<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995 Commission file number 0-663
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
Securities registered pursuant to Section 12(g) of the Act:
Common Stock Rights to Purchase
$1 Par Value Preferred Stock
------------ ---------------
Shares of Common Stock with associated Rights to Purchase Preferred Stock
outstanding at March 6, 1995: 2,491,226 .
------------
The aggregate market value of voting stock held by non-affiliates of the
Registrant at March 6, 1995 (based upon excluding the total number of shares
reported under Item 12 hereof) was $51,240,710.
Portions of the following documents are incorporated by reference:
Proxy Statement for 1996 Annual Meeting of Stockholders (Part III)
The Exhibit Index is located herein beginning at sequential page 48.
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 .
------ ------
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]
<PAGE> 2
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
(Dollars and Shares in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
YEAR ENDED
1994 1993
----------------------------------------
<S> <C> <C>
OPERATIONS
Net sales and operating revenues $202,755 $159,736
Sales commissions, royalties and management fees 4,597 3,710
-------- --------
Total revenues $207,352 $163,446
======== ========
Income (loss) from continuing operations
before taxes $ 20,122 $ 9,554
Income taxes 5,231 2,292
-------- --------
Income (loss) from continuing operations 14,891 7,262
Discontinued operation
-------- --------
Income (loss) before extraordinary provision and
cumulative effects of changes in accounting 14,891 7,262
Extraordinary provision(1)
Cumulative effects of changes in accounting(2)
-------- --------
Net income (loss)(3) $ 14,891 $ 7,262
======== ========
Depreciation and amortization $ 13,603 $ 13,432
Expenditures for properties and equipment 8,813 2,921
PER SHARE DATA
Continuing operations $ 5.98 $ 2.89
Discontinued operation
-------- --------
Income (loss) before extraordinary provision and
cumulative effects of changes in accounting 5.98 2.89
Extraordinary provision(1)
Cumulative effects of changes in accounting(2)
-------- --------
Net income (loss)(3) $ 5.98 $ 2.89
======== ========
Dividends $ 1.00 $ .80
======== ========
OTHER STATISTICS
Total assets $260,813 $259,717
Long-term debt 57,118 69,344
Other long-term liabilities 74,243 80,642
Dividends declared 2,491 2,009
Average shares of Common Stock outstanding 2,491 2,512
Shares of Common Stock outstanding at
year-end 2,483 2,504
<FN>
(1) Extraordinary provision relates to the Coal Industry Retiree Health
Benefit Act of 1992, as further described in Note J to the consolidated
financial statements.
(2) Cumulative effects of changes in accounting are for postretirement
benefits other than pensions and vessel inspection costs in 1992, as
further described in Note A to the consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
DECEMBER 31
1992 1991 1990
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$148,690 $144,249 $159,951
5,321 4,594 6,210
-------- -------- --------
$154,011 $148,843 $166,161
======== ======== ========
$(49,761) $ 3,839 $ 7,006
(17,612) 528 1,829
-------- -------- --------
(32,149) 3,311 5,177
2,440 1,816 1,773
-------- -------- --------
(29,709) 5,127 6,950
( 9,978)
(17,006)
-------- -------- --------
$(56,693) $ 5,127 $ 6,950
======== ======== ========
$ 16,165 $ 15,878 $ 13,691
8,727 3,506 63,894
$ (12.79) $ 1.32 $ 2.03
.97 .72 .69
-------- -------- --------
(11.82) 2.04 2.72
( 3.97)
( 6.77)
-------- -------- --------
$ (22.56) $ 2.04 $ 2.72
======== ======== ========
$ 1.40 $ 1.60 $ 1.60
======== ======== ========
$263,974 $291,133 $303,862
80,534 87,937 99,839
85,838 52,209 53,253
3,518 4,022 4,084
2,513 2,514 2,556
2,513 2,513 2,517
<FN>
(3) The net loss for 1992 includes the effects of asset impairments and a loss
on the disposal of a business as further described in Notes H and I to the
consolidated financial statements.
</TABLE>
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<PAGE> 4
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
FINANCIAL CONDITION
The Company's operating activities provided a strong cash flow of
$19,589,000 in 1994, which more than tripled when compared to $5,357,000 in
1993. Cash flow from operations of $27,958,000 in 1992 was inflated by
proceeds of $12,500,000 from the sale of a long-term coal dock contract
collected at the beginning of 1992. Accounts receivable in 1994 increased by
$3,744,000, compared to 1993, as a result of an extended Marine Transportation
sailing season, strong Iron Ore sales to the North American steel industry and
improved fourth quarter sales for Industrial Sands.
Expenditures for property and equipment amounted to $8,813,000 in
1994 compared to $2,921,000 and $8,727,000 in 1993 and 1992, respectively.
Capital expenditures include vessel inspection costs of $1,326,000 in 1994,
$364,000 in 1993 and $2,782,000 in 1992. Also included in 1994 and 1992 is
$3,204,000 and $2,400,000 of property and equipment purchased as a part of an
$8,000,000 Industrial Sands and a $6,000,000 Refractories & Minerals asset
acquisition, respectively. Capital expenditures for 1995 are currently
expected to approximate 1994 expenditures.
In December 1994 the Company amended and restated its loan agreement
with various banks to extend its term loan through 2001 and reduce semiannual
payments. Under the new loan agreement, term loan balances were consolidated
and increased to $50,000,000 and the Company's revolving credit facility was
increased to $40,000,000, of which $15,000,000 is available only for
acquisitions. The new agreement results in cumulative savings of approximately
$6,000,000 over the term of the loan. The Company did not have to utilize its
revolving credit facility throughout 1994 and repaid $10,000,000 borrowed in
1993, reducing the balance to zero in the second quarter. In 1993, the Company
had $10,000,000 outstanding on its revolving credit throughout the year, except
for a one-month period during the fourth quarter. In December 1993 the Company
refinanced its Title XI Bonds reducing the fixed interest rate from 9.65% to
5.3%. In 1992, the Company repaid $20,000,000 of borrowings under its
revolving credit and reborrowed $15,000,000 within the same year. Long-term
debt is further described in Note G to the consolidated financial statements.
The Company declared and paid dividends on a quarterly basis totaling
$1.00 per share in 1994, $.80 per share in 1993 and $1.60 per share in 1992.
Dividends paid were $2,491,000 in 1994 compared to $2,009,000 and $3,518,000 in
1993 and 1992, respectively. In the third quarter of 1994 the Company's Board
of Directors approved a $.10 per share increase of the quarterly dividend to
$.30 per share of Common Stock. In the fourth quarter of 1992 the Company's
quarterly dividend had been reduced from $.40 to $.20 per share of Common
Stock. The Company purchased 20,800 shares of its Common Stock on the open
market for $536,000 in 1994 and 9,000 shares for $189,000 in 1993 and placed
these shares in treasury.
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In 1994 the Company sold its Ceredo coal dock business and current
investments resulting in pretax gains of $6,518,000 and $1,315,000,
respectively. In 1993, the Company sold certain assets of its Licking River
Terminal coal dock, generating a $1,326,000 pretax gain, and its unsecured
bankruptcy claim against LTV Steel Company, Inc., resulting in a $2,653,000
pretax gain after the retirement of $4,412,000 of long-term receivables. In
1992, the Company's wholly-owned subsidiary, Saginaw Mining Company, ceased
operation of its Ohio coal mine. Permanent closure of the mine was completed
in 1993 and funded by a public utility customer, as required by a long-term
contract. The utility customer paid the Company $1,952,000 which was
recognized as a gain on shutdown of this discontinued operation. Final
settlement of closure costs, primarily related to retiree health care benefits,
has been extended into 1995 at the request of the customer. The Company's
wholly-owned subsidiary, T & B Foundry, was disposed of in 1992 resulting in a
$3,300,000 pretax loss.
The Company is subject to various environmental laws and regulations
imposed by federal, state and local governments. Also, in the normal course of
business, the Company is involved in various pending or threatened legal
actions. The Company cannot reasonably estimate future costs, if any, related
to these matters. However, costs incurred to comply with environmental
regulations and to settle litigation have not been significant in 1994 and
prior years. Although it is possible that the Company's future operating
results could be affected by future costs of environmental compliance or
litigation, it is management's belief that such costs will not have a material
adverse effect on the Company's consolidated financial position.
Anticipated cash flows from operations and current financial
resources are expected to meet the Company's needs during 1995. As was
demonstrated by the Company's 1994 restructuring of its term loans and
revolving credit facility, all financing alternatives are under constant review
to determine their ability to provide sufficient funding at the least possible
cost.
RESULTS OF OPERATIONS
Net sales, operating revenues, sales commissions, royalties and
management fees amounted to $207,352,000 in 1994 as compared to $163,446,000
and $154,011,000 in 1993 and 1992, respectively. Income from operations of
$18,301,000 in 1994 increased 48% as compared to $12,364,000 in 1993. A loss
from operations of $44,932,000 was incurred in 1992. Income from continuing
operations before taxes was $20,122,000 in 1994 as compared to $9,554,000 in
1993 and a loss of $49,761,000 in 1992. Net income for 1994 was $14,891,000 or
$5.98 per share on 2,491,000 average shares as compared to $7,262,000 or $2.89
per share in 1993 on 2,512,000 average shares and a net loss of $56,693,000 or
$22.56 per share in 1992 on 2,513,000 average shares.
