4(a) -- Form of Indenture, $50,000,000 9 1/2% Sinking Fund Debentures due March 1,
2017*
4(b)(i) -- Credit and Agency Agreement dated as of November 5, 1992*
4(b)(ii) -- First Amendment to Credit Agreement, dated as of August 29, 1994*
10(a),(b) -- Eagle-Picher Industries, Inc. Stock Option Plans of 1983 and 1990*
10(c) -- Eagle-Picher Supplemental Executive Retirement Plan*
10(d) -- Eagle-Picher Industries, Inc. Severance Plan dated as of June 25, 1991*
13 -- Excerpts from Annual Report for the Fiscal Year Ended November 30, 1995
21 -- Subsidiaries of the Registrant
23 -- Independent Auditors' Consent
24(a),(b) -- Powers of Attorney
27 -- Financial Data Schedules (Submitted electronically to the SEC for its
information.)
99 -- Plants and Locations
</TABLE>
- ---------------
* Incorporated by reference. See page 22 above.
24
<PAGE> 1
EXHIBIT 13
CONSOLIDATED STATEMENT OF INCOME (LOSS)
Eagle-Picher Industries, Inc.
<TABLE>
<CAPTION>
Years Ended November 30
(In thousands of dollars, except per share) 1995 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $ 848,548 $756,741 $ 661,452
OPERATING COSTS AND EXPENSES
Cost of products sold 706,586 622,907 548,605
Selling and administrative 78,875 75,553 69,093
--------- -------- --------
785,461 698,460 617,698
--------- -------- --------
OPERATING INCOME 63,087 58,281 43,754
Provision for asbestos litigation (1,005,511) - (1,135,500)
Provision for environmental and other claims - - (41,436)
Interest expense (contractual
interest of $8,897 in 1995, $8,940
in 1994 and $9,369 in 1993) (1,926) (1,809) (2,070)
Gain on sale of investment 11,505 - -
Other income (expense) 199 703 (174)
--------- -------- --------
INCOME (LOSS) BEFORE REORGANIZATION
ITEMS, TAXES AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGE (932,646) 57,175 (1,135,426)
REORGANIZATION ITEMS (2,225) (3,426) (4,344)
--------- -------- --------
INCOME (LOSS) BEFORE TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (934,871) 53,749 (1,139,770)
INCOME TAXES 9,300 5,000 5,000
--------- -------- --------
INCOME (LOSS) BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE (944,171) 48,749 (1,144,770)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
FOR POSTRETIREMENT BENEFITS - - (12,598)
--------- -------- --------
NET INCOME (LOSS) $(944,171) $ 48,749 $(1,157,368)
========= ======== =========
INCOME (LOSS) PER SHARE:
INCOME (LOSS) BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $ (85.51) $ 4.42 $ (103.78)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
FOR POSTRETIREMENT BENEFITS - - (1.14)
--------- -------- --------
NET INCOME (LOSS) $ (85.51) $ 4.42 $ (104.92)
========= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
13
<PAGE> 2
CONSOLIDATED BALANCE SHEET
Eagle-Picher Industries, Inc.
<TABLE>
<CAPTION>
ASSETS
November 30
(In thousands of dollars) 1995 1994
- ----------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 93,330 $ 92,606
Receivables, less allowances of $1,860
in 1995 and $1,445 in 1994 127,044 109,130
Income tax refund receivable 4,402 2,246
Inventories 83,647 81,982
Prepaid expenses 17,695 10,295
-------- --------
TOTAL CURRENT ASSETS 326,118 296,259
-------- --------
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements 12,482 11,940
Buildings 84,549 79,937
Machinery and equipment 319,987 301,518
Construction in progress 24,939 14,623
-------- --------
441,957 408,018
Less accumulated depreciation 286,139 263,369
-------- --------
NET PROPERTY, PLANT AND EQUIPMENT 155,818 144,649
-------- --------
DEFERRED INCOME TAXES 62,824 43,924
OTHER ASSETS 35,313 36,275
-------- --------
TOTAL ASSETS $580,073 $521,107
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
14
<PAGE> 3
CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
1995 1994
- ----------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 40,318 $ 43,691
Compensation and employee benefits 13,759 14,005
Long-term debt - current portion 1,525 1,726
Income taxes 4,789 5,223
Taxes other than income 4,772 4,611
Other accrued liabilities 17,460 16,705
-------- --------
TOTAL CURRENT LIABILITIES 82,623 85,961
-------- --------
LIABILITIES SUBJECT TO COMPROMISE 2,662,530 1,657,265
LONG-TERM DEBT, less current portion 19,103 19,896
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 21,720 21,070
OTHER LONG-TERM LIABILITIES 5,405 3,608
-------- --------
TOTAL LIABILITIES 2,791,381 1,787,800
--------- ---------
SHAREHOLDERS' EQUITY (DEFICIT)
Preference stock - no par value.
Authorized 873,457 shares; none issued - -
Common stock - $1.25 par value per share.
Authorized 30,000,000 shares; issued
11,125,000 shares 13,906 13,906
Additional paid-in capital 36,378 36,378
Accumulated deficit (2,261,289) (1,317,118)
Unrealized gain on investments 333 -
Foreign currency translation 1,277 2,054
--------- --------
(2,209,395) (1,264,780)
Cost of 84,068 common treasury shares (1,913) (1,913)
--------- --------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) (2,211,308) (1,266,693)
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) $580,073 $521,107
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
15
<PAGE> 4
CONSOLIDATED STATEMENT OF CASH FLOWS
Eagle-Picher Industries, Inc.
<TABLE>
<CAPTION>
Years Ended November 30
(In thousands of dollars) 1995 1994 1993
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (944,171) $ 48,749 $(1,157,368)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Provision for asbestos litigation 1,005,511 - 1,135,500
Provision for environmental and
other claims - - 41,436
Cumulative effect of accounting change - - 12,598
Depreciation and amortization 28,708 26,143 24,955
Gain on sale of investment (11,505) - -
Changes in assets and liabilities:
Receivables (17,914) (11,544) (10,764)
Inventories (1,665) (13,676) (4,098)
Deferred income taxes (18,900) (14,000) (12,137)
Accounts payable (3,373) 11,326 5,539
Other (6,235) (1,905) 2,015
-------- -------- --------
Net cash provided by
operating activities 30,456 45,093 37,676
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investment 11,505 - -
Capital expenditures (40,558) (35,887) (28,512)
Other 340 1,800 335
-------- -------- --------
Net cash used in investing
activities (28,713) (34,087) (28,177)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt 1,240 - 810
Reduction of long-term debt (2,259) (2,974) (4,007)
Issuance of common shares - - 156
-------- -------- --------
Net cash used in financing
activities (1,019) (2,974) (3,041)
-------- -------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 724 8,032 6,458
-------- -------- --------
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 92,606 84,574 78,116
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 93,330 $ 92,606 $ 84,574
======== ======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
16
<PAGE> 5
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
Eagle-Picher Industries, Inc.
<TABLE>
<CAPTION>
TOTAL
ADDITIONAL UNREALIZED FOREIGN SHAREHOLDERS'
COMMON PAID-IN ACCUMULATED GAIN ON CURRENCY TREASURY EQUITY
(In thousands of dollars) STOCK CAPITAL DEFICIT INVESTMENTS TRANSLATION STOCK (DEFICIT)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE NOVEMBER 30, 1992 $13,906 $37,644 $ (208,499) $ - $1,326 $(3,335) $ (158,958)
Net loss - - (1,157,368) - - - (1,157,368)
Stock options - (1,266) - - - 1,422 156
Foreign currency translation - - - - (1,036) - (1,036)
--------------------------------------------------------------------------------
BALANCE NOVEMBER 30, 1993 13,906 36,378 (1,365,867) - 290 (1,913) (1,317,206)
Net income - - 48,749 - - - 48,749
Foreign currency translation - - - - 1,764 - 1,764
--------------------------------------------------------------------------------
BALANCE NOVEMBER 30, 1994 13,906 36,378 (1,317,118) - 2,054 (1,913) (1,266,693)
Cumulative effect of change in
accounting for marketable
securities - - - 5,377 - - 5,377
Net loss - - (944,171) - - - (944,171)
Realized gain on investment - - - (5,044) - - (5,044)
Foreign currency translation - - - - (777) - (777)
--------------------------------------------------------------------------------
BALANCE NOVEMBER 30, 1995 $13,906 $36,378 $(2,261,289) $ 333 $1,277 $(1,913) $(2,211,308)
================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
17
<PAGE> 6
QUARTERLY DATA
(Unaudited)
(In thousands of dollars, except per share)
<TABLE>
<CAPTION>
1995 FIRST SECOND THIRD FOURTH YEAR
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $197,603 $225,378 $210,723 $214,844 $848,548
- -----------------------------------------------------------------------------------------
Operating Income 15,113 19,147 14,022 14,805 63,087
- -----------------------------------------------------------------------------------------
Net Income (Loss) 13,032 16,776 23,394(1) (997,373)(2) (944,171)
- -----------------------------------------------------------------------------------------
Net Income (Loss) Per Share 1.18 1.52 2.12 (90.33)(2) (85.51)
- -----------------------------------------------------------------------------------------
Bid Prices (3)
High 23/32 9/32 3/16 7/32 23/32
- -----------------------------------------------------------------------------------------
Low 1/16 1/32 1/16 3/32 1/32
- -----------------------------------------------------------------------------------------
Ask Prices (3)
High 1-1/32 1/2 11/32 11/32 1-1/32
- -----------------------------------------------------------------------------------------
Low 3/16 5/32 3/16 7/32 5/32
- -----------------------------------------------------------------------------------------
1994 First Second Third Fourth Year
- -----------------------------------------------------------------------------------------
Net Sales $177,754 $196,994 $186,191 $195,802 $756,741
- -----------------------------------------------------------------------------------------
Operating Income 13,781 17,537 14,226 12,737 58,281
- -----------------------------------------------------------------------------------------
Net Income 11,039 14,669 11,733 11,308 48,749
- -----------------------------------------------------------------------------------------
Net Income Per Share 1.00 1.33 1.06 1.03 4.42
- ----------------------------------------------------------------------------------------
Bid Prices (3)
High 7/8 13/16 1/2 7/16 7/8
- ------------------------------------------------------------------------------------------
Low 1/16 1/4 7/32 1/16 1/16
- -----------------------------------------------------------------------------------------
Ask Prices (3)
High 1-3/8 1-1/4 7/8 11/16 1-3/8
- -----------------------------------------------------------------------------------------
Low 5/32 9/16 15/32 1/4 5/32
- -----------------------------------------------------------------------------------------
<FN>
(1) The Company realized an $11.5 million gain on the sale of certain equity investments in June 1995.
