UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
[X] THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-7276
EXOLON-ESK COMPANY
(Exact name of registrant as specified in its charter)
Delaware 16-0427000
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
1000 East Niagara Street, Tonawanda,
New York 14150
(Address of Principal Executive Offices)
(Zip Code)
(716) 693-4550
(Registrant's telephone number,
including area code)
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO ____
As of August 1, 1998 the registrant had outstanding 481,995
shares of $1 par value Common Stock and 512,897 shares of $1
par value Class A Common Stock.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Exolon-ESK Company
Consolidated Condensed Balance Sheet
(in thousands except share amounts)
(Unaudited)
ASSETS June 30, December 31,
1998 1997
Current assets:
Cash $ 4,383 $ 2,503
Accounts receivable (less allowance
for doubtful accounts of
$250 in 1998 and $350 in 1997) 8,639 9,582
Inventories 17,840 16,636
Prepaid expenses 144 183
Deferred income taxes 355 356
Total Current Assets 31,361 29,260
Investment in Norwegian joint venture 5,829 5,505
Property, plant and equipment, at cost 74,228 71,362
Accumulated depreciation (46,432) (45,072)
Net property, plant and equipment 27,796 26,290
Bond sinking fund 1,818 885
Other assets 1,438 1,337
Total Assets $68,242 $63,277
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 1,367 $ 1,367
Accounts payable 3,582 2,661
Accrued expenses 1,957 1,858
Income taxes payable 696 196
Total Current Liabilities 7,602 6,082
Deferred income taxes 1,836 1,834
Long-term debt excluding current portions 21,483 20,033
Other long-term liabilities 2,536 2,539
Total Liabilities 33,457 30,488
Stockholders' equity:
Preferred stock - Series A -
19,364 shares issued 276 276
Preferred stock - Series B -
19,364 shares issued 166 166
Common stock of $1 par value -
Authorized 600,000 shares,
512,897 issued 513 513
Class A common stock of $1 par value
- Authorized 600,000 shares,
512,897 issued 513 513
Additional paid-in capital 4,345 4,345
Retained earnings 30,205 28,209
Cumulative translation adjustment (865) (865)
Treasury stock, at cost (368) (368)
Total Stockholders' Equity 34,785 32,789
Total Liabilities and Stockholders'
Equity $68,242 $63,277
The accompanying notes are an integral part of these statements.
Exolon-ESK Company
Consolidated Condensed Statements of Income
Unaudited
(in thousands except per share amounts)
Three Months Six Months
Ended Ended
June 30, June 30,
1998 1997 1998 1997
Net sales $17,718 $20,034 $38,069 $40,225
Cost of goods sold 14,154 15,145 30,111 30,754
Gross Profit Before Depreciation 3,564 4,889 7,958 9,471
Operating Expenses
Depreciation 733 755 1,466 1,511
Selling, general & administrative
expenses 1,409 1,384 2,857 2,714
Research and development (2) 9 32 23
2,140 2,148 4,355 4,248
Operating Income 1,424 2,741 3,603 5,223
Other (Expense) Income:
Equity in Earnings before
income taxes of Norwegian
Jt. venture 268 67 324 79
Interest expense (205) (264) (418) (516)
Miscellaneous (expense)
income (59) (155) (164) (241)
4 (352) (258) 678
Earnings before income taxes 1,428 2,389 3,345 4,545
Income tax expense (597) (897) (1,317) (1,705)
Net Earnings $831 $1,492 $2,028 $2,840
EARNINGS PER COMMON SHARE:
Basic $0.85 $1.54 $2.08 $2.93
Diluted $0.82 $1.51 $2.01 $2.82
EARNINGS PER CLASS A COMMON
SHARE:
Basic $0.80 $1.44 $1.96 $2.76
Diluted $0.78 $1.43 $1.90 $2.66
The accompanying notes are an integral part of these statements.