As previously mentioned, pretax results in 1994 include gains of
$7,833,000 on the sale of the Company's Ceredo coal dock business and current
investments. Pretax results in 1993 included gains of $3,979,000 on the sale
of certain assets, a $1,700,000 reserve against doubtful coal customer accounts
receivable and a $652,000 charge related to refinancing the Company's Title XI
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<PAGE> 6
Bonds. The pretax loss for 1992 increased $47,912,000 as a result of
impairment charges and a loss on the disposal of a business. Notes H and I to
the consolidated financial statements further describe these charges. Pretax
results in 1992 also included a $1,544,000 gain on the disposal of certain
undeveloped Iron Ore and Industrial Sands properties.
In 1993 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities". The Company adopted the provisions of the new
standard, effective January 1, 1994, and increased stockholders' equity by
$2,972,000 to reflect unrealized gains on available-for-sale investments.
Available-for-sale investments are carried at fair value and are reported as a
current asset, as further described in Notes A and B to the consolidated
financial statements.
In 1994 the Company reevaluated assumptions used in determining
postretirement pension and health care benefits. The weighted- average
discount rates were adjusted from 7.25% to 8.0% to better reflect market rates.
The assumed health care cost trend rate will decline in 1995 by .50% for
retirees under age 65, while the ultimate trend rate will increase by .50% for
all retirees. The change in assumptions did not affect 1994 net income and
will not have a significant effect on net income in 1995. Postretirement
benefits are further described in Note E to the consolidated financial
statements.
In 1992 the Company adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other
than Pensions." As a part of adopting the new standard, the Company recorded a
one-time, non-cash charge of $17,541,000 or $6.98 per share in 1992. The
Company also changed its method of accounting for vessel inspection costs from
expensing such costs over one shipping season to deferring these costs and
amortizing them over five shipping seasons between required inspections. This
change resulted in a cumulative adjustment of $534,000 or $.21 per share. Note
A to the consolidated financial statements further describes these changes in
accounting. The net loss for 1992 increased $9,978,000 or $3.97 per share for
an extraordinary provision for the Coal Industry Retiree Health Benefit Act of
1992. This legislation required former coal mining companies to assume certain
health care benefit obligations for retired coal miners and their dependents,
as further described in Note J to the consolidated financial statements.
Record tonnages carried by the Company's Great Lakes fleet, strong
Iron Ore sales and improved sales from the Industrial Sands segment combined to
strengthen the Company's 1994 results. The Company benefitted from strong
North American steel industry demand and significant cost reductions achieved
from a realignment into four business units - Marine Transportation, Iron Ore,
Refractories & Minerals and Industrial Sands.
The operating results of the Company's business segments for the
three years ended December 31, 1994 are discussed below. It is the policy of
the Company to allocate certain corporate general and administrative expenses
to its business segments. The Company continues to stress quality products,
cost reductions and improved marketing practices for its products and services
in order to remain competitive and grow within the industries served.
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<PAGE> 7
MARINE TRANSPORTATION - Operating revenues amounted to $82,153,000 in 1994
which were 12% greater than revenues of $73,143,000 in 1993 and 16% greater
than revenues of $70,654,000 in 1992. Operating profit was $12,467,000 in 1994
which was a 16% and 31% increase over 1993 and 1992 levels of $10,791,000 and
$9,538,000, respectively. Income from continuing operations before taxes was
$8,270,000 in 1994 compared to $5,492,000 and $2,228,000 in 1993 and 1992,
respectively.
Revenues improved in 1994 for the Company's Great Lakes vessel fleet
as operating days increased 20% from an extended sailing season after a delayed
start due to severe ice conditions on the Great Lakes. The average rate per
ton in 1994 was comparable to rates in the prior two years. The fleet
experienced a 14% increase in tonnage carried in 1994, representing a record
level, compared to 1993. Tonnage carried in 1994 exceeded 1992 tonnage by 17%.
Transportation of iron ore in 1994 was comparable to 1993, while coal and stone
shipments increased by 25%. Iron ore shipments in 1994 were 14% greater than
in 1992 and shipments of coal and stone improved 19%. The Company operated
twelve vessels during the 1994 sailing season. In 1993, ten vessels sailed for
the full sailing season, while one vessel operated for part of the season.
Eleven vessels operated for the full season in 1992.
The 1994 operating profit improvement, compared to prior years,
resulted from better business conditions for the Company's customers, favorable
weather conditions once the sailing season commenced and lower operating costs.
Capital expenditures and depreciation expense increased in 1994 as more vessels
required their 5-year inspections prior to sailing. Depreciation expense was
lower in 1993, as compared to 1992, as a result of the prior year asset
impairment charges. Interest expense declined in 1994, compared to prior
years, as a result of reductions in outstanding debt and a lower fixed interest
rate on the Company's Title XI Bonds.
A new collective bargaining agreement was reached in early 1995 with
Marine Transportation's unlicensed seamen. This agreement will help to bring
about a smooth beginning to the 1995 navigation season.
IRON ORE - Net sales, royalties and management fees amounted to $54,656,000 in
1994, as compared to $23,634,000 and $18,821,000 in 1993 and 1992,
respectively. Operating profit was $6,866,000 compared to $4,031,000 in 1993
and an operating loss of $2,832,000 in 1992. Income from continuing operations
before taxes was $6,524,000 in 1994 compared to $3,405,000 in 1993 and a loss
of $38,206,000 in 1992.
Both iron ore pellet production lines at Eveleth Mines were in
operation in 1994 with total production approximating 5,000,000 tons, as
compared to 3,100,000 tons in 1993 and 3,600,000 in 1992. Additional pellet
tonnage was available to the Company to sell in 1994, as other owners elected
not to claim their full share of Eveleth production. The Company, in addition
to its sales to long-term contract customers, sells the balance of its share of
Eveleth Mines' iron ore pellet production each year on the spot market.
Revenues and operating results increased in 1994 with strong sales to the North
American steel industry, as compared to prior years. The improvement in 1994
was partially offset by a 10% and 22% decline in the average selling price per
ton as compared to 1993 and 1992 average prices, respectively. Spot market
selling prices increased in 1994, while
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<PAGE> 8
prices declined for long-term contract customers. Sales to contract customers
and new customers in the spot market accounted for the increase in revenues in
1993, as compared to 1992. In addition, Eveleth Mines was shut down for a part
of 1992.
In 1992, the Company recorded a provision for impairment of
$34,694,000, as further described in Note I to the consolidated financial
statements. Prior to 1992 the Company had lost iron ore business equivalent to
approximately 70% of the Company's share of Eveleth's production. Although
Eveleth had initiatives underway by 1992 to reduce its cost, it remained one of
the high cost producers of iron ore pellets. Therefore, the Company sustained
increased losses since the sales price per ton for iron ore pellets had
declined to a greater extent. In addition, low demand for iron ore had
continued for several years as evidenced by the Company's inability to sell any
pellets on the spot market in 1991 or 1992. Based on Eveleth's high cost and
the very unfavorable economic conditions in the steel industry in 1992, the
Company concluded that its investment in Eveleth Mines was impaired and wrote
it down by $12,256,000. The write down represented the excess of the carrying
value of the Company's Eveleth investment over its net realizable value based
on an undiscounted cash flow analysis. The Company also recorded an additional
impairment loss representing its guaranteed future funding of its share of
Eveleth's debt of $8,438,000 which was determined to be non-recoverable.
Payments of $2,812,600 were made in 1993 and 1994 and charged to this accrual,
with a final payment of $2,812,600 due in 1995.
The life-of-mine Agreements require Eveleth to operate at full
capacity with the owners sharing fixed and variable costs, as defined, in
proportion to their respective interest. Under the Agreements, the Company has
a life-of-mine take-or-pay annual obligation for approximately 1,100,000 tons
of iron ore pellet production if Eveleth is operated at full capacity. The
Agreements were amended effective January 1, 1991 through December 31, 1996 to
provide that Eveleth may be operated at less than full capacity and permit each
owner to take iron ore pellet production at more or less than such owner's
proportionate interest in Eveleth's production. Total fixed costs fluctuate
annually based on Eveleth production level under the 1991 Amendment.
Regardless of the amount of pellet production taken, the Company is required
(under the take-or-pay provisions of the Agreements and 1991 Amendment) to fund
its share of fixed costs of Eveleth based upon its proportionate interest in
Eveleth's production. Therefore, the Company is required through 1996 to take
up to approximately 775,000 tons of Eveleth's annual pellet production and pay
its share of fixed and variable costs on these tons, or pay its share of fixed
costs related to its share of Eveleth tons not taken. As discussed below, the
Company cannot predict if the Agreements will be modified again.
