<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
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
- ---------------------------------------- ----------
(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 12, 1996: 2,447,432.
The aggregate market value of voting stock held by non-affiliates of the
Registrant at March 12, 1996 (based upon excluding the total number of shares
reported under Item 12 hereof) was $67,342,560.00.
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 50.
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
PART I
ITEM 1. BUSINESS
--------
A. General - Industry Segments
---------------------------
The Registrant, which was incorporated in Delaware in 1931,
its wholly owned subsidiaries and its predecessor organizations have been
engaged in the transportation, mining and sale of industrial minerals and iron
ore since 1854. The principal offices of the Registrant are located at 1100
Superior Avenue, Cleveland, Ohio 44114-2598.
The information regarding the approximate amounts of
consolidated sales and revenues (including sales commissions, royalties and
management fees), consolidated profit from operations and consolidated
identifiable assets for the three years ended December 31, 1995, attributable
to each of the Registrant's industry segments, appears in Note I of the
Consolidated Financial Statement on pages 40 through 43 of this Annual Report
on Form 10-K.
B. Principal Products and Services
-------------------------------
1. Marine Transportation
---------------------
The Registrant operates U.S. flag self-unloading vessels
engaged in the transportation of iron ore, coal, limestone and other dry bulk
cargo on the Great Lakes. The self-unloader fleet consists of twelve (12)
vessels.
Nine (9) of the vessels are owned by the Registrant and three
(3) are leased as described below. The vessels' cargo capacities range in size
from 13,500 tons to 60,000 tons. The newest vessel was commissioned in 1981
and the oldest in 1925. The relatively long life of Great Lakes vessels is due
to a scheduled program of regular winter maintenance, periodic renovation and
the lack of corrosion because of freshwater operations.
One of the owned vessels, the M/V Columbia Star, a 1,000-foot
Great Lakes self-unloading bulk carrier, has been financed through the use of
bonds issued pursuant to Title XI of the Merchant Marine Act of 1936, as
amended. See Note G of the Notes to Consolidated Financial Statements for
disclosure of financial data with respect to these bonds.
One vessel, the M/V Wolverine, is leased and operated by the
Registrant under a bareboat charter agreement which expires in 1999 and is
renewable thereafter for up to ten years. The agreement provides an option to
purchase
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the equity position in the vessel on the semiannual charter hire payment dates
in each year and an option to purchase the vessel at the end of the charter
period. The two other leased vessels, the M/V David Z. Norton and the M/V Earl
W. Oglebay, formerly known as the M/V William R. Roesch and the M/V Paul
Thayer, respectively, are leased under bareboat subcharter and charter
agreements, respectively, which expire in 1998 and provide options to purchase
the vessels at the end of their respective terms.
The Registrant's Marine Transportation business is seasonal.
An ordinary annual Great Lakes vessel season of navigation is approximately 259
days. However, the season is affected by weather conditions and customers'
demand for service which causes the actual days of operation to vary from year
to year. In 1995 the number of sailing days was 3,469 as compared to 3,241
sailing days in 1994. The increase in the number of sailing days in 1995 as
compared to 1994 was adversely affected by unusually bad weather during the
fourth quarter which resulted in a negative impact on operating revenues. In
1994 and 1995, the Registrant operated twelve (12) vessels during each
season. The Registrant's fleet carried approximately 21.5 million tons and
21.6 million tons in 1995 and 1994, respectively.
The Registrant sold two vessels in 1995; the S/S J. Burton
Ayers was sold on August 1, 1995 and the S/S Crispin Oglebay on June 29, 1995
for pretax gains totaling $2,324,000. The S/S J. Burton Ayers was sold to Black
Creek Shipping Company Ltd. and the S/S Crispin Oglebay was sold to Upper Lakes
Shipping Ltd.; both purchasers are Canadian companies. Neither vessel had
sailed in the last four years.
2. Iron Ore
--------
The Registrant held iron ore mining rights located near
Eveleth, Minnesota, which were assigned in exchange for an overriding royalty
to Eveleth Taconite Company ("Taconite Company") and Eveleth Expansion Company
("Expansion Company"), in which the Registrant and its wholly owned subsidiary,
ONCO Eveleth Company, hold 15% and 20.5% interests, respectively ("Eveleth
Mines"). The Registrant received an overriding royalty in 1995 of
approximately $2,324,000 as compared to approximately $2,323,000, in 1994. Net
management fees received by the Registrant from Eveleth Mines in 1995 were
$1,164,000 compared to $864,000 in 1994. The Eveleth Mines reserves are
sufficient to support the normal level of operations for approximately 40 years.
In addition to the mine, the Eveleth facility consists of a
concentrating and pellet production plant, located approximately eight miles
south of the mine. In 1995, the Registrant produced approximately 750,000 long
tons of Eveleth pellets and sold them under contracts or on the
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open market. The Registrant also sold 44,000 tons of pellets acquired from
others. In 1996, the other Eveleth owners are claiming their full share of
Eveleth Mines pellet production. The Registrant's share of pellet production is
currently limited to its contractual allotment of 775,000 tons.
Eveleth Mines is a cost-sharing operation. The basic
agreements, entered into as of January 1, 1974, govern the operation for the
life of the mine. Under the basic agreements, Eveleth Mines is required to
operate at full capacity, with participants sharing fixed and variable costs in
proportion to their respective equity interests. These agreements were
modified, effective as of January 1, 1991, ("1991 Amendment"), to permit the
participants greater production flexibility and to alter the cost-sharing
arrangements through December 31, 1996. Under the modified agreements, each of
the participants pays fixed costs in proportion to its adjusted equity interest
and variable costs in proportion to the amount of iron ore nominated by it.
Unless modified again, the basic agreements will govern operations in 1997 and
beyond.
The Registrant, in addition to its ownership in Eveleth Mines,
has a contract to serve, on a fee basis, as manager and employer of the Eveleth
Mines operations. The Registrant has notified the owners of Eveleth Mines of
its decision not to extend this contract beyond its current expiration date of
December 31, 1996.
After 1996 the agreements governing Eveleth Mines' operation
may be terminated by the owners on eleven-months notice, or the owners may
choose to share costs pro rata, or on the basis of arrangements that were used
prior to 1981 ("rollback"). These arrangements are different than the cost
sharing arrangements followed under the 1991 Amendment. In 1996, one of the
other Eveleth owners gave notice of rollback, which the Registrant is
contesting. The owners continue to discuss what the potential cost sharing
structure, operation and ownership of Eveleth Mines could be after 1996.
However, no agreements have been reached regarding modification of the basic
agreements or potential restructuring of the ownership of Eveleth Mines. Until
an agreement has been reached, it is not possible to predict how these events
may affect the Registrant.
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3. Refractories & Minerals
-----------------------
Oglebay Norton Refractories & Minerals, Inc. and Canadian
Ferro Hot Metal Specialties Limited, the Registrant's Canadian manufacturing
subsidiary, continue to design, manufacture and market continuous casting
refractories and ingot hot top products used in molten steel processing
and to design, produce and market metallurgical treatment products used in the
refining of molten steel. The Brownsville Plant exited the fluorspar
business in 1994. Management has entered into a conditional agreement for the
termination of its lease with the Brownsville Navigation District and another
conditional agreement for the sale of its equipment. The loss of this business
will not have a material adverse impact upon the financial condition of the
Registrant.
The following is a list of Oglebay Norton Refractories &
Minerals, Inc.'s and Canadian Ferro Hot Metal Specialties Ltd.'s plants:
Name and Location Active/Inactive
- ----------------- ---------------
Brownsville, Texas Active
Cleveland, Ohio Active
Dunkirk, Indiana Active
Tuscarawas, Ohio Closed as of November 1, 1995
Warren, Ohio Active
Stoney Creek, Ontario Active
Canadian Ferro Hot Metal Specialties Limited and Oglebay
Norton Refractories & Minerals, Inc. own the plants and the properties on which
the plants are located except for the Brownsville Plant, which is held under a
lease that expires July 31, 1999.
The Tuscarawas Plant was closed as of November 1, 1995, in
order to achieve greater operating efficiencies. The building and property,
which are not material to the Registrant's consolidated assets, will be sold.
4. Industrial Sands
----------------
Oglebay Norton Industrial Sands, Inc., a wholly owned
subsidiary of the Registrant, mines and processes industrial sands for the
glass, ceramic and oil well service industries.
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The following is a list of the plants of Oglebay Norton
Industrial Sands, Inc.:
<TABLE>
<CAPTION>
Minimum
Name and Current Capacity Years of
Location Markets (tons in 1000's) Reserves(1)
-------- ------- ---------------- --------
<S> <C> <C> <C>
Orange County Construction, 550 15.6
Plant Golf Course and
Stucco Sand
Riverside Plant Pulverized Sand 50 N/A
Glass Rock Plant Glass, Foundry 500 24.4
and Pulverized
Sand
Millwood Plant Glass, Foundry 250 49.0
and Pulverized
Sand
Brady Plant Fracture and 1,500 61.0
Pulverized Sand
</TABLE>
(1) Based on full production at current rated annual capacity.
The Registrant's silica sand operations produced approximately
1,562,000 tons of sand in 1995.
The processed sand sold by the Registrant's industrial sand
business move by truck and rail to consumers.
5. Other
-----
The Registrant sold the capital stock of its wholly owned
subsidiary, National Perlite Products Company, on February 8, 1996. National
Perlite Products Company was inactive for two years prior to the sale of its
capital stock. The sale price was $1,900,000.00 resulting in a $625,000 pretax
gain.
C. Competition
-----------
The Registrant experiences intense competition in all of its
business segments from both foreign and domestic companies with which it
competes in supplying products and services or which offer alternative choices
as to modes of transportation. Vessel rates are an important factor as to the
ability of the Registrant's Great Lakes fleet to compete with other independent
and captive fleets, railroads and other providers of surface transportation.
The Registrant believes that product quality, differentiation and customer
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service are significant competitive considerations for all of its business
segments.
D. Environmental, Health and Safety Considerations
-----------------------------------------------
The Registrant is subject to various environmental laws and
regulations imposed by federal, state and local governments. The Registrant
cannot reasonably estimate future costs, if any, related to compliance with
these laws and regulations. However, costs incurred to comply with
environmental regulations have not been other than in the ordinary course of
business. Although it is possible that the Registrant's future operating
results could be affected by future costs of environmental compliance, it is
management's belief that such costs will not have a material adverse effect on
the Registrant's consolidated financial position. The Registrant is unable to
predict the effects of future environmental laws and regulations upon its
business.
E. Principal Customers
-------------------
More than 10% of the Registrant's 1995 sales and revenues was
attributable to each of AK Steel Corporation and LTV Steel Company, Inc. A
long-term vessel transportation contract and a contract for the sale of iron
ore pellets were the primary sources of revenues from AK Steel Corporation. In
the case of LTV Steel Company, Inc., revenues were largely attributable to
vessel transportation services and refractory and metallurgical treatment
products sold in 1995.
F. Employees
---------
At December 31, 1995, the Registrant and its subsidiaries
employed 1,417 persons.
ITEM 2. PROPERTIES
----------
The Registrant's principal operating properties are described
in response to Item 1. The Registrant's executive offices are located at 1100
Superior Avenue, Cleveland, Ohio, under a sublease expiring on March 31, 2003.
The total area involved is approximately 55,000 square feet.
ITEM 3. LEGAL PROCEEDINGS
-----------------
(1) The Registrant's subsidiary, Laxare, Inc., has been
named as a Defendant in two lawsuits now consolidated in the Circuit Court of
Kanawha County, West Virginia. Plaintiffs Mary Catherine Marks and Josephine
W. Luther ("Plaintiffs") allege that they owned an interest in property
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("Subject Property") upon which Laxare engaged in coal mining and other
activity pursuant to a 1968 lease ("Subject Lease"), allegedly invalid as
against Plaintiffs. Plaintiffs make identical allegations against Cannelton
Industries, Inc., to which Laxare subleased its interest under the Subject
Lease. Plaintiffs seek compensatory and punitive damages in an unspecified
amount against Laxare and Cannelton. Plaintiffs also instituted since-settled
claims against the individuals ("Lessors") who leased Laxare its interest under
the Subject Lease. Laxare denied the material allegations, asserted various
defenses and a counterclaim against Plaintiffs, and cross claimed against the
Lessors. Cannelton has cross claimed against the Lessors and Laxare.
The Circuit Court denied Laxare's Motion for Summary
Judgment, finding that the Plaintiffs have an interest in the Subject Property,
unencumbered by the Subject Lease. Laxare has moved for reconsideration of the
Circuit Court's ruling. The Court dismissed Laxare's cross claim against the
Lessors. Laxare and Cannelton filed motions to dismiss Plaintiffs' claims on
the basis of various affirmative defenses, and Plaintiffs have moved for
judgment in their favor on all issues, except amount of damages.
On August 31, 1995 Laxare, Inc. sought protection
under Chapter 11 of the Bankruptcy Code. Laxare, Inc. is unable to predict, at
this time, the result of the Bankruptcy proceedings. The Registrant believes
that the Bankruptcy proceeding is unlikely to have a material adverse effect on
the Registrant's consolidated financial position.
(2) The Registrant; its wholly owned subsidiary, Oglebay
Norton Taconite Company; Eveleth Taconite Company; Eveleth Expansion Company;
and The United Steel Workers of America, Local 6860, have been named Defendants
in a Complaint filed on August 16, 1988, in Federal District Court, 5th
District of Minnesota, by Lois E. Jenson and Patricia S. Kosmach, in their own
behalf and on behalf of all others similarly situated. The Complaint alleges
both sexual harassment and sexual discrimination under Title VII of the Civil
Rights Act of 1964 (the Act), Title 42, United States Code, 2000e et seq., and
under the provision of the Minnesota Human Rights Act, Minnesota Statutes,
Section 363.01 et seq. The Registrant does not believe that an adverse out come
will have a materially affect upon it.
(3) On November 22, 1988, Kathleen O'Brien Anderson, a
former employee of Eveleth Mines, filed a Notice of Charge of Discrimination
with the Equal Employment Opportunity Commission, alleging sexual harassment
and sexual discrimination. Ms. Anderson was issued a Notice of Right to Sue by
the Equal Employment Opportunity Commission, which has been consolidated with
the preceding Federal Court proceeding.
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These proceedings have been certified as a class
action. This matter was tried in December 1992 and February 1993.
On May 14, 1993, the Court issued its decision,
dismissing seven of Plaintiffs' nine claims of discrimination and harassment
against Defendants, Oglebay Norton Taconite Company and the Registrant. In
addition, it was determined that Eveleth Taconite Company, Eveleth Expansion
Company and Eveleth Expansion Financing Corporation were not "employers", as
defined under the Act, and they were dismissed as parties defendant. This
dismissal, however, does not relieve them of their contractual obligations to
the Registrant and Oglebay Norton Taconite Company.
The Registrant and Oglebay Norton Taconite Company
received unfavorable decisions on the remaining two claims, one involving
discrimination in the promotion of hourly employees to step-up foreman and the
other harassment. Proceedings continue with regard to the two remaining counts
against the Registrant and its subsidiary. As final orders have not been
issued, the opportunity for appeal is not yet available. Trial of the claims
of the named Plaintiffs and sixteen individual class members began on January
17, 1995, before a United States Magistrate Judge sitting as a special master.
To date the special master has not issued his report and recommendation. The
Registrant does not believe that an adverse ruling will have a material adverse
affect upon it.
(4) On February 26, 1993, a Complaint was filed by Lois
E. Jenson and Kathleen O'Brien Anderson in the United States District Court,
District of Minnesota, Fifth Division, naming the Registrant; its wholly owned
subsidiary, Oglebay Norton Taconite Company; Eveleth Taconite Company; Eveleth
Expansion Company; and The United Steel Workers of America, Local 6860,
Defendants. The Complaint alleges violations of Title VII of the Civil Rights
Act of 1964, Title 42, United States Code, Section 2000e et seq., as amended by
the Civil Rights Act of 1991, and the Minnesota Human Rights Act, Minnesota
Statutes, Section 363.01 et seq. The Plaintiffs seek injunctive relief, back
pay, with triple damages, and compensatory and punitive damages in unspecified
amounts. This suit is considered by counsel to be superfluous and barred by
the doctrine of res judicata due to the fact that these same Plaintiffs filed a
related suit in 1988, which was tried in December 1992 and February 1993 and
for which a ruling was rendered on May 14, 1993. An answer has been filed to
this Complaint. The Registrant does not believe that a decision in favor of
plaintiffs would have a material adverse affect upon it.
(5) The Registrant and certain of its subsidiaries are
involved in various other claims and ordinary routine litigation incidental to
their businesses, including claims
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relating to the exposure of persons to asbestos and silica. The full impact of
these claims and proceedings in the aggregate continues to be unknown. The
Registrant continues to monitor this situation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No matter was submitted to a vote of the Registrant's security
holders, through the solicitation of proxies or otherwise, during the fourth
quarter of the fiscal year covered by this report.
EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------
(Included pursuant to Instruction 3 to paragraph (b) of Item 401 of Regulation
S - K)
The executive officers of the Registrant as of March 12, 1996,
unless otherwise indicated, were as follows.
Name Executive Officers Age
- -------------------- ---------------------------------- ---
R. Thomas Green, Jr. Chairman of the Board, President
and Chief Executive Officer
(since 1992); Executive Vice
President (1990-1992); Vice
President-Iron Ore Operations
(1984-1990); and Director 58
Edward G. Jaicks Vice President-Marketing (since
1992) 39
Mark P. Juszli Vice President-Industrial Sands
(since April 26, 1995); General Manager-
Industrial Sands (1994-1995) 44
Richard J. Kessler Vice President-Finance (since 1981),
and Development (since February 23,
1994); Treasurer (1974-1994) 59
H. William Ruf Vice President-Administrative and
Legal Affairs (since February 23,
1994); Vice President-Human Resources
(1993-1994); Vice President-Employee
Relations (1992-1993); Vice President-
Personnel and Industrial Relations
(1978-1992) 61
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John L. Selis Vice President-Iron Ore (since
February 23, 1994); Vice President-
Iron Ore Operations (1992 to
February 23, 1994); Vice President-
Administration (1981-1992) and Law
(1986-1992) 59
Stuart H. Theis Vice President-Marine Transportation
(since January 1, 1994); Assistant to
the President (December 28, 1992-
December 31, 1993) 53
Timothy J. Vice President-Refractories and Minerals
Wojciechowski (since July 26, 1995) 40
Except as noted above, all executive officers of the
Registrant have served in the capacities indicated, respectively, during the
past five years. All executive officers serve at the pleasure of the Board of
Directors, with no fixed term of office.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND
----------------------------------------
RELATED STOCKHOLDER MATTERS
---------------------------
The Company's Common Stock, par value $1 per share, as reported by NASDAQ is
traded on the Over-The-Counter Market. The following is a summary of the
market ranges and dividends declared for each quarterly period in 1995 and 1994
for the Common Stock.
<TABLE>
<CAPTION>
Quarterly Dividends
Period High Low Declared
--------- ---- --- ---------
<S> <C> <C> <C> <C>
1995 4th $38-3/4 $34-3/4 $.30
3rd 36-1/2 33-1/4 .30
2nd 34-1/4 32 .30
1st 34 30 .30
1994 4th $31-3/4 $29-1/4 $.30
3rd 31 24-3/4 .30
2nd 26-1/2 24-1/4 .20
1st 26-1/4 21-3/4 .20
</TABLE>
<TABLE>
<CAPTION>
December 31
------------------
1995 1994
---- ----
<S> <C> <C>
Market price per share $37-1/4 $30-1/2
Stockholders of record 503 531
</TABLE>
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ITEM 6. SELECTED FINANCIAL DATA
-----------------------
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
(Dollars and Shares in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
YEAR ENDED
1995 1994
-------------------------------
<S> <C> <C>
OPERATIONS
Net sales and operating revenues $189,376 $202,755
Sales commissions, royalties and management fees 4,221 4,597
-------- --------
Total revenues $193,597 $207,352
======== ========
Income (loss) from continuing operations
before taxes $ 20,510 $ 20,122
Income taxes (benefit) 5,149 5,231
-------- --------
Income (loss) from continuing operations 15,361 14,891
Discontinued operation(1)
-------- --------
Income (loss) before extraordinary provision and
cumulative effects of changes in accounting 15,361 14,891
Extraordinary provision(2)
Cumulative effects of changes in accounting(3)
-------- --------
Net income (loss)(4) $ 15,361 $ 14,891
======== ========
Depreciation and amortization $ 14,438 $ 13,603
Expenditures for properties and equipment 6,906 8,813
PER SHARE DATA
Continuing operations $ 6.21 $ 5.98
Discontinued operation(1)
-------- --------
Income (loss) before extraordinary provision and
cumulative effects of changes in accounting 6.21 5.98
Extraordinary provision(2)
Cumulative effects of changes in accounting(3)
-------- --------
Net income (loss)(4) $ 6.21 $ 5.98
======== ========
Dividends $ 1.20 $ 1.00
======== ========
OTHER STATISTICS
Total assets $254,256 $260,813
Long-term debt 43,641 57,118
Other long-term liabilities 71,811 74,243
Dividends paid 2,968 2,491
Average shares of Common Stock outstanding 2,474 2,491
Shares of Common Stock outstanding at
year-end 2,466 2,483
</TABLE>
1 The Company's wholly owned subsidiary, Saginaw Mining Company, ceased
operation of its Ohio coal mine in 1992. Permanent closure of the mine was
funded by a public utility customer, as required by long-term contract.
