<PAGE> 1
Page 1 of 12 Pages
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1998 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
------------
None
---------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
---- ----
Shares of Common Stock outstanding at April 30, 1998: 4,763,351
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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 (Unaudited) - March 31, 1998 and
December 31, 1997 3
Condensed Consolidated Statement of
Operations (Unaudited) - Three Months
Ended March 31, 1998 and 1997 4
Condensed Consolidated Statement of
Cash Flows (Unaudited) - Three Months
Ended March 31, 1998 and 1997 5
Notes to Condensed Consolidated Financial
Statements 6 - 7
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8 - 9
PART II. OTHER INFORMATION 10 -12
---------------------------
</TABLE>
<PAGE> 3
Part I. Item 1. FINANCIAL INFORMATION
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
March 31 December 31
1998 1997
------------- -------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 20,864,414 $ 29,885,922
Accounts receivable, less reserve for doubtful accounts
(1998-$726,000; 1997-$723,000) 9,702,388 22,292,432
Inventories
Raw materials and finished products 2,176,831 1,210,940
Operating supplies 3,645,111 3,382,764
------------- -------------
5,821,942 4,593,704
Deferred income taxes 3,050,091 3,050,091
Prepaid insurance and other expenses 6,113,067 1,300,715
Discontinued operations 13,738,001 15,571,082
------------- -------------
TOTAL CURRENT ASSETS 59,289,903 76,693,946
PROPERTIES AND EQUIPMENT 311,762,666 304,958,566
Less allowances for depreciation
and amortization 156,326,906 154,022,177
------------- -------------
155,435,760 150,936,389
PREPAID PENSION COSTS AND OTHER ASSETS 41,623,173 35,821,995
------------- -------------
$ 256,348,836 $ 263,452,330
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 8,728,296 $ 8,722,545
Accounts payable 4,849,740 6,875,498
Payrolls and other accrued compensation 3,066,796 7,547,241
Accrued expenses 12,487,831 12,514,672
Income taxes 1,767,749 2,277,749
------------- -------------
TOTAL CURRENT LIABILITIES 30,900,412 37,937,705
LONG-TERM DEBT, less current portion 36,699,837 36,942,130
POSTRETIREMENT BENEFITS OBLIGATIONS 24,314,271 24,341,252
OTHER LONG-TERM LIABILITIES 25,881,624 25,404,891
DEFERRED INCOME TAXES 21,171,949 21,109,949
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 7,218,729 6,288,822
Retained earnings 137,456,352 138,628,719
------------- -------------
151,928,413 152,170,873
Treasury stock, at cost - 2,489,981
and 2,501,152 shares at respective dates (33,952,107) (33,739,795)
Unallocated Employee Stock Ownership
Plan shares (595,563) (714,675)
------------- -------------
117,380,743 117,716,403
------------- -------------
$ 256,348,836 $ 263,452,330
============= =============
</TABLE>
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<PAGE> 4
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
---------------------------------
1998 1997
------------ ------------
REVENUES
<S> <C> <C>
Net sales $ 11,199,967 $ 11,498,143
Operating revenues 3,107,837 1,287,130
------------ ------------
14,307,804 12,785,273
COSTS AND EXPENSES
Cost of goods sold 7,340,347 6,985,838
Operating expenses 1,758,390 795,095
Depreciation and amortization 961,341 776,376
General, administrative and
selling expenses 3,794,692 3,321,181
------------ ------------
13,854,770 11,878,490
------------ ------------
INCOME FROM OPERATIONS 453,034 906,783
Gain on sale of assets 15,600 762,434
Interest, dividends and other income 477,597 569,191
Interest expense (780,606) (544,451)
Other expense (485,839) (663,921)
------------ ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (320,214) 1,030,036
Income taxes (benefit) (100,000) 278,246
------------ ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS (220,214) 751,790
Discontinued operations:
Income from discontinued operations -0- 101,054
------------ ------------
NET (LOSS) INCOME $ (220,214) $ 852,844
============ ============
PER SHARE AMOUNTS:
Income (loss) per share of common stock - basic:
Continuing operations $ (.05) $ .16
Discontinued operations -0- .02
------------ ------------
NET (LOSS) INCOME PER SHARE - BASIC $ (.05) $ .18
============ ============
Income (loss) per share of common stock - assuming dilution:
Continuing operations $ (.05) $ .16
Discontinued operations -0- .02
------------ ------------
NET (LOSS) INCOME PER SHARE OF COMMON
STOCK - ASSUMING DILUTION $ (.05) $ .18
============ ============
DIVIDENDS PER SHARE OF COMMON STOCK $ .20 $ .175