Unlike the other owners of Eveleth, who are in the business of
producing steel, the Company must sell its share of Eveleth's annual iron ore
pellet production. The Company sells approximately half of its pellets to
other Eveleth owners under long-term sales agreements, while its remaining
share of pellets must be sold on the spot market. Based on Eveleth's high
costs, a depressed pellet sales price and the Company's inability to sell any
pellets on the spot market for a two year period, a $14,000,000 liability for
the unfavorable firm purchase commitments (take-or-pay liability) was recorded
in 1992. The take-or-pay liability was required to provide for the estimated
write down of cost to the then estimated market value of the Company's required
annual purchase of pellets for resale through 1996 under the take-or-pay
provisions of the Agreements. The cost was written
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<PAGE> 9
down to a level such that no gain or loss on the resale of the pellets
was anticipated. The liability was intended to be credited to cost of sales
ratably over the period of 1993 through 1996 as the required pellets were
purchased. This liability has been credited to cost of sales as follows (in
thousands):
<TABLE>
<S> <C>
Balance at 12/31/92 $14,000
Credited to 1993 cost
of iron ore sold (3,500)
-------
Balance at 12/31/93 10,500
Credited to 1994 cost
of iron ore sold (2,300)
-------
Balance at 12/31/94 $ 8,200
=======
</TABLE>
The Company expects to credit $3,500,000 of the remaining liability in 1995 and
the balance in 1996.
The Company's iron ore pellet sales and related cost of sales and
tons sold were as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Iron ore pellet sales $50,624 $20,477 $14,360
Cost of sales:
Cost of sales 49,266 22,583 21,156
Credit through reduction
of take-or-pay liability (2,300) (3,500)
------- ------- -------
Adjusted cost of sales 46,966 19,083 21,156
------- ------- -------
Gross profit on pellet sales $ 3,658 $ 1,394 $ (6,796)
======= ======= ========
Tons sold 1,918 700 424
</TABLE>
In 1994, one of Eveleth's owners elected not to take its full
take-or-pay share of Eveleth's iron ore pellets and instead paid its share of
fixed costs, as defined under the Agreements and 1991 Amendment. As provided
for under the 1991 Amendment the Company elected to take and sell approximately
1,139,000 of this owner's tons for which the Company had to pay only variable
costs associated with these tons. This additional tonnage increased the
Company's gross profit on pellet sales by approximately $4,000,000 in 1994.
Due to the unusual availability of low cost pellets in 1994, the planned
$3,500,000 credit was reduced in 1994 as noted above.
Under separate agreements with the Eveleth owners, the Company was
paid management fees in its role as Eveleth Mines manager. Net management fees
were $864,000 in 1994, $1,150,000 in 1993 and $1,173,000 in 1992.
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<PAGE> 10
Discussions, started in 1993, have continued regarding one partner's
possible exit from Eveleth Mines. However, no agreement has been reached
regarding the terms of such an exit or of a potential restructuring of Eveleth
Mines. Until an agreement has been reached, it is not possible to predict how
these events may affect the Company. All owners have presently claimed their
share of Eveleth production for 1995. Therefore, the Company's 1995 sales and
operating results for its Iron Ore segment will likely be more comparable with
1993 levels. With a new six-year labor contract at Eveleth Mines, the Company
continues its efforts to reduce costs and more aggressively market its share of
Eveleth's production.
During 1992, the Company recorded other impairment charges of
$330,000. In addition, a $550,000 gain on the sale of certain undeveloped iron
ore properties reduced the loss in 1992. Increased production, resulting in
higher royalties, and reduced costs contributed to the improvement in operating
profit in 1994 and 1993 in addition to the impact of utilizing the take-or-pay
liability. Interest expense declined in 1994, compared with the prior year due
to reductions in outstanding debt which is scheduled to be paid off in 1995.
REFRACTORIES & MINERALS - Net sales of $39,502,000 in 1994 were 10% and 15%
greater than 1993 and 1992 levels of $35,756,000 and $34,422,000, respectively.
Operating profit was $1,074,000 in 1994 compared to $2,809,000 and $257,000 in
1993 and 1992, respectively. Income from continuing operations before taxes
was $952,000 in 1994 compared to $2,608,000 in 1993 and a loss of $4,077,000 in
1992.
Strong demand for a more diverse product line and the dramatic
escalation in the price of aluminum, a key component in several products,
resulted in a 24% increase in 1994 metallurgical treatment product sales.
Sales of tundish refractory and ingot hot topping products increased 3% and 2%,
respectively, in 1994. The Company's plan to remain the leader among the few
remaining ingot product suppliers is on track. However, intense competition
prevented the Company from making anticipated market penetration into the
tundish coating and refractory shape sector of the steel industry in 1994.
Fluorspar net sales declined in 1994, compared to prior years, as the Company
exited the fluorspar business. Other options are being investigated for the
Texas facility's briquetting capabilities. The increase in net sales in 1993,
as compared to 1992, was attributable to new business for almost all products.
An 11% increase in net sales related to this new business was partially offset
by the loss of revenues from T & B Foundry, which was disposed of at the end of
1992. T & B Foundry accounted for 16% of the segment's net sales in 1992.
Operating profit declined in 1994, compared to 1993, as the sales mix
shifted away from higher margin ingot and tundish products, and as a result of
exiting the fluorspar business. The Company's Warren, Ohio facility, which
manufactures metallurgical treatment products, incurred higher production,
maintenance and inventory costs as it operated near full capacity throughout
1994.
Administrative, selling and research and development costs increased by almost
10% for the same period with the Company's effort to increase market share,
customer base and product diversification. Operating profit improved in 1993,
compared to 1992, as a result of market penetration and cost reductions in the
production of tundish coatings and hot top products. Interest expense declined
in 1994, compared to prior years, as outstanding debt was reduced.
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<PAGE> 11
The loss from continuing operations before taxes in 1992 included a
$3,300,000 loss on the disposal of T & B Foundry and $755,000 related to
certain liabilities incurred at the Company's Canadian facilities.
INDUSTRIAL SANDS - Net sales of $28,818,000 in 1994 increased 8% and 18%
compared to $26,606,000 and $24,447,000 in 1993 and 1992, respectively.
Operating profit of $2,834,000 in 1994 compared to $1,827,000 in 1993 and
$944,000 in 1992. Income from continuing operations before taxes was
$2,893,000 compared to $1,846,000 in 1993 and a loss of $2,699,000 in 1992.
Tonnage shipped in 1994 increased by 3% and 15% compared to 1993 and
1992 levels, respectively. The average sales price per ton in 1994 improved by
5% and 3% compared to 1993 and 1992 average prices, respectively. The largest
tonnage gains were in frac sand sold in the oil and gas extraction markets and
specialty bulk and strip sand sold in the construction materials and
recreational markets. Frac sand sales were especially strong in the fourth
quarter of 1994 with the Company's $8,000,000 purchase of additional sand
assets. Glass and pulverized sand sales in 1994 were comparable to prior
years, while foundry sand sales improved during the second half of 1994.
Customers in the glass sand market operated at reduced production capacities
throughout most of 1994. The 1993 sales improvement, as compared to 1992, was
primarily the result of sales to the glass and recreational sand markets. A
magnetic separation process enabled the Company to obtain new business,
although this improvement was partially offset by reductions in glass sand
customers' production capacity.
The 1994 operating profit improvement is attributable to reduced
operating costs and a higher utilization of sand production capacity in the
fourth quarter. In addition, steps to streamline the segment's management
processes were implemented during the fourth quarter which reduced overhead
costs and are expected to accelerate long-term productivity gains. Certain
overlapping support functions were consolidated in Cleveland, Ohio, while
responsibility for operating decisions were moved to the production sites.
Operating profit increased in 1993, compared to 1992, on higher sales and a
better mix of products sold. Depreciation expense was lower in both 1994 and
1993 due to asset impairment charges recognized in 1992.
Income from continuing operations before taxes in 1992 includes a
$993,000 gain on the sale of certain undeveloped sand properties and impairment
charges of $4,640,000. The charges resulted from impaired asset carrying
values at the Company's Texas and California facilities.
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<PAGE> 12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The consolidated financial statements included in this Form 10-K/A, filed
February 29, 1996, for the year ended December 31, 1994 have been revised from
those included in the original Form 10-K for that year. The revisions, which
are in response to comments made by the staff of the Securities and Exchange
Commission, are as follows:
Note I has been expanded to discuss more fully the Registrant's 1992
impairment charge related to its investment in Eveleth Mines.
The terminology used throughout the financial statements
to describe the impairment charge has been conformed to the
terminology used in Note I, as revised.
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Oglebay Norton Company
We have audited the accompanying consolidated balance sheet of Oglebay Norton
Company and subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these 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 consolidated financial position of
Oglebay Norton Company and subsidiaries at December 31, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles.
As discussed in Note A to the consolidated financial statements, in 1992 the
Company changed its method of accounting for postretirement benefits other than
pensions and vessel inspection costs.
