<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1997 Commission File Number 0-663
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OGLEBAY NORTON COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 34-0158970
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 Superior Avenue Cleveland, Ohio 44114-2598
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 861-3300
--------------
None
---------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
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Shares of Common Stock outstanding at October 31, 1997: 4,752,180
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<PAGE> 2
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
-----------
<S> <C>
PART I. FINANCIAL INFORMATION
------------------------------
Condensed Consolidated Balance
Sheet - September 30, 1997 (Unaudited) and
December 31, 1996 3
Condensed Consolidated Statement of
Operations (Unaudited) - Three Months
Ended September 30, 1997 and 1996 and Nine
Months Ended September 30, 1997 and 1996 4
Condensed Consolidated Statement of
Cash Flows (Unaudited) - Nine Months
Ended September 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial
Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7 - 11
PART II. OTHER INFORMATION 12
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
SEPTEMBER 30 DECEMBER 31
1997 1996
------------- -------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 14,888,530 $ 21,850,282
Marketable securities 898,475
Accounts receivable, less reserve for doubtful
accounts (1997-$601,000
1996-$512,000) 29,358,575 27,909,834
Inventories
Raw materials and finished products 3,406,109 3,003,079
Operating supplies 3,500,425 3,534,003
------------- -------------
6,906,534 6,537,082
Deferred income taxes 3,425,573 3,214,573
Prepaid insurance and other expenses 3,464,212 1,650,620
------------- -------------
TOTAL CURRENT ASSETS 58,043,424 62,060,866
PROPERTIES AND EQUIPMENT 322,522,000 300,074,691
Less allowances for depreciation
and amortization 161,389,514 157,473,072
------------- -------------
161,132,486 142,601,619
PREPAID PENSION COSTS AND OTHER ASSETS 37,190,336 31,550,923
------------- -------------
$ 256,366,246 $ 236,213,408
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 8,722,545 $ 8,476,450
Accounts payable 4,140,310 7,003,035
Payrolls and other accrued compensation 5,858,814 6,915,055
Accrued expenses 9,948,474 9,485,216
Income taxes 2,134,750 1,620,176
------------- -------------
TOTAL CURRENT LIABILITIES 30,804,893 33,499,932
LONG-TERM DEBT, less current portion 41,061,242 28,664,675
POSTRETIREMENT BENEFITS OBLIGATIONS 24,418,070 24,675,900
OTHER LONG-TERM LIABILITIES 21,864,867 20,272,081
DEFERRED INCOME TAXES 23,557,821 22,651,821
STOCKHOLDERS' EQUITY
Preferred stock, without par value,
authorized 5,000,000 shares;
none issued -0- -0-
Common stock, par value $1 per share,
authorized 10,000,000 shares;
issued 7,253,332 shares 7,253,332 7,253,332
Additional capital 6,214,299 5,849,177
Unrealized gains 410,447
Retained earnings 135,765,305 125,960,692
------------- -------------
149,232,936 139,473,648
Treasury stock, at cost - 2,501,152
and 2,417,958 shares at respective dates (33,739,795) (31,833,524)
Unallocated Employee Stock Ownership
Plan shares (833,788) (1,191,125)
------------- -------------
$ 114,659,353 $ 106,448,999
------------- -------------
$ 256,366,246 $ 236,213,408
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
-3-
<PAGE> 4
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------------ ------------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES
Net sales $ 20,968,701 $ 19,032,184 $ 60,257,307 $ 55,922,581
Operating revenues 32,424,231 30,647,498 64,130,740 57,371,256
------------- ------------- ------------- -------------
53,392,932 49,679,682 124,388,047 113,293,837
COSTS AND EXPENSES
Cost of goods sold 14,641,880 12,742,896 41,636,299 39,401,938
Operating expenses 20,908,107 21,955,205 43,792,081 43,887,370
Depreciation and amortization 3,340,682 4,149,918 7,677,925 9,454,934
General, administrative and
selling expenses 4,180,783 3,843,381 12,464,200 11,969,609
Loss on sale of production capacities and
shutdown of facilities 1,077,845 1,077,845
------------- ------------- ------------- -------------
43,071,452 43,769,245 105,570,505 105,791,696