============ ============
Average number of shares of common stock outstanding - basic 4,766,782 4,817,390
Average number of shares of common stock outstanding - assuming dilution 4,789,540 4,842,489
</TABLE>
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<PAGE> 5
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March
-----------------------------------
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) income $ (220,214) $ 852,844
Adjustments to reconcile net (loss) income to
net cash (used in) provided by operating activities:
Depreciation and amortization 961,341 776,376
Deferred income taxes 62,000 65,000
Gain on sale of assets (15,600) (759,267)
Prepaid pension costs and other assets (867,652) (914,149)
Deferred vessel maintenance costs (4,570,042) (5,900,586)
Decrease in accounts receivable 12,532,170 14,120,603
Decrease (increase) in inventories (278,974) 1,987
Decrease in accounts payable (2,973,727) (2,950,494)
Decrease in payrolls and other accrued compensation (4,113,156) (3,690,225)
(Decrease) increase in accrued expenses (1,752,343) (1,397,470)
(Decrease) increase in income taxes (510,000) (1,114,494)
Operating activities of discontinued operations - net 1,833,081 212,244
Other operating activities (206,336) 1,069,849
------------ ------------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (119,452) 372,218
INVESTING ACTIVITIES
Capital expenditures (3,447,233) (2,475,163)
Acquisition of businesses (4,522,567) (700,000)
Proceeds from sale of assets 817,308 1,178,875
Investing activities of discontinued operations - net -0- (271,217)
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (7,152,492) (2,267,505)
FINANCING ACTIVITIES
Payments on long-term debt (236,542) (119,113)
Payments of dividends (952,154) (842,531)
Purchase of treasury stock (560,868) (675,659)
------------ ------------
NET CASH USED IN FINANCING ACTIVITIES (1,749,564) (1,637,303)
------------ ------------
Decrease in cash and cash equivalents (9,021,508) (3,532,590)
CASH AND CASH EQUIVALENTS, JANUARY 1 29,885,922 21,850,282
------------ ------------
CASH AND CASH EQUIVALENTS, MARCH 31 $ 20,864,414 $ 18,317,692
============ ============
</TABLE>
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<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 operating
results of the Registrant's discontinued Engineered Materials business
segment for the three months ended March 31, 1997. Additionally,
certain amounts in the prior year have been reclassified to conform
with the 1998 condensed consolidated financial statement presentation.
For further information, refer to the consolidated financial statements
and notes thereto included in the Registrant's 1997 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 March 9, 1998, the Registrant's Industrial Sands segment acquired
100% of the outstanding shares of Colorado Silica Sands, Inc. for
$4,523,000 in cash and a note payable of $1,337,000. The addition of
this operation is not expected to have a material impact on the results
of operations of the Registrant.
4. During the first quarter of 1998, the Registrant adopted Statement of
Financial Accounting Standard (SFAS) No. 130, "Reporting Comprehensive
Income". SFAS No. 130 establishes new standards for reporting
comprehensive income and its components. There were no reclassification
adjustments necessary to arrive at comprehensive income as of March 31,
1997 and 1998, as required by the Statement. During the first quarter
of 1998, the Registrant also adopted Statement of Financial Accounting
Standard (SFAS) No. 132, "Employers' Disclosures about Pensions and
Other Postretirement Benefits". SFAS No 132 revises employers'
disclosures about pension and other postretirement benefit plans. It
does not change the measurement or recognition of those plans, and
accordingly, does not have any effect on the Registrant's financial
position or results of operations.
5. By the end of 1998, the Registrant must adopt Statement of Financial
Accounting Standard (SFAS) No. 131, "Disclosure about Segments of an
Enterprise and Related Information". SFAS No. 131 requires the
Registrant to provide information about operating segments in annual
financial statements and requires selected information about operating
segments in interim financial reports. It also requires certain related
disclosures about products and services, geographic areas and major
customers. In accordance with the new statement, the Registrant has
elected not to report segment information in its interim financial
statements during 1998.