Exolon-ESK Company
Consolidated Condensed Statements of Cash Flows
Unaudited
(in thousands)
Six Months
Ended
June 30,
1998 1997
Net cash provided (used) by operating
activities 4,367 (1,062)
Cash Flow from Investing Activities:
Capital expenditures (2,971) (6,252)
Proceeds from restricted cash equivalents - 3,535
Net Cash Provided (Used) by Investing
Activities (2,971) (2,717)
Cash Flow from Financing Activities:
Borrowings (repayments) on debt 517 3,529
Dividends paid (33) (11)
Net Cash Provided (Used) by Financing
Activities 484 3,518
Net increase (decrease) in cash 1,880 (261)
Cash at beginning of period 2,503 275
Cash at end of period $4,383 $14
The accompanying notes are an integral part of these
statements.
EXOLON-ESK COMPANY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 The accompanying unaudited consolidated condensed
financial statements have been prepared in accordance
with generally accepted accounting principles for
interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting
principles for complete financial statements. In the
opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a
fair presentation have been included. Results for the
period ended June 30, 1998 are not necessarily
indicative of the results that may be expected for the
year ending December 31, 1998.
For further information, refer to the financial
statements and footnotes thereto for the year ended
December 31, 1997 included in the Company's Annual
Report on Form 10-K filed with the Securities and
Exchange Commission.
NOTE 2 The following are the major classes of inventories (in
thousands) as of June 30, 1998 and December 31, 1997 :
June 30, December 31,
1998 1997
(Unaudited)
Raw Materials $1,725 $2,839
Semi-Finished and
Finished Goods 18,267 16,183
Supplies and Other 1,305 965
21,297 19,987
Less: LIFO Reserve (3,457) (3,351)
$17,840 $16,636
NOTE 3 Contingencies
a. Environmental issues
(i) Hennepin, Illinois Plant
On October 6, 1994, the Company entered into a Consent
Order (the "Consent Order") with the Illinois Attorney
General and the Illinois Environmental Protection
Agency ("IEPA") in complete settlement of a complaint
brought by them which alleged that the Company had
violated certain air quality requirements in the
operating permit for its Hennepin, Illinois plant. The
Consent Order provides a schedule for the Company to
install a Continuous Emissions Monitoring System
("CEMS") and to implement the required Best Available
Control Technology ("BACT") for air emissions, pursuant
to an IEPA approved construction and operating permit.
The Company obtained final approval for a construction
permit to implement the BACT during 1996.
In order to comply with the Consent Order and complete
facility improvements, the Company expects to incur
capital costs of up to $14,000,000. As of June 30,
1998, the Company has incurred approximately
$13,359,000 of capital costs related to the facility
improvements. The remaining costs are expected to be
incurred in the third quarter of 1998. The cost of
these required capital improvements was financed
principally with the $13,000,000 of proceeds from long-
term bonds, a portion of which are tax-exempt, issued
by the Upper Illinois River Valley Development
Authority.
(ii) Norwegian Joint Venture
The Government of Norway held discussions with certain
Norwegian industries including the abrasive industry
concerning the implementation of reduced gaseous
emission standards. The Company's joint venture is
participating in these discussions to help achieve the
Norwegian Government's objectives as well as assuring
long term economic viability for the joint venture.
The Norwegian State Pollution Control Authority has
issued limits regarding dust emissions and Sulfur
Dioxide emissions that will apply to all Norwegian
silicon carbide producers. Specific target emission
limits have been set, and a compliance timetable
ranging from the present until January 1, 2001 has been
established. The costs associated with achieving
compliance with these limits are uncertain as a result
of various alternatives presently being considered by
the Norwegian joint venture. Management believes the
joint venture can meet the sulfur requirements with
changes in production techniques and raw material
procurement including low sulfur coke rather than
capital expenditures. Based upon current known
information the Company estimates the costs associated
with achieving compliance with these limits would
range from $4 to $5 million.
