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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 23, 1996
-----------------
OGLEBAY NORTON COMPANY
----------------------
(Exact name of Registrant as specified in its charter)
Delaware 0-663 34-0158970
- ----------------------------- ----- -----------
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) 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
____________________________________N/A________________________________________
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
Effective November 25, 1996 the Registrant and its wholly owned
subsidiary, ONCO Eveleth Company, ("ONCO"), and Eveleth Taconite Company,
("ETCO"), Eveleth Expansion Company, ("EXCO"), AK Steel Corporation, ("AK
Steel"), Virginia Horn Taconite Company, ("AKS Sub") Rouge Steel Company,
("Rouge"), Stelco, Inc., ("Stelco"), Ontario Eveleth Company, ("Stelco Sub"),
and Eveleth Mines, LLC, ("EM"), entered into the Eveleth Mines Exit Agreement
(the "Exit Agreement"). The Registrant holds a 15% interest in ETCO, while ONCO
holds a 20.5% interest in EXCO. The remaining 85% of the shares of ETCO are held
by Rouge, and the remaining shares of EXCO are owned by AKS Sub and Stelco Sub.
Rouge, ETCO, Stelco, Stelco Sub, AK Steel and AKS Sub are hereinafter sometimes
referred to as the "Remaining Companies".
ETCO and EXCO each own a portion of certain taconite ore mining
rights in mines located in St. Louis County, Minnesota, and related surface
rights, together with facilities for the mining, crushing, concentrating and
pelletizing of taconite ore (the "Eveleth Mines").
The Registrant served as Manager of Eveleth Mines under the
Eveleth Mines Management Agreement, as amended ("Management Agreement"). Oglebay
Norton Taconite Company, ("ONTAC"), a wholly owned subsidiary of the Registrant,
served as employer of the employees of Eveleth Mines under the Eveleth Mines
Employment Services Agreement (the "Employment Agreement").
Under the terms of the Exit Agreement the parties agreed that the
Registrant and ONCO will cease to participate in the ownership, management and
operations of Eveleth Mines. Accordingly, the Registrant sold to EM all of its
ONTAC shares and EXCO interests while, Rouge purchased all of the Registrant's
shares of ETCO. Certain other agreements relating to the management and
operation of Eveleth Mines were also terminated including the Management
Agreement, Employment Agreement and the pellet sales contracts between ONCO and
each of AK Steel and Stelco Sub (the "Pellet Sales Contracts"). The transaction
closed on December 23, 1996, with an effective date of November 30, 1996.
The Registrant sold, for $5,000,000 and the assumption by EM of
all Known Liabilities, as that term is defined in the Exit Agreement, its ETCO
shares, EXCO interests, ONTAC shares and certain mining equipment. In addition,
the parties agreed to cancel the Pellet Sales Contracts and certain royalty
arrangements, as defined in the Exit Agreement.
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EM agreed to continue to supply pellets to the Registrant to
permit it to fulfill its 1996 pellet sales commitments (other than the Pellet
Sales Contracts which, as noted above, were canceled).
AK Steel and Rouge have agreed to severally indemnify and hold
harmless the Registrant and ONCO and each of their respective subsidiaries,
divisions, affiliates, officers, directors, employees and agents, in accordance
with AK Steel's and Rouge's respective adjusted percentage ownership in EM, for
assumed liabilities, employee liabilities or breach by EM of its covenants
contained in the Agreement.
EM and the Remaining Companies agree to indemnify and hold
harmless the Registrant and ONCO of their respective subsidiaries, divisions,
affiliates, officers, directors, employees and agents, from and against any
loss, cost, deficiency, liability, and damage including attorneys' fees and
expenses incurred or suffered by them arising out of or resulting from the
ownership, management and operations of Eveleth Mines from and after the date of
Closing.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Not Applicable
(b) Pro Forma Financial Information.
The following unaudited Pro Forma condensed consolidated financial
statements are filed with this report:
Pro Forma Condensed Consolidated Balance Sheet at
September 30, 1995..............................Page 5
Pro Forma Condensed Consolidated Statements of Operations:
Year Ended December 31, 1995....................Page 6
Nine Months Ended September 30, 1995............Page 7
The Pro Forma Condensed Consolidated Balance Sheet of the Registrant
as of September 30, 1996 reflects the financial position of the Registrant
after giving effect to the disposition of the assets and assumption of the
liabilities discussed in Item 2 and assumes the disposition took place on
September 30, 1996. The Pro Forma Condensed Consolidated Statements of
Operations for the year December 31, 1995 and the nine months ended September
30, 1996 assume that the disposition occurred on January 1, 1995, and are based
on the operations of the Registrant for the year ended December 31, 1995 and
the nine months ended September 30, 1996.