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<PAGE> 7
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. On April 28, 1998, Oglebay Norton Limestone Company, a wholly-owned
subsidiary of the Registrant, purchased the Port Inland, Michigan
limestone operations of Specialty Minerals, Inc. for $34,000,000. The
acquisition included inventories, land, mineral reserves, equipment and
other tangible property used in the business of mining, processing,
marketing and distributing limestone and lime to the iron and steel,
pulp and paper, chemical, environmental, agricultural and construction
industries. Financing for the acquisition was provided from available
cash and by borrowings of $25,000,000 under the Registrant's revolving
credit agreement.
7. On April 24, 1998, the Registrant initiated a tender offer for all
shares of Global Stone Corporation ("Global Stone") of Oakville,
Ontario, Canada. The offer price for Global Stone shares is Cdn. $7.80
per share payable in cash. There are approximately 32 million common
shares outstanding, including option shares. The offer is set to expire
at midnight on May 15, 1998, unless extended by the Registrant before
that time. Global Stone, a Canadian-based limestone and lime producer,
is the fifth largest producer of lime in North America.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's Discussion and Analysis of Financial Condition
and Results of Operations may contain statements concerning certain trends and
other forward-looking information, within the meaning of the federal securities
laws. Such forward-looking statements are subject to uncertainties and factors
relating to the Company's operations and business environment, all of which are
difficult to predict and many of which are beyond the control of the Company.
The Company believes that the following factors, among others, could affect its
future performance and cause actual results to differ materially from those
expressed or implied by forward-looking statements made by or on behalf of the
Company: (1) unfavorable weather conditions; (2) fluctuations in oil prices; (3)
changes in the demand for the Company's products or services due to changes in
technology; (4) vessel service availability; (5) changes in United States
cabotage laws; (6) labor unrest; (7) the loss or bankruptcy of major customers;
and (8) year 2000 software conversion failures of vendors, suppliers and
customers.
Due to the seasonal nature of certain aspects of the
Registrant's business, the operating results and cash flows for the quarter
ended March 31, 1998 are not necessarily indicative of the results to be
expected for the full year.
-7-
<PAGE> 8
FINANCIAL CONDITION
-------------------
The Registrant's operating activities used cash of $119,000 in
the first quarter of 1998 compared with the same period in 1997 when operating
activities provided cash of $372,000. The decline in operating cash flows
resulted from a reduction in net income, which is principally due to the
reduction in gains on the sale of assets during the first quarter of 1998
compared with the same period in 1997. The operating results of the Company's
business segments are discussed in more detail under "RESULTS OF OPERATIONS".
Capital expenditures totaled $3,447,000 in the first quarter
of 1998 compared with $2,475,000 for the same period in 1997. Expenditures in
the first quarter of 1998 and 1997 included vessel inspection costs of
$1,444,000 and $1,197,000, respectively. Excluding the $17,000,000 acquisition
of vessels in 1997 and capital expenditures related to businesses acquired
during 1998, capital expenditures for 1998 are anticipated to be comparable to
1997.
In the first quarter of 1997, the Registrant received pretax
proceeds of $933,000 from the sale of marketable securities. No such
transactions took place in the first quarter in 1998.
The Registrant made long-term debt payments of $237,000 and
$119,000 in of the first quarter of 1998 and 1997, respectively. The Registrant
executed a $1,337,000 promissory note in conjunction with the acquisition of
Colorado Silica Sands, Inc. The note is payable in three equal annual
installments of $500,000 (including interest), commencing March 1999.
The Registrant declared a dividend of $.20 per share in the
first quarter of 1998 compared with $.17 1/2 in the first quarter of 1997.
Dividends paid were $952,000 in the first quarter of 1998 compared with $843,000
for the same quarter in 1997. The Registrant purchased, and placed in treasury,
14,666 shares of its Common Stock for $561,000 in the first quarter of 1998 and
15,741 shares of its Common Stock for $676,000 in the first quarter of 1997.
In March 1998, the Registrant renegotiated its revolving
credit agreement with certain banks, which would have enabled the Registrant to
borrow up to $100,000,000 for acquisitions, working capital requirements and
other general needs. Prior to the completion of the agreement, the Registrant
announced its tender offer for Global Stone, as further described in Note 7 to
the Condensed Consolidated Financial Statements. Accordingly, the Registrant is
in the process of completing a new revolving credit agreement and other
long-term financing to complete this transaction. Anticipated cash flows from
operations and the new financing arrangements are expected to meet the
Registrant's needs during the remainder of 1998.