ERNST & YOUNG LLP
Cleveland, Ohio
February 15, 1995,
except for Note I, as
to which the date is
February 29, 1996
-23-
<PAGE> 13
CONSOLIDATED BALANCE SHEET
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
December 31
1994 1993
-------------------------------------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 17,720,419 $ 21,243,064
Investments 5,772,650 -0-
Accounts receivable, less reserves for
doubtful accounts of $440,000 in
1994 and $2,082,000 in 1993 32,035,408 28,291,306
Inventories
Raw materials and finished products 3,846,094 4,354,120
Operating supplies 2,261,747 2,305,719
------------- -------------
6,107,841 6,659,839
Deferred income taxes 2,213,246 3,801,985
Prepaid insurance and other expenses 2,237,793 2,191,166
------------- -------------
TOTAL CURRENT ASSETS 66,087,357 62,187,360
INVESTMENTS 10,563,835 14,871,623
PROPERTIES AND EQUIPMENT
Marine Transportation 234,867,117 239,999,642
Iron Ore 1,305,258 113,508
Industrial Sands 52,467,527 49,911,250
Refractories & Minerals 17,330,863 16,252,996
Other 8,872,597 13,115,215
------------- -------------
314,843,362 319,392,611
Less allowances for depreciation
and amortization 156,886,610 156,962,679
------------- -------------
157,956,752 162,429,932
PREPAID PENSION COSTS AND OTHER ASSETS 26,205,459 20,228,456
------------- -------------
$260,813,403 $259,717,371
============ ============
</TABLE>
-24-
<PAGE> 14
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31
1994 1993
--------------------------------------------
CURRENT LIABILITIES
<S> <C> <C>
Current portion of long-term debt $ 8,476,450 $ 11,189,664
Accounts payable 4,569,067 4,035,129
Payrolls and other accrued compensation 7,057,615 4,814,871
Accrued expenses 16,013,208 12,772,673
Income taxes 2,270,951 733,414
Iron Ore impairment obligations 6,312,600 6,312,600
------------- --------------
TOTAL CURRENT LIABILITIES 44,699,891 39,858,351
LONG-TERM DEBT, less current portion 57,117,575 69,344,025
POSTRETIREMENT BENEFITS OBLIGATION 31,071,022 30,285,278
OTHER LONG-TERM LIABILITIES 24,019,063 30,958,324
DEFERRED INCOME TAXES 19,152,931 19,398,153
STOCKHOLDERS' EQUITY
Preferred Stock, without par value - authorized
5,000,000 shares; none issued -0- -0-
Common Stock, par value $1.00 per share - authorized
10,000,000 shares; issued 3,626,666 shares 3,626,666 3,626,666
Additional capital 9,035,841 8,988,043
Unrealized gains 2,278,273 -0-
Retained earnings 101,173,484 88,773,915
------------- --------------
116,114,264 101,388,624
Treasury Stock, at cost - 1,143,540 and
1,122,740 shares at respective dates (29,217,318) (28,681,694)
Unallocated Employee Stock Ownership
Plan shares ( 2,144,025) ( 2,833,690)
------------- --------------
84,752,921 69,873,240
------------- --------------
$260,813,403 $259,717,371
============= ==============
</TABLE>
See notes to consolidated financial statements.
-25-
<PAGE> 15
CONSOLIDATED STATEMENT OF OPERATIONS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Year Ended December 31
1994 1993 1992
-------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Net sales and operating revenues $202,754,512 $159,736,471 $148,690,067
Sales commissions, royalties and
management fees 4,597,517 3,709,687 5,321,222
------------ ------------ ------------
207,352,029 163,446,158 154,011,289
COSTS AND EXPENSES
Cost of goods sold and operating expenses 172,453,991 133,335,772 133,827,997
General, administrative and selling expenses 16,295,454 15,854,049 16,564,471
Reserve for doubtful accounts 301,652 1,892,419 638,110
Iron Ore impairment charges 34,693,983
Other impairment charges 9,918,497
Loss on disposal of business 3,300,000
------------ ------------ ------------
189,051,097 151,082,240 198,943,058
------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS 18,300,932 12,363,918 (44,931,769)
Gain on sale of assets 8,093,805 4,116,906 1,560,218
Interest, dividends and other income 1,387,443 1,184,208 1,465,075
Interest expense (5,992,018) (7,554,878) ( 7,610,195)
Other expense (1,668,327) ( 556,119) ( 244,048)
------------ ------------ ------------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE TAXES 20,121,835 9,554,035 (49,760,719)
INCOME TAXES
Current 4,825,000 233,000 2,330,000
Deferred 406,000 2,059,000 (19,942,000)
------------ ------------ ------------
5,231,000 2,292,000 (17,612,000)
------------ ------------ ------------
INCOME (LOSS) FROM CONTINUING
OPERATIONS 14,890,835 7,262,035 (32,148,719)
Discontinued operation:
Income from discontinued operation 1,152,566
Gain on shutdown of discontinued operation 1,287,791
------------
Income and gain from discontinued operation 2,440,357
------------ ------------ ------------
INCOME (LOSS) BEFORE EXTRAORDINARY
PROVISION AND CUMULATIVE EFFECTS
OF CHANGES IN ACCOUNTING 14,890,835 7,262,035 (29,708,362)
Extraordinary provision for Coal Industry Retiree
Health Benefit Act of 1992 ( 9,977,900)
Cumulative effects of changes in accounting for
postretirement benefits other than pensions
and vessel inspection costs (17,006,415)
------------ ------------ ------------
NET INCOME (LOSS) $ 14,890,835 $ 7,262,035 $(56,692,677)
============ ============ ============
</TABLE>
-26-
<PAGE> 16
CONSOLIDATED STATEMENT OF OPERATIONS - (CONTINUED)
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Year Ended December 31
1994 1993 1992
---------------------------------------------------------
<S> <C> <C> <C>
Income (loss) per share of common stock:
Continuing operations $ 5.98 $ 2.89 $(12.79)
Discontinued operation .97
------- ------ -------
Before extraordinary provision and cumulative
effects of changes in accounting 5.98 2.89 (11.82)
Extraordinary provision ( 3.97)
Cumulative effects of changes in accounting ( 6.77)
------- ------ -------
NET INCOME (LOSS) PER SHARE $ 5.98 $ 2.89 $(22.56)
======= ====== =======
</TABLE>
See notes to consolidated financial statements.
-27-
<PAGE> 17
CONSOLIDATED STATEMENT OF CASH FLOWS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Year Ended December 31
1994 1993 1992
------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $14,890,835 $ 7,262,035 $(56,692,677)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 13,603,183 13,431,957 16,165,164
Deferred income taxes 170,517 447,200 (19,968,342)
Gain on sale of assets ( 8,094,005) ( 4,116,906) ( 2,848,009)
Iron Ore impairment charges 34,693,983
Other impairment charges 9,918,497
Loss on disposal of business 3,300,000
Extraordinary provision for Coal Act of 1992 9,977,900
Cumulative effects of changes in accounting 17,006,415
Prepaid pension costs and other assets ( 1,919,098) ( 2,147,271) ( 1,921,313)
Decrease (increase) in accounts
receivable ( 3,744,102) ( 8,981,222) 11,315,860
Decrease (increase) in inventories 396,592 ( 902,301) (422,785)
Increase (decrease) in accounts payable 533,938 ( 492,806) 374,061
Other operating activities 3,751,390 856,188 7,058,844
------------ ------------ ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 19,589,250 5,356,874 27,957,598
INVESTING ACTIVITIES
Purchase of properties and equipment ( 5,609,103) ( 2,921,175) ( 6,326,590)
Proceeds from sale of assets 11,849,592 8,656,012 4,221,097
Iron Ore and other investments ( 2,885,830) ( 2,829,389) ( 2,751,257)
Acquisition of assets ( 8,000,000) ( 6,000,000)
------------ ------------ ------------
NET CASH PROVIDED BY (USED FOR)
INVESTING ACTIVITIES ( 4,645,341) 2,905,448 (10,856,750)
FINANCING ACTIVITIES
Payments on long-term debt ( 24,189,664) (18,152,879) (28,652,850)
Additional long-term debt 8,750,000 10,000,000 21,000,000
Dividends paid ( 2,491,266) ( 2,009,481) ( 3,518,096)
Purchase of Treasury Stock ( 535,624) ( 189,240)
------------ ------------ ------------
NET CASH USED FOR FINANCING ACTIVITIES ( 18,466,554) (10,351,600) (11,170,946)
------------ ------------ ------------
Increase (decrease) in cash and cash
equivalents ( 3,522,645) ( 2,089,278) 5,929,902
Cash and cash equivalents, January 1 21,243,064 23,332,342 17,402,440
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, DECEMBER 31 $17,720,419 $ 21,243,064 $ 23,332,342
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
-28-
<PAGE> 18
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Unallocated
Common Employee Stock Total
Common Additional Unrealized Retained Stock in Ownership Stockholders'
Stock Capital Gains Earnings Treasury Shares Equity
---------- ---------- ---------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
January 1, 1992 $3,626,666 $8,866,493 $143,732,134 $(28,492,454) $(4,639,446) $123,093,393
Net Loss (56,692,677) (56,692,677)
Dividends
$1.40 per share ( 3,518,096) ( 3,518,096)
Tax benefit of unallocated
shares in ESOP 80,048 80,048
Allocated ESOP shares 902,878 902,878
---------- ---------- ------------ ------------- ----------- ------------
Balance,
December 31, 1992 3,626,666 8,946,541 83,521,361 (28,492,454) (3,736,568) 63,865,546
Net Income 7,262,035 7,262,035
Dividends
$.80 per share ( 2,009,481) ( 2,009,481)
Tax benefit of unallocated
shares in ESOP 41,502 41,502
Purchase of Treasury
Stock ( 189,240) ( 189,240)
Allocated ESOP shares 902,878 902,878
---------- ---------- ------------ ------------- ----------- ------------
Balance,
December 31, 1993 3,626,666 8,988,043 88,773,915 (28,681,694) (2,833,690) 69,873,240
Adjustment for change
in accounting $2,971,792 2,971,792
Net Income 14,890,835 14,890,835
Dividends
$1.00 per share ( 2,491,266) ( 2,491,266)
Change in unrealized gains (693,519) ( 693,519)
Tax benefit of unallocated
shares in ESOP 47,798 47,798
Purchase of Treasury
Stock ( 535,624) ( 535,624)
Allocated ESOP shares 689,665 689,665
---------- ---------- ---------- ------------ ------------- ----------- ------------
Balance,
December 31, 1994 $3,626,666 $9,035,841 $2,278,273 $101,173,484 $(29,217,318) $(2,144,025) $ 84,752,921
========== ========== ========== ============ ============= =========== ============
See notes to consolidated financial statements.