------------- ------------- ------------- -------------
INCOME FROM OPERATIONS 10,321,480 5,910,437 18,817,542 7,502,141
Gain on sale of assets 36,700 509,139 826,567 2,387,703
Interest, dividends and other income 242,377 493,175 1,971,065 2,125,763
Other expense (627,320) (465,707) (2,003,080) (1,536,397)
Interest expense (849,991) (775,073) (2,094,394) (2,432,842)
------------- ------------- ------------- -------------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 9,123,246 5,671,971 17,517,700 8,046,368
Income taxes 2,476,000 918,127 5,080,000 1,138,213
------------- ------------- ------------- -------------
INCOME FROM CONTINUING OPERATIONS 6,476,246 4,753,844 12,437,700 6,908,155
Discontinued operations 1,307,494 3,391,880
------------- ------------- ------------- -------------
NET INCOME $ 6,476,246 $ 6,061,338 $ 12,437,700 $ 10,300,035
============= ============= ============= =============
Income per share of common stock:
Continuing operations $ 1.36 $ .98 $ 2.59 $ 1.41
Discontinued operations .27 .70
------------- ------------- ------------- -------------
NET INCOME PER SHARE OF COMMON STOCK $ 1.36 $ 1.25 $ 2.59 $ 2.11
============= ============= ============= =============
DIVIDENDS PER SHARE OF COMMON STOCK $ .20 $ .18 $ .55 $ .48
============= ============= ============= =============
Average number of shares of Common Stock
outstanding 4,763,736 4,865,358 4,793,398 4,889,670
</TABLE>
See notes to condensed consolidated financial statements.
-4-
<PAGE> 5
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 12,437,700 $ 10,300,035
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 7,677,925 9,454,934
Deferred income taxes 165,000
Gain on sale of assets (826,567) (1,762,702)
Gain on sale of business (625,000)
Loss on sale of production capacities and shutdown of facilities 1,077,845
Prepaid pension costs and other assets (2,701,976) (2,099,982)
Deferred vessel maintenance costs (1,472,923) (2,994,858)
(Increase) decrease in accounts receivable (1,448,741) 670,119
(Increase) decrease in inventories (150,549) 942,814
Decrease in accounts payable (2,866,810) (1,140,988)
Decrease in payrolls and other accrued compensation (810,326) (2,238,077)
Increase in income taxes 514,574 4,792,862
Operating activities of discontinued operations - net (9,760,651)
Other operating activities 245,745 401,208
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 10,598,052 7,182,559
INVESTING ACTIVITIES
Capital expenditures (25,363,219) (4,733,003)
Proceeds from sale of assets 1,363,824 4,783,776
Acquisition of businesses (1,600,000)
------------ ------------
NET CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES (25,599,395) 50,773
FINANCING ACTIVITIES
Additional long-term debt 17,000,000
Payments on long-term debt (4,357,338) (4,357,337)
Payments of dividends (2,633,087) (2,316,150)
Purchases of Treasury Stock (1,969,984) (1,713,791)
------------ ------------
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 8,039,591 (8,387,278)
------------ ------------
Decrease in cash and cash equivalents (6,961,752) (1,153,946)
CASH AND CASH EQUIVALENTS, JANUARY 1 21,850,282 22,660,436
------------ ------------
CASH AND CASH EQUIVALENTS, SEPTEMBER 30 $ 14,888,530 $ 21,506,490
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
-5-
<PAGE> 6
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and,
therefore, do not include all information and notes to the condensed
consolidated financial statements necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. Management of the Registrant,
however, believes that all adjustments considered necessary for a fair
presentation of the results of operations for such period have been made.
The accompanying condensed consolidated financial statements have been
reclassified to report separately the 1996 operating results of
discontinued iron ore operations. Additionally, certain amounts in the
prior year have been reclassified to conform with the 1997 condensed
consolidated financial statement presentation. For further information,
refer to the consolidated financial statements and notes thereto included
in the Registrant's 1996 Annual Report on Form 10-K.
2. Operating results are not necessarily indicative of the results to be
expected for the year, due to the seasonal nature of certain aspects of the
Registrant's business.