2 Extraordinary provision (net of income taxes of $5,140,000) relates to the
Coal Industry Retiree Health Benefit Act of 1992.
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<PAGE> 14
DECEMBER 31
<TABLE>
<CAPTION>
1993 1992 1991
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
$159,736 $148,690 $144,249
3,710 5,321 4,594
-------- -------- --------
$163,446 $154,011 $148,843
======== ======== ========
$ 9,554 $(49,761) $ 3,839
2,292 (17,612) 528
-------- -------- --------
7,262 (32,149) 3,311
2,440 1,816
-------- -------- --------
7,262 (29,709) 5,127
( 9,978)
(17,006)
-------- -------- --------
$ 7,262 $(56,693) $ 5,127
======== ======== ========
$ 13,432 $ 16,165 $ 15,878
2,921 8,727 3,506
$ 2.89 $( 12.79) $ 1.32
.97 .72
-------- -------- --------
2.89 ( 11.82) 2.04
( 3.97)
( 6.77)
-------- -------- --------
$ 2.89 $( 22.56) $ 2.04
======== ======== ========
$ .80 $ 1.40 $ 1.60
======== ======== ========
$259,717 $263,974 $291,133
69,344 80,534 87,937
80,642 85,838 52,209
2,009 3,518 4,022
2,512 2,513 2,514
2,504 2,513 2,513
</TABLE>
3 Cumulative effects of changes in accounting (net of income taxes of
$8,762,000) are for postretirement benefits other than pensions and vessel
inspection costs.
4 The 1992 net loss includes the effects of asset impairments ($29,444,000)
and a loss on the disposal of a business ($2,178,000).
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<PAGE> 15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
FINANCIAL CONDITION
The Company's operating activities provided cash flow of $25,940,000
in 1995 which improved by over 30% compared to $19,589,000 in 1994. Cash flow
from operations was $5,357,000 in 1993. The Company generated income from
operations of $20,988,000 in 1995 compared to $18,301,000 in 1994 and
$12,364,000 in 1993. The improvement was primarily from operating profit
contributions made by the Company's Marine Transportation and Industrial Sands
business segments. Accounts receivable declined in 1995 by $4,354,000 on lower
fourth quarter revenues. The Company was limited to its annual contractual
allotment of iron ore pellets, while additional pellet tonnage was available
for sale in 1994. Harsh weather conditions on the Great Lakes and rivers at
the end of 1995 had a significant adverse impact on the Company's Marine
Transportation fourth quarter operating results. 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 steel industry and
improved fourth quarter sales for Industrial Sands. Accounts payable increased
in 1995 by $1,977,000 primarily as a result of pellet tonnage purchased at the
end of the year by the Company's Iron Ore business segment and resold on the
spot market. Operating results of the Company's business segments are
discussed in more detail under "RESULTS OF OPERATIONS".
Expenditures for property and equipment amounted to $6,906,000 in 1995
compared to $8,813,000 and $2,921,000 in 1994 and 1993, respectively. Capital
expenditures include vessel inspection costs of $2,037,000 in 1995, $1,326,000
in 1994 and $364,000 in 1993. Also included in 1994 is $3,204,000 of property
and equipment purchased as a part of an $8,000,000 Industrial Sands asset
acquisition. Capital expenditures for 1996 are currently expected to be
$2,000,000 less than 1995 expenditures, as no vessel inspections are required
in 1996.
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 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 will
result in cumulative savings of approximately $6,000,000 over the term of the
loan. In 1995, the Company elected to pay $5,000,000 at the end of the year on
its term loan, in addition to scheduled payments. The Company did not utilize
its revolving credit facility throughout 1995. In 1994, the Company repaid
$10,000,000 in the second quarter, borrowed on the facility in the prior year,
reducing the balance to zero for the remainder of the year. 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 when the balance
was reduced to zero. In December 1993 the Company refinanced its Title XI
Bonds reducing the fixed interest rate from 9.65% to 5.3%. Long-term debt is
further described in Note G to the consolidated financial statements. The
Company made Iron Ore investment advances of $2,812,600 in 1995, 1994 and 1993
to fund its proportionate share of Eveleth Mines debt. Eveleth's debt was
fully paid in 1995.
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<PAGE> 16
The Company declared and paid dividends on a quarterly basis totaling
$1.20 per share in 1995, $1.00 per share in 1994 and $.80 per share in 1993.
Dividends paid were $2,968,000 in 1995 compared to $2,491,000 and $2,009,000 in
1994 and 1993, 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. The Company purchased 18,250 shares of its
Common Stock on the open market for $615,000 in 1995, 20,800 shares for
$536,000 in 1994 and 9,000 shares for $189,000 in 1993 and placed these shares
in treasury.
In 1995, the Company sold two Marine Transportation vessels no longer
in service and current marketable securities resulting in pretax gains of
$2,324,000 and $1,630,000, respectively. The Company also realized a $520,000
pretax gain on the sale of undeveloped clay properties in Tennessee in 1995.
In 1994, the Company sold its Ceredo coal dock business and current marketable
securities 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. Total
proceeds from the sale of these assets were $6,553,000 in 1995, $11,850,000 in
1994 and $8,656,000 in 1993.
Anticipated cash flows from operations and current financial resources
are expected to meet the Company's needs during 1996. 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 totaled $193,597,000 in 1995 as compared to $207,352,000 and
$163,446,000 in 1994 and 1993, respectively. Income from operations of
$20,988,000 in 1995 improved by 15% over the $18,301,000 level achieved in
1994. Income from operations in 1994 was 48% greater than income from
operations of $12,364,000 in 1993. Income before taxes was $20,510,000 in
1995, compared to $20,122,000 in 1994 and $9,554,000 in 1993. In 1995, net
income was $15,361,000 or $6.21 per share, compared to net income of
$14,891,000 or $5.98 per share in 1994 and $7,262,000 or $2.89 per share in
1993.
Net income, excluding gains and charges, was $12,272,000 or $4.96 per
share in 1995, compared to $9,549,000 or $3.83 per share in 1994 and $6,097,000
or $2.43 per share in 1993. In 1995, income before taxes includes gains
totaling $4,681,000, primarily from the sale of inactive Marine Transportation
vessels and current marketable securities. Income before taxes in 1994
included gains totaling $8,094,000 essentially from the sale of the Company's
Ceredo coal dock business and current marketable securities. In 1993, income
before taxes included gains totaling $4,117,000 from the sale of 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 Bonds.
In 1995, the Financial Accounting Standards Board issued Statement No.
121, "Accounting for the impairment of Long-Lived Assets to be Disposed Of".
This statement, which must be adopted by the Company in 1996, is not expected
to have a material effect on the Company's consolidated financial statements.
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.
The effect of these statements are further described in Notes A and B to the
consolidated financial statements.
-16-
<PAGE> 17
In 1995, the Company reevaluated assumptions used in determining
postretirement pension and health care benefits. The weighted-average
discount rates were adjusted from 8% to 7.5% to better reflect market rates.
In 1996, the assumed health care cost trend rate will decline by 1% and the
ultimate trend rate will decrease by .5% for all retirees. The change in
assumptions did not affect 1995 net income and will not have a significant
effect on net income in 1996. The weighted-average discount rate, used in
determining health care benefits provided under the Coal Industry Retiree
Health Benefit Act, was adjusted from 7.75% to 7% and did not have a
significant impact on 1995 net income. Postretirement benefits are further
described in Note E to the consolidated financial statements.
The operating results of the Company's business segments for the three
years ended December 31, 1995 are discussed below. It is the policy of the
Company to allocate a portion of corporate general and administrative expenses
to its business segments.
MARINE TRANSPORTATION - Operating revenues of $85,657,000 in 1995 were 4%
greater than revenues of $82,153,000 in 1994 and 17% greater than revenues of
$73,143,000 in 1993. Operating profit was $12,246,000 in 1995, a 2% decline
compared to $12,467,000 in 1994 and a 13% improvement over the 1993 level of
$10,791,000. Income before taxes was $11,149,000 in 1995 compared to
$8,270,000 and $5,492,000 in 1994 and 1993, respectively. In 1995, the Company
sold two inactive vessels resulting in pretax gains totaling $2,324,000.
Interest expense declined to $3,422,000 in 1995, compared to $4,283,000 in 1994
and $5,309,000 in 1993, as a result of reductions in outstanding debt and lower
interest rates on the Company's long-term debt.
Operating revenues improved in 1995 for the Company's Great Lakes
vessel fleet on a 4% increase in revenue per ton of capacity and a 7% increase
in operating days over 1994 levels. Higher revenues in 1994, compared to 1993,
resulted from a 20% increase in vessel operating days on an extended sailing
season after a delayed start due to severe ice conditions on the Great Lakes.
Revenue per ton of capacity in 1994 was comparable to 1993. The 21,486,000
tons hauled by the Company's vessel fleet fell by less than 1% compared to the
21,619,000 record tonnage carried in 1994. The fleet experienced a 14%
increase in tonnage carried in 1994 compared to the 1993 level of 19,001,000
tons. Iron ore shipments declined by 4% in 1995, as the Company did not
participate in the winter shuttle of iron ore on the Cuyahoga River. In 1995,
coal shipments increased by 6%, while limestone shipments declined 2%, compared
to 1994. Northern limestone quarries closed earlier than usual due to harsh
weather conditions at the end of 1995. Transportation of iron ore in 1994 was
comparable to 1993, while coal and limestone shipments increased by 25%.
The Company operated twelve vessels throughout the 1995 sailing
season. In 1994, eleven vessels operated for the whole sailing season and a
twelfth vessel sailed at the end of the second quarter for the remainder of the
season. Ten vessels sailed for the full sailing season in 1993, while one
vessel operated for part of the season. Presently, it appears that the 1996
sailing season will be comparable to 1995 and 1994 operating levels, as the
Company's customers continue to project high levels of demand for the
transportation of iron ore, coal and limestone.
-17-
<PAGE> 18
High winds and unusually heavy ice conditions on the Great Lakes and
rivers at the end of 1995 caused substantial delays and hampered operations
resulting in a 2% decline in operating profit compared to 1994. In 1995,
delays increased by 68% or 200 operating days, compared to 1994, resulting in
an approximate $2,500,000 reduction in operating profit. Operating profit
improved in 1994, compared to 1993, due to better business conditions for the
Company's customers, favorable weather conditions once the sailing season
commenced and lower operating costs. Expenditures for properties and equipment
and depreciation and amortization expense increased to $3,125,000 and
$8,658,000, respectively, in 1995 as three vessels required their five-year
inspections prior to sailing and major improvements were made to one of the
Company's vessels. Expenditures for properties and equipment and depreciation
expense amounted to $1,397,000 and $8,359,000, respectively, in 1994 as three
vessels required their five-year inspections, compared to only one vessel in
1993. Expenditures for properties and equipment and depreciation expense was
$364,000 and $8,157,000, respectively, in 1993. None of the Company's vessels
are scheduled for a five-year inspection in 1996.
INDUSTRIAL SANDS - Net sales of $40,552,000 in 1995 increased by 41% compared
to $28,818,000 in 1994. Net sales in 1994 were 8% greater than the 1993 level
of $26,606,000. Operating profit of $7,175,000 in 1995, compared to $2,834,000
in 1994 and $1,827,000 in 1993. Income before taxes in 1995 was $6,808,000,
compared to $2,893,000 in 1994 and $1,846,000 in 1993. Interest expense was
$524,000 in 1995 and related to the acquisition of additional sand assets at
the end of 1994.
The substantial improvement shown in net sales and operating profit in
1995 was due to economic vigor in most of the segment's markets and advantages
resulting from the $8,000,000 acquisition of additional sand assets near the
segment's Texas facility in the fourth quarter of 1994. A record 1,565,000
tons were shipped in 1995 achieving a 20% increase over the 1994 level of
1,308,000 tons. The average selling price of principal products improved by 9%
in 1995 compared to 1994. This improvement was a result of very favorable
product mix as well as price increases in most markets served. Operating
results of the segment's California and Ohio operations improved significantly
over 1994 results as demand for construction related products increased. In
addition, the benefits of streamlining management at the end of 1994, as
described below, were more fully realized in 1995.
Net sales and operating profit improved in 1994 on a 3% increase in
tonnage shipped and a 5% increase in average sales price per ton compared to
1993 levels. The largest tonnage gains were in frac sand sold in the oil and
gas service 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 acquisition described above. Glass and
pulverized sand sales in 1994 were comparable to 1993, 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. Reduced
operating costs and a higher utilization of production capacity in the fourth
quarter also added to 1994 operating profit. Steps to streamline the segment's
management processes were implemented during the fourth quarter of 1994 which
reduced overhead costs and accelerated productivity gains. Certain overlapping
support functions were consolidated in Cleveland, Ohio, while responsibility
for operating decisions was moved to the production sites.
-18-
<PAGE> 19
Expenditures for property and equipment of $2,360,000 in 1995 compared
to $4,622,000 in 1993 and $2,055,000 in 1993. In 1994, $3,204,000 of the
expenditures relate to property and equipment included in the acquisition of
assets described above. Depreciation and amortization expense of $2,550,000 in
1995, which reflects a full year of the acquisition at the end of 1994,
compared to $2,149,000 in 1994 and $2,055,000 in 1993.
IRON ORE - Net sales, royalties and management fees totaled $30,445,000 in
1995, compared to $54,656,000 and $23,634,000 in 1994 and 1993, respectively.
Operating profit was $5,829,000 in 1995, compared to $6,866,000 in 1994 and
$4,031,000 in 1993. Income before taxes was $5,814,000 in 1995, compared to
$6,524,000 in 1994 and $3,405,000 in 1993. The Company's proportionate share
of Eveleth Mines interest expense declined to $55,000 in 1995, compared to
$360,000 in 1994 and $630,000 in 1993, as a result of reductions in Eveleth's
debt which was fully paid in the second quarter of 1995.
The Eveleth Mines Agreements ("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. The Agreements were amended effective
January 1, 1991 through December 31, 1996 ("1991 Amendment") to provide, among
other things, that Eveleth may be operated at less than full capacity, allow
each owner to take iron ore pellet production at more or less than its
ownership interest and require each owner to fund its adjusted ownership share
of firm contractual cash commitments ("fixed costs") and variable costs based
on pellet tonnage taken. The Company's share of Eveleth's annual pellet
production is 775,000 tons through 1996. However, the Company is obligated
under the take-or-pay provisions of the Agreements to fund its share of fixed
costs whether or not it takes its full share of production. 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 pellets. The Company sells
approximately half of its pellets to other Eveleth owners under long-term sales
agreements, while the remainder must be sold on the spot market. In 1992,
based on Eveleth's high costs, depressed pellet sale prices and the Company's
inability to sell any pellets on the spot market in 1992 and 1991, a
$14,000,000 take-or-pay liability was recorded for the Company's share of
Eveleth's fixed costs under the take-or-pay provisions of the Agreements.
This action anticipated that there would be no gain or loss on the sale of the
pellets. The take-or-pay liability was intended to be credited to cost of
sales ratably over the period of 1993 through 1996. This liability has been
credited to cost of sales as follows: $3,500,000 in 1995, $2,300,000 in 1994
and $3,500,000 in 1993. The Company expects to credit the remaining $4,700,000
liability to cost of sales in 1996.
Eveleth Mines produced nearly 5,300,000 tons of iron ore pellets in
1995, compared to 5,000,000 tons in 1994 and 3,100,000 tons in 1993. In 1995,
the Company sold just above its full contractual allotment of 775,000 tons of
iron ore pellets in a market motivated by strong demand from the steel
industry. The decline in sales volume in 1995 was partially offset by an 18%
increase in the average selling price per ton. Selling prices increased in
1995 for both long-term contract and spot market customers. The Company's iron
ore pellet sales and related cost of sales and tons sold are further described
in Note F to the consolidated financial statements.
-19-
<PAGE> 20
Revenues and operating profit increased in 1994, compared to 1993,
with strong sales to the steel industry. In 1994, one of Eveleth's owner's
elected not to take its full take-or-pay share of Eveleth's iron ore pellets
and instead paid its share of fixed costs. 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. This additional tonnage increased 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 take-or-pay
credit was reduced to $2,300,000 in 1994. The improvement in 1994 was
partially offset by a 10% decline in the average selling price per ton. Spot
market selling prices increased in 1994, while prices declined for long-term
contract customers. Increased production, resulting in higher royalties, and
reduced costs also contributed to the improvements in 1994.
Under separate agreements with the Eveleth owners, the Company was
paid management fees for its role as Eveleth Mines manager. Net management
fees were $1,164,000 in 1995, $864,000 in 1994 and $1,150,000 in 1993.
Depreciation and amortization expense was $1,005,000 in 1995, compared to
$886,000 and $1,086,000 in 1994 and 1993, respectively. There were no
expenditures for properties and equipment in 1995 or 1993. Capital
expenditures in 1994 related to equipment purchased and leased back to Eveleth
Mines for use in the mining process.
The Company notified the other owners of Eveleth Mines at the end of
1995 of its decision not to renew its contract as manager and employer of
Eveleth Mines beyond the current expiration date of December 31, 1996. In
recent years, the interests of the other owners have differed and have made it
increasingly difficult for the Company to adequately represent all owners as
manager. The Company presently intends to continue as an owner of Eveleth and
to receive its contractual allotment of iron ore pellets for resale. All
owners have presently claimed their share of Eveleth production for 1996.
Therefore, the Company's 1996 sales volume for its Iron Ore segment is
anticipated to be comparable to the 1995 level.
After 1996 the Agreements may be terminated by the owners on eleven
months notice; or the owners may choose to share costs pro rata or on the basis
of temporary arrangements that were used following expansion of the Eveleth
facilities prior to 1981 ("rollback"). These arrangements are different than
the cost sharing arrangements followed under the 1991 Amendment. In 1996, one
of the other Eveleth owners gave notice of rollback, which is being contested
by the Company. The owners continue to discuss what the potential cost sharing
structure, operation and ownership of Eveleth Mines could be after 1996.
However, no agreements have been reached regarding modification of the
Agreements or potential restructuring of the ownership of Eveleth Mines. Until
an agreement has been reached, it is not possible to predict how these events
may affect the Company.
REFRACTORIES & MINERALS - Net sales of $36,844,000 in 1995 were 7% less than
1994 sales of $39,502,000. Net sales in 1994 were 10% greater than sales of
$35,756,000 in 1993. Operating profit was $24,000 in 1995, compared to
$1,074,000 and $2,809,000 in 1994 and 1993, respectively. Operating profit in
1995 includes a $613,000 loss on the shutdown and consolidation of
manufacturing facilities for the segment's hot top product line. A loss before
taxes of $189,000 in 1995 compared to income before taxes of $952,000 and
$2,608,000 in 1994 and 1993, respectively. Interest expense of $213,000 in
1995 compared to $195,000 in 1994 and $201,000 in 1993.
In the third quarter of 1995 the Company made a change in the
management of this business segment. As a result of this change, all product
lines are under review to determine if they can meet the established strategic
goals of this segment and the Company. Net sales and operating profit for this
business segment, which did not meet management's expectations in 1995, are
discussed by product line in the paragraphs that follow.
-20-
<PAGE> 21
Although sales of metallurgical treatment products declined by 5% in
1995, operating profit, prior to selling, general and administrative expenses,
improved by more than 80% compared to 1994. Stronger cost controls and
diversification of this product line contributed to the improvement in 1995.
Strong demand for this product line and escalation in the price of aluminum, a
key component in several products, resulted in a 24% increase in 1994
metallurgical treatment sales, compared to 1993. Operating profit, prior to
selling, general and administrative expenses, declined by 20% compared to 1993.
The Company's Warren, Ohio facility, which manufactures metallurgical treatment
products, incurred higher production, maintenance and nonrecurring inventory
costs in 1994 as it operated near full capacity.
As anticipated, ingot hot top product sales declined by 7% in 1995,
compared to 1994. Operating profit, prior to selling, general and
administrative expenses and the loss on consolidation of facilities described
above, declined by 20% in 1995. The Company is one of the few remaining ingot
product suppliers in a declining market, as steel producers continue to shift
to the continuous casting process. In addition to the decline in volume, raw
material cost increases also affected profitability of this product line in
1995. Manufacturing efficiencies will continue to be evaluated in 1996 to
determine if further action is warranted or if the segment's hot top facilities
can be utilized to manufacture other products. Sales of ingot hot top products
increased 2% in 1994, while operating profit, prior to selling, general and
administrative expenses, declined by 11% compared to 1993.
Refractory shapes and tundish coatings product sales declined by 6% in
1995, compared to 1994. Operating profit, prior to selling, general and
administrative expenses, also declined to a break-even level in 1995. The
Company continued to encounter stiff market competition in both product lines.
Uncertainties in Mexico also impacted tundish coating sales and significant
variable cost increases were incurred in the manufacture of refractory shape
products in 1995. In 1994, refractory shapes and tundish coatings product
sales increased by 3%, compared to 1993. Operating profit for both product
lines, prior to selling, general and administrative expenses, was comparable to
1993. Intense competition prevented the Company from making anticipated market
entry into the tundish coatings and refractory shapes sector of the steel
industry in 1994.
Fluorspar net sales and operating profit declined by over $900,000 and
$166,000, respectively, in 1994, compared to 1993, as the Company exited the
fluorspar business.