</TABLE>
-29-
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
December 31, 1994, 1993 and 1992
NOTE A - ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of the Company and its majority owned subsidiaries. Intercompany
transactions and accounts have been eliminated upon consolidation.
CASH EQUIVALENTS: The Company considers all highly liquid investments with a
maturity of three months or less to be cash equivalents. Cash equivalents are
stated at cost which approximates market value.
INVENTORIES: Inventories are stated at the lower of average cost (first-in,
first-out method) or market.
INVESTMENTS: Available-for-sale investments are carried at fair value, based
on quoted market prices, and are reported as a current asset in the
consolidated balance sheet. Realized gains and losses on the sale of such
investments are based on average cost. In prior years, the Company reported
these investments at the lower of cost or market and as long-term.
The Company holds a long-term investment in Eveleth Mines through a 15 percent
interest in Eveleth Taconite Company (ETC) and a 20.5 percent interest in
Eveleth Expansion Company (EEC).
PROPERTIES AND EQUIPMENT: Properties and equipment are carried at cost.
DEPRECIATION AND AMORTIZATION: The Company provides depreciation on the
straight-line method over the estimated useful lives of the assets. The
amortization of advances to Eveleth Mines equivalent to the Company's share of
depreciation of the underlying plant is computed on the units-of-production
method adjusted for levels of operation. Such adjustment provides for a
minimum of 75% of depreciation calculated on a straight-line basis.
-30-
<PAGE> 20
NOTE A - ACCOUNTING POLICIES - (CONTINUED)
NET INCOME (LOSS) PER SHARE: Net income (loss) per share of Common Stock is
based on the average number of shares outstanding.
ACCOUNTING CHANGES AND RECLASSIFICATION: In 1993, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities". The
Company adopted the provisions of the new standard, effective January 1, 1994,
and increased stockholders' equity by $2,971,792 (net of income taxes of
$1,531,000) to reflect unrealized gains on available-for-sale investments.
Prior years consolidated financial statements have not been restated for the
accounting change.
In 1992, the Company adopted the accounting provisions of Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions." This standard requires that the
expected cost of retiree health benefits be charged to expense during the years
that employees render service rather than recognizing these costs on a cash
basis. As a part of adopting the standard, the Company recorded a, one time,
non-cash charge of $17,540,830 (net of income taxes of $9,037,000), or $6.98
per share.
In 1992, the Company changed its method of accounting for vessel inspection
costs from expensing such costs over one shipping season to deferring these
costs and amortizing them over the five shipping seasons between required
inspections. This change results in a better matching of these expenses with
revenues generated during the periods benefitted and improves financial
reporting. This change in accounting resulted in a cumulative adjustment of
$534,415 (net of income taxes of $275,000), or $.21 per share.
Certain amounts in prior years have been reclassified to conform with the 1994
consolidated financial statement presentation.
NOTE B - INVESTMENTS
The fair value of available-for-sale investments is $5,772,650 at December 31,
1994 and includes unrealized gains of $3,451,273 based on a cost of $2,321,377.
The Company realized gains of $1,315,000 from proceeds of $2,166,000 on the
sale of such investments for the year ended December 31, 1994.
-31-
<PAGE> 21
NOTE C - STOCKHOLDERS' EQUITY
The Company's Preferred Stock is issuable in series and the Board of Directors
is authorized to fix the number of shares and designate the terms of each
issue.
Certain shares of Series C $10.00 Preferred Stock and Common Stock have been
reserved for issuance upon exercise of Rights under a Stockholders' Rights
Plan. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors, because the Board, at its
option, may redeem the Rights at their redemption price.
The Company has a noncontributory Employee Stock Ownership Plan (ESOP) and
Trust for the benefit of certain salaried employees. In prior years, the Trust
financed the purchase of 250,000 shares of the Company's Common Stock. The
Company has guaranteed the financing and is obligated to make annual
contributions to enable the Trust to repay the loan, including interest. The
Company, as guarantor, has recorded the loan as long-term debt and a like
amount as a reduction of stockholders' equity.
NOTE D - INCOME TAXES
Total income tax expense (benefit) from continuing operations differs from the
tax computed by applying the U.S. federal corporate income tax statutory rate
for the following reasons (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
-------------------------------------------------
<S> <C> <C> <C>
Computed income tax expense (benefit)
at statutory rate $ 6,854 $3,248 $(16,919)
Tax differences due to:
Percentage depletion (1,270) (751) (696)
State & local income taxes 40 ( 22) 87
Other ( 393) (183) ( 84)
-------- ------ ---------
Total income tax expense (benefit)
from continuing operations $ 5,231 $2,292 $(17,612)
======== ====== =========
</TABLE>
The Company made income tax payments of $3,103,000, $40,000 and $2,483,000
during 1994, 1993 and 1992, respectively. The Company received income tax
refunds of $1,652,000, $222,000 and $106,000 during those same periods.
-32-
<PAGE> 22
NOTE D - INCOME TAXES (CONTINUED)
Significant components of the Company's deferred tax liabilities and assets are
as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1994 1993
-------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Tax in excess of book depreciation $ 42,204 $ 43,106
Pension benefits 4,837 4,323
Other 5,134 2,776
------- --------
Total deferred tax liabilities 52,175 50,205
Deferred tax assets:
Asset impairments 13,582 13,575
Postretirement benefits other than
pensions 9,993 9,459
Coal Act liability 4,664 4,869
Other 6,996 6,706
------- --------
Total deferred tax assets 35,235 34,609
------- --------
Net deferred tax liabilities $ 16,940 $ 15,596
======== ========
</TABLE>
-33-
<PAGE> 23
NOTE E - POSTRETIREMENT BENEFITS
The Company has a number of noncontributory defined benefit pension plans
covering certain employees. The plans provide benefits based on the
participants' years of service and compensation or stated amounts for each year
of service. The Company's funding policy is to contribute amounts to the plans
sufficient to meet the minimum funding required by applicable regulations.
A summary of the components of the net periodic pension credit for defined
benefit plans follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
-----------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned
during the period $ 1,417 $ 1,261 $ 1,156
Interest cost on projected
benefit obligation 4,550 4,644 4,574
Actual return on plan assets 531 (7,558) (5,975)
Net amortization and deferral (8,417) ( 575) (2,086)
------- ------- -------
Net pension credit $(1,919) $(2,228) $(2,331)
======= ======= =======
</TABLE>
Assumptions used in the accounting for defined benefit plans were:
<TABLE>
<CAPTION>
1994 1993 1992
--------------------------------------------
<S> <C> <C> <C>
Weighted-average discount rate 8% 7 1/4% 8 1/2%
Rate of increase in compensation levels 4% 4% 5%
Expected long-term rate of return on assets 9% 9 1/2% 9 1/2%
</TABLE>
-34-
<PAGE> 24
NOTE E - POSTRETIREMENT BENEFITS - (CONTINUED)
The following table sets forth the funded status and amounts recognized in the
consolidated balance sheet for the Company's defined benefit pension plans (in
thousands):
<TABLE>
<CAPTION>
December 31
1994 1993
--------------------------------------------------
<S> <C> <C>
Actuarial present value of
benefit obligations
Vested benefit obligation $(55,736) $(55,720)
======== ========
Accumulated benefit
obligation $(59,930) $(60,162)
======== ========
Projected benefit
obligation $(63,854) $(64,431)
Plan assets at fair value 80,215 84,854
-------- --------
Plan assets in excess of
projected benefit obligation 16,361 20,423
Unrecognized net loss (gain) 1,306 ( 2,432)
Unrecognized prior service cost 4,156 2,473
Unrecognized initial net assets ( 6,005) ( 6,772)
-------- --------
Prepaid pension costs recognized $ 15,818 $ 13,692
======== ========
</TABLE>
Plan assets consist primarily of debt and equity securities.
