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Sequential Page 1 of 10 Pages
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1995 Commission File number 0-663
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OGLEBAY NORTON COMPANY
- - - - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 34-0158970
- - - - ---------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 Superior Avenue Cleveland, Ohio 44114-2598
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 216 861-3300
------------
None
- - - - --------------------------------------------------------------------------------
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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Shares of Common Stock outstanding at April 30, 1995: 2,476,976
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Index on sequential page 2.
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OGLEBAY NORTON COMPANY AND SUBSIDIARIES
INDEX
SEQUENTIAL
PAGE NUMBER
-----------
PART I. FINANCIAL INFORMATION
------------------------------
Consolidated Condensed Balance
Sheet (Unaudited) - March 31, 1995 and
December 31, 1994 3
Consolidated Condensed Statement of
Operations (Unaudited) - Three Months
Ended March 31, 1995 and 1994 4
Consolidated Condensed Statement of
Cash Flows (Unaudited) - Three Months
Ended March 31, 1995 and 1994 5
Notes to Consolidated Condensed Financial
Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7 - 9
PART II. OTHER INFORMATION 10
---------------------------
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PART I. ITEM 1. FINANCIAL INFORMATION
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(UNAUDITED)
<TABLE>
ASSETS
March 31 December 31
1995 1994
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 12,618,044 $ 17,720,419
Investments 6,185,500 5,772,650
Accounts receivable, less
allowances (1995-$409,000;
1994-$440,000) 17,196,949 32,035,408
Inventories
Raw materials and finished products 4,195,379 3,846,094
Operating supplies 2,319,819 2,261,747
------------ ------------
6,515,198 6,107,841
Deferred income taxes 2,075,246 2,213,246
Prepaid insurance and other expenses 7,054,770 2,237,793
------------ ------------
TOTAL CURRENT ASSETS 51,645,707 66,087,357
INVESTMENTS 10,540,335 10,563,835
PROPERTIES AND EQUIPMENT 317,674,305 314,843,362
Less allowances for depreciation
and amortization 157,844,776 156,886,610
------------ ------------
159,829,529 157,956,752
PREPAID PENSION COSTS AND OTHER ASSETS 26,794,537 26,205,459
------------ ------------
$248,810,108 $260,813,403
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31 December 31
1995 1994
------------ ------------
CURRENT LIABILITIES
Current portion of long-term debt $ 8,476,450 $ 8,476,450
Accounts payable 5,075,611 4,569,067
Payrolls and other accrued compensation 3,378,933 7,057,615
Accrued expenses 11,012,926 16,013,208
Income taxes 591,498 2,270,951
Reserve for capacity rationalization 4,906,300 6,312,600
------------ ------------
TOTAL CURRENT LIABILITIES 33,441,718 44,699,891
LONG-TERM DEBT, less current portion 56,998,463 57,117,575
POSTRETIREMENT BENEFITS OBLIGATION 31,389,571 31,071,022
OTHER LONG-TERM LIABILITIES 23,306,450 24,019,063
DEFERRED INCOME TAXES 19,196,931 19,152,931
STOCKHOLDERS' EQUITY
Preferred stock, without par value,
authorized 5,000,000 shares;
none issued -0- -0-
Common stock, par value $1 per share,
authorized 10,000,000 shares;
issued 3,626,666 shares 3,626,666 3,626,666
Additional capital 9,035,841 9,035,841
Unrealized gains 2,551,792 2,278,273
Retained earnings 100,566,411 101,173,484
------------ ------------
115,780,710 116,114,264
Treasury stock, at cost - 1,145,540
and 1,143,540 shares at respective dates (29,278,822) (29,217,318)
Unallocated Employee Stock Ownership
Plan shares ( 2,024,913) (2,144,025)
------------ ------------
84,476,975 84,752,921
------------ ------------
$248,810,108 $260,813,403
============ ============
</TABLE>
See notes to consolidated condensed financial statements.
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OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------------------
1995 1994
---- ----
<S> <C> <C>
REVENUES
Net sales $ 23,758,964 $ 29,138,967
Operating revenues 1,326,093 1,278,255
Sales commissions, royalties
and management fees 846,295 952,353
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25,931,352 31,369,575
COSTS AND EXPENSES
Cost of goods sold 20,044,884 25,034,730
Operating expenses 769,585 1,134,976
General, administrative and
selling expenses 4,014,884 4,211,175
Reserve for doubtful accounts 76,084 58,094
------------ ------------
24,905,437 30,438,975
INCOME FROM OPERATIONS 1,025,915 930,600
Gain on sale of assets 522,481 402,190
Interest, dividends and other income 482,692 270,559
Interest expense (1,234,589) (1,415,982)
Other expense ( 605,234) ( 381,145)
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES 191,265 ( 193,778)
Income taxes (benefit) 54,000 ( 51,000)
------------ ------------
NET INCOME (LOSS) $ 137,265 $ ( 142,778)
============ ============
NET INCOME (LOSS) PER SHARE OF COMMON STOCK $ .06 $( .06)
============ ============
DIVIDENDS PER SHARE OF COMMON STOCK $ .30 $ .20
============ ============
Average number of shares of Common Stock
outstanding 2,481,193 2,493,398
See notes to consolidated condensed financial statements.