(2) In December 1995, the Bankruptcy Court ruled that the estimated aggregate liability on account of present and future
asbestos-related personal injury claims is $2.5 billion. Accordingly, the Company recorded a provision of approximately $1.0
billion to increase its asbestos liability subject to compromise to $2.5 billion.
(3) Effective June 9, 1994, the Company's Common Stock was delisted from the New York Stock Exchange. It is now trading on
the Over-the-Counter Market (trading symbol is EPIHQ). The sources of all prices are quotations from the pink sheets and the
OTC Bulletin Board. The bid and ask quotations represent prices between dealers, do not include retail markup, markdown or
commission, and do not represent actual transactions.
</TABLE>
18
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies used in the preparation of the consolidated
financial statements are summarized below. These policies conform to generally
accepted accounting principles and have been consistently applied.
The Company has accounted for all transactions related to the chapter 11
proceedings in accordance with Statement of Position 90-7 ("SOP 90-7"),
"Financial Reporting by Entities in Reorganization Under the Bankruptcy Code,"
issued by the American Institute of Certified Public Accountants. Accordingly,
Liabilities Subject to Compromise under the chapter 11 proceedings have been
segregated on the Consolidated Balance Sheet and are recorded at the amounts
that have been or are expected to be allowed on known claims rather than
estimates of consideration those claims may receive in a plan of
reorganization. In addition, the Consolidated Statement of Income (Loss)
separately discloses expenses related to the chapter 11 proceedings.
Principles of Consolidation
The consolidated financial statements include the accounts of all of the
Company's subsidiaries which are more than 50% owned and controlled.
Intercompany accounts and transactions have been eliminated. Investments in
nonconsolidated companies which are at least 20% owned are accounted for using
the equity method.
Separate condensed combined financial statements of the entities in chapter 11
have not been presented because they represent a substantial portion of the
Company. Additionally, entities not in chapter 11 represent identifiable
investments of those entities in chapter 11 and are therefore subject to the
chapter 11 process.
Cash and Cash Equivalents
Marketable securities with original maturities of three months or less are
considered to be cash equivalents. The carrying amount reported in the
Consolidated Balance Sheet approximates fair value.
Marketable Securities
Effective December 1, 1994, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 115 ("FAS 115"), "Accounting for Certain
Investments in Debt and Equity Securities." On November 30, 1995, these
investments have been categorized as available for sale and, as a result, are
stated at fair value, based generally on quoted market prices. Unrealized
holding gains and losses are included as a component of Shareholders' Equity
(Deficit) until realized. Realized gains and losses on sales of investments,
as determined on a specific identification basis, are included in the
Consolidated Statement of Income.
Concentrations of Credit Risk
Financial instruments which potentially expose the Company to concentrations of
credit risk consist primarily of trade accounts receivable. The Company's
customer base includes all significant automotive manufacturers and their first
tier suppliers in North America and Europe. Although the Company is directly
affected by the well-being of the automotive industry, management does not
believe significant credit risk existed at November 30, 1995.
Inventories
Inventories are valued at the lower of cost or market, which approximates
current replacement cost. A substantial portion of domestic inventories are
valued using the last-in first-out ("LIFO") method while the balance of the
Company's inventories are valued using the first-in first-out method.
Property, Plant and Equipment
The Company records investments in plant, property and equipment at cost.
The Company provides for depreciation of plant and equipment using the
straight-line method over the estimated lives of the assets which are generally
20 to 40 years for buildings and 3 to 12 years for machinery and equipment.
Improvements which extend the useful life of property are capitalized, while
repair and maintenance costs are charged to operations as incurred.
Cost in Excess of Net Assets Acquired
Amounts are being amortized using the straight-line method primarily over 40
years.
Income Taxes
Income taxes are provided based upon income for financial statement purposes.
Deferred tax assets and liabilities are established based on the difference
between the financial statement and income tax bases of assets and liabilities
using existing tax rates.
19
<PAGE> 8
Foreign Currency Translation
Assets and liabilities of foreign subsidiaries are translated at current
exchange rates, and income and expenses are translated using weighted average
exchange rates. Adjustments resulting from translation of financial statements
stated in local currencies generally are excluded from the results of
operations and accumulated in a separate component of Shareholders' Equity
(Deficit). Gains and losses from foreign currency transactions are included in
the determination of net income (loss) and were not material.
Reclassifications
Certain prior year amounts have been reclassified to conform with current year
financial statement presentation.
B. PROCEEDINGS UNDER CHAPTER 11
On January 7, 1991 ("petition date"), Eagle-Picher Industries, Inc. ("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")
with the United States Bankruptcy Court for the Southern District of Ohio,
Western Division, in Cincinnati, Ohio ("Bankruptcy Court"). Each filing
entity, other than EDI, Inc., currently is 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 typically are the entities with which the Company would negotiate
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. The agreement was with the ICC and the RFC,
the representatives of the holders of present and future asbestos-related
personal injury and other toxic tort claims in the Company's chapter 11 case,
and was reached with the assistance of the mediator. One of the principal
elements of the agreement was a negotiated settlement of the Company's
aggregate liability for such claims in the amount of $1.5 billion. 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.
Throughout 1994, the Company, the ICC and the RFC continued to refine the
details of a joint plan of reorganization ("Original Plan"). The Original Plan
was filed with the Bankruptcy Court on February 28, 1995. The Original Plan
did not have the support of the UCC or the ESC because they did not agree with
the amount of the aggregate asbestos liability which had been negotiated and
which was used in the Original Plan to determine the allocation of the
consideration to be distributed to the unsecured creditor and shareholder
classes. As a result of the dispute, the Company was unable to move forward
with the Original Plan. In order to resolve this dispute, the Company filed a
motion in July 1995 requesting that the Bankruptcy Court estimate the Company's
aggregate liability on account of present and future asbestos-related personal
injury claims. The Bankruptcy Court ruled in December 1995 that the Company's
liability is $2.5 billion ("Estimation Ruling"). The UCC, the ESC and two
individual members of the UCC have filed notices of appeal of the Estimation
Ruling. The Company does not know whether the Appellate Court will hear the
appeals or, if it does, when any decision will be rendered.
The Company intends to file a First Amended Consolidated Plan of Reorganization
("Amended Plan") which will reflect the Estimation Ruling. The Company
anticipates that the only substantive modification to the Original Plan will
relate to the allocation of the consideration to be distributed under the plan
to the various classes of unsecured claims.
The Amended Plan, like the Original Plan, contemplates a resolution of the
Company's liability for all present and future asbestos-related personal injury
claims and certain other tort claims. These claims will be channeled to and
resolved by an independently administered claims trust ("Trust"). The Amended
Plan also will provide for the distribution of cash, notes, debentures, and
common stock
20
<PAGE> 9
of the reorganized Company to the 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. Claims entitled to
priority under the Bankruptcy Code and convenience claims (general unsecured
claims of $500 or less or claims that will be reduced to that amount) will be
paid in full, in cash. In addition, it is contemplated that the Amended Plan
will resolve and discharge all asbestos property damage 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 to receive a
distribution. It is anticipated that under the Amended Plan, existing
shareholders will receive no distributions and their shares will be canceled.
Following the Estimation Ruling, the Company recorded a provision of $1.0
billion to increase the asbestos liability subject to compromise to the amount
found by the Bankruptcy Court. This resulted in negative shareholders' equity
in excess of $2.2 billion. As a result, the Company filed a motion in the
Bankruptcy Court in December 1995 seeking an order to direct the United States
Trustee to disband the ESC on the basis that existing equity holders do not
have an economic interest in the chapter 11 cases. In January 1996, the
Bankruptcy Court ruled that the ongoing activities of the ESC shall be limited
to pursuing its appeal of the Estimation Ruling.
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 have been reported on the basis of the amount
of the allowed claims even though it is expected that the distributions under a
plan of reorganization with respect to such claims will be lesser amounts.