3. On August 27, 1997, the Registrant declared a two-for-one stock split in
the form of a 100% stock dividend to stockholders of record as of October
10, 1997. This stock split has been recorded as of September 30, 1997 by a
transfer, for all periods presented, of $3,627,000 from additional capital
to common stock, representing a $1.00 par value for each additional share
issued. All references in the accompanying Condensed Consolidated Financial
Statements and related Notes and Management's Discussion and Analysis
referring to shares and per share amounts have been adjusted retroactively
for the stock split.
4. Current and foreseeable future conditions on the Great Lakes discourage
construction of new Great Lakes vessels due to the significant capital
costs involved. As a result of the Registrant's preventative maintenance
actions, the estimated useful lives for certain vessels in its fleet are
longer than the current depreciable lives. Furthermore, recent sales of
inactive or older Great Lakes vessels have demonstrated a large demand for
such vessels at market values in excess of the current salvage values
assigned to these vessels. Therefore, effective January 1, 1997, the
Registrant extended the estimated useful lives and increased the estimated
salvage values of these vessels. The effect of these changes in estimate
reduced depreciation by $1,129,000 and $2,246,000 for the three months and
nine months ended September 30, 1997, respectively. The effect of these
changes increased net income by $745,000 ($.16 per share) and $1,482,000
($.31 per share) for the three months and nine months ended September 30,
1997. These changes in estimate will reduce depreciation by $3,178,000 and
increase net income by $2,097,000 for the year ending December 31, 1997.
5. On January 2, 1997, the Registrant's Industrial Sands segment acquired
certain property and assets of a sand screening plant in Bakersfield,
California. The Bakersfield plant buys and screens sand to supply specialty
grades and sizes.
6. On March 19, 1997, the Registrant's wholly-owned subsidiary, Oglebay Norton
Terminals, Inc., executed an agreement with the Cleveland-Cuyahoga County
Port Authority to lease and operate a bulk commodity transfer dock located
at the Port of Cleveland, just west of the Cuyahoga River in Cleveland,
Ohio. The dock, now known as the Cleveland Bulk Terminal, commenced
operations on April 1, 1997. The Registrant intends to use the dock as a
transfer point for iron ore pellets, limestone, coal and other commodities
and has guaranteed up to $6,075,000 in base rent over the ten-year term of
the lease.
-6-
<PAGE> 7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. On May 22, 1997, the Registrant's Industrial Sands segment acquired certain
property and assets of a supplier of blended sand and organic mixes. The
new operation, operating as Kurtz Sports Turf, supplies blended sands for
end users such as golf courses, playgrounds, parks and sports fields.
8. On June 11, 1997 the Registrant purchased two 630 foot long, self-unloading
vessels, the M/V Wolverine and the M/V David Z. Norton for $17,000,000.
These vessels had been operated as part of the Company's fleet for over 20
years under lease agreements that were due to expire within the next two
years. The acquisitions were initially financed through a $15,000,000
borrowing against the Registrant's Revolving Credit facility. The borrowing
against the Revolving Credit facility was replaced with a $17,000,000 fixed
rate 7.32% term loan in July 1997. The loan is payable $750,000 (including
interest) semiannually beginning January 14, 1998 through July 14, 2002;
$1,350,000 (including interest) payable semiannually from January 14, 2003
through January 14, 2007 and a final payment of $7,805,000 (including
interest) due on July 14, 2007.
9. In 1997, the Financial Accounting Standards Board (FASB) issued Statement
No. 128, "Earnings Per Share" (FAS 128), which is effective for financial
statements issued for periods ending after December 15, 1997. FAS 128
establishes new computation and presentation requirements for earnings per
share. The Registrant must adopt FAS 128 for 1997 and believes that impact
on earnings per share will not be material.
In addition, the FASB issued Statement No. 130, "Reporting Comprehensive
Income" (FAS 130), and Statement No. 131, "Disclosure about Segments of an
Enterprise and Related Information" (FAS 131). FAS 130 establishes
standards for reporting comprehensive income and FAS 131 requires reporting
certain information about operating segments. These statements, which must
be adopted by the Registrant no later than 1998, are not expected to have a
material effect on the Registrant's consolidated financial statements.
10. In July 1996, the Registrant's Engineered Materials subsidiary executed
agreements to sell its refractory shapes and coatings production
capacities. A pretax loss of $1,078,000 was recorded during the third
quarter of 1996 to recognize the sale of these production capacities and
shutdown the Cleveland facility that manufactured these products.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Due to the seasonal nature of certain aspects of the
Registrant's business, the operating results and cash flows for the first nine
months of the year are not necessarily indicative of the results to be expected
for the full year.