The unaudited pro forma condensed consolidated financial statements
have been prepared by the Registrant based upon assumptions deemed proper by
it. The unaudited pro forma condensed consolidated financial statements
presented herein are shown for illustrative purposes only and are not
necessarily indicative of the future financial position or future results of
operations of the Registrant, or of the financial position or results of
operations or the Registrant that would have actually occurred had the
transaction been in effect as of the date or for the periods presented. In
addition, it should be noted that the Registrant's financial statements will
reflect the disposition only from November 30, 1996, the effective date.
The unaudited pro forma condensed consolidated financial statements
should be read in conjunction with the historical financial statements and
related notes of the Registrant.
(c) Exhibits.
None.
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Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
OGLEBAY NORTON COMPANY
Dated: January 7, 1997 By /s/ Richard J. Kessler
-----------------------------
Richard J. Kessler,
Vice President Finance and Planning
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PRO FORMA FINANCIAL INFORMATION
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Pro Forma Adjustments
-----------------------
Historical Iron Ore (a) Other Pro Forma
---------- ------------ --------- ---------
ASSETS
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $21,506,490 $3,562,815 (b) $25,069,305
Marketable securities 1,851,300 1,851,300
Accounts Receivable, less reserve for
doubtful accounts - $608,000 27,697,807 $2,771,685 2,771,685 (c) 27,697,807
Inventories
Raw materials and finished products 2,458,546 2,458,546
Operating supplies 2,325,911 2,325,911
------------ ------------
4,784,457 4,784,457
Deferred income taxes 3,338,281 32,251 3,306,030
Prepaid expenses 5,913,331 408,805 5,504,526
------------ ----------- ---------- ------------
TOTAL CURRENT ASSETS 65,091,666 3,212,741 6,334,500 68,213,425
INVESTMENTS 9,968,911 8,897,522 1,071,389
PROPERTIES AND EQUIPMENT 301,779,224 1,305,258 300,473,966
Less allowances for depreciation
and amortization 156,585,858 258,212 156,327,646
------------ ----------- ---------- ------------
145,193,366 1,047,046 144,146,320
PREPAID PENSION COSTS AND
OTHER ASSETS 29,027,534 29,027,534
------------ ----------- ---------- ------------
$249,281,477 $13,157,309 $6,334,500 $242,458,668
============ =========== ========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 8,476,450 $ 8,476,450
Accounts payable 4,119,843 4,119,843
Payrolls and other accrued compensation 5,040,509 5,040,509
Accrued expenses 11,415,299 $ 881,185 $ 463,000 (c) 10,997,114
Income taxes 4,778,616 975,856 241,456 (c) 4,044,216
Iron Ore impairment obligations 2,074,993 2,074,993 --
------------ ----------- ---------- ------------
TOTAL CURRENT LIABILITIES 35,905,710 3,932,034 704,456 32,678,132
LONG-TERM DEBT, less current portion 39,283,788 39,283,788
POSTRETIREMENT BENEFITS OBLIGATIONS 31,654,161 6,672,208 24,981,953
OTHER LONG-TERM LIABILITIES 19,069,461 300,000 300,000 (c) 19,069,461
DEFERRED INCOME TAXES 20,755,529 (737,232) 21,492,761
STOCKHOLDERS' EQUITY
Preferred stock, without par value, authorized
5,000,000 shares; none issued --
Common stock, par value $1 per share, authorized
10,000,000 shares; issued 3,626,666 shares 3,626,666 3,626,666
Additional capital 9,428,440 9,428,440
Unrealized gains 810,158 810,158
Retained earnings 121,549,933 2,990,299 5,330,044 123,889,678
------------ ----------- ---------- ------------
135,415,197 2,990,299 5,330,044 137,754,942
Treasury stock, at cost - 1,201,134 shares (31,492,131) (31,492,131)
Unallocated Employee Stock Ownership
Plan shares (1,310,238) (1,310,238)
------------ ----------- ---------- ------------
102,612,828 2,990,299 5,330,044 104,952,573
------------ ----------- ---------- ------------
$249,281,477 $13,157,309 $6,334,500 $242,458,668
============ =========== ========== ============
<FN>
(a) To eliminate the assets and liabilities included in the balance sheet of
the Registrant's Iron Ore segment at September 30, 1996.