Selling, general and administrative expenses and research and
development costs declined by 3% in 1995, compared to 1994. These similar
costs increased by almost 10% in 1994, compared to 1993, with the Company's
effort to increase market share, customer base and product diversification.
Expenditures for property and equipment were $938,000 in 1995,
compared to $1,225,000 in 1994 and $1,202,000 in 1993. Depreciation and
amortization expense was $2,004,000 in 1995, compared to $1,913,000 in 1994 and
$1,657,000 in 1993. The increase in depreciation in 1995 and 1994, compared to
1993, relates to equipment placed in service for the application of tundish
coatings at the beginning of 1994.
-21-
<PAGE> 22
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
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, 1995 and 1994, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 1995. 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, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Cleveland, Ohio
February 29, 1996
-22-
<PAGE> 23
RESPONSIBILITY FOR CONSOLIDATED FINANCIAL STATEMENTS
Management is responsible for the financial and operating information contained
in the Annual Report, including the consolidated financial staements covered by
the Report of Independent Auditors. These statements were prepared in
conformity with generally accepted accounting principles and include amounts
based on estimates and judgments of management.
The Company seeks to assure the integrity and objectivity of the data in the
financial statements through a system of internal controls. These controls are
designed to provide reasonable assurance that assets are safeguarded and
transactions are executed in accordance with management's authorization and
recorded properly to permit the preparation of financial statements.
Independent auditors, Ernst & Young LLP, are engaged to render an independent
opinion on the Company's financial statements. Their opinion, which appears
herein, is based on an audit of the Company's consolidated financial statements
in accordance with generally accepted auditing standards which includes a
review of internal controls to the extent Ernst & Young LLP deems necessary.
The Company's Board of Directors, through its Audit Committee which is composed
of four outside directors, reviews the Company's financial reports and
accounting and auditing practices. It meets periodically with the independent
auditors and management in this connection.
-23-
<PAGE> 24
CONSOLIDATED BALANCE SHEET
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
December 31
1995 1994
--------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 22,660,436 $ 17,720,419
Marketable securities 3,555,550 5,772,650
Accounts receivable, less reserves for
doubtful accounts of $511,000 in
1995 and $440,000 in 1994 27,681,413 32,035,408
Inventories
Raw materials and finished products 3,456,857 3,846,094
Operating supplies 2,311,529 2,261,747
------------ ------------
5,768,386 6,107,841
Deferred income taxes 3,033,075 2,213,246
Prepaid insurance and other expenses 1,775,417 2,237,793
------------ ------------
TOTAL CURRENT ASSETS 64,474,277 66,087,357
INVESTMENTS 10,519,241 10,563,835
PROPERTIES AND EQUIPMENT
Marine Transportation 222,613,738 234,867,117
Iron Ore 1,305,258 1,305,258
Refractories & Minerals 18,224,745 17,330,863
Industrial Sands 53,801,897 52,467,527
Other 8,883,339 8,872,597
------------ ------------
304,828,977 314,843,362
Less allowances for depreciation
and amortization 153,235,099 156,886,610
------------ ------------
151,593,878 157,956,752
PREPAID PENSION COSTS AND OTHER ASSETS 27,668,477 26,205,459
------------ ------------
TOTAL ASSETS $254,255,873 $260,813,403
============ ============
</TABLE>
-24-
<PAGE> 25
<TABLE>
<CAPTION>
December 31
1995 1994
--------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 8,476,450 $ 8,476,450
Accounts payable 6,546,012 4,569,067
Payrolls and other accrued compensation 7,283,660 7,057,615
Accrued expenses 14,219,918 16,013,208
Income taxes 1,311,849 2,270,951
Iron Ore impairment obligations 4,699,996 6,312,600
------------ ------------
TOTAL CURRENT LIABILITIES 42,537,885 44,699,891
LONG-TERM DEBT, less current portion 43,641,125 57,117,575
POSTRETIREMENT BENEFITS OBLIGATION 31,559,405 31,071,022
OTHER LONG-TERM LIABILITIES 19,922,291 24,019,063
DEFERRED INCOME TAXES 20,329,760 19,152,931
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 9,078,611 9,035,841
Unrealized gains 1,468,476 2,278,273
Retained earnings 113,566,048 101,173,484
------------ ------------
127,739,801 116,114,264
Treasury Stock, at cost - 1,160,790 and
1,143,540 shares at respective dates (29,806,819) (29,217,318)
Unallocated Employee Stock Ownership
Plan shares ( 1,667,575) ( 2,144,025)
------------ ------------
96,265,407 84,752,921
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $254,255,873 $260,813,403
============ ============
</TABLE>
See notes to consolidated financial statements.
-25-
<PAGE> 26
CONSOLIDATED STATEMENT OF OPERATIONS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
-------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Net sales and operating revenues $189,375,595 $202,754,512 $159,736,471
Sales commissions, royalties and
management fees 4,221,272 4,597,517 3,709,687
------------ ------------ ------------
193,596,867 207,352,029 163,446,158
COSTS AND EXPENSES
Cost of goods sold and operating expenses 155,726,578 172,453,991 133,335,772
General, administrative and selling expenses 15,949,541 16,295,454 15,854,049
Reserve for doubtful accounts 320,305 301,652 1,892,419
Loss on shutdown and consolidation of facilities 612,656
------------ ------------ ------------
172,609,080 189,051,097 151,082,240
------------ ------------ ------------
INCOME FROM OPERATIONS 20,987,787 18,300,932 12,363,918
Gain on sale of assets 4,681,213 8,093,805 4,116,906
Interest, dividends and other income 2,281,115 1,387,443 1,184,208
Interest expense (4,359,804) (5,992,018) (7,554,878)
Other expense (3,080,321) (1,668,327) ( 556,119)
------------ ------------ ------------
INCOME BEFORE TAXES 20,509,990 20,121,835 9,554,035
INCOME TAXES
Current 4,376,000 4,825,000 233,000
Deferred 773,000 406,000 2,059,000
------------ ------------ ------------
5,149,000 5,231,000 2,292,000
------------ ------------ ------------
NET INCOME $ 15,360,990 $ 14,890,835 $ 7,262,035
============ ============ ============
NET INCOME PER SHARE $ 6.21 $ 5.98 $ 2.89
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
-26-
<PAGE> 27
CONSOLIDATED STATEMENT OF CASH FLOWS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
-------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $15,360,990 $ 14,890,835 $ 7,262,035
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 14,437,878 13,603,183 13,431,957
Deferred income taxes 773,000 170,517 447,200
Gain on sale of assets ( 4,681,213) ( 8,094,005) ( 4,116,906)
Loss on shutdown and consolidation of facilities 612,656
Prepaid pension costs and other assets ( 2,450,918) ( 1,919,098) ( 2,147,271)
Decrease (increase) in accounts
receivable 4,353,995 ( 3,744,102) ( 8,981,222)
Decrease (increase) in inventories 339,455 396,592 ( 902,301)
Increase (decrease) in accounts payable 1,976,945 533,938 ( 492,806)
Other operating activities ( 4,783,180) 3,751,390 856,188
----------- ------------ ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 25,939,608 19,589,250 5,356,874
INVESTING ACTIVITIES
Purchase of properties and equipment ( 6,905,775) ( 5,609,103) ( 2,921,175)
Proceeds from sale of assets 6,552,562 11,849,592 8,656,012
Iron Ore and other investments ( 3,086,411) ( 2,885,830) ( 2,829,389)
Acquisition of assets ( 8,000,000)
----------- ------------ ------------
NET CASH PROVIDED BY (USED FOR)
INVESTING ACTIVITIES ( 3,439,624) ( 4,645,341) 2,905,448
FINANCING ACTIVITIES
Payments on long-term debt (13,976,450) (24,189,664) (18,152,879)
Additional long-term debt 8,750,000 10,000,000
Payments of dividends ( 2,968,426) ( 2,491,266) ( 2,009,481)
Purchase of Treasury Stock ( 615,091) ( 535,624) ( 189,240)
----------- ------------ ------------
NET CASH USED FOR FINANCING ACTIVITIES (17,559,967) (18,466,554) (10,351,600)
----------- ------------ ------------
Increase (decrease) in cash and cash
equivalents 4,940,017 ( 3,522,645) ( 2,089,278)
Cash and cash equivalents, January 1 17,720,419 21,243,064 23,332,342
----------- ------------ ------------
CASH AND CASH EQUIVALENTS, DECEMBER 31 $22,660,436 $ 17,720,419 $ 21,243,064
=========== ============ ============
</TABLE>
See notes to consolidated financial statements.
-27-
<PAGE> 28
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
COMMON
COMMON ADDITIONAL UNREALIZED RETAINED STOCK IN
STOCK CAPITAL GAINS EARNINGS TREASURY
--------- ----------- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Balance,
January 1, 1993 3,626,666 8,946,541 83,521,361 (28,492,454)
Net Income 7,262,035
Dividends
$.80 per share ( 2,009,481)
Tax benefit of unallocated
shares in ESOP 41,502
Purchase of Treasury
Stock ( 189,240)
Allocated ESOP shares
---------- ---------- ------------ ------------
Balance,
December 31, 1993 3,626,666 8,988,043 88,773,915 (28,681,694)
Adjustment for change
in accounting $2,971,792
Net Income 14,890,835
Dividends
$1.00 per share ( 2,491,266)
Change in unrealized gains (693,519)
Tax benefit of unallocated
shares in ESOP 47,798
Purchase of Treasury
Stock ( 535,624)
Allocated ESOP shares
---------- ---------- ---------- ------------ ------------
Balance,
December 31, 1994 3,626,666 9,035,841 2,278,273 101,173,484 (29,217,318)
Net Income 15,360,990
Dividends
$1.20 per share ( 2,968,426)
Change in unrealized gains (809,797)
Tax benefit of unallocated
shares in ESOP 35,360
Issuance of Treasury Stock
for director stock plan 7,410 25,590
Purchase of Treasury
Stock ( 615,091)
Allocated ESOP shares
---------- ---------- ---------- ------------ ------------
Balance,
December 31, 1995 $3,626,666 $9,078,611 $1,468,476 $113,566,048 $(29,806,819)
========== ========== ========== ============ ============
<CAPTION>
UNALLOCATED
EMPLOYEE STOCK TOTAL
OWNERSHIP STOCKHOLDERS'
PLAN SHARES EQUITY
--------------------------------
<S> <C> <C>
Balance,
January 1, 1993 (3,736,568) 63,865,546
Net Income 7,262,035
Dividends
$.80 per share ( 2,009,481)
Tax benefit of unallocated
shares in ESOP 41,502
Purchase of Treasury
Stock ( 189,240)
Allocated ESOP shares 902,878 902,878
----------- ------------
Balance,
December 31, 1993 (2,833,690) 69,873,240
Adjustment for change
in accounting 2,971,792
Net Income 14,890,835
Dividends
$1.00 per share ( 2,491,266)
Change in unrealized gains ( 693,519)
Tax benefit of unallocated
shares in ESOP 47,798
Purchase of Treasury
Stock ( 535,624)
Allocated ESOP shares 689,665 689,665
----------- ------------
Balance,
December 31, 1994 (2,144,025) 84,752,921
Net Income 15,360,990
Dividends
$1.20 per share ( 2,968,426)
Change in unrealized gains ( 809,797)
Tax benefit of unallocated
shares in ESOP 35,360
Issuance of Treasury Stock
for director stock plan 33,000
Purchase of Treasury
Stock ( 615,091)
Allocated ESOP shares 476,450 476,450
----------- ------------
Balance,
December 31, 1995 $(1,667,575) $ 96,265,407
=========== ============
</TABLE>
See notes to consolidated financial statements.
-28-
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
December 31, 1995, 1994 and 1993
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.
MARKETABLE SECURITIES: Available-for-sale securities 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
securities are based on average cost.
INVESTMENTS: The Company holds a long-term investment in Eveleth Mines
("Eveleth") through a 15 percent interest in Eveleth Taconite Company and a
20.5 percent interest in Eveleth Expansion Company.
PROPERTIES AND EQUIPMENT: Properties and equipment are carried at cost.
DEPRECIATION AND AMORTIZATION: The Company provides depreciation on the
straight-line method over the assets estimated useful lives which range from 3
to 50 years. The amortization of advances to Eveleth 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.
-29-
<PAGE> 30
NOTE A - ACCOUNTING POLICIES - (CONTINUED)
NET INCOME PER SHARE: Net income per share of Common Stock is based on the
average number of shares outstanding.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the Company's consolidated
financial statements and accompanying notes. Actual results could differ from
those estimates and assumptions.
ACCOUNTING CHANGES: In 1993, the Financial Accounting Standards Board issued
Statement No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". The Company adopted the provisions of the 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
securities.
In 1995, the Financial Accounting Standards Board issued Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets
to be Disposed Of". The new standard requires that, under certain
circumstances, long-lived assets be reviewed for impairment and any applicable
loss be recognized. This statement, which must be adopted by the Company in
1996, is not expected to have a material effect on the consolidated financial
statements.
Certain amounts in prior years have been reclassified to conform with the 1995
consolidated financial statement presentation.
NOTE B - MARKETABLE SECURITIES
The fair value of current available-for-sale securities is $3,555,550 at
December 31, 1995 and includes unrealized gains of $2,225,476 based on a cost
of $1,330,074. The Company realized gains of $1,630,000 from proceeds of
$2,621,000 on the sale of such securities for the year ended December 31, 1995.
The fair value of current available-for-sale securities was $5,772,650 at
December 31, 1994 and included 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 securities for the year ended December 31, 1994.
-30-
<PAGE> 31
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 differs from the tax computed by applying the U.S.
federal corporate income tax statutory rate for the following reasons (in
thousands):
<TABLE>
<CAPTION>
1995 1994 1993
------------------------------------------------
<S> <C> <C> <C>
Computed income tax expense
at statutory rate $ 7,179 $ 6,854 $ 3,248
Tax differences due to:
Percentage depletion (1,479) (1,270) (751)
State and local income taxes 53 40 ( 22)
Other ( 614) ( 393) (183)
-------- -------- --------
Total income tax expense $ 5,139 $ 5,231 $ 2,292
======= ======= =======
</TABLE>
The Company made income tax payments of $6,270,000, $3,103,000 and $40,000
during 1995, 1994 and 1993, respectively. The Company received income tax
refunds of $32,000, $1,652,000 and $222,000 during those same periods.
-31-
<PAGE> 32
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
1995 1994
------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Tax in excess of book depreciation $(42,039) $(42,204)
Pension benefits ( 5,501) ( 4,837)
Other ( 4,130) ( 5,134)
-------- --------
Total deferred tax liabilities (51,670) (52,175)
Deferred tax assets:
Asset impairments 10,759 13,582
Postretirement health care and life
insurance 10,366 9,993
Coal Act liability 4,726 4,664
Other 8,522 6,996
--------- ---------
Total deferred tax assets 34,373 35,235
-------- --------
Net deferred tax liabilities $(17,297) $(16,940)
======== ========
</TABLE>
-32-
<PAGE> 33
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>
1995 1994 1993
-------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned
during the period $ 1,373 $ 1,417 $ 1,261
Interest cost on projected
benefit obligation 4,823 4,550 4,644
Actual return on plan assets (18,288) 531 (7,558)
Net amortization and deferral 10,949 (8,417) ( 575)
-------- -------- --------
Net pension credit $(1,143) $(1,919) $(2,228)
======= ======= =======
</TABLE>
Assumptions used in the accounting for defined benefit plans were:
<TABLE>
<CAPTION>
1995 1994 1993
-------------------------------------------------
<S> <C> <C> <C>
Weighted-average discount rate 7.5% 8% 7.25%
Rate of increase in compensation levels 4% 4% 4%
Expected long-term rate of return on assets 9% 9% 9.5%
</TABLE>
-33-
<PAGE> 34
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
1995 1994
--------------------------------------------------
<S> <C> <C>
Actuarial present value of
benefit obligations
Vested benefit obligation $(59,589) $(55,736)
======== ========
Accumulated benefit
obligation $(63,348) $(59,930)
======== ========
Projected benefit
obligation $(68,069) $(63,854)
Plan assets at fair value 94,730 80,215
--------- ---------
Plan assets in excess of
projected benefit obligation 26,661 16,361
Unrecognized net (gain) loss ( 8,125) 1,306
Unrecognized prior service cost 3,895 4,156
Unrecognized initial net assets ( 5,114) ( 6,005)
--------- ----------
Prepaid pension costs recognized $ 17,317 $ 15,818
======== ========
</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 $932,000, $1,160,000 and
$1,434,000 for 1995, 1994 and 1993, 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 related expenses totaled
$1,827,000, $1,703,000 and $1,348,000 for 1995, 1994 and 1993, 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.
-34-
<PAGE> 35
NOTE E - POSTRETIREMENT BENEFITS - (CONTINUED)
Components of the Company's net periodic postretirement benefits cost are as
follows
(in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
-------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 519 $ 599 $ 826
Interest cost 1,635 1,730 2,228
Actual return on plan assets (2) -0- -0-
Net amortization (621) (552) (13)
------- ------ ------
Net periodic postretirement
benefits cost $1,531 $1,777 $3,041
======= ====== ======
</TABLE>
Components of the Company's postretirement benefits obligation are as follows
(in thousands):
<TABLE>
<CAPTION>
December 31
1995 1994
--------------------------------------------
<S> <C> <C>
Actuarial present value of
benefit obligations
Retirees $(13,634) $(14,019)
Fully eligible active plan participants ( 2,780) ( 2,261)
Other active plan participants ( 6,186) ( 7,535)
-------- --------
Accumulated postretirement benefits obligation (22,600) (23,815)
Plan assets at fair value 137 -0-
-------- --------
Accumulated postretirement benefits obligation
in excess of plan assets (22,463) (23,815)
Unrecognized prior service credit ( 1,927) ( 2,120)
Unrecognized net gain ( 7,169) ( 5,136)
-------- ---------
Postretirement benefits obligation recognized $(31,559) $(31,071)
======== ========
</TABLE>
The weighted-average discount rate used in determining the accumulated
postretirement benefits obligation was 7.5% and 8% at December 31, 1995 and
1994, respectively.
The weighted-average annual assumed rate of increase in the health care cost
trend rate for 1996 is 7.25% (8.25% in 1995) for retirees age 65 and over and
9.75% (10.75% in 1995) for retirees under age 65, and both are assumed to
decrease gradually to 5.25% in 2000 and 2005, respectively (5.75% in 1995) and
remain at that level thereafter. The health care cost
-35-
<PAGE> 36
NOTE E - POSTRETIREMENT BENEFITS - (CONTINUED)
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, 1995 by approximately $3,157,000 and the aggregate of the service
and interest cost components of the net periodic postretirement benefits cost
for 1995 by approximately $350,000.
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. Components of the
Company's net periodic postretirement benefits cost under the Coal Act, are as
follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
--------- -------- -------
<S> <C> <C> <C>
Interest cost $1,033 $1,006 $1,270
Actuarial net gain (82) (727) (1,689)
------- ------- -------
Net periodic postretirement
benefit cost (credit) $ 951 $ 279 $ (419)
======= ====== ======
</TABLE>
The Company's accumulated postretirement benefits obligation, related to
retirees and their dependents under the Coal Act, recognized was $13,901,000
and $13,718,000 at December 31, 1995 and 1994, respectively. Other long-term
liabilities include $12,951,000 and $13,046,000 in 1995 and 1994, respectively,
related to the Company's obligation under the Coal Act.
The weighted-average discount rate used in determining the accumulated
postretirement benefits obligation was 7% and 7.75% at December 31, 1995 and
1994, respectively.
The weighted-average annual assumed rate of increase in the health care cost
trend rate for 1996 and 1995 is 6%. Increasing the assumed health care cost
trend rate by 1% in each year would increase the accumulated postretirement
benefits obligation at December 31, 1995 by approximately $1,881,000 and the
interest cost component of the net periodic postretirement benefits cost by
approximately $132,000.
-36-
<PAGE> 37
NOTE F - COMMITMENTS AND CONTINGENCIES
The Company leases buildings, equipment and certain vessels in its Marine
Transportation fleet. In general, these operating 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. Rental expense was $5,139,000, $5,067,000 and
$5,162,000 in 1995, 1994 and 1993, respectively.
Future minimum payments at December 31, 1995, under noncancelable operating
leases, primarily vessel charters, are $4,453,000 in 1996, $4,323,000 in 1997,
$4,231,000 in 1998, $1,931,000 in 1999, $666,000 in 2000 and $1,342,000
thereafter.
The Eveleth Mines Agreements ("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. 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, allow each owner to take iron ore
pellet production at more or less than its ownership interest and require each
owner to fund its adjusted ownership share of firm contractual cash commitments
("fixed costs") and variable costs based on pellet tonnage taken. The
Company's share of Eveleth's annual pellet production is 775,000 tons through
1996. However, the Company is obligated under the take-or-pay provisions of
the Agreements to fund its share of fixed costs whether or not it takes its
full share of production. The Company cannot predict if the Agreements will
be modified again.
The Company sells approximately half of its pellets to other Eveleth owners
under long-term sales agreements, while the remainder must be sold on the spot
market. In 1992, based on Eveleth's high costs, depressed pellet sales prices
and the Company's inability to sell any pellets on the spot market in 1992 and
1991, a $14,000,000 take-or-pay liability was recorded for the Company's share
of Eveleth's fixed costs under the take-or-pay provisions of the Agreements.