This discussion may contain statements concerning certain
trends and other forward-looking information affecting or relating to the
Registrant that are intended to qualify for the protections afforded
"forward-looking statements" under the Private Securities Litigation Reform Act
of 1995. Actual results could differ materially from those projected in such
forward-looking statements contained herein because of a variety of factors,
including but not limited to: (1) weather conditions affecting Marine
Transportation; (2) unanticipated fluctuations in oil prices; (3) unanticipated
changes in the demand for the Registrant's products or services due to changes
in technology; (4) vessel service availability; (5) continuation of United
States cabotage laws; (6) labor unrest; and, (7) loss or bankruptcy of major
customers.
-7-
<PAGE> 8
FINANCIAL CONDITION
-------------------
The Registrant's operating activities provided cash of
$10,598,000 in the first nine months of 1997 compared with $7,183,000 for the
same period in 1996. The increase in cash provided by operating activities
resulted primarily from the Registrant's discontinued Iron Ore segment. The
operating activities of the iron ore operations, sold at the end of 1996, used
cash of $9,761,000 through the first nine months of 1996. Vessel maintenance
costs, which are deferred and amortized over the Marine Transportation sailing
season, totaled $1,473,000 and $2,995,000 as of September 30, 1997 and 1996,
respectively. The decrease in vessel maintenance costs is a result of improved
weather conditions during 1997 compared with 1996. During 1996, the Registrant's
vessel fleet experienced severe weather and heavy ice conditions on the Great
Lakes and connecting rivers causing damage to the vessels, which increased
maintenance and repair costs. Accounts receivable increased by $1,449,000 during
the nine months ended September 30, 1997 compared with a decrease of $670,000
for the same period of 1996. Accounts receivable balances increased during the
first nine months of 1997 due to higher sales and operating revenues
experienced during the third quarter of 1997 compared with the third quarter of
1996. Income taxes payable increased by $515,000 during the first nine months
of 1997 compared with an increase of $4,793,000 for the same period in 1996.
The change in income taxes payable was principally due to the receipt of a
state income tax refund received during February 1996. The refund was
recognized ratably during 1996 through a lower effective tax rate. No such
refund was received during 1997. Operating results of the Registrant's business
segments are discussed in more detail under "RESULTS OF OPERATIONS".
Expenditures for property and equipment were $25,363,000
through the first nine months of 1997 compared with $4,733,000 for the same
period in 1996. As disclosed in note 8 of the Notes To Condensed Consolidated
Financial Statements, the Registrant purchased two Marine Transportation vessels
in June 1997. Additionally, the Registrant expended $2,260,000 for vessel
inspection costs in the first nine months of 1997. No vessel inspections were
required in 1996.
In the first nine months of 1997, the Registrant received
$933,000 on the sale of marketable securities compared with $2,050,000 during
the same period of 1996. The Registrant currently holds no marketable
securities. Additionally, the Registrant received $2,709,000 on the sale of
certain inactive properties during 1996. No such transactions have taken place
in the first nine months of 1997.
The Registrant made long-term debt payments of $4,357,000 in
both the first nine months of 1997 and 1996. During July 1997, the Registrant
financed the acquisition of two Marine Transportation vessels with a
$17,000,000, fixed rate (7.32%), term loan.
The Registrant declared dividends of $.55 during the first
nine months of 1997 compared with $.48 during the first nine months of 1996.
During the third quarter of 1997 the Registrant's Board of Directors approved a
$.025 per share increase in the quarterly dividend to $.20 per share of Common
Stock. Dividends paid were $2,633,000 for the first nine months of 1997 compared
with $2,316,000 for the same period of 1996. The Registrant purchased on the
open market, and placed in treasury, 87,990 shares of its Common Stock for
$1,970,000 in the first nine months of 1997 and 82,888 shares for $1,714,000 in
the first nine months of 1996.
Anticipated cash flows from operations and current financial
resources are expected to meet the Registrant's needs during the remainder of
1997. All financing alternatives are under constant review to determine their
ability to provide sufficient funding at the least possible cost.