b. Legal Matters
(i) Federal Proceedings and Related Matters
On October 18, 1994, a lawsuit was commenced in the
U.S. District Court for the Eastern District of
Pennsylvania (No. 94-CV-6332) under the title "General
Refractories Company v. Washington Mills Electro
Minerals Corporation and Exolon-ESK Company." The suit
purports to be a class action seeking treble damages
from the defendants for allegedly conspiring with
unnamed co-conspirators during the period from January
1, 1985 through the date of the complaint to fix,
raise, maintain and stabilize the price of artificial
abrasive grains and to allocate among themselves their
major customers or accounts for purchases of artificial
grains. The plaintiffs allegedly paid more for
abrasive grain products than they would have paid in
the absence of such anti-trust violations and were
allegedly damaged in an amount that they are presently
unable to determine. On or about July 17, 1995, a
lawsuit captioned "Arden Architectural Specialties,
Inc. v. Washington Mills Electro Minerals Corporation
and Exolon-ESK Company," (95-CV-05745(m)), was
commenced in the United States District Court for the
Western District of New York. The Arden Architectural
Specialties complaint purports to be a class action
that is based on the same matters alleged in the
General Refractories complaint. In October 1997, the
Norton Company was named an additional defendant in
both cases. The Company believes that it has
meritorious defenses to the allegations, and it intends
to vigorously defend against the charges.
In 1994, the U.S. Defense Logistics Agency (the "DLA")
temporarily suspended the Company from contracting with
the U.S. Government under procurement or non-
procurement programs. During 1997, the Company and the
DLA entered into a two-year Administrative Agreement
which lifted the suspension.
(ii) Exolon-ESK Company of Canada, Ltd.
An action for damages was brought against Exolon-ESK
Company and Exolon-ESK Company of Canada, Ltd. by
International Oxide Fusion Inc. of Niagara Falls,
Ontario in December, 1996. This action alleges that
the Thorold, Ontario facility is in the possession of
technology that was provided in 1990 to Exolon-ESK
Company to produce MagChrome and Fused Magnesium Oxide
and has refused to pay further royalty payments.
International Oxide Fusion Inc. claims damages for loss
of royalty payments from the number 4 furnace.
Further, International Oxide Fusion alleges that number
6 furnace, which was designed in 1996, utilizes the
International Oxide Fusion's 1990 furnace design
technology and seeks royalty payment. Exolon-ESK
Company and Exolon-ESK Company of Canada, Ltd. have
filed a Statement of Defense and Counterclaim against
International Oxide Fusion Inc., Edward J. Bielawski,
Robert Thiel (the principals of International Oxide
Fusion Inc.), Thomas Farr and Fusion Unlimited
(Niagara) Inc. which was issued in January, 1997 in
Toronto, Ontario. The Plaintiffs originally sought
$182 million as damages, which management considers to
be beyond any reasonable understanding. The Company's
counterclaim is in the amount of approximately $10
million. A motion for summary judgment on royalty
payments for furnace number 4 was decided against the
Company in December 1997 and the Company paid
royalties, interest and other costs of approximately
$298,000 Canadian dollars in April 1998. A further
expedited trial was ordered on the remaining claims and
counterclaim. It is the opinion of management that the
number 6 furnace does not use the same technology as
the number 4 furnace.
A separate, unrelated lawsuit was commenced by The
Exolon-ESK Company of Canada, Ltd. against Theeb, Ltd.
and Edward J. Bielawski in August, 1997. The action
arises out of a 1985 contract in connection with a
crane and its runway system. The Company is seeking $2
million in damages for negligence and punitive damages.
A Statement of Defense has been filed by the
defendants.
In June 1993, the Company commenced a civil legal
action in Ontario, Canada Court (General Division)
against one of its former officers and certain former
employees of Exolon-ESK Company of Canada, Ltd.
(Exolon-Canada) ( the "Defendants") on various charges
related to allegations that they defrauded the Company
and Exolon-Canada of money, property and services over
many years (the "Perrotto Case"). Summary Judgment was
granted on the issue of liability against Paul Perrotto
and Michael Perrotto on July 16, 1997 with a Reference
(hearing) directed in Toronto on the issue of damages.
The hearing is expected to be held in the Fall 1998.
The action remains ongoing against various other
Defendants.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Comparison of the Six Months Ended June 30, 1998 with the Six
Months Ended June 30, 1997.
Net Sales. Total net sales decreased by 5% to $38,069,000
during the six months ended June 30, 1998 from $40,225,000 in the
first six months of 1997 primarily due to decreased demand.