This action anticipated that there would be no gain or loss on the sale of the
pellets. The take-or-pay liability was intended to be credited to cost of
sales ratably over the period of 1993 through 1996. This liability has been
credited to cost of sales as follows: $3,500,000 in 1995, $2,300,000 in 1994
and $3,500,000 in 1993. The Company expects to credit the remaining $4,700,000
to cost of sales in 1996.
-37-
<PAGE> 38
NOTE F - COMMITMENTS AND CONTINGENCIES - (CONTINUED)
The Company's iron ore pellet sales and related cost of sales and tons sold
were as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Iron ore pellet sales $ 24,892 $ 50,624 $ 20,477
Cost of sales:
Cost of sales 26,303 49,266 22,583
Credit through reduction
of take-or-pay liability (3,500) (2,300) (3,500)
-------- -------- --------
Adjusted cost of sales 22,803 46,966 19,083
------- ------- -------
Gross profit on pellet sales $ 2,089 $ 3,658 $ 1,394
======== ======== ========
Tons sold 800 1,918 700
</TABLE>
In 1994, one of Eveleth's owner's elected not to take its full take-or-pay
share of Eveleth's pellets and instead paid its share of defined fixed costs.
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. This additional
tonnage increased 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 take-or-pay credit was reduced to $2,300,000 in 1994.
Under separate agreements with the Eveleth owners, the Company was paid
management fees for its role as Eveleth Mines manager. Net management fees
were $1,164,000 in 1995, $864,000 in 1994 and $1,150,000 in 1993.
Accrued expenses include $4,939,000 and $5,897,000 payable in 1995 and 1994,
respectively, for Eveleth's working capital requirements.
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 1995 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.
-38-
<PAGE> 39
NOTE G - LONG-TERM DEBT
Long-term debt is as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1995 1994
-----------------------------------------
<S> <C> <C>
Title XI Ship Financing Bonds
Fixed rate, 5.3% $13,700 $16,200
Term Loan, Variable rate, 6.31% 36,750 47,250
Guaranteed ESOP Loans
Variable rate, 5.40%, and 617 794
Fixed rate, 8.88%,
due in equal quarterly installments
through May 31, 1999 1,050 1,350
------- ------
52,117 65,594
Less current portion 8,476 8,476
------- ------
$43,461 $57,118
======= =======
</TABLE>
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. The Bonds require semiannual sinking fund
payments of $1,250,000 through 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 U.S. Department of Transportation for certain designated financial
transactions. No approval was required through 1995 and the Company does not
anticipate any such consent will be required in the future.
Under an amended and restated loan agreement with various banks the Company has
mandatory semiannual payments on the Term Loan of $2,750,000 through June 30,
2001, with a final payment of $6,500,000 on December 31, 2001. The Company
elected to pay an additional $5,000,000 on the Term Loan at the end of 1995.
The Company has a $40,000,000 Revolving Credit facility available under the
loan agreement, of which $15,000,000 is only available for acquisitions. The
variable interest rate premium on both the Revolving Credit and Term Loan
fluctuates based upon the Company's funded debt to total capital and interest
coverage ratios. The Revolving Credit terminates on December 31, 1997, subject
to annual renewals under certain conditions to December 31, 2001. The Company
did not use the Revolving Credit facility in 1995 or 1994 and has $40,000,000
of borrowing available at December 31, 1995.
-39-
<PAGE> 40
NOTE G - LONG-TERM DEBT - (CONTINUED)
The Title XI Ship Financing Bonds and the Term Loan are secured by first
preferred ship mortgages on five of the Company's vessels with a net book value
of $103,000,000. The fair value of long-term debt approximates the total
liability recorded at December 31, 1995.
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
$89,246,000 at December 31, 1995, compared to a minimum specified level of
$72,126,000.
Long-term debt maturities are $8,476,000 in 1996 through 1998, $8,238,000 in
1999, $8,000,000 in 2000 and $10,450,000 in 2001. The Company made interest
payments of $4,399,000, $5,345,000 and $7,973,000 during 1995, 1994 and 1993,
respectively.
NOTE H - DISPOSITIONS
In 1995, the Company sold two Marine Transportation vessels no longer in
service and undeveloped clay properties in Tennessee resulting in pretax gains
of $2,324,000 and $520,000, respectively. Also included in 1995 is a $613,000
pretax loss on the shutdown and consolidation of certain facilities of the
Company's Refractories & Minerals business segment.
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.
NOTE I - 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 steel making
and related industries. The Company's operations are organized in four
business units:
OGLEBAY NORTON MARINE TRANSPORTATION
The Marine Transportation unit operates a fleet of twelve self-unloading
vessels shipping bulk commodities, primarily iron ore, coal and limestone,
on the Great Lakes.
-40-
<PAGE> 41
NOTE I - INDUSTRY SEGMENTS AND MAJOR CUSTOMERS - (CONTINUED)
OGLEBAY NORTON INDUSTRIAL SANDS, INC.
This unit consists of five operations, providing silica sands to a wide
range of markets. Two facilities in Ohio supply the glass, paint,
ceramic, recreation and foundry industries. Facilities in Brady, Texas,
and Riverside, California, primarily serve the oil and gas well,
filtration and construction sectors. A facility located near San Juan
Capistrano, California, serves principally the construction and recreation
industries.
OGLEBAY NORTON IRON ORE
Oglebay Norton Company is an equity partner in the iron ore mining and
pelletizing operations of Eveleth Mines, located near Eveleth, Minnesota,
on the Mesabi Range. The Company is contractually entitled to an
allotment of pellet production, which is sold to steelmakers. The Company
is presently the contractual employer and manager of Eveleth. This
relationship will terminate at the end of 1996.
OGLEBAY NORTON REFRACTORIES & MINERALS, INC.
The Refractories & Minerals units produces precast refractory shapes,
tundish coatings, ingot hot tops and metallurgical treatment products for
the casting and refining of molten steel.
Accounts receivable of $17,665,912 at December 31, 1995 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>
1995
A $19,280 $ 8,158 $ 440 $ -0- $27,878
B 17,041 -0- 6,456 -0- 23,497
------- ------- ------- --------- --------
$36,321 $ 8,158 $ 6,896 $ -0- $51,375
======= ======= ======= ======== =======
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
======= ======= ======= ======= =======
</TABLE>
-41-
<PAGE> 42
INDUSTRY SEGMENT DATA
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
(In Thousands)
<TABLE>
<CAPTION>
Marine Iron
Transportation Ore
-------------- ----
<S> <C> <C>
1995
Identifiable assets $ 132,455 $ 16,667
Depreciation and amortization expense 8,658 1,005
Expenditures for properties and equipment 3,125
Total revenues $ 85,657 $ 30,445
Operating profit (loss) $ 12,246 $ 5,829
Gain on sale of assets 2,325 40
Company's proportionate share of Eveleth Mines
interest expense (55)
Interest expense (3,422)
--------- --------
Income (loss) before taxes $ 11,149 $ 5,814
======== =======
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 of Eveleth Mines
interest expense (360)
Interest expense (4,283)
--------- --------
Income 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 of Eveleth Mines
interest expense (630)
Interest expense (5,309)
---------- --------
Income (loss) before taxes $ 5,492 $ 3,405
========== ========
</TABLE>
- ---------------
[FN]
1 Consists primarily of cash and cash equivalents, marketable securities and
prepaid pension costs.
-42-
<PAGE> 43
<TABLE>
<CAPTION>
Refractories Industrial Total Corporate
& Minerals Sands Segments and Other Consolidated
- ------------ --------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
$ 18,934 $ 33,964 $202,020 $52,236 (1) $254,256
2,004 2,550 14,217 221 14,438
938 2,360 6,423 483 6,906
$ 36,844 $ 40,552 $193,498 $99 $193,597
$ 24(3) $ 7,175 $ 25,274 $(5,030)(2) $ 20,244
157 2,522 2,159 4,681
( 55) ( 55)
( 213) (524) (4,159) ( 201) (4,360)
-------- --------- -------- ------- --------
$( 189) $ 6,808 $ 23,582 $(3,072) $ 20,510
======== ========= ======== ======= ========
$ 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
======== ========= ======== ========= ========
</TABLE>
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.
3 Includes a $613,000 loss on shutdown and consolidation of facilities.
-43-
<PAGE> 44
NOTE J - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
Unaudited quarterly results of operations for the years ended December 31, 1995
and 1994 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>
1995
December 31 $51,622 $8,830 $4,039 $1.64
September 30 56,236 10,407 6,810 2.75
June 30 56,433 10,142 4,375 1.77
March 31 25,085 4,270 137 .06
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)
</TABLE>
Per share amounts are based on the average number of shares outstanding during
each quarter. The sum of 1995 net income (loss) per share amounts for the four
quarters does not equal the annual per share amount as a result of Common Stock
purchases for treasury by the Company.
First quarter net income for 1995 increased $343,000 ($.14 per share) related
to the sale of undeveloped clay properties in Tennessee. Third quarter net
income for 1995 increased $1,534,000 ($.62 per share) related to the sale of
two of the Company's vessels no longer in service. Fourth quarter net income
for 1995 increased $557,000 ($.23 per share) due to the sale of securities and
other assets. The fourth quarter of 1995 also included a $405,000 ($.16 per
share) reduction of net income related to a loss on the shutdown and
consolidation of certain facilities of the Company's Refractories & Minerals
business segment. The 1995 gains on sale of assets and shutdown loss are
disclosed in Notes B and H.
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 a reduction of the Iron Ore take-or-pay credit, as disclosed in Note
F, and $403,000 ($.16 per share) on the write-off of unamortized financing
costs associated with the Company's former loan agreement.
-44-
<PAGE> 45
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------
None
PART III
Information in this Part III required by Item 10 ("Directors
and Officers of the Registrant"), Items 11 and 13 ("Executive Compensation" and
"Certain Relationships and Related Transactions") and Item 12 ("Security
Ownership of Certain Beneficial Owners and Management") is incorporated herein
by reference to the information contained in the Registrant's definitive Proxy
Statement for its 1996 Annual Meeting of Stockholders under the captions
"Nominees for Board of Directors" on page 4, "Ownership of Voting Securities"
on pages 5 through 7 and "Compensation of Executive Officers" on pages 7
through 10, respectively. A definitive Proxy Statement will be filed with the
Securities and Exchange Commission on or before March 27, 1996.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
-------------------------------------------
REPORTS ON FORM 8-K
-------------------
(a)(1) LIST OF FINANCIAL STATEMENTS: The response to this
portion of Item 14 is submitted as a separate section of this Annual Report on
Form 10-K.
(a)(2) LIST OF FINANCIAL STATEMENT SCHEDULES: The response
to this portion of Item 14 is submitted as a separate section of this Annual
Report on Form 10-K.
(a)(3) LIST OF EXHIBITS: See the Exhibit Index beginning at
sequential page 50 of this Annual Report on Form 10-K.
(b) REPORTS ON FORM 8-K: The Registrant did not file
any reports on Form 8-K in 1995.
(c) EXHIBITS: The response to this portion of
Item 14 is submitted as a separate section of this Annual Report on Form 10-K
beginning at sequential page 50.
(d) FINANCIAL STATEMENT SCHEDULES: None
-45-
<PAGE> 46
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Annual 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
March 27, 1996
<PAGE> 47
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report has been signed below by the Principal Executive Officer, the
Principal Financial Officer, the Principal Accounting Officer and a majority of
the Directors of the Registrant on March 27, 1996.
Chairman of the Board, President
/S/ R. Thomas Green, Jr. and Chief Executive Officer
----------------------- Officer and Director; Principal
R. Thomas Green, Jr. Executive Officer
/S/ Richard J. Kessler Vice President-Finance and
- ------------------------ Development; Principal Financial
Richard J. Kessler and Accounting Officer
/S/ Brent D. Baird
- ------------------------
Brent D. Baird Director
/S/ Malvin E. Bank
- ------------------------
Malvin E. Bank Director
/S/ William G. Bares
- ------------------------
William G. Bares Director
/S/ Albert C. Bersticker
- ------------------------
Albert C. Bersticker Director
/S/ John J. Dwyer
- ------------------------
John J. Dwyer Director
/S/ Ralph D. Ketchum
- ------------------------
Ralph D. Ketchum Director
/S/ Renold D. Thompson Vice Chairman of the Board and
- ------------------------
Renold D. Thompson Director
/S/ John D. Weil
- ------------------------
John D. Weil Director
On December 10, 1995, Mr. Fred R. White, Jr., Vice Chairman Emeritus and
Director of the Board of Directors died.
<PAGE> 48
ANNUAL REPORT ON FORM 10-K
ITEM 14(a) (1) AND (2), AND 14(c)
LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
CERTAIN EXHIBITS
YEAR ENDED DECEMBER 31, 1995
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CLEVELAND, OHIO
<PAGE> 49
FORM 10-K
ITEM 14(a) (1) AND (2)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
The following consolidated financial statements of the Registrant and its
subsidiaries are included in Item 8:
Consolidated Balance Sheet - December 31, 1995 and 1994
Consolidated Statement of Operations - Years Ended December 31, 1995, 1994
and 1993
Consolidated Statement of Cash Flows - Years Ended December 31, 1995, 1994
and 1993
Consolidated Statement of Stockholders' Equity - Years Ended December 31,
1995, 1994 and 1993
Notes to Consolidated Financial Statements
All schedules for which provision is made in the applicable regulation of
the Securities and Exchange Commission have been omitted for the reason that
they are not required or are not applicable, or the required information is
shown in the consolidated financial statements or notes thereto.
<PAGE> 50
Item 14 (a) 3
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEC Location or
Exhibit No. Description Sequential Page
----------- ----------- ---------------
<S> <C> <C>
3 (a) Restated Certificate of Incorporated by reference in
Incorporation Exhibit 3(a) in the
Registrant's Annual Report on
Form 10-K for the year ended
December 31, 1993
(b) By-Laws
54
4 (a) The
Registrant is a party to
instruments,
copies of which will be
furnished to the Securities
and Exchange
Commission upon request,
defining the rights of
holders of its
long-term debt identified in
Note G to the
Consolidated
Financial
Statements
</TABLE>
<PAGE> 51
<TABLE>
<S> <C> <C>
(b) Form of Rights Agreement Incorporated by reference in
Exhibit 4(b) in the
Registrant's Annual Report on
Form 10-K for the year ended
December 31, 1993
10 (a) Form of Incorporated by reference in
Supplemental Exhibit 10(a) in the
Pension Agreements with Registrant's Annual Report on
selected Form 10-K for the year ended
former officers December 31, 1993
(b) Agreement with Brent D. Incorporated by reference in
Baird Exhibit 10(b) in the
Registrant's Annual Report on
Form 10-K for the year ended
December 31, 1993
(c) Trust Incorporated by reference in
Agreement for Exhibit 10(c) in the
Oglebay Norton Company Registrant's Annual Report on
Incentive Savings Plan and Form 10-K for the year ended
Trust (January 1, 1991 December 31, 1993
Restatement)
(d) Form of Change-in-Control Incorporated by reference in
Agreements with seven Exhibit 10(d) in the
Executive Officers Registrant's
Annual Report on Form 10-K for
the year ended
December 31, 1993
(d)(1) Amendment to form of Incorporated by reference in
Change-in-Control Agreements Exhibit 10(d)(1) in the Regis-
with four Executive Officers trant's Annual Report on Form
10-K for the year ended
December 31, 1994
</TABLE>
<PAGE> 52
<TABLE>
<S> <C> <C>
(d)(2) Form of Change-in- Incorporated by reference in
Control Agreements with three Exhibit 10(d)(2) in the
Executive Officers Registrant's Annual Report on
Form 10-K for the year ended
December 31, 1994
(e) Form of Right of First Incorporated by reference in
Refusal Agreements with seven Exhibit 10(e) in the
Directors Registrant's Annual Report on
Form 10-K for the year ended
December 31, 1993
(f) Agreement with John D. Incorporated by reference in
Weil Exhibit 10(f) in the
Registrant's Annual Report on
Form 10-K for the year ended
December 31, 1993
(g) Employment Agreement with
Chairman, President and Chief
Executive Officer 73
(h) Oglebay Norton Company 90
Long-Term Incentive Plan
11 Statement re: Not Applicable
Computation of Per Share
Earnings
12 Statement re: Not Applicable
Computations of Ratios
</TABLE>
<PAGE> 53
<TABLE>
<S> <C> <C>
13 1995 Annual Report to Not Applicable
Stockholders
18 Letter re: Change in Not Applicable
Accounting
Principles
21 Subsidiaries of the Registrant 114
22 Published Report Regarding Not Applicable
Matters Submitted to Vote of
Security
Holders
23 Consent of 115
Independent
Auditors
24 Power of Attorney Not Applicable
27 Financial Data 116
Schedule
28 Information from reports Not Applicable
furnished to state insurance
regulatory authorities
</TABLE>
<PAGE> 1
Exhibit 3.B
BY-LAWS
OF
OGLEBAY NORTON COMPANY
As of April 26, 1995
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Section Page
Number Subject Number
- --------------------------------------------------------------------------
<S> <C> <C>
OFFICES
1. Offices ................................................... 1
SEAL
2. Seal ...................................................... 1
STOCKHOLDERS' MEETINGS
3. Place of meetings ......................................... 1
4. Annual meeting ............................................ 2
5. Quorum .................................................... 2
6. Voting .................................................... 2
7. Notice of annual meeting .................................. 3
8. Stockholders' list ........................................ 3
9. Special meetings .......................................... 3
10. Business transacted at special meetings ................... 3
11. Notice of special meetings ................................ 3
DIRECTORS
12. Number; election; qualifications; term of office .......... 4
13. Powers and authorities .................................... 4
VACANCIES
14. Vacancies ................................................. 4
MEETINGS OF THE BOARD
15. Regular meetings .......................................... 5
16. Special meetings .......................................... 5
17. Quorum .................................................... 5
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
Number Subject Number
- --------------------------------------------------------------------------
ACTION WITHOUT A MEETING
<S> <C> <C>
18. Action by directors without a meeting ................... 5
COMMITTEES
19. Executive Committee ..................................... 5
20. Other committees ........................................ 6
COMPENSATION OF DIRECTORS AND COMMITTEE MEMBERS
21. Compensation of directors ............................... 6
22. Compensation of committee members ....................... 6
OFFICERS
23. Election and designation of officers; compensation;
term of office; vacancies ......................... 7
CHAIRMAN OF THE BOARD
24. Chairman of the Board .................................. 7
VICE CHAIRMAN OF THE BOARD
24a. Vice Chairman of the Board ............................. 7
PRESIDENT
25. President .............................................. 7
EXECUTIVE VICE PRESIDENTS
26. Executive Vice Presidents .............................. 8
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
Number Subject Number
- --------------------------------------------------------------------------
<S> <C> <C>
SENIOR VICE PRESIDENTS
27. Senior Vice Presidents ................................. 8
VICE PRESIDENTS
28. Vice Presidents ........................................ 8
SECRETARY
29. Secretary .............................................. 8
TREASURER
30. Treasurer .............................................. 8
OTHER OFFICERS
31. Other officers ......................................... 9
EXECUTION OF DOCUMENTS
32. Execution of documents ................................. 9
AUTHORITY TO VOTE SECURITIES
33. Authority to vote securities ........................... 9
DELEGATION OF AUTHORITY AND DUTIES
34. Delegation of authority and duties of officers ......... 9
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
Section Page
Number Subject Number
- --------------------------------------------------------------------------
<S> <C> <C>
STOCK CERTIFICATES
35. Stock certificates ..................................... 9
TRANSFERS OF STOCK
36. Transfers of stock ...................................... 10
LOST, STOLEN OR DESTROYED CERTIFICATES
37. Lost, stolen or destroyed certificates .................. 10
TRANSFER AGENT AND REGISTRAR
38. Transfer agent and registrar ............................ 10
RECORD DATES
39. Record dates ............................................ 11
REGISTERED STOCKHOLDERS
40. Right of corporation to recognize only record
stockholders ...................................... 11
INSPECTION OF BOOKS
41. Inspection of books ..................................... 11
FISCAL YEAR
42. Fiscal year ............................................. 12
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
Section Page
Number Subject Number
- --------------------------------------------------------------------------
<S> <C> <C>
DIVIDENDS
43. Dividends ............................................... 12
DIRECTORS' ANNUAL STATEMENT
44. Directors' annual statement ............................. 12
NOTICES
45. Notices ................................................. 12
AMENDMENTS
46. Amendments .............................................. 13
</TABLE>
<PAGE> 7
BY-LAWS
OF
OGLEBAY NORTON COMPANY
(Revised as of April 26, 1995)
OFFICES
1. The principal office shall be in the City of Wilmington, County of New
Castle, State of Delaware, and the name of the resident agent in charge
thereof is The Corporation Trust Company.
The corporation shall also have an office in the City of Cleveland, Ohio,
and it may also have such other offices at such other places, either
within or without the State of Delaware, as the Board of Directors may
from time to time designate or the business of the corporation may
require.
The books of the corporation, other than the duplicate stock ledger,
which shall at all times be kept at the principal office of the
corporation in Delaware, shall be kept at such one or more of the offices
of the corporation or at such other place or places, either within or
without the State of Delaware, as the directors may from time to time
determine.