</TABLE>
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OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------------------------------------------
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 137,265 $ ( 142,778)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization 1,289,514 1,460,491
Deferred income taxes 41,000 ( 45,000)
Gain on sale of assets ( 522,481) ( 402,190)
Prepaid pension costs and other assets ( 836,053) 161,258
Deferred vessel maintenance costs (4,589,524) (4,245,270)
Decrease (increase) in accounts receivable 14,838,459 7,718,808
Decrease (increase) in inventories ( 407,357) 10,240
Increase (decrease) in accounts payable 506,544 ( 116,840)
Increase (decrease) in payrolls and other accrued compensation (3,678,682) (2,569,537)
Increase (decrease) in accrued expenses (4,504,715) 1,006,129
Increase (decrease) in income taxes (1,679,453) (1,821,807)
Other operating activities ( 502,404) (1,255,582)
------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 92,113 ( 242,078)
INVESTING ACTIVITIES
Purchase of properties and equipment (2,840,944) (1,295,690)
Proceeds from sale of assets 534,150 652,748
Iron Ore and other investments (1,462,739) (1,434,966)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (3,769,533) (2,077,908)
FINANCING ACTIVITIES
Payments on long-term debt ( 619,113) (5,975,720)
Dividends paid ( 744,338) ( 498,285)
Purchase of treasury stock ( 61,504) ( 283,506)
------------ -----------
NET CASH USED IN FINANCING ACTIVITIES (1,424,955) (6,757,511)
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Decrease in cash and cash equivalents (5,102,375) (9,077,497)
CASH AND CASH EQUIVALENTS, JANUARY 1 17,720,419 21,243,064
------------ ------------
CASH AND CASH EQUIVALENTS, MARCH 31 $ 12,618,044 $ 12,165,567
============ ============
See notes to consolidated condensed financial statements.
</TABLE>
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OGLEBAY NORTON COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with the instructions to Form 10-Q
and therefore, do not include all information and notes to the
consolidated condensed financial statements necessary for a fair
presentation of financial position, results of operations and cash
flows in conformity with generally accepted accounting principles.
Management of the Registrant, however, believes that all adjustments
considered necessary for a fair presentation of the results of
operations for such period have been made. Certain amounts in the
prior year have been reclassified to conform with the 1995
consolidated condensed financial statement presentation. For further
information, refer to the consolidated financial statements and notes
thereto included in the Registrant's 1994 annual report on Form 10-K.
2. Operating results are not necessarily indicative of the results to be
expected for the year, due to the seasonal nature of certain aspects
of the Registrant's business.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Due to the seasonal nature of certain aspects of the
Registrant's business, the operating results and cash flows for the first three
months of the year are not necessarily indicative of the results to be expected
for the full year.
FINANCIAL CONDITION
-------------------
At March 31, 1995 the Registrant's net current assets were
$18,204,000 as compared to $21,387,000 at December 31, 1994. Net current assets
declined from the end of last year primarily as a result of the purchase of
properties and equipment, the reduction of long-term debt and other
liabilities, the payment of dividends, and the payment of the Registrant's
portion of Eveleth Mines liabilities.
The Registrant acquired under its stock repurchase program
2,000 shares and 12,500 shares of its Common Stock on the open market and
placed these shares in treasury in the first three months of 1995 and 1994,
respectively. The Registrant declared and paid dividends of $.30 per share in
the first quarter of 1995 and $.20 per share in the first quarter of 1994.
During the first quarter of 1995, the Registrant sold certain
undeveloped clay properties in Tennessee resulting in a $520,000 pretax gain.
During the first quarter of 1994, the Registrant sold current investments
resulting in a $339,000 pretax gain.
Cash flow from operations in the first three months of 1995
was favorable compared to the first three months of 1994. The Registrant
repaid a total of $619,000 of its debt in the first three months of 1995
compared with $5,976,000 for the same period in 1994. Included in 1994 is a
$5,000,000 reduction in revolving credit debt with no balance presently
outstanding in 1995. Anticipated cash flows from operations and current
financial resources are expected to meet the Registrant's needs during the
remainder of 1995.
RESULTS OF OPERATIONS
---------------------
QUARTER ENDED MARCH 31, 1995 COMPARED TO
QUARTER ENDED MARCH 31, 1994
The Registrant's consolidated net income for the first three
months of 1995 was $137,000 or $.06 per share on consolidated revenues of
$25,931,000 compared to a net loss of $143,000 or $.06 per share on revenues of
$31,370,000 for the first three months of 1994. Consolidated revenues for the
first three months of 1995 declined 17% compared to the first three months of
1994 due mainly to a 62% decline in revenues for the Registrant's Iron Ore
segment as discussed below.
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RESULTS OF OPERATIONS (CONTINUED)
---------------------
QUARTER ENDED MARCH 31, 1995 COMPARED TO
QUARTER ENDED MARCH 31, 1994
During the first quarter of 1995 the Registrant sold for cash
certain undeveloped clay properties located in Tennessee resulting in a
$520,000 pretax gain. Net income for the first quarter of 1995 increased
$343,000 or $.14 per share as a result of the gain. During the first quarter
of 1994 the Registrant sold for cash current investments resulting in a
$339,000 pretax gain. The net loss for the first quarter of 1994 decreased
$224,000 or $.09 per share as a result of the gain.