Upon confirmation of a plan of reorganization, the Company would utilize the
"fresh-start" reporting principles contained in SOP 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
Amended Plan, the ultimate consideration to be received by all 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 thereof
or the ultimate amount creditors will receive.
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:
<TABLE>
<CAPTION>
(In thousands of dollars)
1995 1994
---- ----
<S> <C> <C>
Asbestos liability - Note K $ 2,502,511 $ 1,499,993
Long-term debt - Note E 62,003 62,004
Accounts payable 41,236 41,074
Accrued liabilities - Note L 56,780 54,194
--------- ---------
$ 2,662,530 $ 1,657,265
========= =========
</TABLE>
The net expense resulting from the Company's chapter 11 filings has been
segregated from expenses related to ordinary operations in the accompanying
Consolidated Statement of Income (Loss) and includes the following:
<TABLE>
<CAPTION>
(In thousands of dollars)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Professional fees $ 7,047 $ 6,218 $ 5,865
Debt financing costs - 200 -
Other expenses 181 296 863
Interest income (5,003) (3,288) (2,384)
------- ------- -------
$ 2,225 $ 3,426 $ 4,344
======= ======= =======
</TABLE>
Interest income is attributable to the accumulation of cash and cash
equivalents subsequent to the petition date.
C. INVENTORIES
Inventories consisted of:
<TABLE>
<CAPTION>
(In thousands of dollars)
1995 1994
---- ----
<S> <C> <C>
Raw materials and supplies $ 49,358 $ 52,146
Work-in-process 27,943 24,907
Finished goods 19,470 15,853
------- --------
96,771 92,906
Allowance to value inventory at
cost on the LIFO method 13,124 10,924
-------- --------
$ 83,647 $81,982
======== =======
</TABLE>
The percentage of inventories valued using the LIFO method was 75% in 1995 and
81% in 1994. The effects of liquidations of LIFO inventory quantities carried
at lower costs prevailing in prior years were not material.
21
<PAGE> 10
D. OTHER ASSETS
Other assets consisted of:
<TABLE>
<CAPTION>
(In thousands of dollars)
1995 1994
---- ----
<S> <C> <C>
Cost in excess of net assets acquired,
net of accumulated amortization of
$4,385 in 1995 and $3,973 in 1994 $ 12,382 $ 12,507
Notes receivable 5,137 5,778
Prepaid pension cost - Note I 7,545 7,879
Other 10,249 10,111
-------- --------
$ 35,313 $ 36,275
======== ========
</TABLE>
Notes receivable include $4,550,000 received as partial consideration for the
sale of a division. This note is payable in two equal installments in 1997 and
1998 and bears interest at 8%. Pursuant to the terms of the note, interest is
payable semiannually commencing in August 1994. The Company is receiving
interest payments in accordance with the terms of the note.
E. LONG-TERM DEBT AND SHORT-TERM BORROWINGS
The Company has a Bankruptcy Court approved debtor in possession financing
agreement which provides a $40,000,000 committed revolving credit facility
("Facility"). The entire amount of the Facility is available for both cash
borrowings and letters of credit. The Facility expires on the earlier of
December 31, 1996 or the effective date of a plan of reorganization. Letters
of credit totaling $30,205,000 and $32,941,000 were outstanding on November 30,
1995 and 1994, respectively, leaving the Company with $9,795,000 and
$7,059,000, respectively, in available borrowing capacity under the Facility.
There were no cash borrowings under the Facility at any time in 1995 or 1994.
The annual rate of interest under the Facility is the agent bank's prime rate
plus 1-1/2%. Fees for letters of credit range up to 2-1/2% per annum and a
commitment fee equal to 1/2% per annum is due on the unused portion. The
obligations are secured by accounts receivable and inventories and are afforded
administrative priority under the Bankruptcy Code. The Company has had
sufficient collateral to borrow the maximum amount under the Facility. The
Facility also contains affirmative and negative covenants which include, among
other things, limitations on capital expenditures and additional borrowings and
minimum quarterly and annual cash flow requirements. The Company has been in
compliance with these covenants throughout the term of the Facility.
The Company's foreign subsidiaries entered into agreements with various banks
which provided lines of credit in the amount of $17,100,000 that expire in
1998. At November 30, 1995, there were $1,200,000 in borrowings outstanding
leaving $15,900,000 in available borrowing capacity. The annual rates of
interest on these lines of credit range from 3/4% to 1-1/2% over the banks'
base rates. Some have no commitment fees; the fees on the others range from
.25% to .65% per annum on the unused portion. These agreements also contain
covenants which include restrictions on dividends and minimum financial
requirements. The Company is in compliance with these covenants at November
30, 1995.
Repayments of pre-petition debt obligations may be made only with the approval
of the Bankruptcy Court. The Bankruptcy Court has approved payments by the
Company with respect to certain pre-petition secured debt obligations in order
to provide the holders of such obligations with adequate protection of their
interests in their collateral security. These adequate protection payments
generally have been in the form of principal payments paid over the remaining
lives of the collateral assets in an aggregate amount equal to the determined
market value of those assets. The amount by which the original obligation and
pre-petition accrued interest exceeds the collateral value is deemed to be a
general unsecured claim. These claims are included in Liabilities Subject to
Compromise. Interest expense has not been recorded on these obligations for
the post-petition period because interest is not payable. Interest on
undersecured and other unsecured pre-petition debt obligations would have been
$6,971,000, $7,131,000 and $7,299,000 in 1995, 1994, and 1993, respectively.
Due to the chapter 11 filings and the anticipated reorganization, it is not
practicable to estimate the fair value of long-term debt which is described
below.
22
<PAGE> 11
Long-term debt consisted of:
<TABLE>
<CAPTION>
(In thousands of dollars)
1995 1994
---- ----
<S> <C> <C>
9-1/2% Sinking fund debentures, due
2017 $ 50,000 $ 50,000
Industrial revenue bonds 18,050 18,125
Secured notes 12,161 13,683
Debt of foreign subsidiaries 1,949 1,304
Other 471 514
------- -------
82,631 83,626
Less:
Current portion 1,525 1,726
Subject to compromise 62,003 62,004
------- -------
Long-term debt, less current portion $ 19,103 $ 19,896
======= =======
Unsecured debt included in Liabilities
Subject to Compromise consisted of:
Sinking fund debentures $ 50,000 $ 50,000
Industrial revenue bonds 7,500 7,500
Unsecured portion of secured notes 4,131 4,132
Other 372 372
------- -------
$ 62,003 $ 62,004
======= =======
</TABLE>
Interest rates averaged 5% in 1995, 4% in 1994, and 5% in 1993 on the
industrial revenue bonds, foreign and other long-term debt on which the Company
is obligated to pay interest. These long-term debt amounts are to mature at
various dates through 2004.
Long-term debt (excluding amounts subject to compromise) is scheduled to mature
as follows: $1,525,000 in 1996, $2,203,000 in 1997, $2,721,000 in 1998,
$1,179,000 in 1999, and $877,000 in 2000. The unsecured portion of long-term
debt will be resolved in a plan of reorganization.
During 1995, 1994, and 1993, the Company paid interest of $1,966,000,
$1,765,000, and $2,075,000, respectively.
F. INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("FAS 109"), in 1993. The cumulative effect of
this change in accounting for income taxes was not material and prior year
financial statements were not restated to apply the provisions of FAS 109.
Total income tax benefit for the year ended November 30, 1993 of $1,490,000
consisted of $5,000,000 expense from operations and $6,490,000 tax benefit of
the cumulative effect of the change in accounting for postretirement benefits.
The following is a summary of the components of income taxes (benefit) from
operations:
<TABLE>
<CAPTION>
(In thousands of dollars)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Federal - current $ 20,900 $ 15,600 $ 12,500
- deferred (18,900) (14,000) (11,800)
Foreign 3,400 900 2,700
State and local 3,900 2,500 1,600
-------- -------- --------
$ 9,300 $ 5,000 $ 5,000
======== ======== ========
</TABLE>
The sources of income (loss) before income tax expense (benefit) and cumulative
effect of accounting change are as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
United States $(941,971) $ 47,670 $(1,143,312)
Foreign 7,100 6,079 3,542
--------- -------- ----------
$(934,871) $ 53,749 $(1,139,770)
========= ======== ==========
</TABLE>
The significant components of deferred income tax expense (benefit)
attributable to income from operations are as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Deferred tax benefit (exclusive of the
effects of other components listed
below) $(351,800) $ (400) $(412,900)
Adjustments to deferred tax assets and
liabilities for enacted changes in
tax laws and rates - - (3,800)
Change in beginning-of-the-year balance
of the valuation allowance for
deferred tax assets 332,900 (13,600) 404,900
-------- -------- --------
$(18,900) $(14,000) $(11,800)
======== ======== ========
</TABLE>
Components of deferred tax balances as of November 30 are as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
1995 1994
---- ----
<S> <C> <C>
Deferred tax liabilities:
Property, plant and equipment $ (7,820) $ (6,608)
Prepaid pension (2,641) (2,758)
Other (3,338) (3,371)
-------- --------
Total deferred tax liabilities (13,799) (12,737)
-------- --------
Deferred tax assets:
Asbestos liability 877,171 524,998
Accrued liabilities (including amounts
subject to compromise) 26,246 26,223
Postretirement benefit liability 7,602 7,375
Other 4,483 4,048
-------- --------
Total deferred tax assets 915,502 562,644
-------- --------
Valuation allowance (838,879) (505,983)
-------- --------
Net deferred tax assets $ 62,824 $ 43,924
======== ========
</TABLE>
23
<PAGE> 12
Given the uncertainties surrounding the chapter 11 cases, the Company does not
believe that recognition of a significant portion of the deferred tax assets
relating to the asbestos liability and other pre-petition liabilities
is appropriate at this time. These liabilities have been recorded at the
expected amounts of the allowed claims; if the liabilities are settled for
lesser amounts, there will be a corresponding reduction in the deferred tax
assets and related valuation allowance. A significant portion of the net
deferred tax asset recognized at November 30, 1995 is expected to be recovered
through the carryback of amounts which will become deductible when the related
liabilities are paid. It is expected that the Company will realize the
benefits related to these deductions when it emerges from chapter 11. The
changes in the valuation allowance result from increased amounts provided for
asbestos litigation and other claims net of increases in the amounts
recoverable through these carrybacks.