Defined contribution plans are maintained for certain employees and Company
contributions are based on specified percentages of employee contributions,
except for the ESOP. The expense for these plans was $1,160,000, $1,434,000
and $1,321,000 for 1994, 1993 and 1992, respectively. The Company also pays
into certain defined benefit multi-employer plans under various union
agreements which provide pension and other benefits for various classes of
employees. Payments are based upon negotiated contract rates and the expense
amounted to $1,703,000, $1,348,000 and $1,088,000 for 1994, 1993 and 1992,
respectively.
In addition to providing pension benefits, the Company provides health care and
life insurance benefits for certain retired employees. Substantially, all of
the Company's employees are eligible for these benefits when they reach normal
retirement age. The Company's policy is to fund these postretirement benefit
costs principally on a cash basis as claims are incurred.
-35-
<PAGE> 25
NOTE E - POSTRETIREMENT BENEFITS - (CONTINUED)
Net periodic postretirement benefits cost includes the following components (in
thousands):
<TABLE>
<CAPTION>
1994 1993 1992
----------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 599 $ 826 $ 691
Interest cost 1,730 2,228 2,180
Net amortization (552) (13) -0-
------ ------ ------
Net periodic postretirement
benefit cost $1,777 $3,041 $2,871
====== ====== ======
</TABLE>
Components of the unfunded postretirement benefits obligation are as follows
(in thousands):
<TABLE>
<CAPTION>
December 31
1994 1993
--------------------------------------------
<S> <C> <C>
Retirees $14,019 $14,478
Fully eligible active plan participants 2,261 2,728
Other active plan participants 7,535 10,255
------- -------
Accumulated postretirement benefits obligation 23,815 27,461
Unrecognized prior service credit 2,120 1,962
Unrecognized net gain 5136 862
------- -------
Postretirement benefits obligation recognized $31,071 $30,285
======= =======
</TABLE>
The weighted-average discount rate used in determining the accumulated
postretirement benefits obligation was 8.0% and 7.25% at December 31, 1994 and
1993, respectively.
The weighted-average annual assumed rate of increase in the health care cost
trend rate for 1995 is 8.25% (9% in 1994) for retirees age 65 and over and
10.75% (12% in 1994) for retirees under age 65, and both are assumed to
decrease gradually to 5.75% in 2000 and 2005, respectively (5.25% in 1994) and
remain at that level thereafter. The health care cost trend rate assumption
has a significant effect on the amounts reported. For example, increasing the
assumed health care cost trend rate by 1% in each year would increase the
accumulated postretirement benefits obligation as of December 31, 1994 by
approximately $3,359,000 and the aggregate of the service and interest cost
components of net periodic postretirement benefits cost for 1994 by
approximately $377,000.
-36-
<PAGE> 26
NOTE F - COMMITMENTS
Rental expense was $5,067,000, $5,162,000 and $5,181,000 in 1994, 1993 and
1992, respectively. In general, the leases are renewable or contain purchase
options at the end of the lease term. The purchase price or renewal lease
payment is based on the fair market value of the asset at the date of purchase
or renewal.
Future minimum payments at December 31, 1994, under noncancelable operating
leases, primarily vessel charters, are $4,421,000 in 1995, $4,252,000 in 1996,
$4,088,000 in 1997, $4,036,000 in 1998, $1,790,000 in 1999 and $1,938,000
thereafter.
The Company and its partners in Eveleth Mines have guaranteed to reimburse ETC
and EEC for all costs incurred in production of iron ore pellets, including
EEC's debt service. Each partner of Eveleth Mines pays its share of costs
based upon its share of production or ownership interest, whichever is
applicable. Purchases by the Company under an Eveleth Mines contract amounted
to $49,757,000, $24,800,000 and $21,764,000 for the years ended December 31,
1994, 1993 and 1992, respectively. Maturities on EEC's debt are $2,812,600 in
1995 and are included in the Iron Ore impairment obligations. Accrued expenses
include $5,897,000 and $4,955,000 payable in 1994 and 1993, respectively, for
ETC's and EEC's working capital requirements.
NOTE G - LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-term debt is as follows (in thousands):
December 31
1994 1993
-----------------------------------------
<S> <C> <C>
Title XI Ship Financing Bonds
Fixed rate, 5.3% $16,200 $18,700
Term Loan, Variable rate, 7.5% 47,250 44,750
Revolving Credit, Variable rate -0- 10,000
Term Loan, Variable rate -0- 4,250
Guaranteed ESOP Loans
Variable rate -0- 213
Variable rate, 5.45%, and 794 971
Fixed rate, 8.88%,
due in equal quarterly
installments through May 31, 1999 1,350 1,650
--------- --------
65,594 80,534
Less current portion 8,476 11,190
--------- --------
$57,118 $69,344
========= =========
</TABLE>
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<PAGE> 27
NOTE G - LONG-TERM DEBT (CONTINUED)
The Title XI Ship Financing Bonds relate to a first preferred ship mortgage on
the M/V Columbia Star and are guaranteed by the U.S. Government under the
Federal Ship Financing Program. In 1993, the Company refinanced the Title XI
Bonds at a pretax cost of $652,000, reducing the fixed interest rate from 9.65%
to 5.3%. The Bonds require sinking fund payments of $1,250,000 semiannually
through December 15, 2000, with a final payment of $1,200,000 in 2001.
The Title XI Bonds and a vessel charter agreement may require the Company,
under certain conditions, to make deposits to a reserve fund, maintain
specified levels of stockholders' equity or obtain prior written consent from
the Maritime Administrator, U.S. Department of Transportation, for certain
designated financial transactions. No approval was required through 1994 and
the Company does not anticipate any such consent will be required in the
future.
In December 1994, the Company amended and restated its loan agreement with
various banks to extend the Term Loan through December 31, 2001 and reduce
semiannual payments. Under the new loan agreement, the Term Loan balances were
consolidated and increased to $50,000,000 and the Revolving Credit was
increased to $40,000,000, of which $15,000,000 is available only for
acquisitions. The commitment fee on the unused Revolving Credit was reduced to
.25%, while the variable interest rate premium declined on both the Revolving
Credit and Term Loan. The variable interest rate premium, under the new loan
agreement, will fluctuate based upon the Company's funded debt to total capital
and interest coverage ratios.
The Company has mandatory semiannual payments under the Term Loan of $2,750,000
from December 31, 1994 through June 30, 2001, with a final payment of
$11,500,000 on December 31, 2001. The Revolving Credit terminates on December
31, 1997, subject to annual renewals under certain conditions to December 31,
2001. The Company has $40,000,000 of borrowing available under the Revolving
Credit at December 31, 1994.
Collateral for the Title XI Ship Financing Bonds and the Term Loan is in the
form of first preferred ship mortgages on five of the Company's vessels with a
net book value of $107,000,000.
The Company, in separate agreements which expire in 1995, entered into interest
rate swaps with major financial institutions to substitute fixed rates for
LIBOR-based interest rates on notional amounts totaling $24,030,000 at December
31, 1994. The interest rate differential is recognized over the lives of the
agreements as an adjustment to interest expense. The weighted average interest
rate was 9.9% on the amounts covered by the swap agreements during 1994.
Market risks associated with the swap agreements are mitigated since increased
interest payments under the agreements resulting from a decrease in LIBOR-based
interest rates are effectively offset by decreased variable rate interest
payments under the debt obligations.
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<PAGE> 28
NOTE G - LONG-TERM DEBT (CONTINUED)
The Company's debt agreements, as amended, contain various covenants with the
most restrictive covenant requiring the Company to maintain specified levels of
tangible net worth during each year. The Company's tangible net worth was
$76,707,000 at December 31, 1994, compared to a minimum specified level of
$64,445,000.
Long-term debt maturities are $8,476,000 in 1995 through 1998, $8,238,000 in
1999, $8,000,000 in 2000 and $15,450,000 in 2001. The Company made interest
payments of $5,345,000, $7,973,000 and $7,279,000 during 1994, 1993 and 1992,
respectively.
The fair value of the Company's long-term debt and interest rate swaps is
estimated to be $64,400,000 and $230,000, respectively, at December 31, 1994.
Such fair values were estimated using discounted cash flow analysis based on
the Company's current incremental borrowing rates for similar types of
arrangements.
NOTE H - DISPOSITIONS
In 1994, the Company sold its Ceredo coal dock business resulting in a
$6,518,000 pretax gain. The Company sold certain assets of its Licking River
Terminal coal dock in 1993, which resulted in a $1,326,000 pretax gain. Also
in 1993, the Company sold for cash its unsecured bankruptcy claim against LTV
Steel Company, Inc. resulting in a $2,653,000 pretax gain after the retirement
of $4,412,000 of long-term receivables.
In 1992, the Company's wholly owned subsidiary, Saginaw Mining Company, ceased
operation of its Ohio coal mine. Permanent closure of the mine was completed
in 1993 and was funded by a public utility customer, as required by a long-term
contract. The utility customer paid the Company $1,951,791 in 1992 which was
recognized as a gain on shutdown of discontinued operation of $1,287,791 (net
of income taxes of $664,000), or $.51 per share. The discontinued operation
had total revenues of $19,365,000 and pretax income of $1,603,000 in 1992.