SEAL
2. The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Delaware". Said seal may be
used by causing it, or a facsimile thereof, to be impressed or affixed or
reproduced or otherwise.
STOCKHOLDERS' MEETINGS
3. The annual meeting of the stockholders shall be held in the office of the
corporation in the City of Cleveland, Ohio. All other meetings of the
stockholders may be held at such place within or without the State of
Delaware as shall be designated in the call for such meeting.
<PAGE> 8
4. The annual meeting of the stockholders shall be held on the last
Wednesday in April in each year at such time and place as shall be
designated in the call for such meeting and at such meeting the
stockholders shall elect, by ballot, a Board of Directors and transact
such other business as may properly be brought before the meeting.
5. The holders of a majority of the capital stock of the corporation present
in person or represented by proxy shall constitute a quorum at all
meetings of the stockholders for the transaction of business, except as
otherwise provided by law, by the Certificate of Incorporation, or by
these By-Laws; provided, however, that no action required by law, by the
Certificate of Incorporation, or by these By-Laws to be authorized or
taken by a designated proportion of the capital stock of the corporation
may be authorized or taken by a lesser proportion; and provided, further,
that, if a quorum shall not be present or represented at any meeting of
the stockholders, the holders of a majority of the voting shares present
or represented thereat shall have power to adjourn the meeting, from time
to time, without notice other than announcement at the meeting, until the
requisite amount of voting stock shall be present or represented. At
such adjourned meeting, at which the requisite amount of voting stock
shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified.
6. At each meeting of the stockholders, every stockholder having the right
to vote shall be entitled to vote in person or by proxy appointed by an
instrument in writing subscribed by such stockholder, and bearing a date
not more than three years prior to said meeting, unless said instrument
provides for a longer period. On all matters, except the election of
directors, each stockholder shall have one vote for each share of stock
having voting power registered in his name on the books of the
corporation. At all elections of directors, each stockholder shall be
entitled to as many votes as shall equal the number of his shares of
stock multiplied by the number of directors to be elected, and he may
cast all of such votes for a single director or may distribute them among
the number to be voted for, or any two or more of them, as he may see
fit. In the event that no record date shall be fixed for the
determination of stockholders entitled to vote at any election of
directors, in accordance with the provisions of Section 39 of these
By-Laws, no share of stock shall be voted at such election which shall
have been transferred on the books of the corporation within twenty (20)
days next preceding such election. The vote for directors and, on the
demand of any
- 2 -
<PAGE> 9
stockholder, the vote upon any question before the meeting shall be by
ballot. All elections shall be had and all questions decided by a
plurality vote, except as otherwise required by law or by these By-Laws.
7. Written notice of the annual meeting, stating the time, place and object
thereof, shall be mailed to each stockholder entitled to vote thereat at
such address as appears on the stock book of the corporation at least ten
(10) days prior to the meeting.
8. A complete list of the stockholders entitled to vote at the ensuing
election of directors, arranged in alphabetical order and showing the
address of each and the number of shares registered in the name of each,
shall be prepared by the Secretary and open to the examination of any
stockholder during ordinary business hours for a period of at least ten
(10) days before every such election, either at a place within the city,
town, or village where the election is to be held and which place shall
be specified in the notice of the meeting, or , if not so specified, at
the place where said meeting is to be held, and the list shall be
produced and kept at the time and place of election during the whole time
thereof, and subject to the inspection of any stockholder who may be
present.
9. Special meetings of the stockholders for any purpose or purposes, unless
otherwise prescribed by law, may be called by the Chairman of the Board
or by the President, and shall be called by the President or Secretary at
the request, in writing, of a majority of the Board of Directors, or at
the request, in writing, of stockholders owning not less than one-third
in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose
or purposes of the proposed meeting.
10. Business transacted at all special meetings shall be confined to the
objects stated in the call.
11. Written notice of any special meeting of the stockholders stating the
time, place and object thereof, shall be mailed, postage prepaid, at
least ten (10) days before such meeting, to each stockholder entitled to
vote thereat, at such address as appears on the books of the corporation.
- 3 -
<PAGE> 10
DIRECTORS
12. The property and business of this corporation shall be managed by its
Board of Directors, consisting of such number of members, not less,
however, than three, as the stockholders may determine at any annual or
special meeting called for the purpose of electing directors at which a
quorum is present, by the affirmative vote of a majority of the capital
stock which is represented at the meeting and entitled to vote on such
proposal. Unless so determined by the stockholders, the number shall be
ten, of which three shall be directors of the class whose term expires in
1996 and every three years thereafter, four shall be directors of the
class whose term expires in 1997 and every three years thereafter, and
three shall be directors of the class whose term expires in 1998 and
every three years thereafter. Whenever the stockholders shall have so
determined the number, such number shall be deemed the authorized number
of directors until the same shall be changed by vote of the stockholders
as aforesaid or by amendment of these By-Laws. Directors need not be
stockholders. They shall be elected at the annual meeting of the
stockholders, and each director shall be elected to serve until his
successor shall be elected and shall qualify.
13. In addition to the powers and authorities by these By-Laws expressly
conferred upon them, the directors may exercise all such powers of the
corporation and do all such lawful acts and things as are not by law, by
the Certificate of Incorporation, or by these By-Laws directed or
required to be exercised or done by the stockholders.
VACANCIES
14. If the office of any director or directors becomes vacant by reason of
death, resignation, retirement, disqualification, removal from office or
otherwise, the remaining directors, though less than a quorum, shall
choose a successor or successors who shall hold office until the next
annual meeting of stockholders at which the class or classes of directors
in which the vacancy or vacancies occur shall be elected and until a
successor or successors shall have been duly elected and qualified,
unless sooner displaced.
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<PAGE> 11
MEETINGS OF THE BOARD
15. Regular meetings of the Board shall be held on the last Wednesday of
February, April, June, August, October and December at such hour and
place and upon such notice, if any, as the Board shall determine. In the
event the last Wednesday is a holiday or for any reason is deemed by the
Board to be inappropriate, then the meeting shall be held on such
alternate date as may be determined by the Board.
16. Special meetings of the Board may be called by the Chairman of the Board
or by the President on one (1) day's notice to each director, either
personally or by mail, telegram, or cablegram. Special meetings shall be
called by the President or Secretary in like manner and on like notice on
the written request of two (2) directors.
17. At all meetings of the Board, a majority of the directors shall be
necessary and sufficient to constitute a quorum for the transaction of
business, and the act of a majority of the directors present at any
meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by law, by
the Certificate of Incorporation, or by these By-Laws.
ACTION WITHOUT A MEETING
18. Any action required or permitted to be taken at any meeting of the Board
of Directors or any committee thereof may be taken without a meeting if,
prior to such action, a written consent thereto is signed by all members
of the Board or of such committee, as the case may be, and such written
consent is filed with the minutes of proceedings of the Board or
committee.
COMMITTEES
19. The Board of Directors shall by resolution appoint an Executive Committee
consisting of not less than four or more than eight directors of the
corporation, as the Board shall determine, together with such alternates
as the Board may deem advisable. The Executive Committee shall meet on
the last Wednesday of each calendar month in which the Board of Directors
does not meet at such place or places as they may from time to time
determine, and shall have and may exercise all of the powers of the Board
of
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<PAGE> 12
Directors when the Board is not in session. Unless otherwise ordered by
the Board of Directors, the Executive Committee may prescribe its own
rules for calling and holding meetings and for its own procedures and may
act at a meeting by a majority of its members or without a meeting by
written consent of all of its members. The Executive Committee shall
cause the Secretary to keep full and complete records of all meetings and
actions, which shall be open to inspection by any director. Each member
of the Executive Committee and each alternate shall hold office during
the pleasure of the Board of Directors.
20. The Board of Directors may by resolution appoint one or more additional
committees, each committee to consist of two or more directors of the
corporation and to have such authority and to perform such duties as may
from time to time be determined by the Board of Directors.
COMPENSATION OF DIRECTORS AND COMMITTEE MEMBERS
21. Each member of the Board of this Company, with the exception of salaried
officers or employees of the Company or its subsidiaries, shall be paid a
quarterly retainer of $3,000 for each quarter in which such director
serves, payable in February, May, August and November, covering the
quarter commencing with the month in which such payment is payable and,
in addition, shall receive 100 shares of the common stock of the Company
on the date upon which the Board of Directors holds its meeting next
succeeding the annual meeting of the Company's stockholders. In
addition, each member of the Board of Directors and each "honorary"
member of the Board of Directors, with the exception of salaried officers
or employees of the Company or its subsidiaries, shall receive for such
member's attendance at each meeting of the Board of Directors a fee of
$750, plus travel expenses incurred by such member in attending any
meeting or in pursuance of any activity on behalf of the Company or its
subsidiaries.
22. Each member of the Executive Committee, the Compensation and Organization
Committee, the Audit Committee and such other committee as may from time
to time be appointed by the Board of Directors, with the exception of
salaried officers or employees of the Company or its subsidiaries, shall
receive for his attendance at each such committee meeting a fee of $750,
plus travel expenses incurred by him in attending any meeting or in
pursuance of any activity on behalf of the Company or its subsidiaries.
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<PAGE> 13
OFFICERS
23. The Board of Directors shall elect a Chairman of the Board, a President,
one or more Vice Presidents, any one or more of whom may be designated
Executive Vice Presidents and any one or more of whom may be designated
Senior Vice Presidents, a Treasurer and a Secretary. The Board of
Directors may elect such other officers as in its discretion it deems
necessary. The Chairman of the Board, the Vice Chairman of the Board,
and the President shall be directors, but no other one of the officers
need be a director. Any two, but not more than two, of such offices may
be held by the same person. The compensation of all of the officers of
the corporation shall be fixed by the Board of Directors. Officers
elected by the Board of Directors shall hold office until their
successors are chosen and qualified in their stead. Any officer elected
by the Board of Directors shall hold office during the pleasure of the
Board. If the office of any officer or officers becomes vacant, the
vacancy may be filled by the Board of Directors.
CHAIRMAN OF THE BOARD
24. The Chairman of the Board shall preside at all meetings of the Board of
Directors and shall have such other authority and perform such other
duties as may be determined by the Board of Directors.
VICE CHAIRMAN OF THE BOARD
24a. The Vice Chairman of the Board shall have such authority as may be
determined by the Board of Directors and perform such duties as may be
assigned to him by the Chairman of the Board.
PRESIDENT
25. The President shall preside at all meetings of the stockholders. Subject
to directions of the Board of Directors, he shall have general executive
authority and responsibility with respect to the business and affairs of
the corporation, and shall have such other authority and perform such
other duties as may be determined by the Board of Directors.
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<PAGE> 14
EXECUTIVE VICE PRESIDENTS
26. The Executive Vice Presidents shall exercise all of the authority and
perform all of the duties of the President in case of the absence or
disability of the latter or when circumstances prevent the latter from
acting, and shall have such other authority and perform such other duties
as may be determined by the Board of Directors.
SENIOR VICE PRESIDENTS
27. The Senior Vice Presidents shall exercise all of the authority and
perform all of the duties of the President in case of the absence or
disability of both the President and the Executive Vice Presidents or
when circumstances prevent both the President and the Executive Vice
Presidents from acting, and shall have such other authority and perform
such other duties as may be determined by the Board of Directors.
VICE PRESIDENTS
28. The Vice Presidents severally shall have such authority and perform such
duties as may be determined by the Board of Directors or by the
President.
SECRETARY
29. The Secretary shall record all of the proceedings of the meetings of the
stockholders, the Board of Directors, and the Executive Committee. He
shall keep such other books as may be required by the Board of Directors,
shall give notices of meetings of the stockholders, the Board, and the
Executive Committee required by law, by these By-Laws, or otherwise,
shall attest, on behalf of the corporation, all documents requiring the
attestation of the Secretary, and shall have such authority and perform
such other duties as may be determined by the Board of Directors.
TREASURER
30. The Treasurer shall receive and have in charge all money, bills, notes,
bonds, stocks in other corporations, and similar property belonging to
the corporation, and shall hold and dispose of the
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<PAGE> 15
same as may be ordered by the Board of Directors. He shall keep accurate
financial accounts and hold the same open for the inspection and
examination of the directors and shall have such authority and perform
such other duties as may be determined by the Board of Directors.
OTHER OFFICERS
31. The Assistant Secretaries and the Assistant Treasurers, if any, and any
other officers whom the Board of Directors may elect shall, respectively,
have such authority and perform such duties as may be determined by the
Board of Directors.
EXECUTION OF DOCUMENTS
32. Except as otherwise provided in these By-Laws, or by resolutions of the
Board, all documents evidencing conveyances by or contracts or other
obligations of the corporation shall be signed by the President, the
Executive Vice President, a Senior Vice President, or a Vice President,
and attested by the Secretary or an Assistant Secretary.
AUTHORITY TO VOTE SECURITIES
33. The Chairman of the Board, the President, the Executive Vice President,
and the Senior Vice Presidents are each authorized to vote, appoint
proxies, and execute consents, waivers, and releases with respect to
securities of other corporations owned by the corporation.
DELEGATION OF AUTHORITY AND DUTIES
34. The Board of Directors is authorized to delegate the authority and duties
of any officer to any other officer and generally to control the action
of the officers and to require the performance of duties in addition to
those mentioned in these By-Laws.
STOCK CERTIFICATES
35. Every holder of stock in the corporation shall be entitled to one or more
certificates, signed by the Chairman of the Board, the President, the
Executive Vice President, or a Senior Vice
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<PAGE> 16
President and by the Secretary, the Treasurer, an Assistant Secretary, or
an Assistant Treasurer, certifying the number of shares owned by him in
the corporation. When such a certificate is countersigned by an
incorporated transfer agent or registrar, the signature of any of said
officers of the corporation may be facsimile, engraved, stamped, or
printed. Although any officer of the corporation whose manual or
facsimile signature is affixed to such a certificate ceases to be such
officer before the certificate is delivered, such certificate
nevertheless shall be effective in all respects when delivered.
TRANSFERS OF STOCK
36. Stock of the corporation shall be transferable upon the books of the
corporation by the holders thereof, in person, or by a duly authorized
attorney, and new certificates shall be issued upon surrender and
cancellation of certificates for a like number of shares, with duly
executed assignment or power of transfer endorsed thereon or attached
thereto, and with such proof of the authenticity of the signatures to
such assignment or power of transfer as the corporation or its agents may
reasonably require.
LOST, STOLEN OR DESTROYED CERTIFICATES
37. The corporation may issue a new stock certificate in the place of any
certificate alleged to have been lost, stolen or destroyed. The Board of
Directors may require the owner, or his legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any
claim that may be made against it on account of the issuance of such new
certificate. A new certificate may be issued without requiring any bond
when, in the judgment of the directors, it is proper to do so.
TRANSFER AGENT AND REGISTRAR
38. The Board of Directors may, from time to time, appoint, or revoke the
appointment of, transfer agents and registrars and may require all stock
certificates to bear the signatures of such transfer agents and
registrars or any of them.
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<PAGE> 17
RECORD DATES
39. The Board of Directors may fix in advance a date, not exceeding fifty
(50) days preceding the date of any meeting of stockholders, or the date
for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital stock
shall go into effect, or a date in connection with obtaining the consent
of stockholders for any purpose, as a record date for the determination
of the stockholders entitled to notice of, and to vote at, any such
meeting and any adjournment thereof, or entitled to receive payment of
any such dividend, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of capital
stock, or to give such consent, and in such case only such stockholders
as shall be stockholders of record on the date so fixed shall be entitled
to such notice of and to vote at, such meeting and any adjournment
thereof, or to receive payment of such dividend, or to receive such
allotment of rights, or to exercise such rights, or to give such consent,
as the case may be, notwithstanding any transfer of any stock on the
books of the corporation after any such record date fixed as aforesaid.
REGISTERED STOCKHOLDERS
40. The corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof, and, accordingly,
shall not be bound to recognize any equitable or other claim to, or
interest in, such share on the part of any other person, whether or not
it shall have express or other notice thereof, save as expressly provided
by the laws of Delaware.
INSPECTION OF BOOKS
41. The directors shall determine, from time to time, whether and if allowed,
when and under what conditions and regulations, the accounts and books of
the corporation (except such as may by statute be specifically open to
inspection), or any of them, shall be open to the inspection of the
stockholders, and the stockholders' rights in this respect are and shall
be restricted and limited accordingly.
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<PAGE> 18
FISCAL YEAR
42. The fiscal year shall begin on the first day of January in each year.
DIVIDENDS
43. Dividends upon the capital stock of the corporation, subject to the
provisions of the Certificate of Incorporation, if any, may be declared
by the Board of Directors at any regular or special meeting, pursuant to
law. Dividends may be paid in cash, in property or in shares of the
capital stock.
Before payment of any dividend, there may be set aside, out of any funds
of the corporation available for dividends, such sum or sums as the
directors, from time to time, in their absolute discretion, think proper,
as a reserve fund to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the corporation, or for such
other purpose as the directors shall think conducive to the interest of
the corporation; and the directors may abolish any such reserve in the
manner in which it was created.
DIRECTORS' ANNUAL STATEMENT
44. The Board of Directors shall present at each annual meeting, and when
called for by vote of the stockholders, at any special meeting of the
stockholders, a full and clear statement of the business and condition of
the corporation.
NOTICES
45. Whenever, under the provisions of these By-Laws, notice is required to be
given to any director, officer or stockholder, it shall not be construed
to mean personal notice, but such notice may be given in writing, by
mail, by depositing the same in the post office or letter box in a
postpaid, sealed wrapper, addressed to such stockholder, officer or
director at such address as appears on the books of the corporation; and
such notice shall be deemed to be given at the time when the same shall
be thus mailed.
Any stockholder, director or officer may waive any notice required to be
given by law, by the Certificate of Incorporation, or by
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<PAGE> 19
these By-Laws and shall be deemed to have waived notice of any meeting
which he shall attend without protesting, prior to or at the
commencement of such meeting, the lack, of proper notice thereof.
AMENDMENTS
46. The By-Laws of the corporation may be amended, or new By-Laws may be
adopted, by the Board of Directors by the affirmative vote of a
majority of the directors present at any meeting of the Board at which
there is a quorum present and acting; or they may be amended, or new
By-Laws may be adopted, by the stockholders, at any regular or special
meeting thereof, by the affirmative vote of a majority of the stock
issued and outstanding and entitled to vote thereat, if notice of the
proposed amendment be contained in the notice of the meeting, or
without a meeting by the written consent of a majority of the stock
issued and outstanding. No amendment of these By-Laws with respect to
the time or place for the election of directors shall be made within
sixty (60) days next before the day on which such election is to be
held. In case of any amendment of these By-Laws with respect to such
time or place, notice thereof shall be given to each stockholder, in
the manner provided in Section 45 of these By-Laws, at least twenty
(20) days before the first election following such amendment is held.
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<PAGE> 1
Exhibit 10.G
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT is entered into this 28th day of
June, 1995, to be effective as of the 1st day of April, 1995, by and between
OGLEBAY NORTON COMPANY, a Delaware corporation (the "Company"), and R. THOMAS
GREEN, JR., ("Employee").
W I T N E S S E T H:
WHEREAS, Employee has for many years served the Company in
many different capacities, each with increasing responsibility and increasing
importance to the Company, and has fully, ably, and responsibly discharged the
duties of his various positions with the Company; and
WHEREAS, the Board of Directors of the Company (the "Board")
has determined that it would be in the best interests of the Company and its
shareholders to have the Company enter into this Employment Agreement with
Employee to secure his services as Chairman of the Board, President and Chief
Executive Officer of the Company;
NOW, THEREFORE, the Company and Employee agree as follows;
1. EMPLOYMENT, CONTRACT PERIOD.
----------------------------
(a) During the period specified in Paragraph
1(b), the Company shall employ Employee, and Employee shall serve the
Company, as Chairman of the Board, President and Chief Executive
Officer of the Company on the terms and subject to the conditions set
forth herein.
<PAGE> 2
(b) The term of Employee's employment hereunder
shall commence on April 1, 1995 (the "Effective Date") and, subject to
prior termination as provided in Paragraph 6 hereof, shall continue
for three years until March 31, 1998. The term of Employee's
employment hereunder is sometimes hereinafter referred to as the
"Contract Period".
2. POSITION, DUTIES, RESPONSIBILITIES. At all times
during the Contract Period, Employee shall:
(a) Hold the position and have the duties and
responsibilities of Chairman of the Board, President and Chief
Executive Officer of the Company as those duties and responsibilities
have been understood by the executive officers of the Company and by
its Board through the Effective Date and as those duties and
responsibilities may be defined and extended, from time to time after
the Effective Date, by the Board with Employee's consent;
(b) Adhere to and implement the policies and
directives promulgated, from time to time, by the Board;
(c) Observe all company policies applicable to
executive officers of the Company;
(d) Devote his business time, energy, and talent
to the business of and to the furtherance of the purposes and
objectives of the Company to generally the same extent as he has so
devoted his business time, energy, and talent as an officer of the
Company before the Effective Date, and neither directly
2
<PAGE> 3
nor indirectly render any business, commercial, or professional
services to any other person, firm, or organization for compensation
without the prior approval of the Board; and
(e) Serve as a Director of the Company and as a
member of any Board committees determined by the Board, upon the same
terms and conditions as any other employee of the Company who
also serves as a Director.