-8-
<PAGE> 9
RESULTS OF OPERATIONS
---------------------
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO
NINE MONTHS ENDED SEPTEMBER 30, 1996
The Registrant's income from operations improved in the first
nine months of 1997 to a level of $18,818,000 on revenues of $124,388,000,
compared with $7,502,000 on revenues of $113,294,000 for the same period in
1996. Income from continuing operations improved 80% to a level of $12,438,000
($2.59 per share) for the first nine months of 1997 compared with $6,908,000
($1.41 per share) for the first nine months of 1996. Net income for the first
nine months of 1997 was $12,438,000 ($2.59 per share) compared with $10,300,000
($2.11 per share) for the same period in 1996.
Interest expense declined by $338,000, or 14%, in the first
nine months of 1997, compared with the same period in the prior year, due to a
reduction in debt through June 1997. Interest expense through the first nine
months of 1997 includes $266,000 of interest related to the $17,000,000 in new
borrowings as described in Note 8 of the Notes to Condensed Consolidated
Financial Statements.
Operating results of the Registrant's business segments for
the nine months ended September 30, 1997 and 1996 are discussed below. It is the
policy of the Registrant to allocate a portion of corporate general and
administrative expenses to its business segments. Corporate general and
administrative expenses for the first nine months of 1996, which were previously
allocated to discontinued operations, have been reallocated to the remaining
business segments.
Operating revenues for the Registrant's Marine Transportation
business segment increased 12% to $64,131,000 for the first nine months of 1997
compared with $57,371,000 for the same period in 1996. The segment's operating
profit increased to $13,613,000 for the first nine months of 1997 compared with
$4,967,000 for the same period in 1996. When compared with the first nine months
of 1996, the segment has experienced favorable fuel prices, strong customer
demand, more favorable weather conditions and higher water levels, allowing the
vessels to carry increased tonnage. The start of the 1996 sailing season was
plagued by heavy ice conditions in the rivers and upper Great Lakes region. As a
result, the segment's operating profit for the first nine months of 1996 was
adversely impacted by increased labor and repair charges. The segment's
operating profit for the first nine months of 1997 was also favorably impacted
by $2,937,000 resulting from the decrease in depreciation and reduction in
charter fees, as discussed in Notes 4 and 8, respectively, of the Notes To
Condensed Consolidated Financial Statements.
Net sales for the Registrant's Industrial Sands business
segment amounted to $37,833,000 for the first nine months of 1997, an 18%
increase over sales of $32,135,000 for the first nine months of 1996. The
segment's operating profit for the first nine months of 1997 increased 35%, to a
level of $8,961,000 compared with $6,659,000, for the same period of 1996.
Operating results of the segment's Texas and California operations had very
solid performances during the first nine months of 1997. The Texas operations
continue to experience strong demand for high-quality frac sand by the oil and
gas well service markets. The segment's Orange County operations improved due to
strong demand for its products from the construction industry in southern
California. The additions of the Bakersfield and Kurtz Sports Turf operations,
as disclosed in Notes 5 and 7, respectively, of the Notes To Condensed
Consolidated Financial Statements, also enhanced the segment's operating
results.
-9-
<PAGE> 10
RESULTS OF OPERATIONS (CONTINUED)
---------------------
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO
NINE MONTHS ENDED SEPTEMBER 30, 1996
Net sales for the Registrant's Engineered Materials segment
amounted to $22,424,000 for the first nine months of 1997 compared with
$23,134,000 with the same period in the prior year. The segment's operating loss
for the first nine months of 1997 was $682,000 compared with $63,000 for the
same period in the prior year. Metallurgical treatment products sales increased
by 38% as a result of the Registrant's acquisition of the Kingsford Heights,
Indiana operation late in 1996. Operating profit percentages for this product
line declined, however, primarily as a result of higher raw material costs. The
increase in metallurgical treatment products sales was offset by reductions in
refractory shapes and coatings, and ingot hot top sales of $2,910,000 and
$2,685,000 , respectively. Operating profit for the refractory shapes and
coatings, and ingot hot top product lines decreased by 47% and 49%, respectively
as a result of the decline in volumes. The refractory shapes and coatings
production capacities were sold in July 1996. Ingot hot tops volume declined
more rapidly than expected, as the Registrant is one of the few remaining
suppliers of hot tops to steel producers who have not shifted to the continuous
casting process. A decision whether to consolidate the Registrant's hot top
operations into one facility is expected by the end of the year.