Final settlement of closure costs, primarily related to retiree health care
benefits, has been extended into 1995 at the request of the customer.
The Company's wholly owned subsidiary, T & B Foundry, was disposed of in 1992
resulting in a $3,300,000 pretax loss. The Foundry was included in the
Company's Refractories & Minerals segment in 1992.
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<PAGE> 29
NOTE I - ASSET IMPAIRMENTS AND RESERVES
In 1992, the Company recorded a provision for impairment of $34,694,000 which
included $20,694,000 to record impairment of the Company's investment in
Eveleth Mines ("Eveleth"). The impairment charge consisted of a write down of
the Company's investment of $12,256,000 and an accrual of $8,438,000 for the
Company's guaranteed funding of its share of Eveleth Mines' debt to be paid
through 1995. The remaining $14,000,000 of the provision represented the
Company's estimate of its loss through 1996 under the take-or-pay provisions of
the Eveleth Mines Agreements ("Agreements").
Prior to 1992 the Company had lost iron ore business equivalent to
approximately 70% of the Company's share of Eveleth's production. Although
Eveleth had initiatives underway by 1992 to reduce its costs, it remained one
of the high cost producers of iron ore pellets. Therefore, the Company
sustained increased losses since the sales price per ton for iron ore pellets
had declined to a greater extent. In addition, low demand for iron ore had
continued for several years as evidenced by the Company's inability to sell any
pellets on the spot market in 1991 or 1992. Based on Eveleth's high costs and
the very unfavorable economic conditions in the steel industry in 1992, the
Company concluded that its investment in Eveleth Mines was impaired and wrote
it down by $12,256,000. The write down represented the excess of the carrying
value of the Company's Eveleth investment over its net realizable value based
on an undiscounted cash flow analysis. The Company also recorded an additional
impairment loss representing its guaranteed future funding of its share of
Eveleth's debt of $8,438,000 which was determined to be non-recoverable.
Payments of $2,812,600 were made in 1993 and 1994 and charged to this accrual,
with a final payment of $2,812,600 due in 1995.
The life-of-mine Agreements require Eveleth to operate at full capacity with
the owners sharing fixed and variable costs, as defined, in proportion to their
respective interest. Under the Agreements, the Company has a life-of-mine
take-or-pay annual obligation for approximately 1,100,000 tons of iron ore
pellet production if Eveleth is operated at full capacity. The Agreements were
amended effective January 1, 1991 through December 31, 1996 ("1991 Amendment")
to provide that Eveleth may be operated at less than full capacity and permit
each owner to take iron ore pellet production at more or less than such owner's
proportionate interest in Eveleth's production. Total fixed costs fluctuate
annually based on Eveleth's production level under the 1991 Amendment.
Regardless of the amount of pellet production taken, the Company is required
(under the take-or-pay provisions of the Agreements and 1991 Amendment) to fund
its share of fixed costs of Eveleth based upon its proportionate interest in
Eveleth's production. Therefore, the Company is required through 1996 to take
up to approximately 775,000 tons of Eveleth's annual pellet production and pay
its share of fixed and variable costs on these tons, or pay its share of fixed
costs related to its share of Eveleth tons not taken. The Company cannot
predict if the Agreements will be modified again.
Unlike the other owners of Eveleth, who are in the business of producing steel,
the Company must sell its share of Eveleth's annual iron ore pellet production.
The Company sells approximately half of its pellets to other Eveleth owners
under long-term sales agreements, while its remaining share of pellets must be
sold on the spot market. Based on Eveleth's high costs, a depressed pellet
sales price and the Company's inability to sell any pellets on the
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<PAGE> 30
spot market for a two year period, a $14,000,000 liability for the unfavorable
firm purchase commitments (take-or-pay liability) was recorded in 1992. The
take-or-pay liability was required to provide for the estimated write down of
cost to the then estimated market value of the Company's required annual
purchase of pellets for resale through 1996 under the take-or-pay provisions of
the Agreements. The cost was written down to a level such that no gain or loss
on the resale of the pellets was anticipated. The liability was intended to be
credited to cost of sales ratably over the period of 1993 through 1996 as the
required pellets were purchased. This liability has been credited to cost of
sales as follows (in thousands):
<TABLE>
<S> <C>
Balance at 12/31/92 $14,000
Credited to 1993 cost
of iron ore sold (3,500)
---------
Balance at 12/31/93 10,500
Credited to 1994 cost
of iron ore sold (2,300)
---------
Balance at 12/31/94 $ 8,200
========
</TABLE>
The Company expects to credit $3,500,000 of the remaining liability in 1995 and
the balance in 1996. Other long-term liabilities include Iron Ore impairment
obligations of $4,700,000 and $7,000,000 at December 31, 1994 and 1993,
respectively.
The Company's iron ore pellet sales and related cost of sales and tons sold
were as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Iron ore pellet sales $50,624 $20,477 $14,360
Cost of sales:
Cost of sales 46,966 22,583 21,156
Credit through reduction
of take-or-pay liability (2,300) (3,500)
-------- -------- --------
Adjusted cost of sales 46,966 19,083 21,156
-------- -------- --------
Gross profit of pellet sales $ 3,658 $ 1,394 $ (6,796)
======= ======= ========
Tons sold 1,918 700 424
</TABLE>
In 1994, one of Eveleth's owners elected not to take its full take-or-pay share
of Eveleth's iron ore pellets and instead paid its share of fixed costs, as
defined under the Agreements and 1991 Amendment. As provided for under the
1991 Amendment the Company elected to take and sell approximately 1,139,000 of
this owner's tons for which the Company had to pay only variable costs
associated with these tons. This additional tonnage increased the Company's
gross profit on pellet sales by approximately $4,000,000 in 1994. Due to the
unusual availability of low cost pellets in 1994, the planned $3,500,000 credit
was reduced in 1994.
Under separate agreements with the Eveleth owners, the Company was paid
management fees in its role as Eveleth Mines manager. Net management fees were
$864,000 in 1994, $1,150,000 in 1993 and $1,173,000 in 1992.
-41-
<PAGE> 31
Also in 1992, the Company recorded other charges of $9,918,497 related to
changes in market conditions and circumstances that impaired certain asset
carrying values and resulted in certain liabilities primarily in its Marine
Transportation, Refractories & Minerals and Industrial Sands segments.
NOTE J - EXTRAORDINARY PROVISION
In 1992, the Coal Industry Retiree Health Benefit Act was enacted. This
legislation requires companies that mine coal or previously mined coal to
assume certain health care benefit obligations for retired coal miners and
their dependents. Some of these coal miners never worked for the companies or
have had no relationship with the companies for decades. While the exact
amount of the liability was difficult to determine, the Company recorded a,
non-cash, extraordinary charge of $9,977,900 (net of income taxes of
$5,140,000), or $3.97 per share, to accrue for this obligation in 1992. The
Coal Act liability was $13,718,000 and $14,320,000 at December 31, 1994 and
1993, respectively. The change in the liability in 1994 is a result of
interest accretion, changes in actuarial assumptions and payments of $881,000.
The continuing effects of the Coal Act are expected to reduce future annual net
income by approximately $700,000.
NOTE K - INDUSTRY SEGMENTS AND MAJOR CUSTOMERS
Oglebay Norton Company is a Cleveland-based firm serving the steel, ceramic,
chemical, glass, electric utility, construction and oil-and gas-well service
industries. The Company provides Great Lakes marine transportation, industrial
minerals, refractory and metallurgical treatment products used in steelmaking
and related industries. The Company's operations were consolidated in 1994
from numerous entities into four distinct business groups:
OGLEBAY NORTON MARINE TRANSPORTATION
Formerly known as the Columbia Transportation Division and the Pringle
Transit Company, and now under one name, Marine Transportation operates a
fleet of vessels shipping bulk commodities, primarily iron ore, coal and
limestone, on the Great Lakes.
OGLEBAY NORTON IRON ORE
The Company is an equity partner in and manager of the iron ore mining and
pelletizing operations of Eveleth Mines, located near Eveleth, Minnesota,
on the Mesabi Range.
OGLEBAY NORTON REFRACTORIES & MINERALS, INC.
The Refractories & Minerals unit is comprised of the former Ferro
Engineering Division, Indiana Manufacturing Company, Tuscarawas
Manufacturing Company, and ONCO Minerals which, together with Canadian
Ferro Hot Metal Specialties Limited, produce precast refractory shapes,
tundish coatings, ingot hot tops and metallurgical treatment products for
the casting and refining of molten steel. The Company's mineral
processing plant in Brownsville, Texas, also services the steel industry.
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<PAGE> 32
OGLEBAY NORTON INDUSTRIAL SANDS, INC.
This group consists of five operating units, all providing silica and
related sand products to a wide range of markets. The former Central
Silica Company, with two facilities in Ohio, supplies the glass, paint,
ceramic, recreation and foundry industries. The former Texas Mining
Company, with facilities in Brady, Texas, and Riverside, California,
primarily serves the oil-and gas-well, filtration and construction
sectors. The former California Silica Products Company, located near San
Juan Capistrano, California, serves principally the construction and
recreation industries.