Interest expense declined 13% in the first quarter of 1995,
compared to the same period in the prior year, due to the refinancing of a
portion of the Registrant's long-term debt in December 1994 and an overall
reduction in debt.
Operating results of the Registrant's business segments for
the first quarter ended March 31, 1995 and 1994 are discussed below. It is the
policy of the Registrant to allocate certain corporate general and
administrative expenses to its business segments.
Operating revenues for the Registrant's Marine Transportation
segment amounted to $1,326,000 for the first quarter of 1995 compared to
$478,000 for the first quarter of 1994. The segment's operating loss of
$218,000 for the first quarter of 1995 decreased 70% compared to $727,000 for
the first quarter of 1994. The improvement is attributable to an early start
to the shipping season as a result of good weather, with eleven vessels
operating at March 31, 1995. Due to severe ice conditions on the Great
Lakes, the start of the Registrant's 1994 shipping season was delayed into
April.
Net sales, royalties and management fees for the Registrant's
Iron Ore segment declined 62% to $5,323,000 for the first quarter of 1995
compared to $14,070,000 for the first quarter of 1994. The segment's operating
profit for the first quarter of 1995 declined 63% to $805,000 compared to
$2,191,000 for the first quarter of 1994. In 1995, the Registrant is limited
to its annual allotment of 775,000 gross tons of iron ore pellets under its
Eveleth Mines agreements as the other owners have nominated their full
contractual tonnage. Additional pellet tonnage was available to the Registrant
to sell in 1994, as other owners elected not to claim their full share of
Eveleth production. Eveleth Mines plans to produce near its capacity of
5,400,000 tons of pellets in 1995 compared to 5,000,000 tons in 1994.
Net sales for the Registrant's Refractories & Minerals segment
amounted to $9,968,000 for the first quarter of 1995, which was a 4%
improvement compared to $9,624,000 for the first quarter of 1994. Operating
profit for the segment was $112,000 for the first quarter of 1995 which was 79%
less when compared to $524,000 for the first quarter of 1994. Operating profit
for this segment was negatively impacted by increased raw material costs in its
ingot hot topping operations and a decline in tundish coating products sold in
Mexico.
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RESULTS OF OPERATIONS (CONTINUED)
---------------------
QUARTER ENDED MARCH 31, 1995 COMPARED TO
QUARTER ENDED MARCH 31, 1994
Net sales for the Registrant's Industrial Sands segment
amounted to $9,314,000 for the first quarter of 1995, a 49% increase over sales
of $6,235,000 for the first quarter of 1994. Operating profit of $1,409,000
for the first quarter of 1995 increased significantly compared to $273,000 for
the first quarter of 1994. Strong demand for the segment's Ohio and Texas
whole grain and ground silica products and higher capacity utilized as a result
of the 1994 acquisition of additional assets in Texas were responsible for the
improvement.
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<PAGE> 10
PART II. OTHER INFORMATION
- - - - ---------------------------
ITEM 5. OTHER INFORMATION
- - - - ------- -----------------
The Registrant repurchased 65,640 shares of its Common Stock
under the Registrant's stock repurchase program. Under the
program, which was initially authorized on February 22, 1989
and reaffirmed by the Board of Directors on April 27, 1994,
the Registrant is authorized to purchase from time to time on
the open market or through private purchases shares of Common
Stock having an aggregate cost of up to $3,000,000.
Approximately $1,145,000 remains available for stock
repurchases under the program.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- - - - ------- --------------------------------
(a) Exhibits
(27) - Financial Data Schedule
(b) Reports on Form 8-K - None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
OGLEBAY NORTON COMPANY
DATE: May 12, 1995 By: /s/ R. J. Kessler
-------------------------------
R. J. Kessler
Vice President -
Finance and Development
On behalf of the Registrant
and as Principal Financial
and Accounting Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 12,618,044
<SECURITIES> 6,185,500
<RECEIVABLES> 17,196,949
<ALLOWANCES> 409,000
<INVENTORY> 6,515,198
<CURRENT-ASSETS> 51,645,707
<PP&E> 317,674,305
<DEPRECIATION> 157,844,776
<TOTAL-ASSETS> 248,810,108
<CURRENT-LIABILITIES> 33,441,718
<BONDS> 56,998,463
<COMMON> 3,626,666
0
0
<OTHER-SE> 80,850,309
<TOTAL-LIABILITY-AND-EQUITY> 248,810,108
<SALES> 23,758,964
<TOTAL-REVENUES> 25,931,352
<CGS> 20,044,884
<TOTAL-COSTS> 24,905,437
<OTHER-EXPENSES> 605,234
<LOSS-PROVISION> 76,084
<INTEREST-EXPENSE> 1,234,589
<INCOME-PRETAX> 191,265
<INCOME-TAX> 54,000
<INCOME-CONTINUING> 137,265
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 137,265
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