The differences between the total income tax expense from operations and the
income tax expense (benefit) computed using the Federal income tax rate were
as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Computed "expected" tax
expense (benefit) $(327,200) $ 18,800 $(398,900)
Change in valuation allowance 332,900 (13,600) 404,900
Change in Federal income tax rate - - (3,800)
Foreign tax rate differential 600 (1,500) 1,300
State and local taxes, net of
Federal benefit 2,500 1,600 1,000
Other 500 (300) 500
-------- --------- ---------
Total income tax expense $ 9,300 $ 5,000 $ 5,000
======== ========= =========
</TABLE>
The Company paid income taxes, net of refunds received, in 1995, 1994, and 1993
of $28,800,000, $18,200,000, and $16,500,000, respectively.
G. INCOME (LOSS) PER SHARE
The calculation of net income (loss) per share is based upon the average number
of common shares outstanding assuming the exercise of stock options. The
average number of shares used in the computation of net income (loss) per
share was 11,040,932 in 1995 and 1994 and 11,030,515 in 1993.
H. COMMON STOCK OPTIONS
At November 30, 1995, there were outstanding common stock options under a 1990
and a 1983 plan each authorizing 450,000 shares. The options expire at various
dates through 2000. No options could be exercised as of November 30, 1995.
Stock option transactions are summarized as follows:
<TABLE>
<CAPTION>
Shares Option Price
------ ------------
<S> <C> <C>
Outstanding at November 30, 1992 597,000 $ 2.50 to $14.25
Exercised (62,500) $ 2.50
Expired (15,000) $ 2.50
------- -------
Outstanding at November 30, 1993 519,500 $ 2.50 to $14.25
Expired (20,000) $ 2.50
------- -------
Outstanding at November 30, 1994 499,500 $ 2.50 to $14.25
Expired (5,000) $ 2.50
------- -------
Outstanding at November 30, 1995 494,500 $ 2.50 to $14.25
</TABLE>
There were 284,274 shares available for future grants at November 30, 1995.
I. RETIREMENT BENEFIT PLANS
Substantially all employees of the Company and its subsidiaries are covered by
various pension or profit sharing retirement plans. The cost of providing
retirement benefits was $1,900,000 in 1995, $998,000 in 1994, and $849,000 in
1993.
Plan benefits for salaried employees are based primarily on employees' highest
five consecutive years' earnings during the last ten years of employment. Plan
benefits for hourly employees typically are based on a dollar unit multiplied
by the number of service years.
Net periodic pension expense for the Company's defined benefit plans included
the following components:
<TABLE>
<CAPTION>
(In thousands of dollars)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Service cost - benefits earned
during the period $ 4,001 $ 4,684 $ 3,924
Interest cost on projected
benefit obligation 12,972 12,144 12,490
Actual gain on plan assets (40,975) (635) (20,658)
Net amortization and deferral 24,336 (17,052) 3,943
-------- -------- --------
Net periodic pension costs $ 334 $ (859) $ (301)
======== ======== ========
</TABLE>
The plans' assets consist primarily of listed equity securities and publicly
traded notes and bonds. The actual net return on plan assets was 21.2% in
1995, .3% in 1994,
24
<PAGE> 13
and 11.3% in 1993, and generally reflects the performance of the equity and
bond markets.
The following table sets forth the plans' funded status and amounts recognized
in the Company's Consolidated Balance Sheet at November 30:
<TABLE>
<CAPTION>
(In thousands of dollars)
1995 1994
---- ----
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $(167,376) $(143,249)
========= =========
Accumulated benefit obligation $(174,515) $(148,243)
========= =========
Projected benefit obligation $(191,831) $(161,089)
Plan assets at fair value 208,256 178,216
--------- ---------
Projected benefit obligation
less than plan assets 16,425 17,127
Unrecognized net gain (1,942) (72)
Unrecognized prior service cost 2,244 1,192
Unrecognized net asset (9,182) (10,368)
--------- ---------
Prepaid pension cost recognized $ 7,545 $ 7,879
========= =========
</TABLE>
The discount rate and weighted average rate of increase in future compensation
levels used in determining the actuarial present value of the projected benefit
obligation were 7.0% and 4.2%, and 8.0% and 4.2%, respectively, at November 30,
1995 and 1994, respectively. The expected long-term rate of return on assets
was 9.0% in 1995 and in 1994. The Company's funding policy is to fund amounts
on an actuarial basis to provide for current and future benefits in accordance
with the funding guidelines of ERISA.
J. EMPLOYEE BENEFITS OTHER THAN PENSIONS
In addition to providing pension retirement benefits, the Company makes health
care and life insurance benefits available to certain retired employees on a
limited basis. Generally, the medical plans pay a stated percentage of medical
expenses reduced by deductibles and other coverages. Eligible employees may
elect to be covered by these health and life insurance benefits if they reach
early or normal retirement age while working for the Company. In most cases, a
retiree contribution for health insurance coverage is required. The Company
funds these benefit costs primarily on a pay-as-you-go basis.
In the fourth quarter of 1993, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" ("FAS 106"). The Company
recognized the accumulated postretirement benefit obligation of $19,088,000
retroactively to December 1, 1992 as an accounting change. On an aftertax
basis, this charge was $12,598,000 or $1.14 per share. Previously reported
quarterly results in 1993 were restated to reflect the adoption of FAS 106 as
of December 1, 1992. The adoption of FAS 106 had no impact on consolidated
cash flows. The components of expense were as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Service cost - benefits earned
during the period $ 396 $ 510 $ 467
Interest cost on accumulated
postretirement benefit obligation 1,202 1,327 1,394
Amortization of unrecognized net gain (179) - -
------- ------- -------
Net periodic postretirement benefit costs $ 1,419 $ 1,837 $ 1,861
======= ======= =======
</TABLE>
The accumulated postretirement benefit obligation at November 30 consisted of
the following components:
<TABLE>
<CAPTION>
(In thousands of dollars)
1995 1994
---- ----
<S> <C> <C>
Retirees and dependents $12,021 $13,017
Eligible active participants 1,650 1,602
Other active participants 5,862 4,823
------- -------
Accumulated postretirement
benefit obligation 19,533 19,442
Unrecognized net gain 2,187 1,628
------- -------
Accrued postretirement benefit costs $21,720 $21,070
======= =======
</TABLE>
Benefit costs were estimated assuming retiree health care costs would
initially increase at an 11% annual rate which decreases to an ultimate rate of
6% in 5 years. If this annual trend rate would increase by 1%, the accumulated
postretirement obligation as of November 30, 1995 would increase by $2,021,000
with a corresponding increase of $267,000 in the postretirement benefit expense
in 1995. The discount rates used in determining the accumulated postretirement
obligation at November 30, 1995 and 1994 were 6.5% and 7.5%, respectively.
K. ASBESTOS LITIGATION AND CLAIMS
As discussed above in Note B, the Company currently intends to file a First
Amended Consolidated Plan of Reorganization ("Amended Plan") with the ICC and
the RFC. Like the Original Plan filed in 1995, the Amended Plan will provide,
among other things, that all present and future asbestos-related personal
injury claims
25
<PAGE> 14
will be channeled to and resolved by an independently administered claims
trust. Similar plans of reorganization have been confirmed in the chapter 11
cases of certain other companies involved in asbestos litigation. It is also
currently contemplated that the Amended Plan will resolve and discharge all
asbestos property damage claims.
The asbestos-related claims, which consist of personal injury and property
damage claims, are discussed below.
Personal Injury
- ---------------
Prior to its chapter 11 filing, the Company had been named as a co-defendant in
a substantial number of lawsuits brought by present or former insulators,
shipyard workers, steel workers, tire workers and other persons alleging damage
to their health from exposure to dust from asbestos-containing industrial
insulation products. As a result of the chapter 11 filing by the Company, all
such litigation is automatically stayed pursuant to section 362 of the
Bankruptcy Code. As of the petition date, there were approximately 67,800
asbestos-related personal injury claims outstanding against the Company.
The Bankruptcy Court set September 30, 1992 as the bar date for present
asbestos-related claims. The Company implemented the Court-approved plan to
notify known and potential claimants of the bar date. All persons with a
pre-petition asbestos-related claim were required to file a proof of claim by
the bar date in order to participate in the reorganization cases.