-8-
<PAGE> 9
RESULTS OF OPERATIONS
---------------------
QUARTER ENDED MARCH 31, 1998 COMPARED WITH
QUARTER ENDED MARCH 31, 1997
Income from operations declined in the first quarter of 1998
to $453,000 on revenues of $14,308,000 compared with $907,000 on revenues of
$12,785,000 for the same quarter in 1997. The Registrant reported a net loss of
$220,000 ($.05 per share) for the first quarter of 1998, compared with net
income of $853,000 ($.18 per share) for the same period in 1997. Net income for
the first quarter of 1997 includes income from discontinued operations of
$101,000 ($.02 per share).
Interest expense increased 43% in the first quarter of 1998,
compared with the same period in the prior year, due to an increase in
borrowings.
Operating results of the Registrant's business segments for
the first quarter ended March 31, 1998 and 1997 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 quarter of 1997, which were previously
allocated to the discontinued operations, have been reallocated to the remaining
business segments.
Operating revenues for the Registrant's Marine Transportation
segment totaled $3,108,000 for the first quarter of 1998 compared with
$1,287,000 for the first quarter of 1997. Operating income was $260,000 for the
first quarter of 1998 compared with a loss of $494,000 for the first quarter of
1997. The 1998 sailing season opened under favorable weather conditions on the
Great Lakes, with the mild winter providing an opportunity for an early start to
the season. Tonnage levels hauled in the first quarter of 1998 were 1,084,000
tons, compared with 535,000 tons hauled in the first quarter of 1997.
Net sales for the Registrant's Industrial Sands segment of
$11,200,000 for the first quarter of 1998 were comparable to net sales of
$11,498,000 in first quarter of 1997. Operating profit of $1,582,000 for the
first quarter of 1998 decreased by 40% compared with $2,623,000 for the first
quarter of 1997. Shipments of 356,000 tons for the first quarter of 1998
represented a 12% decrease from the same quarter in 1997. The acquisition of
Colorado Silica Sands, Inc. in March 1998, and changes in product mix resulted
in sales volumes comparable to the same period in the prior year. However, the
Registrant's Brady, Texas operations could not sustain the strong pace
established in the first quarter of 1997 as softening oil prices impacted demand
for frac sands used by well operators.
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<PAGE> 10
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Not applicable.
PART II. OTHER INFORMATION
- ---------------------------
ITEM 5. OTHER INFORMATION
- --------------------------
Acquisition of Limestone Assets of Specialty Minerals, Inc.
-----------------------------------------------------------
On April 28, 1998, Oglebay Norton Limestone Company ("ONLC"), a
wholly-owned subsidiary of the Registrant, acquired certain assets comprising
the limestone operations and business of Specialty Minerals, Inc for
$34,000,000. The purchase price and other terms of the acquisition were
determined through arms-length negotiations. The acquisition included
inventories, land, mineral reserves, equipment and other tangible property used
in the business of mining, processing, marketing and distributing limestone and
lime to the iron and steel, pulp and paper, chemical, environmental,
agricultural and construction industries. ONLC intends to continue such use
following the acquisition. Financing for the acquisition was provided from cash
and by borrowings under the Registrant's revolving credit agreement.
There are no material relationships between Specialty Minerals and the
Registrant or any of the Registrant's affiliates, any director or officer of the
Registrant, or any associate of any such officer or director.
Proforma financial statements or information are not required to be
disclosed for the transaction pursuant to Rule 3-05(b) of Regulation S-X, as
none of the conditions set forth in Rule 1-02(w) of Regulation S-X exceeds
twenty percent.
1998 Annual Meeting of Stockholders
-----------------------------------
On April 29, 1998, the Registrant announced it would delay mailing its
proxy statement-prospectus in connection with the 1998 Annual Meeting of
Stockholders until after completion of its recently announced tender offer for
Global Stone Corporation ("Global Stone"), a Canadian-based limestone and lime
producer with operations in the United States and Canada. The tender offer for
Global Stone is set to expire on May 15, 1998, unless extended by the
Registrant. The Registrant's 1998 Annual Meeting of Stockholders will be held as
soon as practicable after the tender offer for Global Stone has concluded. A
copy of the April 29, 1998 press release accompanies this filing.
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<PAGE> 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
<TABLE>
<CAPTION>
(a) Exhibits
<S> <C> <C>
10(d)(2) Form of Change-in- Incorporated by
Control Agreements with reference from Exhibit
Five Executive Officers and 10(d)(3) in the Company's
Three key employees * Annual Report on Form 10-K
For the year ended
December 31, 1996.
Schedule of Participants
Filed herewith as Exhibit
10(d)(2).