Accounts receivable of $21,091,000 at December 31, 1994 are due from companies
in steel related industries. Credit is extended based on an evaluation of a
customer's financial condition, and generally collateral is not required.
Credit losses have, historically, been insignificant. Sales to two major steel
producers exceeded 10% of consolidated net sales and operating revenues and are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
Marine Iron Refractories &
Customer Transportation Ore Minerals Other Total
- -------- ---------------- ---- --------------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
1994
A $16,868 $ 6,948 $ 555 $ 20 $24,391
B 17,207 -0- 7,122 700 25,029
------- ------- ------- ------- -------
$34,075 $ 6,948 $7,677 $ 720 $49,420
======= ======= ======= ======= =======
1993
A $14,523 $ 8,935 $ 752 $ 68 $24,278
B 19,384 -0- 6,698 1,513 27,595
------- ------- ------- ------- -------
$33,907 $ 8,935 $7,450 $ 1,581 $51,873
======= ======= ======= ======= =======
1992
A $14,462 $10,090 $ 572 $ 105 $25,229
B 23,700 -0- 6,428 1,464 31,592
------- ------- ------- ------- -------
$38,162 $10,090 $7,000 $ 1,569 $56,821
======= ======= ======= ======= =======
</TABLE>
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<PAGE> 33
INDUSTRY SEGMENT DATA
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
(In Thousands)
<TABLE>
<CAPTION>
Marine Iron
Transportation Ore
-------------- ----
<S> <C> <C>
1994
Identifiable assets $ 140,661 $ 19,354
Depreciation and amortization expense 8,359 886
Expenditures for properties and equipment 1,397 1,192
Total revenues 82,153 54,656
Operating profit (loss) $ 12,467 $ 6,866
Gain on sale of assets 86 18
Company's proportionate share in interest
expense of Eveleth Mines (360)
Interest expense (4,283)
---------- -----------
Income from continuing operations before taxes $ 8,270 $ 6,524
========== ===========
1993
Identifiable assets $146,918 $16,022
Depreciation and amortization expense 8,157 1,086
Expenditures for properties and equipment 364
Total revenues 73,143 23,634
Operating profit (loss) $ 10,791 $ 4,031
Gain on sale of assets 10 4
Company's proportionate share in interest
expense of Eveleth Mines ( 630)
Interest expense (5,309)
---------- -----------
Income (loss) from continuing operations before taxes $ 5,492 $ 3,405
========== ===========
1992
Identifiable assets $ 149,830 $ 12,649
Depreciation and amortization expense 8,677 2,627
Expenditures for properties and equipment 3,359
Total revenues 70,654 18,821
Operating profit (loss) $ 9,538 $( 2,832)
Iron Ore impairment charges (34,694)
Other impairment charges (1,492) ( 330)
Gain on sale of assets 550
Loss on disposal of business
Company's proportionate share in interest
expense of Eveleth Mines ( 900)
Interest expense ( 5,818)
---------- -----------
Income (loss) from continuing operations before taxes $ 2,228 $(38,206)
========== ===========
<FN>
(1) Consists primarily of cash and cash equivalents, investments and prepaid pension costs.
</TABLE>
-44-
<PAGE> 34
<TABLE>
<CAPTION>
Refractories Industrial Total Corporate
& Minerals Sands Segments and Other Consolidated
- ------------ --------- -------- --------- ------------
<S> <C> <C> <C> <C>
$ 20,256 $ 34,048 $ 214,319 $ 46,494(1) $ 260,813
1,913 2,149 13,307 296 13,603
1,225 4,622 8,436 377 8,813
39,502 28,818 205,129 2,223 207,352
$ 1,074 $ 2,834 $ 23,241 $( 4,861)(2) $ 18,380
73 59 236 7,858 8,094
( 360) ( 360)
( 195) ( 4,478) ( 1,514) ( 5,992)
--------- ---------- --------- --------- ---------
$ 952 $ 2,893 $ 18,639 $ 1,483 $ 20,122
========= ========== ========= ========= =========
$ 21,807 $ 25,682 $ 210,429 $ 49,288(1) $ 259,717
1,657 2,055 12,955 477 13,432
1,202 943 2,509 412 2,921
35,756 26,606 159,139 4,307 163,446
$ 2,809 $ 1,827 $ 19,458 $( 5,836)(2) $ 13,622
19 33 4,084 4,117
( 630) ( 630)
( 201) ( 5,510) ( 2,045) ( 7,555)
--------- ---------- --------- --------- ---------
$ 2,608 $ 1,846 $ 13,351 $( 3,797) $ 9,554
========= ========== ========= ========= =========
$ 20,304 $ 27,532 $ 210,315 $ 53,659(1) $ 263,974
1,906 2,504 15,714 451 16,165
3,622 1,545 8,526 201 8,727
34,422 24,447 148,344 5,667 154,011
$ 257 $ 944 $ 7,907 $( 2,806)(2) $ 5,101
( 34,694) ( 34,694)
( 755) ( 4,640) ( 7,217) ( 2,701) ( 9,918)
5 997 1,552 8 1,560
( 3,300) ( 3,300) ( 3,300)
( 900) ( 900)
( 284) ( 6,102) ( 1,508) ( 7,610)
--------- ---------- --------- --------- ----------
$( 4,077) $( 2,699) $( 42,754) $( 7,007) $( 49,761)
========= ========== ========= ========= ==========
<FN>
(2) Includes other operations, certain corporate expenses, net of dividends, interest and other
income, and in 1993 a $1,700,000 reserve against doubtful coal customer accounts receivable
and $652,000 of debt refinancing costs.
</TABLE>
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<PAGE> 35
NOTE L - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
Unaudited quarterly results of operations for the years ended December 31, 1994
and 1993 are summarized as follows (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Net Net
Sales and Income
Three Months Operating Gross Net Income (Loss)
Ended Revenues Profit (Loss) Per Share
- -------------- -------- ------- ------------- ---------
<S> <C> <C> <C> <C>
1994
December 31 $61,352 $8,828 $4,119 $1.65
September 30 57,499 9,701 4,077 1.64
June 30 53,487 7,525 6,838 2.75
March 31 30,417 4,247 (143) (.06)
1993
December 31 $48,281 $8,703 $ 4,229 $1.68
September 30 47,946 8,215 2,311 .92
June 30 47,004 7,632 2,810 1.12
March 31 16,505 1,850 (2,088) (.83)
</TABLE>
Per share amounts are based on the average number of shares outstanding during
each quarter.
Second quarter net income for 1994 increased $4,302,000 ($1.73 per share)
related to the sale of the Company's Ceredo coal dock business, as disclosed in
Note H.
Fourth quarter net income for 1994 decreased $594,000 ($.24 per share) related
to an adjustment of Iron Ore impairment obligations, as disclosed in Note
I, and $403,000 ($.16 per share) on the write-off of unamortized financing
costs associated with the Company's former loan agreement, as disclosed in Note
G.
Second quarter net income for 1993 increased $1,751,000 ($.70 per share)
related to the sale of an unsecured bankruptcy claim, as disclosed in Note H,
and declined $792,000 ($.32 per share) as a result of a reserve against
doubtful coal customer accounts receivable.
Fourth quarter net income for 1993 increased $875,000 ($.35 per share) related
to the sale of certain assets, as disclosed in Note H, and declined $760,000
($.30 per share) related to bond refinancing costs and an additional reserve
against remaining doubtful coal customer accounts receivable.
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<PAGE> 36
EXHIBIT 23
Consent of Independent Auditors
We consent to the incorporation by reference in the following Registration
Statements and Post-Effective Amendment of our report dated February 15, 1995,
except for Note I, as to which the date is February 29, 1996, with respect to
the consolidated financial statements of Oglebay Norton Company and
subsidiaries included in this Annual Report (Form 10-K/A) for the year ended
December 31, 1994:
Registration Statement Number 33-37974 on Form S-8 dated November 23, 1990
pertaining to the Oglebay Norton Company Incentive Savings Plan and Trust;
Registration Statement Number 33-37975 on Form S-8 dated November 23, 1990
pertaining to the Oglebay Norton Taconite Company Thrift Plan and Trust;
Post-Effective Amendment Number 4 to Registration Statement Number 2-80895
on Form S-8 dated February 13, 1990 pertaining to the Oglebay Norton
Company Incentive Savings Plan and Trust;
Registration Statement Number 33-29046 on Form S-8 dated June 9, 1989
pertaining to the Oglebay Norton Company Employee Stock Ownership Plan and
Trust;
Registration Statement Number 33-21006 on Form S-8 dated April 21, 1988
pertaining to the Oglebay Norton Company Employee Stock Ownership Plan and
Trust.
ERNST & YOUNG LLP
Cleveland, Ohio
February 29, 1996
<PAGE> 37
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.
OGLEBAY NORTON COMPANY
/S/ Richard J. Kessler
---------------------------------
Richard J. Kessler
Vice President-Finance
and Development
February 29, 1996