Approximately 160,000 proofs of claim were filed alleging personal injury. The
Company believes that approximately 11,000 of these claims are duplicates or
were filed by persons whose lawsuits were previously closed.
The vast majority of persons who had filed pre-petition lawsuits against the
Company, and whose lawsuits were pending as of the petition date, filed proofs
of claim in the reorganization cases. Therefore, approximately 81,200
previously undisclosed claims were filed as a result of the bar date. The
Company believes that most of the approximately 40,000 claimants who in 1991,
pursuant to a previous Bankruptcy Court order, notified the Company of their
intent to assert a claim against the Company, also filed claims pursuant to the
bar date. The Company expects that additional asbestos-related personal injury
claims will arise for several decades into the future. Holders of these claims
were not required to file claims pursuant to the bar date.
In July 1995, 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 motion was filed because the UCC
and the ESC appointed in the Company's chapter 11 cases had not agreed with the
amount of such liability previously negotiated for settlement purposes among
the Company, the ICC and the RFC. In December 1995, the Bankruptcy Court ruled
that the Company's estimated liability for such claims is $2,502,511,000.
Appeals have been filed by certain creditors, the UCC and the ESC seeking to
have the Bankruptcy Court's ruling overturned. The Company does not know
whether the Appellate Court will hear the appeals or, if it does, when any
decision may be rendered.
Property Damage
- ---------------
There were forty-one lawsuits pending against the Company at the end of fiscal
1991 arising from the alleged 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 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. A few of the pending cases were certified as class
actions. 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 those asserted in 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.
In February 1996, after the close of the fiscal year, the hospital members of
the American Hospital Association, which filed asbestos-related property damage
claims against the Company in the alleged approximate amount of $300 million
("Hospitals"), filed a motion in the Bankruptcy Court seeking an order (a)
estimating the aggregate value of
26
<PAGE> 15
all asbestos-related property damage claims against the Company and (b)
temporarily allowing such claims for purposes of voting on a plan of
reorganization. The motion states that the relief requested is not intended
to be a determination by the Bankruptcy Court of the Company's liability, if
any, on account of such claims or to assign a permanently fixed value for such
claims, but is sought in order to determine the appropriate distribution to
creditor classes under a plan of reorganization. Because the motion was just
filed, the Company has not yet made a determination as to how it intends
to respond. The Company does, however, intend to file with the Bankruptcy
Court shortly an objection on various grounds to many asbestos-related property
damage claims, including claims filed by the hospitals.
It is anticipated that the Amended Plan will provide alternative methods for
treatment of the asbestos-related property damage claims. If the class of
asbestos-related property damage claimants votes to accept the Amended Plan, a
second trust will be established to resolve the claims and the Company will
fund the trust with $3 million in cash. If such class votes to reject the
Amended Plan, but the Amended Plan is nevertheless confirmed, such claims will
be resolved and discharged pursuant to claims resolution procedures contained
in the Amended Plan. These procedures will require such claimants to prove by
application of a scientific protocol that the asbestos-containing insulation
products for which they are seeking damages were manufactured by the Company.
If the class of asbestos-related property damage claimants rejects the Amended
Plan and has its claims resolved through the claims resolution procedures
discussed above, the eventual outcome of its claims cannot be reasonably
predicted at this time. It should also be noted that the Company may have
insurance coverage for certain of these claims.
L. ENVIRONMENTAL AND OTHER LITIGATION CLAIMS
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. Pursuant to this general claims bar date,
numerous proofs of claim were filed alleging a right to payment from the estate
due to litigation matters. Certain of such claims are discussed below.
Environmental
- -------------
The Company received 1,102 proofs of claim alleging a right to payment because
of environmental matters. These claims, relating primarily to various
Superfund sites, sought payment aggregating $27.9 billion, of which readily
identifiable duplicate claims approximated $27.5 billion. The Company has
resolved the majority of these environmental claims through negotiations with
the United States Environmental Protection Agency ("USEPA") and the United
States Department of Interior ("USDOI"). The USEPA is responsible for
resolving, among other things, claims arising from Superfund sites and the
USDOI is responsible for resolving the Company's liability for any natural
resource damage that may have occurred at the Superfund sites. Natural
resource damage is damage caused to the environment or to plants or animals by
the release of hazardous materials at Superfund sites. Pursuant to an
agreement among the Company, USEPA, USDOI, and certain states, which is subject
to the approval of the Bankruptcy Court, the agencies would be afforded allowed
pre-petition general unsecured claims aggregating approximately $43.0 million
in full satisfaction of all of the Company's alleged liability at most of its
known Superfund sites, including any liability for any natural resource damage.
This amount has been provided for and is included in Liabilities Subject to
Compromise. In exchange for these allowed claims, the agencies and such states
would release the Company from liability at these sites and grant the Company
protection from claims of other parties that may be co-liable at the sites. The
intent of the settlement agreement is to completely resolve all claims against
the Company with respect to these sites.
With respect to the small number of sites as to which the USEPA believes that
it does not have sufficient information to negotiate a meaningful settlement
with the Company, the settlement agreement provides a process which permits any
liability with respect to these sites to be resolved in the future when
additional information is available. Pursuant to this process, the Company
retains all of its rights and defenses as to these sites and may settle or
litigate its liability at such future time. The settlement agreement also
provides that any future liability of the Company, when fixed, will be
satisfied essentially with the same type and amount of consideration that
pre-petition general unsecured
27
<PAGE> 16
creditors receive pursuant to a confirmed plan of reorganization in the
Company's chapter 11 case.
In November 1995, a hearing was held before the Bankruptcy Court on the
Company's motion seeking the approval of the settlement agreement. USEPA and
USDOI joined in the motion. Certain parties that may be liable at certain of
the sites resolved by the settlement agreement opposed the Company's motion.
Such opposition basically seeks increases in the amount of the allowed claims
provided in the settlement agreement attributable to the sites where the
objectants may have liability. The Company believes, however, that the terms
and provisions of the settlement agreement are fair and equitable and that the
objections raised have no basis. The Court has not yet ruled on the motion.
Lead Chemicals
- --------------
The Bankruptcy Court received 131 timely proofs of claim asserting liability
based on personal injury or property damage from lead chemicals allegedly
manufactured and sold by the Company. Three additional claims were filed in
November 1993, after the 1991 bar date. While some of the timely filed claims
did not specify an amount, those that did sought an aggregate of $165 million.
All of the timely filed claims which specified an amount of damages have been
fully withdrawn without the allowance of any amount by the Company.
The three late filed claims referred to above were filed by the City of New York
or its agencies which had filed a pre-petition lawsuit against the Company. In
November 1994, the Bankruptcy Court sustained the Company's objection to these
claims and disallowed them because they were late filed. No appeal of this
ruling was sought by the claimants. As a result, the Company has disposed of
all filed lead-related property damage claims. The Company had also filed
objections to seven other claims that were filed against it seeking damages for
bodily injuries resulting from exposure to lead. Pursuant to the objections,
the Company sought an order of the Bankruptcy Court disallowing such claims
because the claimants' lawsuits asserting similar claims against other
defendants which were not in bankruptcy had been dismissed in the trial court.
In June 1995, the Bankruptcy Court disallowed all seven of such claims.
Currently, there are 113 remaining timely-filed lead-related personal injury
claims that have not been resolved.
The Company believes that it has valid grounds to object to the allowance of
all of the remaining lead-related personal injury claims. It is currently
contemplated that all lead-related personal injury claims that were filed that
are not disposed of pursuant to an objection filed by the Company, and all
future lead-related personal injury claims, will be channeled to and resolved
by the trust referred to in Note K above, to be established under the Amended
Plan for the benefit of holders of personal injury claims resulting from
exposure to asbestos or lead- containing products.
Other Litigation
- ----------------
The Company received, by the 1991 bar date, ninety-two claims arising out of
litigation matters other than those related to lead, asbestos or environmental
issues. These claims aggregated approximately $1.1 billion. The majority of
these claims have been resolved by disallowance, settlement pursuant to
Bankruptcy Court authority or by the allowance of a pre-petition general
unsecured claim for amounts that are not material to the Company or its
operations.
Summary
- -------
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 intends to defend all
litigation claims vigorously in the manner permitted by the Bankruptcy
Code and/or 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. Further, all such claims against the Company
will be treated in a plan of reorganization.
The Company has resolved most of the litigation claims that were asserted by
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.
28
<PAGE> 17
The eventual outcome of the environmental and other litigation claims described
herein cannot be reasonably predicted due to numerous uncertainties that are
inherent in the reorganization process. However, the Company believes that its
provision for these claims is adequate. In addition, the Company may have
insurance coverage for certain of these claims and other factual and legal
defenses available to it.
M. OTHER INCOME
The Company held certain equity investments having no cost basis, but which had
a fair value of approximately $5.4 million when FAS 115 was adopted. A
substantial portion of these investments related to shares of stock in a
Canadian mining concern that the Company received in 1990 in settlement of
certain indebtedness. 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, had recently increased
significantly. Substantially all of these investments were sold in June, 1995,
resulting in a realized gain of $11.5 million.