10(x) Separation Agreement and Filed herewith as Exhibit
Release between the 10(x).
Company and Richard J.
Kessler *
27 Financial Data Schedule
99 Press Release dated Filed herewith as Exhibit
April 29, 1998 99
</TABLE>
* Indicates management contracts or compensatory plans or
arrangements in which one or more directors or executive
officers of the Registrant may be participants.
(b) Reports on Form 8-K - None
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<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
OGLEBAY NORTON COMPANY
DATE: May 13, 1998 By: /s/ David H. Kelsey
------------------------------------
David H. Kelsey
Vice President -
Chief Financial Officer
On behalf of the Registrant
and as Principal Financial
and Accounting Officer
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<PAGE> 1
Exhibit 10(d)(2)
Schedule of Participants
In Change-in-Control Agreements
-------------------------------
The form of Change-in-Control Agreement was filed as Exhibit 10(d)(3) to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1996
and is incorporated herein by reference. All Change-in-Control Agreements are
identical except for the identity of the participants and dates of
execution.
Participants:
-------------
M. F. Biehl
J. S. Gray
P. V. Gorman, Jr.
M. P. Juszli
D. H. Kelsey
D. G. Slezak
S. H. Theis
T. J. Wojciechowski
<PAGE> 1
Exhibit 10(x)
SEPARATION AGREEMENT AND RELEASE
The parties to this Separation Agreement and Release ("Agreement") are
Oglebay Norton Company (hereinafter referred to as "Oglebay") and Richard J.
Kessler (hereinafter referred to as "Kessler"). This Agreement is entered into
for the purpose of fully and totally releasing and settling all present and/or
future claims or disputes between the parties arising out of events, whether
known or unknown, suspected or unsuspected, occurring prior to the signing of
this Agreement.
WHEREAS, Kessler is presently employed as Oglebay's Vice President and
Chief Financial Officer; and
WHEREAS, Kessler and Oglebay are mutually desirous of terminating the
employment relationship; and
WHEREAS, Kessler and Oglebay are further desirous of entering into a
comprehensive agreement to settle and satisfy any and all claims as may be
related to the termination of said employment relationship;
NOW, THEREFORE, in consideration of the promises and covenants
contained herein, the parties agree as follows:
1. EMPLOYMENT TERMINATION. The parties hereby acknowledge and
agree that the employment relationship between Oglebay and
Kessler will be terminated as of December 31, 1999.
1. Effective as of March 9, 1998, Kessler will
voluntarily resign as Vice President and Chief
Financial Officer of Oglebay.
-1-
<PAGE> 2
2. Kessler will continue to be employed by Oglebay in
the capacity of a consultant until December 31, 1999.
During such period Oglebay agrees to pay compensation
for the services described below at the rate of
$159,000 per year paid monthly. Kessler acknowledges
that he will not participate in the 1998 and 1999
Performance Management Process bonuses. Between March
1, 1998 and December 31, 1999, Oglebay shall further
provide to Kessler all other benefits as are provided
to full-time salaried employees of Oglebay.
3. CONSULTING DUTIES. Between March 1, 1998 and December
31, 1999, Kessler's primary responsibility will be to
facilitate the transition of duties and
responsibilities to the person chosen by Oglebay to
be the next Chief Financial Officer. The transitional
duties are expected to require Kessler's full time
and best efforts. Kessler will further assist the
Chief Financial Officer and the President and Chief
Executive Officer on special projects. At such time
that it is mutually agreed and to the extent that
Kessler's full time and best efforts are no longer
needed by Oglebay, Kessler will be free to pursue
other interests.
2. LIFE INSURANCE. Oglebay further agrees to pay all premiums on
Kessler's insurance policy under the Executive Life Program in
accordance with the agreement dated June 3, 1992, entered into
between Kessler and R. Thomas Green, Jr. on behalf of Oglebay.
3. RETIREMENT BENEFITS. Commencing December 31, 1999, if Kessler
terminates the employment relationship by retirement, Oglebay
agrees that Kessler
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<PAGE> 3
shall be entitled to receive a monthly pension benefit of
$9,000 per month (including amounts payable to Kessler under
any defined benefit plan or supplemental defined benefit plan
presently maintained by Oglebay), subject to appropriate
actuarial adjustments for optional forms of payment as
provided for under Oglebay's Salaried Benefit Plan. If
Kessler's employment relationship with Oglebay is terminated
by reason of his death prior to December 31, 1999, he will be
presumed to have retired the day before he died and his spouse
will then be entitled to Pre-Retirement Death Benefits as
prescribed in the Salaried Pension Plan and will be based on
the above $9,000 per month figure.