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO
THREE MONTHS ENDED SEPTEMBER 30, 1996
The Registrant's income from operations improved 75% in the
third quarter of 1997 to $10,321,000, on revenues of $53,393,000, compared to
$5,910,000, on revenues of $49,680,000 for the same period of 1996. Income from
continuing operations was $6,476,000 ($1.36 per share) for the third quarter of
1997 compared with $4,754,000 ($.98 per share) for the same period of 1996. Net
income was $6,476,000 ($1.36 per share) compared with net income of $6,061,000
($1.25 per share) for the same quarter of 1996. The increases in 1997
consolidated revenues and net income can be attributed to the favorable weather
conditions and high water levels experienced by the Registrant's Marine
Transportation fleet, as well as a strong demand for the Registrant's Industrial
Sands products by the oil and gas well service markets in Texas and California
and the strong construction market in southern California, as previously
discussed.
Interest expense increased by $75,000, or 10%, in the third
quarter of 1997, compared to the same quarter in the prior year, due to the
increase in debt related to the acquisition of the Registrant's Marine
Transportation vessels, as described in Note 8 of the Notes To Condensed
Consolidated Financial Statements.
Operating results of the Registrant's business segments for
the third quarter ended September 30, 1997 and 1996 are discussed below. The
comments set forth above in the nine months comparison of 1997 with 1996
generally apply, except as noted, when comparing the third quarter of 1997 to
the same period in 1996.
Operating revenues for the Registrant's Marine Transportation
business segment of $32,424,000 for the third quarter of 1997 increased 6%
compared with $30,647,000 for the third quarter of 1996. The segment's operating
profit was $8,579,000 for the third quarter of 1997 compared with $4,875,000 for
the third quarter of 1996. The segment's operating profit for the quarter ended
September 30, 1997 was favorably impacted by $1,820,000 due to the decrease in
depreciation and reduction in charter fees, as discussed in Notes 4 and 8,
respectively, of the Notes To Condensed Consolidated Financial Statements.
-10-
<PAGE> 11
RESULTS OF OPERATIONS (CONTINUED)
---------------------
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO
THREE MONTHS ENDED SEPTEMBER 30, 1996
Net sales for the Registrant's Industrial Sands business
segment amounted to $13,178,000 for the third quarter of 1997, a 17% increase
from 1996 third quarter sales of $11,246,000. The segment's 1997 third quarter
operating profit of $2,952,000 increased 6% from the 1996 third quarter profit
of $2,789,000. Much of the improvement is attributable to the acquisitions
earlier this year of the Bakersfield and Kurtz Sports Turf operations, as
described in Notes 5 and 7, respectively, of the Notes to Condensed Consolidated
Financial Statements. The addition of these operations resulted in a 16%
increase in tons shipped and contributed to the change in the segment's product
mix.
Net sales for the Registrant's Engineered Materials business
segment amounted to $7,791,000 for the third quarter of 1997, which was a 3%
increase compared with $7,582,000 for the third quarter of 1996. The segment
experienced an operating loss of $179,000 for the third quarter of 1997 compared
with operating income of $219,000 for the same period of 1996. The new Warren,
Ohio raw material facility, which is expected to improve quality and reduce
costs in the production of metallurgical treatments, is in the start-up phase
and is expected to be fully operational by the end of the year.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
- ------- ----------------------------------------
ABOUT MARKET RISK
-----------------
Not applicable.
PART II. OTHER INFORMATION
- ---------------------------
ITEM 5. OTHER INFORMATION
- ------- -----------------
On August 27, 1997, the Registrant's Board of Directors
authorized a two-for-one split of its Common Stock, $1.00 par value ("Common
Stock"), to be effected by means of a 100% stock dividend distributed on October
30, 1997, to holders of record of its Common Stock on October 10, 1997 ("Stock
Split").
The Stock Split also resulted in an adjustment to the rights
issued under the Company's Amended and Restated Rights Agreement (the "Rights
Agreement"). As a result of the Stock Split, the exercise payable under the
Rights Agreement when the rights "flip-in" (as defined in the Rights Agreement)
is reduced from $5.00 per share to $2.50 per share.