Gross Profit. Gross profit before depreciation expense was
$7,958,000 in the first six months of 1998 compared to
$9,471,000 in the first six months of 1997. As a percent of net
sales, gross margins were 21% in the first six months of 1998
compared to 24% in the same period of 1997. The decrease in
gross profit as a percent of net sales from the first six months
of 1998 compared to the same period for 1997 can be attributed to
a decrease in the overall price received for our products caused
by a change in our product mix to selling more products with
lower overall gross margins.
Operating Expenses. Total operating expenses increased to
$4,355,000 in the six months ended June 30, 1998 from $4,248,000
in the same period of 1997. Operating expenses as a percent of
sales were unchanged at 11% in the first six months of 1998 as
compared to the first six months of 1997. The Company's largest
portion of operating expense, selling, general and administrative
expense, increased to $2,857,000 in the first six months of 1998
when compared to $2,714,000 during the first six months of 1997.
The increase in selling, general and administrative expense in
the first six months of 1998 can be attributed to increased
advertising and sales commissions expense. As a percent of net
sales, selling and general and administrative expense increased
to 8% in the first six months of 1998 compared to 7% in the same
period of 1997.
Operating Income. Operating income decreased by 31% to
$3,603,000 in the six months ended June 30, 1998 from $5,223,000
in the six months ended June 30, 1997 primarily due to the
decrease in net sales and increases in cost of sales.
Norwegian Joint Venture. The Company's 50% share of the
pre-tax earnings of its Norwegian joint venture, Orkla Exolon
A/S, was $324,000 for the six months ended June 30, 1998 versus
$79,000 in the six months ended June 30, 1997. The Company's
share in the venture's net sales was $3,824,000 in the six months
ended June 30, 1998 as compared to $3,938,000 in the six months
ended June 30, 1997.
Interest and Miscellaneous Expense. Interest expense
decreased in the first six months of 1998 to $418,000 from
$516,000 in the first six months of 1997. Average borrowing
levels of the Company's bank debt were reduced by approximately
$1,759,000 in the first six months of 1998 when compared to the
first six months of 1997. Interest costs on the debt related to
the Company's facility improvements in Illinois are being
capitalized. Interest costs of $240,000 were capitalized during
the six months ended June 30, 1998.
Miscellaneous expense of $164,000 was reported in the first
six months of 1998 compared to miscellaneous expense of $241,000
in the six months ended June 30, 1997.
Income Tax. The Company's effective tax rate was 39% for
the six months ended June 30, 1998 as compared to 38% for the six
months ended June 30, 1997.
Comparison of the Three Months Ended June 30, 1998 with the
Three Months Ended June 30, 1997.
Net Sales. Total net sales decreased by 12% to $17,718,000
in the three months ended June 30, 1998 from $20,034,000 in the
three months ended June 30, 1997 due to decreased market demand
and increased foreign competition.
Gross Profit. Gross profit before depreciation expense was
$3,564,000 in the three months ended June 30,1998 when compared
to $4,889,000 in the three months ended June 30, 1997. As a
percent of net sales, gross margins were 20% in the second
quarter of 1998 compared to 24% in the same period of 1997. The
decrease in gross profit as a percent of net sales from the
second quarter of 1998 compared to the same period for 1997 can
be attributed to increases in costs of products sold combined
with a decrease in the overall price received for our products
caused by a change in our product mix to selling more products
with lower overall gross margins.
Operating Expenses. Total operating expenses decreased
marginally to $2,140,000 in the three months ended June 30, 1998
from $2,148,000 in the same period of 1997. Operating expenses
as a percent of net sales increased to 12% for the three months
ended June 30, 1998 as compared to 11% for the three months
ended June 30, 1997. The Company's largest portion of operating
expense, selling, general and administrative expense, increased
to $1,406,000 in the three months ended June 30, 1998 when
compared to $1,384,000 during the three months ended June 30,
1997. The increase in selling, general and administrative
expense in the second quarter of 1998 can be attributed to
increased advertising and sales commissions expense. As a
percent of net sales, selling, general and administrative expense
increased to 8% in the three months ended June 30, 1998 as
compared to 7% for the three months ended June 30, 1997.