4. RETIREMENT PLANNING FEES. Oglebay shall pay up to $5,000 for
any and all retirement planning consultation deemed necessary
by Kessler prior to his retirement on December 31, 1999. In
addition to the payment and reimbursement for such
consultation, Oglebay shall pay to Kessler an additional
amount sufficient to pay all federal, state and local taxes
incurred by Kessler as a result of (a) the payment of the
expense or receipt of the reimbursement and (b) the receipt of
the additional payment.
5. In consideration of the foregoing, Kessler agrees, if
applicable, to dismiss with prejudice any and all charges,
complaints, claims or legal actions now pending before any
administrative agency (state or federal) or court, and agrees
not to initiate or maintain any charges, complaints, claims,
legal actions or grievances arising out of or in connection
with his previous employment with or separation from Oglebay,
his claimed right to severance
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<PAGE> 4
pay, or any events occurring prior to the signing of this
Agreement before any court or any administrative agency in the
future, except a charge brought pursuant to the provision of
29 U.S.C. Section 626(f)(4). The right to file such a charge
and the resolution of such charge shall have no force and
effect on any other provision set forth in this Agreement.
6. In further consideration of the foregoing, Kessler agrees to
release and forever discharge Oglebay and any of its past,
present or future affiliated companies, subsidiaries,
divisions, and any and all of Oglebay's past, present, and
future officers, agents, directors, representatives,
employees, shareholders and, as applicable, their successors,
assigns, heirs and executors, from any and all claims,
including, but not limited to, employment, re-employment,
demands, liability, obligations, damages, rights, costs,
losses, debts and expenses (including but not limited to
attorneys' fees), causes of actions, or lawsuits based upon,
related to, or arising out of his employment with and
separation from Oglebay, with respect to any events, whether
known or unknown or suspect or unsuspected, occurring prior to
the signing of this Agreement. This Agreement not to sue
includes, but is not limited to:
claims, actions, causes of action or liabilities
arising under Title VII of the Civil Rights Act of
1964, as amended; the Age Discrimination in
Employment Act, as amended; Employee Retirement
Income Security Act of 1974, as amended; the Older
Workers Benefits Protection Act, as amended; 42
U.S.C. Section 1981, as amended; the Civil Rights Act
of 1991, as amended; the Worker Adjustment and
Retaining Notification Act, as amended; the
Rehabilitation Act of 1973, as amended; the Americans
with Disabilities Act, as amended; the Family
-4-
<PAGE> 5
and Medical Leave Act, as amended; any state
anti-discrimination, civil rights or human rights
laws, any other federal, state, or municipal
employment discrimination statutes and decisional law
including, but not limited to, claims based on age,
sex, attainment of benefit plan rights, race,
religion, national origin, marital status, sexual
orientation, ancestry, harassment, parental status,
handicap, disability, retaliation, and veteran
status, as well as claims for breach of contract,
employee benefits, implied contract, promissory
estoppel, defamation, tort claims, and any common law
claims recognized now or later, including violations
of public policy.
7. Kessler further agrees that he will not divulge the terms of
this Agreement to any person or entity whatsoever at any time,
except to his spouse and attorney, unless required to do so by
law. Should Oglebay Norton Co. prove that the terms were
divulged by Kessler then Kessler shall return all
consideration tendered and will totally and fully release
Oglebay from all obligations, claims, charges, complaints or
causes of action and Kessler will be entitled to no rights,
remedies or causes thereafter.
8. Kessler acknowledges that he has been given a period of at
least twenty-one (21) days within which to consider this
Agreement prior to the execution of it and that he has
reviewed its terms and considered its effect, including the
foregoing release of claims. Kessler also acknowledges that he
has been advised in writing to consult with an attorney prior
to executing it. Kessler understands that for a period of
seven (7) days following the execution of this Agreement, he
may revoke it, and that this Agreement shall not become
effective or enforceable until the revocation period of seven
(7) days has expired. Kessler understands that in order to
revoke this Agreement within this seven (7) day time period he
must provide written notice of that intention to Paul V.
Gorman, Oglebay's Assistant Vice President of Human
-5-
<PAGE> 6
Resources ("Gorman") so that Gorman may actually and
personally receive notice of the revocation.