Nothing in this Agreement shall preclude Employee from devoting reasonable
periods of time to charitable and community activities, to serve as a director
on the boards of other companies, with the concurrence of the Compensation and
Organization Committee of the Board of Directors, or the management of his
investment assets provided such activities do not materially interfere with the
performance by Employee of his duties hereunder.
3. COMPENSATION. For services actually rendered by
Employee on behalf of the Company during the Contract Period as contemplated by
this Agreement the Company shall pay to Employee: (a) a base salary at the
rate of $276,600 per year or such greater amount as the Board, upon
recommendation of the Compensation and Organization Committee, may determine;
and, (b) the variable pay portion of Employee's compensation under the
Company's Pay for Performance Plan ("PMP"), or such substitute plan or
arrangement as the Company may adopt during the Contract Period. The base
salary shall be paid to Employee in the same increments and on the same
schedule each month as in effect for Employee's base salary as an officer of
the Company
3
<PAGE> 4
on the Effective Date. Employee shall not be entitled to any base salary
during any period when he is receiving long-term disability benefits under the
Disability Benefit Arrangement provided to Employee by the Company.
4. VACATION. Employee will be entitled to such periods
of vacation and sick leave allowance each year as are determined by the
Company's vacation and sick leave policy for executive officers as in effect on
the Effective Date or as may be increased from time to time thereafter.
Neither vacation time nor sick leave allowance will be accumulated from year to
year.
5. OTHER COMPANY PLANS, BENEFITS, AND PERQUISITES.
-----------------------------------------------
(a) Employee shall be entitled to participate in
the Company's Pension Plan for Salaried Employees; the unfunded excess
benefit plan maintained in conjunction with the Salaried Plan; the
Salary Continuation Arrangement; the Disability Benefit Arrangement;
his Executive Life Program Agreement with the Company; the
post-retirement Death Benefit Arrangement; the Incentive Savings Plan;
the 1983 Stock Equivalent Plan; and every other employee benefit plan
not specifically referred to in this Agreement that is generally
available to executive officers of the Company at any time during the
Contract Period. Employee's participation in and benefits under any
such plan shall be on the terms and subject to the conditions
specified in the governing document of the particular plan which
terms and conditions shall not be
4
<PAGE> 5
amended during the Contract Period unless the benefits to Employee are
at least as great under the plan as amended (or under a substitute
plan or arrangement) as were the benefits under the plan as in effect
on the Effective Date. The Company will also provide Employee with
such perquisites as the Company has customarily provided to its top
executive officers.
(b) The Company shall maintain a membership in
The Pepper Pike Club for Employee. Employee shall solely use the
membership for business purposes of the Company, including such use as
is consistent with the customary duties and responsibilities of
persons holding the office of Chairman of the Board, President and
Chief Executive Officer of a publicly traded corporation.
6. TERMINATION.
-----------
(a) Employee's employment hereunder will
terminate without further notice upon the death of Employee.
(b) The Company may terminate Employee's
employment hereunder effective immediately upon giving notice of such
termination;
(i) For "cause," (A) If Employee commits an
act of fraud, embezzlement, theft, or other similar criminal act
constituting a felony and involving the Company's business or (B) if
Employee breaches his agreement with respect to the time to be devoted
to the business of the Company set forth in Paragraph 2(d) hereof and
fails to cure such breach within 30 days of receipt of written
notice of such breach from the Board; or
5
<PAGE> 6
(ii) Upon disability, if Employee is
prevented from performing his duties hereunder by reason of physical or mental
incapacity for a period of 180 consecutive days.
(c) Employee may terminate his employment
hereunder effective immediately upon giving of notice of such termination:
(i) Without cause at any time; or
(ii) For "good reason," which, for
purposes of this Agreement shall mean the occurrence of any of the following:
(A) Any reduction in aggregate direct
remuneration, position, responsibilities, or duties
contemplated for Employee under this Agreement or any
material reduction in the aggregate of employee
benefits, perquisites, or fringe benefits
contemplated for Employee under this Agreement; or
(B) Any good faith determination by
Employee that, as a result of fundamental differences
of opinion between Employee and the Board as to the
goals of the Company, Employee is unable to carry out
the responsibilities and duties contemplated for
Employee under this Agreement.
6
<PAGE> 7
7. SEVERANCE COMPENSATION.
----------------------
(a) If Employee's employment is terminated before
March 31, 1998 by the Company without cause or by Employee for good
reason, then, except as provided in Paragraph 7(b), 7(c), 7(d), or
7(e), the Company shall pay and provide to Employee the following
compensation and benefits through March 31, 1998:
(i) Base salary at the highest monthly
rate payable to Employee during the Contract Period, to be paid at the times
provided in Paragraph 3 hereof;
(ii) Coverage under the Company's medical
insurance plan, short-term disability plan, and long-term disability plan,
Salary Continuation Arrangement, Disability Benefit Arrangement,
Executive Life Program Agreement, and post-retirement Death Benefit
Arrangement, each as in effect on the Effective Date (or, if
terminated and replaced by a successor plan or benefit arrangement, as
so provided in such successor plan or benefit arrangement or, if
subsequently amended to increase benefits to Employee or his
dependents, as so amended) and each as if Employee's employment
had continued through March 31, 1998; and
(iii) Coverage under the Company's unfunded
excess benefit plan as if Employee's employment had continued through March 31,
1998.
7
<PAGE> 8
If any of the benefits to be provided under one or more of the plans,
agreements, or arrangements specified above cannot be provided through
that plan, agreement, or arrangement to Employee following termination
of his employment, the Company shall directly provide the full
equivalent of such benefits to Employee.
(b) If Employee becomes entitled to compensation
and benefits pursuant to Paragraph 7(a) he shall use reasonable
efforts to seek other employment, provided, however, that he shall not
be required to accept a position of less importance and dignity or of
substantially different character than that of Chairman of the Board,
President and Chief Executive Officer of the Company or a position
that would require Employee to engage in activity in violation of
Employee's agreement with respect to noncompetition set forth in
Paragraph 9 hereof nor shall he be required to accept a position
outside the Greater Cleveland area. The Company's obligations under
items (i) and (ii) of Paragraph 7(a) will be offset by payments and
benefits received by Employee from another employer to the following
extent:
(i) The Company's obligation to pay any
particular installment of base salary following Employee's
termination will be offset, on a dollar for dollar basis, by any
cash compensation received by Employee from another employer
before the date on which the installment of base salary is
payable by the Company.
8
<PAGE> 9
(ii) To the extent that Employee is
provided medical, dental, short-term or long-term disability income protection,
or life insurance benefits by another employer during any period, the Company
will be relieved to such extent of its obligation to provide such benefits to
Employee. For example, if a new
employer provides Employee with a medical benefits plan that pays
$500.00 for a specific claim made by Employee and the Company's
medical insurance plan would have paid $750.00 for that claim,
then the Company will be obligated to pay Employee $250.00 with
respect to that claim.
Other than as provided in this Paragraph 7(b) Employee shall have no
duty to mitigate the amount of any payment or benefit provided for in
this Agreement.
(c) If during any period in which Employee is
entitled to payments or benefits from the Company under Paragraph 7(a);
(i) Employee materially and willfully
breaches his agreement with respect to confidential information
set forth in Paragraph 8 hereof and such breach directly causes
the Company substantial and demonstrable damage; or
(ii) Employee materially and willfully
breaches his agreement with respect to non-competition set forth
in Paragraph 9 hereof and such breach directly causes the Company
substantial and demonstrable damage;
9
<PAGE> 10
then the Company will be relieved of its obligations under Paragraph
7(a) hereof as of the first day of the month immediately following the
date of such material breach.
(d) If Employee dies during any period in which
he is entitled to payments or benefits from the Company under
Paragraph 7(a), the Company will be relieved of its obligations under
item (i) of Paragraph 7(a) and the Company will provide to Employee's
beneficiaries and dependents death benefits and continuing medical and
dental benefits to the same extent as if Employee's death had occurred
while Employee was in the active employ of the Company.
(e) If at any time Employee becomes entitled to
payments or benefits from the Company both under Paragraph 7(a) of
this Agreement and under any provision of the "Change-in-Control
Agreement" (defined and amended by Paragraph 10, below), Employee
shall be entitled to receive, with respect to each category of
payments and benefits, all of the payments and benefits provided for
under that agreement (either this Agreement or the Change-in-Control
Agreement) that is most favorable to Employee but Employee shall
not be entitled to a double payment with respect to any calendar
period.
8. CONFIDENTIAL INFORMATION. Employee agrees
that he will not, during the term of the Agreement or at any time thereafter,
either directly or indirectly, disclose or make known to any other person,
firm, or corporation any confidential information, trade secret, or proprietary
information of the Company that Employee may
10
<PAGE> 11
acquire in the performance of Employee's duties hereunder. Upon the
termination of Employee's employment with the Company, Employee agrees to
deliver forthwith to the Company any and all literature, documents,
correspondence, and other materials and records furnished to or acquired by
Employee during the course of such employment.
9. NONCOMPETITION. During any period in which Employee is
receiving base salary under this Agreement (whether during the Contract Period
pursuant to Paragraph 3 or following termination pursuant to Paragraph 7(a))
and for a period of one year after Employee last receives base salary under
this Agreement, Employee shall not act as a proprietor, investor, director,
officer, employee, substantial stockholder, consultant, or partner in any
business engaged to a material extent in direct competition with the Company in
any market in any line of business engaged in by the Company during the
Contract Period.
10. CHANGE-IN-CONTROL AGREEMENT. The Company and
Employee are parties to another employment agreement (intended to become
effective upon a change of control of the Company) entered into in 1987 by and
between the Company and Employee (as amended to date, as amended in the
remainder of this Paragraph 10, and as may be amended from time to time by the
Company and Employee, the "Change-in-Control Agreement"). The
Change-in-Control Agreement is hereby amended by substituting for the original
Paragraph 20 thereof (captioned "Limitation on Contingent Payments") a new
Paragraph 20 to read in its entirety, with its caption, as follows:
11
<PAGE> 12
"20. EXCISE TAX. As to the Company's obligation if
any of the payments or benefits to be paid and provided to Employee by
the Company under any provision of this Agreement or any portion of
any such payment or benefits would constitute "excess parachute
payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), or any successor provision, see
Paragraph 12 of the Employment Agreement between Employee and the
Company pursuant to which Employee is employed as Chairman of the
Board, President and Chief Executive Officer effective April 1, 1995."
Except for the prohibition of double payments contained in Paragraph 7(e),
above, nothing in this Agreement shall limit Employee's rights under the
Change-in-Control Agreement.
11. COSTS OF ENFORCEMENT. The Company shall pay and be
solely responsible for any and all costs and expenses (including attorneys's
fees) incurred by Employee in seeking to enforce the Company's obligations
under this Agreement unless and to the extent a court of competent jurisdiction
determines that the Company was relieved of those obligations because (a) the
Company terminated Employee for cause (as determined under Paragraph 6(b)(i)
hereof), (b) Employee voluntarily terminated his employment other than for good
reason (as determined under Paragraph 6(c)(ii) hereof), or (c) Employee
materially and willfully breached his agreement not to compete with the Company
or his agreement with respect to confidential information and such breach
12
<PAGE> 13
directly caused substantial and demonstrable damage to the Company. The
Company shall forthwith pay directly or reimburse Employee for any and all such
costs and expenses upon presentation by Employee or by counsel selected from
time to time by Employee of a statement or statements prepared by Employee or
by such counsel of the amount of such costs and expenses. If and to the extent
a court of competent jurisdiction renders a final binding judgment determining
that the Company was relieved of its obligations for any of the reasons set
forth in (a), (b), or (c) above, Employee shall repay the amount of such
payments or reimbursements to the Company. In addition to the payment and
reimbursement of expenses of enforcement provided for in this Paragraph 11, the
Company shall pay to Employee in cash, as and when the Company makes any
payment on behalf of, or reimbursement to, Employee, an additional amount
sufficient to pay all federal, state, and local taxes (whether income taxes or
other taxes) incurred by Employee as a result of (x) payment of the expense or
receipt of the reimbursement, and (y) receipt of the additional cash payment.
The Company shall also pay to Employee interest (calculated at the Base Rate
from time to time in effect at National City Bank, Cleveland, Ohio, compounded
monthly) on any payments or benefits that are paid or provided to Employee
later than the date on which due under the terms of this Agreement.
12. EXCISE TAX. If any of the payments or benefits to be
paid and provided to Employee by the Company under any provision of this
Agreement, under any provision of the Change-in-Control Agreement, or under any
provision of any other
13
<PAGE> 14
agreement, plan, or arrangement, or any portion of any such payment or benefits
would constitute "excess parachute payments" within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code"), or any successor
provision, the Company shall make additional cash payments to Employee at the
same times as any such payment or benefit constituting an excess parachute
payment is paid or provided and in such amounts as are necessary to put
Employee in the same position after payment of all federal, state, and local
taxes (whether income taxes, excise taxes under Section 4999 of the Code or
otherwise, or other taxes) as he would have been in after payment of all
federal, state, and local income taxes if the payments or benefits had been
subject only to federal, state, and local income taxes generally applicable to
compensation income. For example, if a $100,000 payment to Employee
constituted an excess parachute payment subject to a 20% excise tax under
Section 4999 of the Code, as well as federal income tax at a 28% effective
rate, state income tax at a 10% marginal rate, and local income tax at a 2%
marginal rate and no other taxes, and the state and local taxes were deductible
for federal income tax purposes, the Company would be required to pay to
Employee an additional $46,748 with respect to the $100,000 excess parachute
payment. The net amount available to Employee after all taxes, including the
excise tax on both the $100,000 and the $46,748, would be $63,630, the same
amount that would be available to Employee had the $100,000 payment been
subject only to federal, state, and local income taxes.
14
<PAGE> 15
13. NOTICES. For purposes of this Agreement, all
communications provided for herein shall be in writing and shall be deemed to
have been duly given when delivered or when mailed by United States registered
or certified mail, return receipt requested, postage prepaid, addressed to the
Company (Attention: Secretary) at its principal executive office and to
Employee at his principal residence, or to such other address as either party
may have furnished to the other in writing and in accordance herewith, except
that notices of change of address shall be effective only upon receipt.
14. ASSIGNMENT, BINDING EFFECT.
---------------------------
(a) This Agreement shall be binding upon and
shall inure to the benefit of the Company and the Company's successors and
assigns. The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation, or otherwise) to all or substantially all
of the business and/or assets of the Company, by agreement in form and
substance satisfactory to Employee, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.
(b) This Agreement shall be binding upon Employee
and this Agreement and all rights of Employee hereunder shall inure to the
benefit of, and be enforceable by, Employee and his personal or legal
representatives, executors, or administrators. No right, benefit, or interest
of Employee hereunder shall be subject to assignment, anticipation, alienation,
sale, encumbrance, charge, pledge, hypothecation, or to execution, attachment,
levy, or similar process; except that Employee may assign any
15
<PAGE> 16
right, benefit, or interest hereunder if such assignment is permitted under the
terms of any plan or policy of insurance or annuity contract governing such
right, benefit, or interest.
15. INVALID PROVISIONS.
-------------------
(a) Any provision of this Agreement that is
prohibited or unenforceable shall be ineffective to the extent, but only to the
extent, of such prohibition or unenforceability without invalidating the
remaining portions hereof and such remaining portions of this Agreement shall
continue to be in full force and effect.
(b) In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable, the parties
will negotiate in good faith to replace such provision with another provision
that will be valid or enforceable and that is as close as practicable to the
provision held invalid or unenforceable.
16. ENTIRE AGREEMENT, MODIFICATION. Except for the
Change-in-Control Agreement, this Agreement contains the entire agreement
between the parties with respect to the employment of Employee by the Company
and supersedes all prior and contemporaneous agreements, representations, and
understandings of the parties. No modification, amendment, or waiver of any of
the provisions of the Agreement shall be effective unless in writing,
specifically referring hereto, and signed by both parties.
17. WAIVER OF BREACH. The failure at any time to enforce
any of the provisions of this Agreement or to require performance by the other
party of any of the provisions of this Agreement shall in no way be construed
to be a waiver of such provisions or to affect either the validity of this
Agreement or any part of this Agreement
16
<PAGE> 17
or the right of either party thereafter to enforce each and every provision of
this Agreement in accordance with the terms hereof.
18. GOVERNING LAW. This Agreement has been made in and
shall be governed and construed in accordance with the laws of the State of
Ohio.
IN WITNESS WHEREOF, the Company and Employee have executed
this Agreement as of the day and year first above written.
Attest: OGLEBAY NORTON COMPANY
____________________________ By:______________________________
DAVID G. SLEZAK H. WILLIAM RUF
Secretary Vice President-Administrative
and Legal Affairs
________________________________
R. THOMAS GREEN, JR.
<PAGE> 1
Exhibit 10.H
OGLEBAY NORTON COMPANY
LONG-TERM INCENTIVE PLAN
<PAGE> 2
OGLEBAY NORTON COMPANY
LONG-TERM INCENTIVE PLAN
<TABLE>
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Table of Contents
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<S> <C> <C> <C>
ARTICLE I - PURPOSE AND DEFINITIONS
Section 1.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Definitions and Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - STOCK SUBJECT TO THE PLAN
Section 2.1 Stock Subject to Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.2 Annual Per-Participant Limitations . . . . . . . . . . . . . . . . . . . . 5
Section 2.3 Computation of Stock Available for the Plan . . . . . . . . . . . . . . . . 5
Section 2.4 Unused, Forfeited and Reacquired Shares . . . . . . . . . . . . . . . . . . 5
Section 2.5 Other Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III - ELIGIBILITY
Section 3.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV - ANNUAL INCENTIVE DEFERRAL PROGRAM
Section 4.1 Election to Defer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.2 Investment of Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.3 Matching Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.4 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.5 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.6 In-Service Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE V - LONG-TERM INCENTIVE PROGRAM
Section 5.1 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.2 Stock Appreciation Rights . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.3 Restricted Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.4 Performance Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VI - ADMINISTRATION, GENERAL PROVISIONS
Section 6.1 Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.2 Authority of the Committee . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.3 Amendments and Termination . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.4 Unfunded Status of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.5 Change-of-Control Provisions . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.6 General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.7 Effective Date of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 6.8 Term of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 6.9 Proceeds and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.11 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.12 Awards in Substitution for Awards Granted by Other Companies . . . . . . . 22
</TABLE>
<PAGE> 3
OGLEBAY NORTON COMPANY
LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE AND DEFINITIONS
SECTION 1.1 PURPOSE. The name of this plan is the Oglebay Norton Company
Long-Term Incentive Plan (the "Plan"). The purpose of the Plan is to promote
ownership and holding of Oglebay Norton Company stock by key employees, thereby
reinforcing a mutuality of interest with other stockholders, and to enable the
Company to attract, retain and motivate key employees by sharing in the growth
of the value of the Company.
This Plan is an integrated compensation and incentive program composed of five
(5) operative long-term incentive compensation features. These separate
incentive compensation programs are designed to accomplish distinct purposes
under uniform administration and with a common goal of maximizing stockholder
value.
SECTION 1.2 DEFINITIONS AND USAGE. For the purposes of the Plan, the
following terms, when used with initial capital letters, shall have the
meanings as set forth below:
"ACCOUNT" means the bookkeeping account established by the Company for
a Participant who elects to defer a portion of his Annual Incentive
Award pursuant to Article IV which will reflect the deferrals,
matching contributions and dividends allocable to him pursuant to
Article IV.
"AFFILIATE" means (a) a corporation which, for purposes of Section 422
of the Code, is a parent or subsidiary of the Company, and (b) any
other entity in which the Company has a substantial equity investment,
as designated by the Committee.
"ANNUAL INCENTIVE AWARD" means the amount payable to a Participant
under the Oglebay Norton Company Annual Incentive Plan.
"ANNUAL INCENTIVE AWARD DEFERRALS" means the portion of the Annual
Incentive Award that a Participant elects to defer pursuant to Section
4.1.
"BASE AMOUNT" means the amount of the Annual Incentive Award that the
Participant elects to receive immediately upon payment.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means, in connection with an involuntary termination by the
Company of a Participant's employment, (a) the willful and continued
failure by the Participant to perform substantially the duties of the
Participant's position or (b) the willful engaging by
<PAGE> 4
the Participant in conduct which is demonstrably injurious to the
Company, monetarily or otherwise.
"CHANGE OF CONTROL" means (a) a report is filed with the Securities
and Exchange Commission (the "SEC") on Schedule 13D or Schedule 14D-1
(or any successor schedule, form or report), each as promulgated
pursuant to the Exchange Act, disclosing that any "person" (as the
term "person" is defined in Section 13(d) or Section 14(d)(2) of the
Exchange Act) is or has become a beneficial owner, directly or
indirectly, of securities of the Company representing twenty-five
percent (25%) or more of the combined voting power of the Company's
then outstanding securities; (b) the Company files a report or proxy
statement with the SEC pursuant to the Exchange Act disclosing in
response to Item 1 of Form 8-K thereunder or Item 6(e) of Schedule 14A
thereunder that a Change in Control of the Company has or may have
occurred or will or may occur in the future pursuant to any
then-existing contract or transaction; (c) the Company is merged or
consolidated with another corporation and, as a result thereof,
securities representing less than fifty percent (50%) of the combined
voting power of the surviving or resulting corporation's securities
(or of the securities of a parent corporation in case of a merger in
which the surviving or resulting corporation becomes a wholly-owned
subsidiary of the parent corporation) are owned in the aggregate by
holders of the Company's securities immediately prior to such merger
or consolidation; (d) all or substantially all of the assets of the
Company are sold in a single transaction or a series of related
transactions to a single purchaser or a group of affiliated
purchasers; or (e) during any period of twenty-four (24) consecutive
months, individuals who were Directors of the Company at the beginning
of such period cease to constitute at least a majority of the
Company's Board unless the election, or nomination for election by the
Company's shareholders, of more than one-half of any new Directors of
the Company was approved by a vote of at least two-thirds of the
Directors of the Company then still in office who were Directors of
the Company at the beginning of such twenty-four (24) month period.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
"COMMITTEE" means the Compensation and Organization Committee of the
Board or any subcommittee thereof established by the Board.