N. INDUSTRY SEGMENT INFORMATION
A general description of the products manufactured by the Company's three
industry segments is:
Industrial
Diatomaceous earth products, rubber products, rare metals, fiberglass
reinforced plastic parts and industrial chemicals.
Machinery
Earth moving machines, heavy-duty forklift trucks, aerospace and defense parts,
metal cleaning and finishing systems and aluminum castings.
Automotive
Mechanical, structural, and trim parts for passenger cars, trucks, vans and
utility vehicles for the OEM and replacement markets.
Sales between segments and foreign operations were not material.
Consolidated sales to Ford Motor Company amounted to $166,800,000 in 1995,
$165,300,000 in 1994, and $148,000,000 in 1993. No other customer accounted
for 10% or more of consolidated sales with the exception of General Motors
Corporation ("GMC") in 1994 and 1993 when consolidated sales to GMC amounted to
$81,400,000 and $73,100,000, respectively.
Consolidated export sales were $92,500,000 in 1995, $76,900,000 in 1994 and
$73,200,000 in 1993.
29
<PAGE> 18
INDUSTRY SEGMENT INFORMATION
<TABLE>
<CAPTION>
Years ended November 30
(In millions of dollars)
Industrial Machinery Automotive
1995 1994 1993 1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $160.6 $141.4 $132.6 $254.7 $217.0 $171.7 $433.2 $398.3 $357.2
====== ====== ====== ====== ====== ====== ====== ====== ======
Operating Income 15.6 14.5 15.0 24.1 18.8 9.1 42.1 43.7 37.4
==== ==== ==== ==== ==== === ==== ==== ====
Identifiable Assets 80.6 78.2 72.7 112.0 109.8 92.8 217.1 190.6 168.2
==== ==== ==== ===== ===== ==== ===== ===== =====
Depreciation and Amortization 6.1 5.5 4.9 4.7 4.0 3.4 17.6 16.2 16.2
=== === === === === === ==== ==== ====
Capital Expenditures 4.4 7.7 5.6 7.6 6.9 7.4 28.3 21.2 15.4
=== === === === === === ==== ==== ====
Segment Total Corporate Total
1995 1994 1993 1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ---- ---- ---- ---- ----
Sales $848.5 $756.7 $661.5 $ - $ - $ - $848.5 $756.7 $661.5
====== ====== ====== ====== ====== ====== ====== ====== ======
Operating Income (Loss) 81.8 77.0 61.5 (18.7) (18.7) (17.7) 63.1 58.3 43.8
==== ==== ====
Provision for Asbestos Ligitation (1,005.5) - (1,135.5) (1,005.5) - (1,135.5)
Provision for Environmental and Other Claims - - (41.4) - - (41.4)
Interest Expense (1.9) (1.8) (2.1) (1.9) (1.8) (2.1)
Other Income (Expense) 11.6 .6 (.2) 11.6 .6 (.2)
Reorganization Items (2.2) (3.4) (4.4) (2.2) (3.4) (4.4)
===== ===== ===== ----- ----- -----
Income (Loss) Before Taxes (934.9) 53.7 (1,139.8)(1)
======= ==== =========
Identifiable Assets 409.7 378.6 333.7 170.4 142.5 125.7 580.1 521.1 459.4
===== ===== ===== ===== ===== ===== ===== ===== =====
Depreciation and Amortization 28.4 25.7 24.5 .3 .4 .5 28.7 26.1 25.0
==== ==== ==== == == == ==== ==== ====
Capital Expenditures 40.3 35.8 28.4 .3 .1 .1 40.6 35.9 28.5
==== ==== ==== == == == ==== ==== ====
<FN>
(1) Before cumulative effect of accounting changes.
</TABLE>
30
<PAGE> 19
INDEPENDENT AUDITORS' REPORT
- ----------------------------
The Board of Directors
Eagle-Picher Industries, Inc.:
We have audited the accompanying consolidated balance sheet of Eagle-Picher
Industries, Inc. and subsidiaries (debtor in possession, as of January 7, 1991)
as of November 30, 1995 and 1994, and the related consolidated statements of
income (loss), shareholders' equity (deficit), and cash flows for each of the
years in the three-year period ended November 30, 1995. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Eagle-Picher
Industries, Inc. and subsidiaries as of November 30, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended November 30, 1995 in conformity with generally accepted
accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note B to
the consolidated financial statements, on January 7, 1991, Eagle-Picher
Industries, Inc. and seven of its domestic subsidiaries each filed a voluntary
petition for relief under chapter 11 of the United States Bankruptcy Code with
the United States Bankruptcy Court. Although the Company and its operating
subsidiaries, other than EDI, Inc., are currently operating their businesses as
debtors in possession under the jurisdiction of the Bankruptcy Court, the
continuation of their businesses as going concerns is contingent upon, among
other things, the ability to formulate a plan of reorganization which will gain
approval of the creditors and confirmation by the Bankruptcy Court. The filing
under chapter 11 and the continued uncertainty related to claims associated
with the Company's sale of asbestos products and certain other litigation,
raise substantial doubt about the Company's ability to continue as a going
concern. The consolidated financial statements do not include any adjustments
that may be required in connection with restructuring the Company and its
subsidiaries as they reorganize under chapter 11 of the United States
Bankruptcy Code.
As discussed in Note J, the Company adopted the provisions of the Financial
Accounting Standards Board's SFAS No. 106, Employers' Accounting for
Postretirement Benefits Other than Pensions, on December 1, 1992.
/s/KPMG Peat Marwick LLP
- -------------------------
KPMG Peat Marwick LLP
Cincinnati, Ohio
February 14, 1996
31
<PAGE> 20
Report of Management
The Company's management is responsible for the preparation and presentation of
the consolidated financial statements and related financial data included in
this annual report. The financial information has been prepared in conformity
with generally accepted accounting principles and as such includes amounts
based on judgments and estimates made by management.
The Company's system of internal accounting controls is designed to provide
reasonable assurance at reasonable costs that assets are safeguarded from loss
or unauthorized use, and that the financial records may be relied upon for the
preparation of the consolidated financial statements.
The consolidated financial statements have been audited by our independent
auditors, KPMG Peat Marwick LLP. Their audit is conducted in accordance with
generally accepted auditing standards and provides an independent assessment as
to the fair presentation, in all material respects, of the Company's
consolidated financial statements.
The Audit Committee of the Board of Directors, composed solely of outside
directors, meets periodically with management and the independent auditors to
review internal accounting controls and the quality of financial reporting.
Financial management and the independent auditors have full and free access to
the Audit Committee.
/s/Thomas E. Petry
- ------------------------
Thomas E. Petry
Chairman and Chief
Executive Officer
/s/Andries Ruijssenaars
- ------------------------
Andries Ruijssenaars
President and Chief
Operating Officer
/s/David N. Hall
- ------------------------
David N. Hall
Senior Vice President -
Finance
Cincinnati, Ohio
February 14, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
RESULTS OF OPERATIONS
1995 COMPARED TO 1994
On a 12% sales increase, operating income increased 8% to $63.1 million in 1995
from $58.3 million in 1994. Comparative sales volume by industry segment
showed increases of 14% in the Industrial segment, 17% in the Machinery
segment, and 9% in the Automotive segment. Operating income increased 8% in
the Industrial segment and 28% in the Machinery segment, but decreased 4% in
the Automotive segment. The increase in operating income in the Industrial
Segment was shared by all operations within the segment. This segment tends
not to experience cyclical swings as its customers serve a range of consumer
nondurable markets. The increase in operating income in the Machinery segment
was attributable solely to the continuing improvements in both volume and
operating efficiencies in the operations making earth moving and material
handling equipment. The decrease in operating income in the Automotive segment
was due to: 1) intense pricing pressure by major customers demanding price
concessions; 2) inability to pass on raw material cost increases on a timely
basis; and 3) start-up costs associated with new business.
In December 1995, the Bankruptcy Court estimated the Company's aggregate
liability on account of present and future asbestos-related personal injury
claims to be $2.5 billion. As a result, the Company recorded a provision in
the fourth quarter of 1995 of $1.0 billion to increase the asbestos liability
subject to compromise to $2.5 billion.
Interest expense was $1.9 million in 1995 compared to $1.8 million in 1994.
A gain on sale of investments of $11.5 million resulted from the sale of
securities which the Company had received several years ago in settlement of
financing it had provided to a supplier.
Reorganization items are described in Note B.
The primary components of the income tax provision are described in Note F.
1994 COMPARED TO 1993
On a 14% sales increase, operating income increased 33% to $58.3 million in
1994 from $43.8 million in 1993.
32
<PAGE> 21
Comparative sales volume by industry segment showed increases of 7% in
the Industrial segment, 26% in the Machinery segment, and 12% in the Automotive
segment. Operating income decreased 3% in the Industrial segment, but
increased 107% in the Machinery segment and 17% in the Automotive segment. The
decrease in operating income in the Industrial segment was attributable to
pricing pressures on diatomaceous earth products. The increase in operating
income in the Machinery segment was primarily associated with improvements in
production of a line of heavy-duty forklift trucks. An increase in sales
volumes of metal cleaning and finishing equipment also contributed to the
increase in operating income in the Machinery segment. The increase in
operating income in the Automotive segment was due to: 1) an increase in export
sales and stronger performance of our operations in Great Britain and Spain; 2)
broader market penetration coupled with record domestic auto production; and 3)
favorable product mix heavily weighted toward the light truck, van, and sport
utility segment of the market for which several divisions produce components.