Operating Income. Operating income decreased by 48% to
$1,424,000 in the three months ended June 30, 1998 from
$2,741,000 in the three months ended June 30, 1997 primarily as a
result of the decrease in net sales.
Norwegian Joint Venture. The Company's 50% share of the
pre-tax earnings of its Norwegian joint venture, Orkla Exolon
A/S, were $151,000 for the three months ended June 30, 1998
versus $67,000 in the three months ended June 30, 1997. The
Company's share in the venture's net sales was $1,824,000 in the
three months ended June 30, 1998 as compared to $2,025,000 in
the three months ended June 30, 1997.
Interest and Miscellaneous Expense. Interest expense
decreased in the three months ended June 30, 1998 to $205,000
from $264,000 in the three months ended June 30, 1997. Average
borrowing levels of the Company's bank debt were reduced by
approximately $2,484,000 for the quarter ended June 30, 1998 when
compared to the same period for 1997. Interest costs on the debt
related to the Company's facility improvements in Illinois are
being capitalized. Interest costs of $190,000 were capitalized
during the three months ended June 30, 1998.
Miscellaneous expense of $59,000 was reported in the three
months ended June 30, 1998 compared to miscellaneous expense of
$155,000 in the three months ended June 30, 1997.
Income Tax. The Company's effective tax rate was 42% for
the three months ended June 30, 1998 as compared to 38% for the
same period ended June 30, 1997.
Liquidity and Capital Resources
As of June 30, 1998, working capital (current assets less
current liabilities) has increased to $23,759,000, when compared
to $23,178,000 as of December 31, 1997. Accounts receivable
decreased by $943,000 as of June 30, 1998 versus 1997 year end
primarily as a result of the decrease in sales levels during the
six months ended June 30, 1998 as compared to the 1997 year.
Inventories increased by 1,204,000 as of June 30, 1998 as
compared to December 31, 1997. Accounts payable increased by
$921,000 as of June 30, 1998 when compared to December 31, 1997.
Current maturities of long term debt have remained the same as of
June 30, 1998 versus June 30, 1997.
For the six months ended June 30, 1998, net cash provided by
operating activities was $4,367,000. Cash reserves increased by
$1,880,000 as of June 30, 1998 compared to December 31, 1997.
Net cash provided by operating activities was used to fund
$2,971,000 of capital expenditures in the six months ended June
30, 1998.
The Company's current ratio decreased to 4.1 to 1.0 at June
30, 1998 from 4.8 to 1.0 as of December 31, 1997. The ratio of
total liabilities to shareholder's equity improved to 1.0 to 1.0
as of June 30, 1998 as compared to 1.1 to 1.0 at December 31,
1997. Management believes that the cash provided by operations
and long-term borrowing arrangements will provide adequate funds
for current commitments and other requirements in the near
future.
The Company has been directed by the Illinois Environmental
Protection Agency ("IEPA") to control its sulfur emissions at its
Hennepin, Illinois silicon carbide furnace plant. For further
information see Note 3(a)(i) to the Notes to Consolidated
Financial Statements on page 5, which is incorporated herein by
reference.
Reference is made to the descriptions of the following legal
matters, within Note 3(b) to the Notes to Consolidated Financial
Statements under the caption "Legal Matters" beginning on page 6
of this Form 10-Q Report, which descriptions are incorporated
herein by reference: (1) civil law suits brought against the
Company and others commenced by General Refractories Company in
October 1994 and by Arden Architectural Specialties, Inc. in July
1995; (2) a temporary suspension imposed upon the Company and
others in December 1994 by the U.S. Defense Logistics Agency; (3)
a civil lawsuit brought against the Company in December 1996 by
International Oxide Fusion, Inc.; (4) civil lawsuit brought by
the Company in August 1997 against Theeb, LTD and Edward J.
Bielawski; and (5) a legal action commenced in June 1993 by the
Company in Ontario, Canada seeking $2,000,000 in damages against
certain former officers and employees.
Impact of Year 2000
Some of the Company's older computer programs were written
using two digits rather than four to define the applicable year.