-11-
<PAGE> 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
- ------- ---------------------------------
(a) Exhibits
(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 H to the Consolidated
Financial Statements to Registrant's Form 10-K
for the year ended December 31, 1996 and which
also include the $17,000,000 Credit Agreement,
dated July 14, 1997 with National City Bank.
(10)(i)(1)- Form of Amended and Filed herewith as
Restated Director Stock Exhibit (10)(i)(1).
Plan
(27) - Financial Data Schedule
(b) Reports on Form 8-K - None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
OGLEBAY NORTON COMPANY
DATE: November 14, 1997 By:
---------------------------------
R. J. Kessler
Vice President -
Finance and Planning
On behalf of the Registrant
and as Principal Financial
and Accounting Officer
-12-
<PAGE> 1
Exhibit 10(i)(1)
OGLEBAY NORTON COMPANY
AMENDED AND RESTATED DIRECTOR STOCK PLAN
1. PURPOSE. The Oglebay Norton Company Director Stock Plan
(the "Plan") is designed to provide appropriate consideration to Directors and
to further align their interests with those of the stockholders of the Company.
2. ELIGIBILITY. All current Directors of the Company
(excluding Directors who are employees on the date of distribution of the shares
of stock) and each person becoming a Director of the Company (excluding
Directors who are employees on the date of distribution of the shares of stock)
during the term of the Plan.
3. DIRECTOR STOCK GRANTS. Subject to Section 5, each nominee
for election as a Director at the 1995 Annual Meeting of Stockholders elected as
a Director and each other Director of the Company (excluding Directors who are
employees) in office on the date of such meeting shall, subject to approval by
the stockholders at the 1995 Annual Meeting of Stockholders, be granted an
initial grant of 100 shares of Common Stock of the Company at the meeting of the
Board of Directors immediately following the 1995 Annual Meeting of
Stockholders. Each Director (excluding Directors who are employees on the date
of distribution of the shares of stock) continuing in office shall thereafter be
granted an additional 100 shares of Common Stock of the Company as of the
meeting of the Company's Board of Directors next succeeding each Annual Meeting
of the Company's Stockholders during the term of the Plan. No action by the
Board of Directors or the Compensation and Organization Committee of the Board
of Directors of the Company will be required to effect these Director stock
grants.
4. COMMON STOCK AVAILABLE FOR DIRECTOR GRANTS. Subject to
Section 5, the aggregate number of shares of Common Stock that may be subject to
Director stock grants will be 15,000.
5. AMENDMENT AND ADJUSTMENTS.
(a) AMENDMENT. The Board of Directors may amend, suspend,
or terminate this Plan at any time, except that no amendments may be made more
than once every six months, other than to comport with changes in the Internal
Revenue Code, as amended, the Employee Retirement Income Security Act, or the
rules thereunder and other relevant laws, rules and regulations. Stockholder
approval for any such amendment will be required only to the extent necessary to
preserve the exemption provided by Rule 16b-3 under the Securities and Exchange
Act of 1934, as amended, for this Plan.
<PAGE> 2
- 2 -
(b) ADJUSTMENT. In the event that, subsequent to the date
of the 1995 Annual Meeting of Stockholders, the outstanding shares of Common
Stock are changed into or exchanged for a different number or kind of shares or
other securities of the Company by reason of any recapitalization,
reclassification, stock split-up, stock dividend, or combination of shares, or
the like, the number of shares of Common Stock granted annually pursuant to
Section 3 of this Plan and the maximum number of shares set forth in Section 4
which may be subject to the Plan shall be adjusted accordingly from time to time
as the Board of Directors, the Compensation and Organization Committee of the
Board of Directors, or the officers of the Company shall deem appropriate.
6. EFFECTIVE AND TERMINATION DATES. This Plan will become
effective on the date it is approved by holders of a majority of the shares of
Common Stock of the Company present or represented, and entitled to vote at the
1995 Annual Meeting of Stockholders and will continue in effect until December
31, 2004.
Amendment effective September 29, 1997
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 14,888,530
<SECURITIES> 0
<RECEIVABLES> 29,358,575
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<CURRENT-ASSETS> 58,043,424
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0
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<COMMON> 7,253,332
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<INCOME-PRETAX> 17,517,700
<INCOME-TAX> 5,080,000
<INCOME-CONTINUING> 12,437,700
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