In November 1993, the Company reached an agreement on the principal elements of
a plan of reorganization with the Injury Claimants' Committee and the Legal
Representative for Future Claimants, the representatives of the holders of
present and future asbestos-related personal injury and other toxic tort claims
in the Company's chapter 11 case. The agreement contemplated a settlement of
the Company's liability for all present and future asbestos-related personal
injury claims. As a consequence of the proposed settlement, the Company
recorded an additional provision of $1.135 billion for all present and future
asbestos-related personal injury claims, thereby increasing the asbestos
liability subject to the compromise on the Consolidated Balance Sheet to $1.5
billion. In addition, in 1993 a provision of $41.4 million was made for
environmental and other litigation claims.
Interest expense decreased to $1.8 million from $2.1 million due primarily to
the repayment of certain foreign debt in 1994.
Reorganization items are described in Note B.
The primary components of the income tax provision are described in Note F.
INDUSTRY SEGMENT DATA
Industry segment data for 1995, 1994 and 1993 is summarized on page 30.
FINANCIAL CONDITION
The filing of the petitions for reorganization under chapter 11 on January 7,
1991 had a significant positive impact on the Company's liquidity. The filing
stayed all litigation against the Company with respect to pre-petition claims
and reduced the cash drain for asbestos litigation. In the third quarter of
1995, the Company filed a motion with the Bankruptcy Court presiding over the
Company's chapter 11 case asking the Court to estimate its aggregate liability
on account of present and future asbestos-related personal injury claims. In
December 1995, the Court ruled on the motion and estimated this liability to
be $2.5 billion. As a result, the Company recorded a provision in the fourth
quarter of 1995 of $1.0 billion to increase the asbestos liability subject to
compromise to $2.5 billion. At November 30, 1995, the balance of Liabilities
Subject to Compromise was $2.663 billion. These amounts were recorded based on
the expected amount of the allowed claims, not the amounts of consideration
that such allowed claims may receive pursuant to a plan of reorganization.
During 1995, there was a $.7 million increase in cash. Operating activities
provided $30.5 million. Items which affected cash provided by operations
include the following:
1) There was a significant increase in customer tooling costs from $15.0
million at the end of fiscal 1994, to $26.5 million at November 30, 1995. It is
common practice in the automotive industry to accumulate customer tooling costs
while the tooling is under construction and bill the customer upon its
completion. It is anticipated that customer tooling will return to a more
traditional level of $10.0 to $12.0 million by the end of 1996, which would
generate $14.5 to $16.5 million in cash in the coming fiscal year.
2) There was an increase in working capital, other than customer tooling
costs, which was in line with the 12% increase in sales volume.
3) While income tax expense for financial statement purposes was $9.3 million,
the Company paid income taxes, net of a small refund, of $28.8 million.
4) The Company incurred interest expenses of $1.9 million and reorganization
costs of $2.2 million.
33
<PAGE> 22
In addition, the Company used cash of $28.7 million, net of an $11.5 million
sale of an investment (Note M), for investing activities. The Company had near
record ($43.0 million in 1988) capital expenditures of $40.6 million in 1995.
This compares to $35.9 million spent in 1994. The capital expenditures in
1995 included $10.3 of an approved $12.0 million expansion of a new coating
line for the manufacture of gasket materials which is to be completed in early
1996.
Finally, the Company used $1.0 million of cash for financing activities which
included repayment of debt in accordance with adequate protection payments
authorized by the Bankruptcy Court, combined with the financing activities of
the foreign subsidiaries. As of November 30, 1995, the Company had $82.6
million of long-term debt compared to $83.6 million at the end of the prior
year. The disposition of unsecured debt included in liabilities subject to
compromise of $62.0 million will be treated in a plan of reorganization.
The Company has a Bankruptcy Court approved debtor in possession financing
agreement which provides a $40.0 million committed revolving credit facility.
This facility expires the earlier of December 31, 1996 or the effective date of
a plan of reorganization. Should a plan not become effective by the end of
1996, the Company would expect to have the current facility extended for as
long as necessary. At November 30, 1995, $30.2 million in letters of credit
were outstanding under the facility leaving the Company with $9.8 million in
available borrowing capacity. There were no cash borrowings in 1995 under the
facility.
While the Company is reorganizing under chapter 11, it is prohibited from
paying interest or principal on pre-petition obligations without the approval
of the Bankruptcy Court. To the extent cash generated from operations exceeds
capital expenditures, working capital requirements, approved payments of
secured debt and administrative expenses of the reorganization, the Company
will continue to accumulate cash. Consequently, the liquidity of the Company
should improve.
The Company intends to file an amended plan of reorganization with the
Bankruptcy Court as soon as practicable. It is contemplated that such plan
will provide for a discharge of the Company's pre-petition liabilities
(Liabilities Subject to Compromise) and provide the reorganized Company with a
capital structure appropriate for an industrial products company which will
enable the Company to access financing in the credit and debt markets.
RECENT FASB PRONOUNCEMENTS
During the year, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("FAS 121").
This statement requires that long-lived assets and certain identifiable
intangibles to be held and used by an entity be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. Measurement of an impairment loss on these
assets should be based on the fair value of the assets. FAS 121 is required to
be adopted for fiscal years beginning after December 15, 1995. As such, the
Company will adopt this standard the sooner of the fiscal year ended November
30, 1997 or the effective date of a plan of reorganization. Management has not
fully assessed the impact of FAS 121; however, it is not anticipated that its
adoption will have a material impact on the financial statements.
Statement of Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("FAS 123"), was also issued in 1995. This statement establishes
a fair value method of accounting for stock-based compensation plans. Adoption
of the fair value method is encouraged; however, entities may elect to continue
to account for stock-based compensation plans according to the provisions of
Accounting principles Bulletin No. 25, "Accounting for Stock Issued to
Employees" ("APB 25"), but provide the disclosures related to FAS 123. FAS 123
is effective for transactions entered into in fiscal years that begin after
December 15, 1995. Accordingly, the Company will adopt this standard the
sooner of the fiscal year ended November 30, 1997 or the effective date of a
plan of reorganization. As a result of the numerous uncertainties that are
inherent in the reorganization process, Management has not assessed the impact
that adoption of FAS 123 would have on the financial statements.
34
<PAGE> 23
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(Unaudited)
(In thousands of dollars, except per share)
- -------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $848,548 $756,741 $661,452 $611,458 $598,631
- -------------------------------------------------------------------------------------------
Operating Income 63,087 58,281 43,754 46,560 18,849
- -------------------------------------------------------------------------------------------
Income (Loss) Before
Reorganization Items
and Taxes (932,646)(1) 57,175 (1,135,426)(2) 40,924 (788)
- -------------------------------------------------------------------------------------------
Reorganization Items (3) (2,225) (3,426) (4,344) (9,038) (12,124)
- -------------------------------------------------------------------------------------------
Income (Loss) Before Taxes (934,871) 53,749 (1,139,770) 31,886 (12,912)
- -------------------------------------------------------------------------------------------
Net Income (Loss) (944,171) 48,749 (1,144,770)(4) 28,886 (15,812)
- -------------------------------------------------------------------------------------------
Net Income (Loss) Per Share (85.51) 4.42(4) (103.78)(4) 2.63 (1.44)
- -------------------------------------------------------------------------------------------
Common Dividend Per Share - - - - -
- -------------------------------------------------------------------------------------------
Total Assets 580,073 521,107 459,360 419,435 398,990
- -------------------------------------------------------------------------------------------
Long-Term Debt,
less current portion 19,103(5) 19,896(5) 21,712(5) 25,033(5) 32,001(5)
- -------------------------------------------------------------------------------------------
<FN>
(1) Includes a provision for asbestos litigation of $1.0 billion in 1995.
(2) Includes a provision for asbestos litigation of $1.135 billion and a provision
for environmental and other claims of $41.4 million in 1993.
(3) On January 7, 1991, the Company and seven of its domestic subsidiaries each
filed a petition for relief under chapter 11 of the U.S. Bankruptcy Code.
(4) Excludes cumulative adjustment for adoption of FAS 106 in 1993 which decreased
net income by $12.6 million ($1.14 per share).
(5) Long-term debt of $62.0 million in 1995, 1994 and 1993 and $61.7 million in 1992,
and 1991 has been included in liabilities subject to compromise.
</TABLE>
35
<PAGE> 1
EXHIBIT 21
EAGLE-PICHER INDUSTRIES, INC.