As a result, those computer programs have time-sensitive software
that recognize a date using "00" as the year 1900 rather than the
year 2000. This could cause a system failure or miscalculations
causing disruptions of operations, including, among other things,
a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
The Company has completed an assessment and will have to
modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year
2000 and thereafter. The total Year 2000 Project cost is now
estimated at approximately $950,000, which includes $723,000 for
the purchase of new software and computer equipment that will be
capitalized and $60,000 that will be expensed as incurred. To
date, the Company has incurred approximately $470,000 ($410,000
capitalized), primarily for assessment of the Year 2000 Issue;
development of a modification plan and purchase of new software.
The new software system was rolled out at the Tonawanda facility
in July, 1998.
The project is estimated to be completed not later than
December 31, 1998, which is prior to any anticipated impact on
its operating systems. The Company believes that with
modifications to existing software and conversions to new
software, the Year 2000 Issue will not pose significant
operational problems for its computer systems. However, if such
modifications and conversions are not made, or are not completed
timely, the Year 2000 Issue could have a material impact on the
operations of the Company. In July, 1998 , Year 2000 assessment
surveys were sent to all vendors and suppliers to assure their
compliance with our interdependent systems.
The costs of the project and the date on which the Company
believes it will complete the Year 2000 modifications are based
on management's best estimates, which were derived utilizing
numerous assumptions of future events, including the continued
availability of certain resources and other factors. However,
there can be no guarantee that these estimates will be achieved
and actual results could differ materially from those
anticipated. Specific factors that might cause such material
differences include, but are not limited to, the availability and
cost of personnel trained in this area, the ability to locate and
correct all relevant computer codes, and the inter-connectivity
and interdependency of third party systems.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
a. Federal Proceedings and Related Matters
Reference is made to the information concerning
lawsuits filed by General Refractories Company and
Arden Architectural Specialties, Inc. against the
Company contained in Note 3(b)(i) of the Notes to
Consolidated Condensed Financial Statements included in
this Form 10-Q.
b. International Oxide Fusion, Inc. v. Exolon-ESK Company
and Exolon-ESK Company of Canada, Ltd.
Reference is made to the information concerning the
lawsuit filed by International Oxide Fusion, Inc.
against Exolon-ESK Company and Exolon-ESK Company of
Canada, Ltd. contained in Note 3(b)(ii) of the Notes to
Consolidated Condensed Financial Statements included in
this Form 10-Q.
c. The Exolon-ESK Company of Canada, Ltd. v. Theeb, Ltd.
and Edward J. Bielawski
Reference is made to the information concerning a
lawsuit filed against Theeb, Ltd. and Edward J.
Bielawski contained in Note 3(b)(ii) of the Notes to
Consolidated Condensed Financial Statements included in
this Form 10-Q.
d. Exolon-ESK Company and Exolon-ESK Company of Canada,
Ltd. v. Michael Perrotto, et al.
Reference is made to the information concerning the
Perrotto case contained in Note 3(b)(ii) of the Notes
to Consolidated Condensed Financial Statements included
in this Form 10-Q, which is hereby incorporated herein
by reference.
Item 2. Change in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
The Board of Directors of Exolon-ESK Company has, with regret,
accepted the resignation of Robert A. Rieger as President and
Chief Executive Officer effective September 30, 1998. Mr.
Rieger joined the Company in September, 1997. Mr. Rieger is
leaving to accept a senior management position with a world-
wide producer of specialty chemicals, plastics, ceramics and
electronic products. Until he leaves, Mr. Rieger will work
closely with management and the Board of Directors to insure
an orderly transition. A new candidate will assume the role
effective October 1, 1998.
Item 6. Exhibits and Reports on Form 8-K
The following exhibits and reports are included/incorporated
by reference herein:
(a) Exhibits
11 Computation of Earnings Per Share
27 Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
EXOLON-ESK COMPANY
/S/ Robert Rieger
Robert Rieger
President and Chief Executive Officer
/S/ Michael Bieger
Michael Bieger
Vice President Finance and
Chief Financial Officer
Date: August 11, 1998
EXHIBIT INDEX
Exhibit Description Reference
No.