"COMPANY" means the Oglebay Norton Company, a corporation organized
under the laws of the State of Delaware, or any successor
organization.
"DISABILITY" means a disability covered under the Oglebay Norton
Company Long-Term Disability Insurance Plan.
"DISINTERESTED PERSON" shall have the meaning set forth in Rule
16b-3(c)(2) of the Rules.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
2
<PAGE> 5
"FAIR MARKET VALUE" means, with respect to a share of Stock as of any
given day, the last reported closing price for a share of Stock on the
National Association of Securities Dealers Automated Quotations System
("NASDAQ") for the day as of which such determination is being made
or, if there was no sale of Stock so reported for such day, on the
most recently preceding day on which there was such a sale; or if the
Stock is not listed or admitted to trading on NASDAQ on the day as of
which the determination is being made, the amount determined by the
Committee to be the fair market value of a share of Stock on such day.
"INCENTIVE STOCK OPTION" means any Stock Option intended to qualify as
an "incentive stock option" within the meaning of Section 422 of the
Code.
"INSIDER" means a Participant who is subject to the requirements of
the Rules.
"MATCHING CONTRIBUTIONS" means the Company contribution made on behalf
of Participants who elect to defer a portion of their Annual Incentive
Award as provided in Section 4.3.
"NON-QUALIFIED STOCK OPTION" means any Stock Option that is not an
Incentive Stock Option.
"OUTSIDE DIRECTOR" shall have the meaning set forth in Treasury
Regulation Section 1.162-27(e)(3).
"PARTICIPANT" means an employee to whom an award is granted pursuant
to the Plan or who is eligible to defer and elects to defer a portion
of his Annual Incentive Award under Article IV.
"PERFORMANCE AWARD" means an award made pursuant to Section 5.4 that
is payable in cash and/or Stock (including Restricted Stock) in
accordance with the terms of the grant, based on Company, business
unit and/or individual performance goals over a period of time.
"PLAN" means the Oglebay Norton Company Long-Term Incentive Plan, as
hereinafter amended from time to time.
"RESTRICTED STOCK" means an award of shares of Stock that is subject
to restrictions pursuant to Section 5.3.
"RETIREMENT" means a Participant's retirement from active employment
with the Company and each of its Affiliates pursuant to which the
Participant is entitled to receive a normal, early, disability or
shutdown retirement pension under the Oglebay Norton Company Pension
Plan for Salaried Employees.
"RULES" means Section 16 of the Exchange Act and the regulations
promulgated thereunder.
3
<PAGE> 6
"STOCK" means the common stock, one dollar ($1.00) par value per
share, of the Company.
"STOCK APPRECIATION RIGHT" means the rights granted pursuant to an
award under Section 5.2.
"STOCK OPTION" or "OPTION" means any option to purchase shares of
Stock (including Restricted Stock, if the Committee so determines)
granted pursuant to Section 5.1.
Except where otherwise indicated by the context, any masculine terminology used
herein also shall include the feminine and vice versa, and the definition of
any term herein in the singular also shall include the plural and vice versa.
References herein to Articles, Sections and Subsections are references to
provisions in this Plan.
4
<PAGE> 7
ARTICLE II
STOCK SUBJECT TO THE PLAN
SECTION 2.1 STOCK SUBJECT TO PLAN. The Stock to be subject or related to
awards under the Plan may be either authorized and unissued or held in the
treasury of the Company. The maximum number of shares of Stock authorized with
respect to the deferrals or grant of awards under the Plan, subject to
adjustment in accordance with Section 2.52.4 below, shall be one hundred
thousand (100,000).
SECTION 2.2 ANNUAL PER-PARTICIPANT LIMITATIONS. The maximum number of shares
of Stock covered by deferrals or awards under the Plan provided to any
Participant for any year shall not exceed ten thousand (10,000), subject to
adjustment in accordance with Section 2.5 below. In addition, for awards
settled in cash (in whole or in part), the maximum cash amount payable with
respect deferrals or awards under the Plan to any Participant for any year
shall not exceed the greater of the Fair Market Value of the number of shares
of Stock set forth in the preceding sentence at the date of grant or the date
of settlement of the award.
SECTION 2.3 COMPUTATION OF STOCK AVAILABLE FOR THE PLAN. For the purpose
of computing the total number of shares of Stock generally available under the
Plan, under Article IV and Sections 5.1, 5.2, 5.3 and 5.4, respectively, for
award at any time during which the Plan is in effect, there shall be debited
against the total number of shares of Stock determined to be available under
this Article II, the maximum number of shares of Stock subject to issuance upon
exercise of options or other stock based awards made under the Plan.
SECTION 2.4 UNUSED, FORFEITED AND REACQUIRED SHARES. The shares related to
the unexercised or undistributed portion of any terminated, expired or
forfeited award under the Plan shall be made available in connection with
future awards under the Plan in addition to the shares determined available
pursuant to Sections 2.1, 2.2 and 2.3.
SECTION 2.5 OTHER ADJUSTMENT. In the event of any merger, reorganization,
consolidation, recapitalization, Stock dividend, Stock split or other change in
corporate structure affecting the Stock, the Committee shall take any action
which in its discretion it deems necessary to preserve benefits to Participants
in this Plan, including, without limitation, substitution or adjustment in the
aggregate number of shares reserved for issuance under the Plan, in the number
and option price of shares subject to outstanding Options granted under the
Plan and in the number and price of shares subject to other awards made under
the Plan, or substitution of property or other securities for Stock, Stock
Options or Restricted Stock covered by any awards under this Plan.
5
<PAGE> 8
ARTICLE III
ELIGIBILITY
SECTION 3.1 ELIGIBILITY. Officers and other key employees of the Company or
an Affiliate (but excluding members of the Committee and any person who serves
only as a director) who are responsible for or contribute to the management,
growth and/or profitability of the business of the Company and/or its
Affiliates are eligible, upon selection by the Committee, to elect to defer a
portion of their Annual Incentive Award and/or to be granted awards under the
Plan.
6
<PAGE> 9
ARTICLE IV
ANNUAL INCENTIVE DEFERRAL PROGRAM
SECTION 4.1 ELECTION TO DEFER. A Participant may elect to defer the receipt
of all or a portion of his Annual Incentive Award for any year by selecting the
applicable percentage of his Annual Incentive Award (in ten percent (10%)
increments) to be deferred for that year. In the alternative, a Participant
may elect to defer the portion of his Annual Incentive Award for a year that
exceeds a Base Amount set by the Participant. No election to defer under this
Section shall be effective unless the Participant completes a deferral election
agreement provided by the Committee (indicating the amount of deferrals and the
form of distribution of amounts held in his Account) for that year and files
the properly completed and executed agreement with the Committee on or before
such date as is necessary to defer an award for Federal income tax purposes.
Once a Participant has made an effective Annual Incentive Award Deferral
election for a year, he may not thereafter change that election for that year.
SECTION 4.2 INVESTMENT OF DEFERRALS. Annual Incentive Award Deferrals under
this Article will be converted into share units based on the Fair Market Value
of the Stock on the date that the deferred Annual Incentive Award otherwise
would have been paid to the Participant. Dividends equal to the actual Stock
dividends paid shall be credited to the share units in the Participant's
Account, and shall in turn be converted into share units based on the Fair
Market Value of the Stock on the date such dividends are paid. If shareholder
approval is not obtained as provided in Section 6.7, share units will be
settled in cash at the time of distribution under this Article based on the
Fair Market Value of those units at the time of distribution.
SECTION 4.3 MATCHING CONTRIBUTION. Each year, the Company will make a
Matching Contribution to a Participant's Account equal to fifty percent (50%)
of the Participant's Annual Incentive Award Deferral made for that year. Such
Matching Contribution shall be made at the same time the Annual Incentive Award
Deferral is made to the Participant's Account. In addition, prior to the time
for making deferral elections for that year, the Committee, in its sole
discretion, may determine to award an additional Matching Contribution of up to
fifty percent (50%) on a Participant's Annual Incentive Award Deferral;
provided, however, that a Participant's entitlement to such additional Matching
Contribution may be conditioned on such factors as the Committee may establish
at the time the additional Matching Contribution is granted, including, without
limitation, satisfaction of certain performance measures, additional vesting
requirements or other limitations or restrictions set by the Committee.
Matching Contributions will be invested in the same manner as provided for
Annual Incentive Award Deferrals pursuant to Section 4.2.
SECTION 4.4 VESTING. All Annual Incentive Award Deferrals pursuant to Section
4.1 (and dividends generated from those deferrals) will be one hundred percent
(100%) vested at all times. Matching Contributions pursuant to Section 4.3
(and dividends generated from those amounts) will become one hundred percent
(100%) vested on the fifth anniversary of the date those Matching Contributions
are allocated to a Participant's Account, provided that the Participant has
been in continuous service with the Company or an Affiliate for that entire
five (5) year period.
7
<PAGE> 10
Notwithstanding the foregoing, Matching Contributions made within the most
recent five (5) year period will become one hundred percent (100%) vested (a)
upon the Participant's early, normal, disability or shutdown retirement (as
those terms are defined in the Oglebay Norton Company Pension Plan for Salaried
Employees); (b) upon a Change of Control; (c) upon a sale or other disposition
of an Affiliate, provided that this Subsection shall apply only to a
Participant who is employed at such Affiliate at the time of such sale or
disposition and who is not provided a comparable position with the Company or
another Affiliate after such sale or disposition; or (d) upon any other event
as the Committee shall deem appropriate in its sole discretion. Upon a
Participant's in-service withdrawal of Annual Incentive Award Deferrals
pursuant to Section 4.6, all Matching Contributions attributable to those
deferrals will be immediately forfeited.
SECTION 4.5 DISTRIBUTIONS.
(a) Upon a Participant's retirement (under the terms of the Oglebay
Norton Company Pension Plan for Salaried Employees), death, other termination
of employment from the Company and all Affiliates, upon a Change or Control, or
upon any other event as the Committee shall deem appropriate in its sole
discretion, all of a Participant's Annual Incentive Award Deferrals (and
dividends generated from those deferrals) and the vested portion of a
Participant's Matching Contributions (and dividends generated from those
amounts) allocated to the Participant's Account shall be distributed. Such
distributions shall be made or commence as soon as administratively feasible
following the event that entitles the Participant to a distribution.
(b) Distributions under this Article will be made either in a lump
sum or in equal annual installments of up to ten (10) years, as elected by the
Participant on the most recent deferral election agreement filed by that
Participant with the Committee; provided, however, that no deferral election
agreement completed within twenty-four (24) months of the Participant's
entitlement to a distribution under this Section will be effective with respect
to the form of distribution and, instead, the immediately prior deferral
election agreement of the Participant shall be used to determine the form of
distribution. Notwithstanding the Participant's election as to the form of
distribution, any vested Matching Contributions (and dividends generated from
those amounts), made within the most recent five (5) years before entitlement
to a distribution will automatically be paid in five (5) annual installments.
(c) All distributions under this Article shall be made in shares of
Stock; provided, however, that if shareholder approval is not obtained as
provided in Section 6.7, share units will be settled in cash at the time of
distribution under this Section based on the Fair Market Value of those units
at the time of distribution.
(d) Notwithstanding the foregoing, any Annual Incentive Award
Deferral and the vested portion of any Matching Contribution which are actually
made in the year after a Participant has received or commenced to receive his
distribution shall be paid in the following manner: (i) if the Participant has
already received a lump sum distribution, the additional Annual Incentive Award
Deferral will be paid in a lump sum as soon as administratively feasible
following its deferral; (ii) if the Participant is receiving installment
payments, the additional Annual Incentive Award Deferral will be added to the
deferral amounts not yet paid and distributed, pro rata, for the remainder of
8
<PAGE> 11
the existing installment term; and (iii) if the Participant is entitled to
vested Matching Contributions, those additional vested Matching Contributions
will be subject to the five (5) year installment requirement of Subsection (b),
will be added to the Matching Contributions not yet paid under that five (5)
year schedule and will be distributed pro rata for the remainder of the
existing five (5) year term.
SECTION 4.6 IN-SERVICE WITHDRAWALS. While employed by the Company or an
Affiliate, a Participant may elect to withdraw all or a portion of his Annual
Incentive Award Deferrals (and dividends generated from those deferrals),
provided that the Annual Incentive Award Deferrals withdrawn must have been
allocated to the Participant's Account for at least five (5) years prior to the
time of the withdrawal. Withdrawals shall be made by completing a withdrawal
election form provided by the Committee and filing that form with the
Committee. Upon taking an in- service withdrawal, all Matching Contributions
associated with the amount of Annual Incentive Award Deferrals withdrawn will
be immediately forfeited by the Participant.
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ARTICLE V
LONG-TERM INCENTIVE PROGRAM
SECTION 5.1 STOCK OPTIONS. Stock Options may be granted alone, in
addition to or in tandem with other awards granted under the Plan. Any Stock
Option granted under the Plan shall be in such form as the Committee may from
time to time approve.
The Committee shall have the authority to grant any optionee Incentive Stock
Options, Non-Qualified Stock Options or both types of Stock Options (in each
case with or without Stock Appreciation Rights). To the extent that any Stock
Option does not qualify as an Incentive Stock Option, it shall constitute a
separate Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of this Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be so exercised,
so as to disqualify the Plan under Section 422 of the Code, or, without the
consent of the optionee(s) affected, to disqualify any Incentive Stock Option
under such Section 422 of the Code.
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem
appropriate:
(a) OPTION PRICE. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Committee at the time of grant
but shall be not less than one hundred percent (100%) of the Fair Market Value
of the Stock at the time of grant. Notwithstanding the preceding, the
Committee, in its discretion, may determine a Stock Option price of less than
the Fair Market Value of the Stock at the time of grant, if such Stock Option
is granted as a substitute for a stock option granted by an entity which has
been merged with or acquired by the Company or an Affiliate and such substitute
grant is made in connection with such merger or acquisition. Any Incentive
Stock Option granted to any optionee who, at the time the option is granted,
owns more than ten percent (10%) of the voting power of all classes of stock of
the Company or of an Affiliate shall have an exercise price no less than one
hundred and ten percent (110%) of Fair Market Value per share on date of the
grant.
(b) OPTION TERM. The term of each Stock Option shall be fixed by
the Committee, but no Stock Option shall be exercisable more than ten (10)
years after the date the Option is granted. However, any Incentive Stock
Option granted to any optionee who, at the time the option is granted owns more
than ten percent (10%) of the voting power of all classes of stock of the
Company or of an Affiliate may not have a term of more than five (5) years. No
Option may be exercised by any person after expiration of the term of the
Option.
(c) EXERCISABILITY. Stock Options shall be exercisable at such time
or times and subject to such terms and conditions as shall be determined by the
Committee at or after grant; provided, however, that, except as provided in
Section 5.1(d) and Section 6.5, and unless otherwise determined by the
Committee at or after grant, no Stock Option shall be exercisable during the
six
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(6) months following the date of the granting of the Option. If the Committee
provides, in its discretion, that any Stock Option is exercisable only in
installments, the Committee may waive such installment exercise provisions at
any time at or after grant in whole or in part, based on such factors as the
Committee shall determine, in its sole discretion.
(d) TERMINATION BY REASON OF DEATH, DISABILITY OR RETIREMENT. If an
optionee's employment by the Company and any Affiliate terminates by reason of
death, Disability or Retirement, any Stock Option held by such optionee will
immediately vest and may thereafter be exercised by the optionee or by the
legal representative of the estate or by the legatee of the optionee under the
will of the optionee, for a period of two (2) years (or such shorter period as
the Committee may specify at grant) from the date of such termination or until
the expiration of the stated term of such Stock Option, whichever period is the
shorter. In the event of termination of employment by reason of Disability or
Retirement, if an Incentive Stock Option is exercised after the expiration of
the exercise periods that apply for purposes of Section 422 of the Code, such
Stock Option will thereafter be treated as a Non-Qualified Stock Option.
(e) OTHER TERMINATION. Unless otherwise provided in this Plan, or
otherwise determined by the Committee at or after grant, if an optionee's
employment by the Company terminates for any reason other than death,
Disability or Retirement, the Stock Option shall thereupon terminate, except
that such Stock Option may be exercised (to the extent exercisable upon the
optionee's termination) for the lesser of three (3) months or the balance of
such Stock Option's term if the optionee is involuntarily terminated by the
Company without Cause.
(f) INCENTIVE STOCK OPTION LIMITATIONS. To the extent required for
"incentive stock option" status under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the stock with
respect to which Incentive Stock Options are exercisable for the first time by
the optionee during any calendar year under the Plan and/or any other stock
option plan of the Company (within the meaning of Section 424 of the Code)
shall not exceed one hundred thousand dollars ($100,000).
(g) EXERCISE OF STOCK OPTIONS. An optionee may exercise a Stock
Option in whole or in part at any time and from time to time during the period
within which a Stock Option may be exercised. To exercise a Stock Option, an
optionee shall give written notice of exercise to the secretary of the Company
specifying the number of shares of Stock to be purchased; and provide payment
of the Option price for such shares of Stock by cash or check payable to the
order of the Company, by Stock owned by the optionee or by sale of shares of
Stock acquired in the exercise of a Stock Option (to the extent such cashless
exercise is permitted under rules promulgated by the Committee and under the
Rules) or any combination of Stock and cash or check. If payment of the Option
exercise price of a Non-Qualified Stock Option is made in whole or in part in
the form of unrestricted Stock already owned by the Participant, the Company
may require that the Stock be owned by the Participant for a period of six (6)
months or longer.
An optionee shall be treated for all purposes as the owner of record of the
number of shares of Stock purchased pursuant to exercise of the Stock Option
(in whole or in part) as of the date the conditions set forth in preceding
paragraph are satisfied. Notwithstanding the foregoing, no
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exercise of a Stock Option shall be effective until the shares of Stock subject
to this Plan have been registered or qualified for sale under applicable
Federal and state securities laws, and no Stock Option shall be deemed granted
until this Plan is approved by the holders of Company stock having a majority
of the voting power of all stock represented at a meeting duly held in
accordance with Delaware law within twelve (12) months after this Plan is
adopted by the Board.
Upon the effective exercise of a Stock Option (in whole or in part) in
accordance with Subsection (h), the Committee shall deliver to the optionee the
number of shares of Stock for which the Stock Option is exercised, adjusted for
any shares of Stock sold or withheld in connection with such exercise.
(h) CASH-OUT OF OPTION; SETTLEMENT OF SPREAD VALUE IN RESTRICTED
STOCK. On receipt of written notice to exercise, the Committee may, in its
sole discretion, elect to cash out all or part of the portion of the Option(s)
to be exercised by paying the optionee an amount, in cash or Stock, equal to
the excess of the Fair Market Value of the Stock over the option price (the
"Spread Value") on the effective date of such cash-out.
In addition, if the option agreement so provides at grant or is amended after
grant and prior to exercise to so provide (with the optionee's consent), the
Committee may require that all or part of the shares to be issued with respect
to the Spread Value of an exercised option take the form of Restricted Stock,
which shall be valued on the date of exercise on the basis of the Fair Market
Value of such Restricted Stock determined without regard to the forfeiture
restrictions involved.
SECTION 5.2 STOCK APPRECIATION RIGHTS. Both Tandem Stock Appreciation Rights
and Non-Tandem Stock Appreciation Rights, as described below, may be granted to
Participants in the Plan.
(a) TANDEM STOCK APPRECIATION RIGHTS. A Tandem Stock Appreciation
Right is the right, granted under this Subsection, to surrender to the Company
all (or a portion) of a Stock Option or other award under this Plan in exchange
for an amount equal to the Spread Value, as defined in Section 5.1(h), of the
Stock (or portion of the Stock) covered by the associated Stock Option. Tandem
Stock Appreciation Rights may be granted in conjunction with all or part of any
Stock Option or other award granted under the Plan. In the case of an
Incentive Stock Option, such rights may be granted only at the time of the
grant of such Stock Option.
A Stock Appreciation Right or applicable portion thereof granted with respect
to a given Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option, except that, unless
otherwise determined by the Committee, in its sole discretion, at the time of
grant, a Stock Appreciation Right granted with respect to less than the full
number of shares covered by a related Stock Option shall not be reduced until
the number of shares covered by an exercise or termination of the related Stock
Option exceeds the number of shares not covered by the Stock Appreciation
Right.
A Stock Appreciation Right may be exercised by an optionee, in accordance with
this Subsection, by surrendering the applicable portion of the related Stock
Option. Upon such exercise and
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surrender, the optionee shall be entitled to receive an amount determined in
the manner prescribed in this Subsection. Stock Options which have been so
surrendered, in whole or in part, shall no longer be exercisable to the extent
the related Stock Appreciation Rights have been exercised.