SUBSIDIARIES OF THE REGISTRANT
Cincinnati Industrial Machinery Sales Company [Ohio]
Daisy Parts, Inc. [Michigan]
Eagle-Picher Development Company, Inc. [Delaware]
Transicoil Inc. [Pennsylvania]
Transicoil (Malaysia) SDN. BHD. [Malaysia]
Michigan Automotive Research Corporation (MARCO) [Michigan]
EDI, Inc. [Michigan]
Eagle-Picher Espana, S.A. [Spain]
Eagle-Picher Europe, Inc. [Delaware]
Eagle-Picher Fluid Systems Ltd [England and Wales]
Eagle-Picher Far East, Inc. [Delaware]
Eagle-Picher, Inc. [Virgin Islands]
Eagle-Picher Industries of Canada Limited [Canada]
Eagle-Picher Industries GmbH [Germany]
Eagle-Picher Industries Materials GmbH [Germany]
Eagle-Picher Minerals, Inc. [Nevada]
Eagle-Picher Minerals International S.A.R.L. [France]
United Minerals Verwaltungs- und Beteiligungs GmbH [Germany]
United Minerals GmbH & Co. KG [Germany]
Equipos de Acuna, S.A. de C.V. [Mexico]
Hillsdale Tool & Manufacturing Co. [Michigan]
Eagle-Picher Industries Europe GmbH [Germany]
EPTEC, S.A. de C.V. [Mexico]
Eagle-Picher Fluid Systems, Inc. [Michigan]
- ---------------
[ ] Brackets indicate state or country of incorporation and do not form part of
corporate name.
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Eagle-Picher Industries, Inc.:
We consent to incorporation by reference in Registration Statement Nos. 2-50595,
33-5792, 33-31975 and 33-37518 on Form S-8 of Eagle-Picher Industries, Inc. of
our report, with explanatory paragraphs, dated February 14, 1996 relating to the
consolidated balance sheet of Eagle-Picher Industries, Inc. and subsidiaries
(debtor in possession, as of January 7, 1991) as of November 30, 1995 and 1994,
and the related consolidated statements of income (loss), shareholders' equity
(deficit), and cash flows for each of the years in the three-year period ended
November 30, 1995, which reports appear in the Company's 1995 Annual Report on
Form 10-K and in the 1995 Annual Report, which is incorporated by reference in
the Company's 1995 Annual Report on Form 10-K. Our report on the consolidated
financial statements refers to a change in accounting for postretirement
benefits other than pensions in 1993.
/s/ KPMG Peat Marwick LLP
Cincinnati, Ohio
February 27, 1996
<PAGE> 1
EXHIBIT 24(a)
POWER OF ATTORNEY
Each of the undersigned officers and/or directors of Eagle-Picher Industries,
Inc. hereby consents to and appoints Thomas E. Petry and James A. Ralston, and
each of them, as his true and lawful attorneys-in-fact and agents with all power
of substitution, for him and in his name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K for the 1995 fiscal year of
Eagle-Picher Industries, Inc., a corporation organized and existing under the
laws of the State of Ohio, and any and all amendments thereto, and to file the
same, with all exhibits thereto, and all documents in connection therewith, with
the Securities and Exchange Commission pursuant to the requirements of the
Securities Exchange Act of 1934, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the same as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue thereof.
In Witness Whereof, each of the undersigned has hereunto set his hand on this
14th day of February, 1996.
/s/ Thomas E. Petry
------------------------------------------------------
Thomas E. Petry
Director, Chairman of the Board
and Chief Executive Officer
/s/ Andries Ruijssenaars
------------------------------------------------------
Andries Ruijssenaars
Director, President and Chief
Operating Officer
/s/ David N. Hall
------------------------------------------------------
David N. Hall
Senior Vice President-Finance
(Principal Financial Officer)
/s/ Paul W. Christensen, Jr.
------------------------------------------------------
Paul W. Christensen, Jr.
Director
/s/ V. Anderson Coombe
------------------------------------------------------
V. Anderson Coombe
Director
/s/ Roger L. Howe
------------------------------------------------------
Roger L. Howe
Director
/s/ Daniel W. LeBlond
------------------------------------------------------
Daniel W. LeBlond
Director
/s/ Powell McHenry
------------------------------------------------------
Powell McHenry
Director
/s/ Eugene P. Ruehlmann
------------------------------------------------------
Eugene P. Ruehlmann
Director
<PAGE> 1
EXHIBIT 24(b)
POWER OF ATTORNEY
The undersigned officer of Eagle-Picher Industries, Inc. hereby consents to and
appoints Thomas E. Petry and James A. Ralston, and each of them, as his true and
lawful attorneys-in-fact and agents with all power of substitution, for him and
in his name, place and stead, in any and all capacities, to sign the Annual
Report on Form 10-K for the 1995 fiscal year of Eagle-Picher Industries, Inc., a
corporation organized and existing under the laws of the State of Ohio, and any
and all amendments thereto, and to file the same, with all exhibits thereto, and
all documents in connection therewith, with the Securities and Exchange
Commission pursuant to the requirements of the Securities Exchange Act of 1934,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the same as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
In Witness Whereof, the undersigned has hereunto set his hand on this 20th day
of February, 1996.
/s/ Carroll D. Curless
- ------------------------------------
Carroll D. Curless
Vice President and Controller
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Income (Loss) and the Consolidated Balance Sheet and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> NOV-30-1995
<EXCHANGE-RATE> 1
<CASH> 93,330
<SECURITIES> 0
<RECEIVABLES> 128,904
<ALLOWANCES> 1,860
<INVENTORY> 83,647
<CURRENT-ASSETS> 326,118
<PP&E> 441,957
<DEPRECIATION> 286,139
<TOTAL-ASSETS> 580,073
<CURRENT-LIABILITIES> 82,623
<BONDS> 82,631
<COMMON> 13,906
0
0
<OTHER-SE> (2,225,214)
<TOTAL-LIABILITY-AND-EQUITY> 580,073
<SALES> 848,548
<TOTAL-REVENUES> 848,548
<CGS> 785,461
<TOTAL-COSTS> 785,461
<OTHER-EXPENSES> 1,005,511
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,926
<INCOME-PRETAX> (934,871)
<INCOME-TAX> 9,300
<INCOME-CONTINUING> (944,171)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (944,171)
<EPS-PRIMARY> (85.51)
<EPS-DILUTED> (85.51)
</TABLE>
<PAGE> 1
EXHIBIT 99
<TABLE>
<CAPTION>
EPI OPERATIONS (DIVISIONS) PLANT LOCATIONS
- ----------------------------------------------------------------------------------------------
<S> <C>
Cincinnati Industrial Machinery Sharonville, Ohio
3280 Hageman Street
Sharonville, Ohio 45241
Construction Equipment Lubbock, Texas
1802 E. 50th Street Acuna, Coahuila, Mexico
Lubbock, Texas 79404
Eagle-Picher Fluid Systems, Inc. Brighton, Michigan*
7854 Lochlin Drive
Brighton, Michigan 48116
Electronics Joplin, Missouri (6)
"C" and Porter Streets Colorado Springs, Colorado (2)
Joplin, Missouri 64801 Galena, Kansas
Grove, Oklahoma
Seneca, Missouri
Stella, Missouri
Socorro, New Mexico**
Fabricon Products River Rouge, Michigan
1721 West Pleasant Avenue Philadelphia, Pennsylvania
River Rouge, Michigan 48218 Riverton, New Jersey
Hillsdale Tool & Manufacturing Co. Hillsdale, Michigan (4)**
135 E. South Street Hamilton, Indiana
Hillsdale, Michigan 49242 Jonesville, Michigan
Vassar, Michigan
San Luis Potosi, Mexico
Michigan Automotive Ann Arbor, Michigan
Research Corporation (MARCO)
1254 North Main Street
Ann Arbor, Michigan 48104
Minerals Clark Station, Nevada
6110 Plumas Street Lovelock, Nevada
Reno, Nevada 89509 Vale, Oregon
</TABLE>
- ---------------
* Effective approximately March 1, 1996.
** The New Mexico plant and one of the Hillsdale, Michigan plants have little,
if any, manufacturing activity at this time.
<PAGE> 2
<TABLE>
<CAPTION>
EPI OPERATIONS (DIVISIONS) PLANT LOCATIONS
- ----------------------------------------------------------------------------------------------
<S> <C>
Orthane Denton, Texas***
1500 I-35 W. (at Airport Road)
Denton, Texas 76202
Plastics Grabill, Indiana
14123 Roth Road Ashley, Indiana
Grabill, Indiana 46741 Huntington, Indiana
Ross Aluminum Foundries Sidney, Ohio (2)
815 North Oak Avenue
Sidney, Ohio 45365
Rubber Molding Norwich, Connecticut
19 Ohio Avenue Pine Bluff, Arkansas
Norwich, Connecticut 06360 Stratford, Connecticut
Specialty Materials Quapaw, Oklahoma (2)
One Mile NE of Quapaw on Hwy. 69A Miami, Oklahoma (3)
Quapaw, Oklahoma 74363 Harrisonville, Missouri
Lenexa, Kansas
Suspension Systems Paris, Illinois
Route 133 West
Paris, Illinois 61944
Transicoil Inc. Trooper, Pennsylvania
2560 General Armistead Avenue Melaka, Malaysia
Trooper, Pennsylvania 19403
Trim Kalkaska, Michigan
829 U.S. Hwy. 131 NW
Kalkaska, Michigan 49646
Wolverine Gasket Inkster, Michigan
2638 Princess Street Blacksburg, Virginia
Inkster, Michigan 48141 Leesburg, Florida
Garden City, Michigan
Eagle-Picher Industries Europe GmbH Market Harborough, England
Soria, Spain
Ohringen, Germany
</TABLE>
- ---------------
*** A substantial portion of the business of the Denton, Texas facility was sold
on January 31, 1996. The remainder will be transferred to the Brighton,
Michigan plant, listed above.