9. It is agreed that the execution and/or implementation of this
Agreement does not in any way constitute or represent an
admission of any kind by Oglebay and/or by Kessler.
10. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties and the terms hereof are contractual and
not mere recitals. This Agreement shall be added to the
schedule of agreements for Oglebay's grantor trust known as
Rabbi Trust II. All prior agreement(s) relative to Kessler's
employment are hereby terminated and only this Agreement shall
be listed on the aforementioned schedule of agreements. No
modification or amendment of this Agreement shall be valid or
binding unless contained in a written instrument and signed by
the parties hereto.
11. GOVERNING LAW. This Agreement shall be construed under the
laws of the State of Ohio and shall in all respect be
interpreted, enforced and governed under the law of said
State.
-6-
<PAGE> 7
READ BEFORE SIGNING
-------------------
I HAVE CAREFULLY READ AND FULLY UNDERSTAND THE PROVISIONS OF THIS
SETTLEMENT AGREEMENT AND RELEASE. THIS RELEASE INCLUDES CLAIMS OR
RIGHTS AND ALLEGED CLAIMS OR RIGHTS RELATING TO FEDERAL, STATE, OR
LOCAL LAWS PROHIBITING EMPLOYMENT DISCRIMINATION, WHETHER BASED ON AGE,
SEX, RACE, COLOR, NATIONAL ORIGIN, RELIGION, HANDICAP OR MARITAL,
PARENTAL OR VETERAN STATUS OR CLAIMS GROWING OUT OF ANY LEGAL
RESTRICTIONS ON OGLEBAY'S RIGHT TO TERMINATE ITS EMPLOYEES. I HAVE NOT
RELIED UPON ANY OTHER REPRESENTATION OR STATEMENT WRITTEN OR ORAL. I
HAVE HAD TIME TO CONSULT WITH AN ATTORNEY OF MY CHOICE PRIOR TO
EXECUTING THIS SETTLEMENT AGREEMENT AND RELEASE.
IN WITNESS WHEREOF, the parties have hereunto set their hands this 23rd
& 24th day of March, 1998.
<TABLE>
<CAPTION>
Witnessed:
OGLEBAY NORTON COMPANY
<S> <C>
/s/ Lou Ann Anghel By: /s/ John N. Lauer
- --------------------------------- --------------------------------
John N. Lauer
- ------------------------------ Its: President and Chief Executive Officer
By: /s/ Paul V. Gorman, Jr.
--------------------------------
Paul V. Gorman, Jr.
Its: Assistant Vice President of Human Resources
Date: 3-23-98
------------------------------
/s/ Marilyn K. Pell /s/ Richard J. Kessler
- --------------------------------- ------------------------------------
Richard J. Kessler
- ---------------------------------
Date: 3-24-98
------------------------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 20,864,414
<SECURITIES> 0
<RECEIVABLES> 9,702,388
<ALLOWANCES> 726,000
<INVENTORY> 5,821,942
<CURRENT-ASSETS> 59,289,903
<PP&E> 311,762,666
<DEPRECIATION> 156,326,906
<TOTAL-ASSETS> 256,348,836
<CURRENT-LIABILITIES> 30,900,412
<BONDS> 0
0
0
<COMMON> 7,253,332
<OTHER-SE> 110,127,411
<TOTAL-LIABILITY-AND-EQUITY> 256,348,836
<SALES> 11,199,967
<TOTAL-REVENUES> 14,307,804
<CGS> 7,340,347
<TOTAL-COSTS> 13,854,770
<OTHER-EXPENSES> 485,839
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 780,606
<INCOME-PRETAX> (320,214)
<INCOME-TAX> (100,000)
<INCOME-CONTINUING> (220,214)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (220,214)
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
<PAGE> 1
EXH. 99
OGLEBAY NORTON COMPANY
NEWS
FOR IMMEDIATE RELEASE
FOR FURTHER INFORMATION
CONTACT JEFFREY S. GRAY
(216) 861-8736
CLEVELAND, OHIO
APRIL 29, 1998
OGLEBAY NORTON REPORTS IMPROVED REVENUES IN THE FIRST QUARTER;
EARNINGS OFF DUE TO 1997 NON-RECURRING GAINS AND INDUSTRIAL SANDS SOFTNESS
Oglebay Norton Company (NASDAQ:OGLE) today announced improved revenues
in the first quarter ended March 31, 1998.