(b) To reflect net proceeds from the sale of the Iron Ore segment, computed as
the sales price of $5,000,000, less net current liabilities payable, as of
September 30, 1996, to the Remaining Companies.
(c) To reflect transaction costs, assets and liabilities retained by the
Registrant, and income tax benefit related to the transaction.
</TABLE>
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PRO FORMA FINANCIAL INFORMATION
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma Adjustments
-----------------------
Historical Iron Ore (a) Other Pro Forma
---------- ------------ -------- ---------
REVENUES
<S> <C> <C> <C> <C>
Net sales $103,719,024 $26,223,892 $77,495,132
Operating revenues 85,656,571 85,656,571
Royalties and management fees 4,221,272 4,221,272 --
----------- ---------- -----------
193,596,867 30,445,164 163,151,703
COSTS AND EXPENSES
Cost of goods sold 85,827,000 24,071,716 61,755,284
Operating expenses 70,218,851 70,218,851
General, administrative and selling expenses 15,949,541 544,939 $866,456 (b) 16,271,058
Loss on sale of production capacities and
shutdown of facilities 612,656 612,656
----------- ---------- --------- -----------
172,608,048 24,616,655 866,456 148,857,849
INCOME FROM OPERATIONS 20,988,819 5,828,509 (866,456) 14,293,854
OTHER INCOME (EXPENSE) - NET (478,829) (478,829)
----------- ---------- --------- -----------
INCOME BEFORE INCOME TAXES 20,509,990 5,828,509 (866,456) 13,815,025
Income taxes 5,149,000 2,608,000 (295,000) 2,246,000
----------- ---------- --------- -----------
NET INCOME $15,360,990 $3,220,509 ($571,456) $11,569,025
=========== ========== ========= ===========
NET INCOME PER SHARE OF COMMON STOCK $ 6.21 $ 1.30 $ 4.68
=========== ========== ===========
DIVIDENDS PER SHARE OF COMMON STOCK $ 1.20 $ 1.20
=========== ===========
Average number of shares of Common Stock outstanding 2,474,111
<FN>
(a) To eliminate the profit of the Registrant's Iron Ore segment for the entire
period.
(b) To reflect allocated corporate general and administrative expenses that
would not have been eliminated due to the sale of the Registrant's Iron Ore
segment.
</TABLE>
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PRO FORMA FINANCIAL INFORMATION
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma Adjustments
------------------------
Historical Iron Ore (a) Other Pro Forma
---------- ------------ -------- ---------
REVENUES
<S> <C> <C> <C> <C>
Net sales $78,288,335 $22,365,754 $55,922,581
Operating revenues 57,371,256 57,371,256
Royalties and management fees 2,991,909 2,991,909 --
----------- ---------- -----------
138,651,500 25,357,663 113,293,837
COSTS AND EXPENSES
Cost of goods sold 63,510,707 20,703,242 42,807,465
Operating expenses 50,092,550 50,092,550
General, administrative and selling expenses 11,278,851 217,345 $581,591 (b) 11,643,097
Loss on sale of production capacities and
shutdown of facilities 1,077,845 1,077,845
----------- ---------- --------- ----------
125,959,953 20,920,587 581,591 105,620,957
INCOME FROM OPERATIONS 12,691,547 4,437,076 (581,591) 7,672,880
OTHER INCOME (EXPENSE) - NET 373,488 373,488
----------- ---------- --------- ----------
INCOME BEFORE INCOME TAXES 13,065,035 4,437,076 (581,591) 8,046,368
Income taxes 2,765,000 1,429,000 (198,000) 1,138,000
----------- ---------- --------- ----------
NET INCOME $10,300,035 $3,008,076 ($383,591) $6,908,368
=========== ========== ========= ==========
NET INCOME PER SHARE OF COMMON STOCK $ 4.21 $ 1.23 $ 2.83
=========== ========== ==========
DIVIDENDS PER SHARE OF COMMON STOCK $ 0.95 $ 0.95
=========== ==========
Average number of shares of Common Stock outstanding 2,444,835
<FN>
(a) To eliminate the profit of the Registrant's Iron Ore segment for the entire
period.
(b) To reflect allocated corporate general and administrative expenses that
would not have been eliminated due to the sale of the Registrant's Iron Ore
segment.
</TABLE>