Tandem Stock Appreciation Rights shall be subject to such terms and conditions,
not inconsistent with the provisions of the Plan, as shall be determined from
time to time by the Committee.
(b) NON-TANDEM STOCK APPRECIATION RIGHTS. A Non-Tandem Stock
Appreciation Right is a right granted pursuant to this Subsection to receive an
amount equal to the difference between (i) the Fair Market Value, as of the
date such Right is exercised, of a number of shares of Stock specified in the
grant of such Right, and (ii) the Fair Market Value of such shares of Stock as
of the date such Right is granted.
Non-Tandem Stock Appreciation Rights shall be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as shall be
determined from time to time by the Committee.
SECTION 5.3 RESTRICTED STOCK.
(a) ADMINISTRATION. Shares of Restricted Stock may be issued either
alone or in addition to other awards granted under the Plan. The Committee may
condition the vesting of Restricted Stock upon the attainment of specified
performance goals or such other factors as the Committee may determine, in its
sole discretion; provided, however, that specified performance goals intended
to satisfy the requirements of Section 162(m) of the Code shall be
preestablished and objective in accordance with Section 162(m) and the
regulations thereunder, may vary among Participants and among groups of
Participants, and shall be based upon such Company, business unit and/or
individual objective performance factors and criteria as the Committee may deem
appropriate, including and limited to stock price, market share, sales,
earnings per share, return on assets, return on equity, costs, cash flow and
any combination thereof.
(b) RESTRICTIONS AND CONDITIONS. Each award of Restricted Stock
hereunder shall be subject to the following:
(i) The prospective recipient of a Restricted Stock award
shall not have any rights with respect to such award,
unless and until such recipient has executed an
agreement evidencing the award and has delivered a fully
executed copy thereof to the Company and has otherwise
complied with the applicable terms and conditions of
such award.
(ii) The purchase price for shares of Restricted Stock may be
equal to or less than their par value and may be zero,
unless otherwise required under applicable state law.
(iii) Awards of Restricted Stock must be accepted within a
period, to be determined by the Committee at the time of
the grant, after the award date,
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by executing a Restricted Stock agreement and paying
whatever price (if any) is required under this Section.
(iv) Except as otherwise specified by the Committee, each
Participant receiving a Restricted Stock award shall be
issued a stock certificate in respect of such shares of
Restricted Stock. Such certificate shall be registered
in the name of such Participant and shall bear an
appropriate legend referring to the terms, conditions
and restrictions applicable to such award, substantially
in the following form:
The transferability of this certificate and the
shares of stock represented hereby are subject to
the terms and conditions (including forfeiture) of
the Oglebay Norton Company Long-Term Incentive Plan
and an agreement entered into between the
registered owner and the Oglebay Norton Company.
Copies of such Plan and agreement are on file in
the offices of the Oglebay Norton Company, 1100
Superior Avenue, Cleveland, Ohio 44114.
(v) The Committee may require that the stock certificates
evidencing such shares be held in custody by the Company
until the restrictions thereon shall have lapsed, and
that, as a condition of any Restricted Stock award, the
Participant shall have delivered a stock power, endorsed
in blank, relating to the Stock covered by such award.
(vi) Subject to the provisions of this Plan and the
Restricted Stock agreement, during a period set by the
Committee commencing with the date of such award (the
"Restriction Period"), the Participant shall not be
permitted to sell, transfer, pledge, assign or otherwise
encumber shares of Restricted Stock awarded under the
Plan. Within these limits, the Committee, in its sole
discretion, may provide for the lapse of such
restrictions in installments and may accelerate or waive
such restrictions in whole or in part, based on service,
performance and/or such other factors or criteria as the
Committee may determine, in its sole discretion;
provided, however, that in no event shall any such
lapse, acceleration or waiver of restrictions occur with
respect to Restricted Stock that is intended to qualify
as performance-based compensation under Section 162(m)
of the Code (to the extent such lapse, acceleration or
waiver would cause such Restricted Stock to fail to so
qualify).
(vii) Each Restricted Stock award agreement shall provide that
the Restricted Stock covered by the agreement shall be
subject to a "substantial risk of forfeiture" (within
the meaning of Section 83 of the Code) for a period to
be determined by the Committee.
(viii) Except as provided above, the Participant shall have,
with respect to the shares of Restricted Stock, all of
the rights of a stockholder of the Company,
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including the right to vote the shares and the right to
receive any cash dividends. The Committee, in its sole
discretion, as determined at the time of award, may
permit or require the payment of cash dividends to be
deferred and, if the Committee so determines, reinvested
in additional Restricted Stock to the extent shares are
available under Article II.
(ix) Subject to the applicable provisions of the Restricted
Stock agreement and this Section and unless otherwise
determined by the Committee, upon termination of a
Participant's employment with the Company for any reason
during the Restriction Period, all shares still subject
to restriction shall be forfeited by the Participant.
(x) In the event of hardship or other special circumstances
of a Participant whose employment with the Company is
involuntarily terminated (other than for Cause), the
Committee may, in it sole discretion, waive in whole or
in part any or all remaining restrictions with respect
to such Participant's shares of Restricted Stock, based
on such factors as the Committee may deem appropriate;
provided, however, that in no event shall any such
waiver of restrictions occur with respect to Restricted
Stock that is intended to qualify as performance-based
compensation under Section 162(m) of the Code (to the
extent such waiver would cause such Restricted Stock to
fail to so qualify)..
(xi) If and when the Restriction Period expires without a
prior forfeiture of the Restricted Stock subject to such
Restriction Period, the certificates for such shares
shall be delivered to the Participant promptly.
SECTION 5.4 PERFORMANCE AWARDS.
(a) AWARDS AND ADMINISTRATION. Performance Awards may be awarded
either alone or in addition to other awards granted under the Plan. The
Committee shall determine the nature, length and starting date of the
performance period (the "Performance Period") for each Performance Award, which
shall be subject to Section 6.5, and shall determine the performance objectives
to be used in valuing Performance Awards and determining the extent to which
such Performance Awards have been earned. Performance objectives may vary from
Participant to Participant and between groups of Participants and shall be
based upon such Company, business unit and/or individual performance factors
and criteria as the Committee may deem appropriate, including, but not limited
to, earnings per share or return on equity; provided, however, that performance
objective intended to satisfy the requirements of Section 162(m) of the Code
shall be preestablished and objective in accordance with Section 162(m) and the
regulations thereunder, and such performance factors and criteria shall be
limited to stock price, market share, sales, earnings per share, return on
assets, return on equity, costs, cash flow and any combination thereof.
Performance Periods may overlap and Participants may participate simultaneously
with respect to Performance Awards that are subject to different Performance
Periods and/or different performance factors and criteria.
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At the beginning of each Performance Period, the Committee shall determine for
each Performance Award subject to such Performance Period the range of dollar
values or number of shares of Stock to be awarded to the Participant at the end
of the Performance Period if and to the extent that the relevant measure(s) of
performance for such Performance Award is (are) met. Such dollar values or
number of shares of Stock may be fixed or may vary in accordance with such
performance and/or other criteria as may be specified by the Committee, in its
sole discretion.
(b) ADJUSTMENT OF AWARDS. In the event of special or unusual events
or circumstances affecting the application of one or more performance
objectives to a Performance Award, the Committee may revise the performance
objectives and/or underlying factors and criteria applicable to the Performance
Awards affected, to the extent deemed appropriate by the Committee, in its sole
discretion, to avoid unintended windfalls or hardship; provided, however, that
in no event shall any such revision result in the increase in a Performance
Award or waiver of a performance goal if such Award or goal is intended to
qualify as performance-based compensation under Section 162(m) of the Code.
(c) TERMINATION OF EMPLOYMENT. Subject to Section 6.5 and unless
otherwise provided in the applicable award agreement(s), if a Participant
terminates employment with the Company during a Performance Period because of
death, Disability or Retirement, such Participant may be entitled to payment
with respect to each outstanding Performance Award at the end of the applicable
Performance Period as follows:
(i) to the extent relevant under the terms of the award,
based upon the Participant's performance for the portion
of such Performance Period ending on the date of
termination and the performance of the applicable
business unit(s) for the entire Performance Period, and
(ii) where deemed appropriate by the Committee, prorated for
the portion of the Performance Period during which the
Participant was employed by the Company, all as
determined by the Committee, in its sole discretion.
Notwithstanding the preceding, the Committee may provide for an
earlier payment in settlement of such award in such amount and
under such terms and conditions as the Committee deems
appropriate; provided, however, that in no event shall any such
earlier payment occur with respect to Performance Awards that
are intended to qualify as performance-based compensation under
Section 162(m) of the Code (to the extent such earlier payment
would cause such Performance Shares to fail to so qualify).
Subject to Section 6.5, if a Participant terminates employment
with the Company during a Performance Period for any reason
other than death, Disability or Retirement, then such
Participant shall not be entitled to any payment with respect to
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the Performance Awards subject to such Performance Period,
unless the Committee shall otherwise determine, in its sole
discretion.
(d) TIMING AND FORM OF PAYMENT. The earned portion of a Performance
Award may be paid currently or on a deferred basis with such interest or
earnings equivalent as may be determined by the Committee, in its sole
discretion; provided, however, that no deferral of a Performance Award intended
to qualify as performance-based compensation under Section 162(m) of the Code
shall result in the deferred Performance Award earning a rate of interest based
on criteria other than a reasonable rate of interest or one or more
predetermined actual investments. Payment shall be made in the form of cash or
whole shares of Stock, including Restricted Stock, either in a lump sum payment
or in installments commencing as soon as practicable after the end of the
relevant Performance Period, all as the Committee shall determine at or after
grant.
(e) EFFECT OF PERFORMANCE AWARDS ON STOCK AVAILABLE UNDER ARTICLES
IV AND V. If and to the extent a Performance Award is payable in Stock and the
full amount of such value is not paid in Stock, then the shares of Stock
representing the portion of the value of the Performance Award not paid in
Stock shall again become available for award under this Article and Article IV.
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ARTICLE VI
ADMINISTRATION, GENERAL PROVISIONS
SECTION 6.1 ADMINISTRATION. The Plan shall be administered by the Committee,
which at all times shall be comprised of not less than three (3) persons who
are: (a) Disinterested Persons, if required to qualify the Plan for an
exemption from Section 16(b) of the Exchange Act that is available under the
Rules; and (b) Outside Directors, if required to qualify compensation paid
under the Plan as performance-based compensation under Section 162(m) of the
Code. Members of the Board who qualify as Disinterested Persons and/or Outside
Directors shall perform the functions of the Committee if at any time the Board
has not appointed such members to comprise the Committee.
SECTION 6.2 AUTHORITY OF THE COMMITTEE. The Committee shall have the
authority to:
(a) select the officers and other key employees of the Company or an
Affiliate who may make deferral elections or to whom awards may
from time to time be granted hereunder, and to determine for
each such officer and other key employee the levels and other
terms and conditions of any stock-ownership requirements;
(b) grant to eligible employees, pursuant to the terms of the Plan,
Matching Contributions, additional Matching Contributions, Stock
Options, Stock Appreciation Rights, Restricted Stock,
Performance Awards and/or other permissible awards hereunder,
and determine the conditions, restrictions and procedures to be
applied to each such award;
(c) determine the terms and conditions, not inconsistent with the
terms of the Plan, of any deferral made or award granted
hereunder, including, but not limited to, the share price and
any restriction or limitation or any vesting acceleration or
forfeiture waiver regarding any deferral or award and/or the
shares of Stock relating thereto, based on such factors as the
Committee shall determine, in its sole discretion;
(d) take such action as it deems appropriate to comply with the
provisions of the Code, the Exchange Act and other applicable
laws, including any such action it deems appropriate under
Section 162(m) of the Code concerning the Federal income tax
deductibility of deferrals or awards granted hereunder
(including without limitation, determining preestablished,
objective performance goals and the method of computing awards,
reviewing award formulas and performance goals and criteria,
certifying whether performance goal measures have been
satisfied, and establishing a subcommittee consisting of
outside, independent directors for this purpose; provided,
however, that actions of any such subcommittee shall be subject
to ratification by the Committee);
(e) determine whether, to what extent and under what circumstances
any award under this Plan shall be deferred either automatically
or at the election of the Participant;
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(f) amend the terms of any deferral made or award granted hereunder,
prospectively or retroactively; provided, however, that any such
amendment must be consistent with the provisions of this Plan,
and no such amendment shall impair the rights of a Participant
with respect to any outstanding deferral or award under the Plan
without his consent;
(g) interpret the terms and provisions of this Plan and any deferral
made or award granted hereunder (and any agreements relating
thereto), and otherwise settle all claims and disputes arising
under this Plan;
(h) delegate responsibility and authority for the operation and
administration of the Plan, appoint employees and officers of
the Company and Affiliates to act on its behalf, and employ
persons to assist in fulfilling its responsibilities under the
Plan; and
(i) adopt, alter and repeal such administrative rules, guidelines
and practices governing the Plan as it shall, from time to time,
deem advisable, and otherwise supervise the administration of
this Plan.
All decisions made by the Committee pursuant to the provisions of the Plan
shall be final and binding on all persons, including the Company and
Participants.
The Committee may make decisions to take action under this Plan only by
majority action of all Committee members. The Committee may act without a
meeting only by written instrument signed by all members of the Committee.
SECTION 6.3 AMENDMENTS AND TERMINATION. The Board may amend, alter or
discontinue the Plan at any time and from time to time, but no amendment,
alteration or discontinuation shall be made which would impair the rights of an
optionee or Participant with respect to any outstanding deferral or award under
the Plan without the optionee's or Participant's consent, or which, without the
approval of the Company's stockholders, would:
(a) except as expressly provided in this Plan, increase the total
number of shares reserved for the purpose of the Plan;
(b) extend the maximum Option period applicable under the Plan;
(c) otherwise cause the Plan to fail to qualify for an exemption it
is seeking to rely upon under the Rules; or
(d) otherwise cause the Plan to fail to satisfy the requirements of
any applicable securities or tax law or the applicable rules and
regulations promulgated under NASDAQ.
SECTION 6.4 UNFUNDED STATUS OF PLAN. The Plan is intended to constitute an
"unfunded" plan for incentive compensation. With respect to any payments not
yet made to a Participant or optionee
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by the Company, nothing contained herein shall give any such Participant or
optionee any rights that are greater than those of a general creditor of the
Company. In its sole discretion, the Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Stock or payments in lieu of or with respect to deferrals or awards
hereunder; provided, however, that, unless the Committee otherwise determines
with the consent of the affected Participant, the existence of such trusts or
other arrangements shall be consistent with the "unfunded" status of the Plan.
SECTION 6.5 CHANGE-OF-CONTROL PROVISIONS. The Committee, in its discretion,
may provide at the time of a grant of any award under Article V that the terms
of the award, including, but not limited to, the method of determining Fair
Market Value, or the date on which an award vests or becomes exercisable, may
be modified in the event of a change-of-control; provided that in no event
shall such modification occur with respect to any award that is intended to
qualify as performance-based compensation under Section 162(m) of the Code (to
the extent such modification would cause the award to fail to so qualify).
Except as otherwise provided under this Plan, the Committee may determine at
any time at or after the grant of an award under Article V, (a) the criteria
used to determine whether a change-of-control has occurred, and (b) whether a
change-of-control has in fact occurred.
SECTION 6.6 GENERAL PROVISIONS.
(a) The Committee may require each person purchasing shares pursuant
to a Stock Option under the Plan to represent to and agree with the Company in
writing that the optionee or Participant is acquiring the shares without a view
to distribution thereof. The certificates for such shares may include any
legend which the Committee deems appropriate to reflect any restrictions on
transfer.
All certificates for shares of Stock or other securities delivered under the
Plan shall be subject to such stock-transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Exchange Act, any stock exchange upon which the Stock is
then listed and any applicable Federal or state securities law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.
(c) The adoption of the Plan shall not confer upon any employee of
the Company or an Affiliate any right to continued employment with the Company
or an Affiliate, as the case may be, nor shall it interfere in any way with the
right of the Company or an Affiliate to terminate the employment of any of its
employees at any time.
(d) No later than the date as of which an amount first becomes
includible in the gross income of the Participant for applicable income tax
purposes with respect to any deferral or award
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under the Plan, the Participant shall pay to the Company, or make arrangements
satisfactory to the Committee regarding the payment of, any Federal, state or
local taxes of any kind required by law to be withheld with respect to such
amount. Unless otherwise determined by the Committee, the minimum required
withholding obligations may be settled with Stock, including Stock that is part
of the deferral or award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements and the Company shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to
the Participant.
(e) At the time of grant under Article V, the Committee may provide
in connection with any grant made under this Plan that the shares of Stock
received as a result of such grant shall be subject to a right of first
refusal, pursuant to which the Participant shall be required to offer to the
Company any shares that the Participant wishes to sell, with the price being
the then Fair Market Value of the Stock, subject to such other terms and
conditions as the Committee shall specify at the time of grant.
(f) The reinvestment of dividends in additional Restricted Stock (or
in other types of Plan deferrals or awards) at the time of any dividend payment
shall only be permissible if sufficient shares of Stock are available under
Article II for such reinvestment (taking into account then outstanding Stock
Options and other Plan deferrals or awards).
(g) The Committee shall establish such procedures as it deems
appropriate for a Participant to designate a beneficiary to whom any amounts
payable in the event of the Participant's death are to be paid.
(h) The Plan and all deferrals or awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of
the State of Ohio, to the extent not preempted by Federal law.
SECTION 6.7 EFFECTIVE DATE OF PLAN. This Plan shall be effective on December
13, 1995; provided, however, that, except as provided in Article IV, the
effectiveness of this Plan is conditioned on its approval by an affirmative
vote of the holders of Company stock represented at a meeting duly held in
accordance with Delaware law within twelve (12) months after the date this Plan
is adopted by the Board. All awards under this Plan, other than those provided
in Article IV, shall be null and void if the Plan is not approved by such
stockholders within such twelve-month period. Notwithstanding the foregoing,
Article IV (and the provisions of the Plan necessary for the operation of
Article IV) shall continue to be effective without stockholder approval;
provided, however, that, if stockholder approval is not obtained, the
modifications described in Article IV relating to Stock equivalents and cash
distributions shall apply.
SECTION 6.8 TERM OF PLAN. No award under Article V shall be granted pursuant
to the Plan on or after the tenth anniversary of the earlier of the date of
stockholder approval or the date this Plan is adopted by the Board, but awards
granted prior to such tenth anniversary may extend beyond that.
21
<PAGE> 24
SECTION 6.9 PROCEEDS AND EXPENSES. The proceeds received by the Company from
the sale of shares of Stock pursuant to the exercise of Stock Options shall be
used for general corporate purposes. The Company shall bear any expenses
associated with the administration of this Plan.
SECTION 6.10 SEVERABILITY. If any provision of this Plan shall be held
illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining provisions of this Plan, but this Plan shall be construed
and enforced as if such illegal or invalid provision had never been included
herein.
SECTION 6.11 ASSIGNABILITY. No Option, Stock Appreciation Right or other
"derivative security" (as defined for purposes of the Rules) awarded under the
Plan may be transferred other than (a) by will or by the laws of descent and
distribution, or (b) as otherwise hereafter permitted in accordance with the
Rules without jeopardizing or impairing any exemption provided for under the
Rules. Any restriction on the transferability of derivative securities
required by the Rules in order to qualify for an exemption under the Rules is
hereby incorporated in the Plan to the extent necessary to obtain the
applicable exemption.
SECTION 6.12 AWARDS IN SUBSTITUTION FOR AWARDS GRANTED BY OTHER COMPANIES. To
the extent not otherwise provided in the Plan, awards (whether Stock Options,
Stock Appreciation Rights, Restricted Stock or Performance Awards) may be
granted under the Plan in substitution for awards held by employees of a
company who become employees of the Company or an Affiliate as a result of the
acquisition, merger or consolidation of the employer company by or with the
Company or an Affiliate. The terms, provisions and benefits of the substitute
awards so granted may vary from those set forth in or authorized by the Plan to
such extent as the Committee at the time of the grant may deem appropriate to
conform, in whole or in part, to the terms, provisions and benefits of awards
in substitution for which they are granted.
The undersigned, pursuant to the approval of the Board on December 13, 1995,
does herewith execute the Oglebay Norton Company Long-Term Incentive Plan.
/s/ H. William Ruf
----------------------------------
H. William Ruf
Vice President, Administration and
Legal Affairs
22
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF OGLEBAY NORTON COMPANY
--------------------------------------
Jurisdiction
Subsidiaries of Incorporation
------------ ----------------
Canadian Ferro Hot Metal
Specialties Limited Ontario
Laxare, Inc. West Virginia
Oglebay Norton Industrial Sands, Inc. California
Oglebay Norton Refractories & Minerals, Inc. Ohio
Oglebay Norton Taconite Company Minnesota
ON Coast Petroleum Company Texas
ONCO Eveleth Company Minnesota
ONCO WVA, Inc. West Virginia
Saginaw Mining Company Ohio
<PAGE> 1
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 29, 1996,
with respect to the consolidated financial statements of Oglebay Norton Company
included in this Annual Report (Form 10-K) for the year ended December 31,
1995:
Registration Statement Number 33-58819 on Form S-8 dated April 26, 1995
pertaining to the Oglebay Norton Company Director Stock Plan;
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 23, 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
March 26, 1996
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