Revenues of $14,308,000 for the first quarter were up 12 percent from
$12,785,000 in the first quarter of 1997. Marine Transportation revenues
increased due to the division's ability to complete winter maintenance work on
its fleet of vessels in record time and as a result of the very mild winter on
the Great Lakes. Revenues from Industrial Sands decreased compared with the
year-ago record quarter due to adverse weather conditions in Southern California
and reduced oil-field demand for the Company's frac sand.
For the 1998 first quarter, the Company recorded a net loss of
$220,000, or $.05 per share, compared with net income of $853,000, or $.18 per
share, in the same year-ago period. Net income for the first quarter of 1997
included pre-tax gains of $762,000 primarily on the sale of marketable
securities. Excluding these gains, the Company would have recorded 1997 net
income of $358,000, or $.07 per share.
"Our operating performance represents a solid first quarter for Oglebay
Norton," said John N. Lauer, president and chief executive officer. "We had
expected a larger seasonal loss, but for the first time in the Company's
history, our Marine Transportation division recorded a profit in the opening
quarter of the year.
<PAGE> 2
"Additionally, our recently announced acquisitions demonstrate Oglebay
Norton's commitment to accelerate growth in selected industries in which we can
achieve or strengthen a market leadership position. We continue to pursue
acquisition opportunities in industrial sands as we further our growth efforts
in this business segment, and we are actively evaluating strategic opportunities
in other areas as well."
In early March, Oglebay Norton completed its acquisition of Colorado
Silica Sand, Inc. located in Colorado Springs. On April 28, 1998, the Company
completed its purchase of Port Inland limestone facilities in the Upper
Peninsula of Michigan. Combined, these two operations recorded 1997 revenues in
excess of $25 million.
In addition to these acquisitions, Oglebay Norton initiated a tender
offer on April 24, 1998, for all shares of Global Stone Corporation, a
Canadian-based limestone and lime producer with annual revenues of approximately
$125 million (U.S.) from operations in both Canada and the United States. The
offer is set to expire at midnight on May 15, 1998, unless extended by Oglebay
Norton before that time.
"These strategic actions taken by Oglebay Norton illustrate our focus
in 1998 on building shareholder value," noted Lauer. "As a consequence,
quarterly earnings for Oglebay Norton will not necessarily be indicative of the
Company's true enterprise value."
The Company also said that it will defer mailing the proxy/prospectus
with respect to its proposed holding company reorganization until after its
recently announced tender offer for Global Stone has been concluded. The Company
has filed a preliminary proxy/prospectus seeking shareholder approval to create
an Ohio-based holding company structure and to increase authorized shares from
10 million to 30 million. Lauer stated, "Given the timing of our tender offer
and the related shareholder and regulatory approval timetables, we will hold the
annual meeting as soon as practicable after the tender offer for Global Stone
has concluded."
In other action, Oglebay Norton Company's Board of Directors declared a
regular dividend of $0.20 per share, payable on June 30, 1998, to stockholders
of record on June 8, 1998.
Oglebay Norton Company is a Cleveland, Ohio-based company engaged in
Great Lakes marine transportation and material handling, and the mining and
marketing of industrial sands and limestone. It serves the steel, oil and gas,
ceramic, chemical, glass, paper, electric utility and construction industries.
The Company recorded revenues from continuing operations of $145 million for the
year ended December 31, 1997.
<PAGE> 3
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Oglebay Norton Company and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended
March 31
(000'S EXCEPT PER SHARE AMOUNTS) 1998 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
NET SALES AND OPERATING REVENUES $ 14,308 $ 12,785
COSTS AND EXPENSES
Cost of goods sold and operating expenses 9,099 7,781
Depreciation and amortization 961 776
General, administrative and selling expenses 3,795 3,321
-------- --------
13,855 11,878
-------- --------
INCOME FROM OPERATIONS 453 907
Gain on sale of assets 16 762
Interest, dividends and other income 478 569
Interest expense (781) (544)
Other expense (486) (664)
-------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (320) 1,030
Income taxes (100) 278
-------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS $ (220) $ 752
Income from discontinued operations -0- 101
-------- --------
NET INCOME (LOSS) $ (220) $ 853
======== ========
PER SHARE AMOUNTS:
Continuing operations $ (.05) $ .16
Discontinued operations -0- .02
-------- --------
Net income (loss) per share - basic and assuming dilution $ (.05) $ .18
======== ========
Average number of shares 4,764 4,817
Average number of shares adjusted for basic 4,767 4,817
Average number of shares assuming dilution 4,784 4,842
</TABLE>