3A Certificate of Amendment of Exhibit 3A to the report
Restated Certificate of on Form 10-K for the
Incorporation dated April year ended December 31,
30, 1997 1996*
3A(1) Certificate of Merger Exhibit 3A(1) to the
report on Form 10-K for
the year ended December
31, 1995*
3F Certificate of Amendment of Exhibit 3F to the report
Restated Certificate of on Form 10-K for the
Incorporation dated April year ended December 31,
23, 1986 1994*
3G Certificate of Amendment of Exhibit 3G to the report
Restated Certificate of on Form 10-K for the
Incorporation dated May 4, year ended December 31,
1987 1994*
3H Amendment of Certificate of Exhibit 3H to the Report
Incorporation dated October on Form 10-Q for the
28, 1992 quarter ended September
30, 1992*
3I Restated Bylaws containing Exhibit 3I to the Report
all previous amendments on Form 10-K for the
adopted year ended December 31,
1996*
4 Instruments Defining Rights Articles of
of Security Holders Incorporation, Exhibits
3A, and Exhibits 3F and
3G to the Report on Form
10-K for the year ended
December 31, 1994*
10D(23) Amendment Credit Agreement Exhibit 10D(23)A to the
A dated December 1, 1996 Report on Form 10-K for
the year ended December
31, 1996*
10D(24) Industrial Revenue Bond Exhibit 10D(24) to the
Agreement dated January 1, Report on Form 10-K for
1993. the year ended December
31, 1997*
10D(25) Industrial Revenue Bond Loan Exhibit 10D(25) to the
Agreement dated December 1, Report on Form 10-K for
1996 the year ended December
31, 1996*
10D(26) Building Loan Agreement Exhibit 10D(26) to the
dated December 1, 1996 Report on Form 10-K for
the year ended December
31, 1996*
Exhibit Description Reference
No.
10F Stockholder's Agreement Exhibit 10F to the
dated as of April 26, 1984 report on Form 10-K for
between the Registrant and the year ended December
Wacker Chemical Corporation 31, 1995*
10G Restated License Agreement Exhibit 10G to the
dated as of April 26, 1984 report on Form 10-K for
among Elektroschmelzwerk the year ended December
Kempten GmbH, ESK 31, 1995*
Corporation and the
Registrant
10H Distributorship Agreement Exhibit 10H to the
dated July 30, 1997 between Report on Form 10-K for
Elektroschmelzwerk Kempten the year ended December
GmbH and the Registrant 31, 1997*
10I Indemnification Agreement Exhibit 10I to the
dated as of December 15, report on Form 10-K for
1984 between Wacker Chemical the year ended December
Corporation and the 31, 1995*
Registrant
10M Federal Indictments dated Exhibit 10M to the
February 11, 1994 Report on Form 10-K for
the year ended December
31, 1993*
22 Subsidiaries of the Exhibit 22
Registrant
27 Financial Data Schedule Submitted electronically
* Incorporated herein by reference.
Exhibit 11
Exolon-ESK Company and Subsidiaries
Computation of Earnings Per Share
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
March 31, June 30,
1998 1997 1998 1997
Net earnings $1,197 $1,348 $2,028 $2,840
Less Preferred Stock
Dividends:
Series A (5) (5) (11) (11)
Series B (5) (5) (11) (11)
Undistributed earnings $1,187 $1,338 $2,006 $2,818
Net earnings attributable
to:
Common Stock (50.0%) 593 669 1,003 1,409
Class A Common Stock
(50.0%) 594 669 1,003 1,409
$1,187 $1,338 $2,006 $2,818
Net earnings per share of
Common Stock:
Basic $1.23 $1.39 $2.08 $2.92
Diluted $1.19 $1.34 $2.01 $2.84
Net earnings per share of
Class A Common Stock:
Basic $1.16 $1.30 $1.96 $2.75
Diluted $1.12 $1.26 $1.90 $2.68
Weighted Average Shares
Outstanding:
Basic:
Common Stock 482,000 482,000 482,000 482,000
Class A Common Stock 513,000 513,000 513,000 513,000
Diluted:
Common Stock 504,000 504,000 504,000 504,000
Class A Common Stock 535,000 535,000 535,000 535,000
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<FISCAL-YEAR-END> DEC-31-1998
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