Prospectus Supplement Rule 424 (b3)
(To Prospectus dated March 1, 1996, Registration Statement
as supplemented by Prospectus Supplements File No. 333-1408
dated March 6, 1996 and June 4, 1996)
1,193,000 Shares
The Carbide/Graphite Group, Inc.
Common Stock
---------------------------
This Prospectus Supplement relates to the offer and sale of 1,193,000
shares of $0.01 par value common stock (the "Common Stock") of The
Carbide/Graphite Group, Inc. (the "Company") which may be offered for sale
hereby, including shares of Common Stock which may be issuable upon exercise of
outstanding stock options and shares offered for resale following such exercise,
from time to time, by any or all of the selling stockholders named herein (the
"Selling Stockholders"). See "Security Ownership of Selling Stockholders"
contained in this Prospectus Supplement. The Company will not receive any of the
proceeds from the sale of such shares.
On March 1, 1996, 2,457,958 shares of Common Stock (the "Registered
Shares") were registered with the Securities and Exchange Commission on Form
S-1. On March 6, 1996, 999,958 shares of the Registered Shares were offered
pursuant to a Prospectus Supplement and sold by certain selling stockholders
named therein through an underwritten public offering. From June 4, 1996 through
July 12, 1996, 265,000 shares of the Registered Shares were sold by certain
Selling Stockholders. The 1,193,000 shares of the remaining Registered Shares
may be offered for sale hereby.
The Common Stock is quoted on the NASDAQ National Market System under the
symbol "CGGI." On September 30, 1996, the last reported sale price of the
Company's Common Stock as reported by the NASDAQ National Market System was
$18.50 per share.
See "Risk Factors" commencing on page 8 of the accompanying Prospectus for
a discussion of certain factors that should be considered in connection with an
investment in the Common Stock offered hereby.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------
The shares of Common Stock to which this Prospectus Supplement relates may
from time to time be offered and sold by the Selling Stockholders to or through
underwriters, through one or more agents or dealers or directly to purchasers.
The shares of Common Stock may be sold by the Selling Stockholders from time to
time, in ordinary brokers' transactions through the NASDAQ National Market
System at the price prevailing at the time of such sale. The commission payable
will be the regular commission a broker receives for effecting such sales. The
shares of Common Stock may also be offered in block trades, private
transactions, or otherwise. The net proceeds to the Selling Stockholder will be
the proceeds received by him upon such sales, less brokerage commissions. All
expenses of registration in connection with this offering are being borne by the
Company, but the Selling Stockholders will pay any brokerage fees and other
expenses of sale incurred by them. See "Plan of Distribution" in the
accompanying Prospectus.
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The date of this Prospectus Supplement is October 1, 1996
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<TABLE>
SECURITY OWNERSHIP OF SELLING STOCKHOLDERS
The following table sets forth certain information, as of the date of this
Prospectus Supplement, regarding the beneficial ownership of Common Stock by
each of the Selling Stockholders.
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to sale under this After sale under this
Prospectus Supplement Prospectus Supplement
(1)(2) (1)(2)
-------------------------- ---------------------------
Beneficial Owner Number Percentage Number Percentage
- ------------------------------------------------------- ---------- ------------- ---------- --------------
<S> <C> <C> <C> <C>
Nicholas T. Kaiser (3)................................ 455,000 5.3% + -
One Gateway Center, 19th Floor
Pittsburgh, PA 15222
Ronald N. Clawson (3)................................. 140,000 1.8 + -
Walter B. Fowler (3).................................. 70,000 0.8 + -
Stephen D. Weaver (3)................................. 30,000 0.4 + -
James G. Baldwin (3).................................. 75,000 0.9 + -
James R. Ball (3)..................................... 15,000 0.2 + -
Ronald B. Kalich (3).................................. 10,000 0.1 + -
Roger Mulvihill (3)................................... 8,000 0.1 + -
Paul F. Balser (3).................................... - - - -
Robert M. Howe (4).................................... - - - -
All officers and directors as a group (10 persons).... 803,000 9.3 + -
John P. Monago......................................... 55,000 0.7 + -
Vice President and Plant Manager (Niagara Falls)
Michael A. Kokoska..................................... 35,000 0.4 + -
District Sales Manager
Millard E. Walck....................................... 30,000 0.4 + -
Controller (Niagara Falls)
Ara P. Hacetoglu (5).................................. 27,500 0.3 + -
Vice President and Plant Manager (Louisville)
Walter E. Damian....................................... 25,000 0.3 + -
Vice President - Human Resources
Stanley L. Foster...................................... 25,000 0.3 + -
Director - Environment and Planning
Robert G. Pepler (6).................................. 25,000 0.3 + -
Vice President and Plant Manager (Calvert City)
Peter E. Younghans (7)................................ 22,500 0.3 + -
Vice President and Plant Manager (St. Marys)
Samuel L. Hoff......................................... 20,000 0.2 + -
Director - Raw Materials Technology
Jim J. Trigg (8)...................................... 20,000 0.2 + -
General Manager - Seadrift Coke, L.P.
Gerald N. Casillo...................................... 18,000 0.2 + -
Manager - Production and Process Engineering
Robert G. Keys......................................... 15,000 0.2 + -
Maintenance Manager - Seadrift Coke, L.P.
Stewart W. Robinson.................................... 15,000 0.2 + -
Vice President - Technical (Carbide)
Frank L. Sizemore...................................... 15,000 0.2 + -
Maintenance Manager (Louisville)
Joseph A. Garvelli..................................... 12,500 0.2 + -
Controller - Seadrift Coke, L.P.
David F. Higginbotham.................................. 12,500 0.2 + -
International Sales Manager
Donald S. Masyada...................................... 12,500 0.2 + -
Vice President - Electrode Sales
</TABLE>
(table continued on next page)
SS-2
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(table continued from previous page)
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to sale under this After sale under this
Prospectus Supplement Prospectus Supplement
(1)(2) (1)(2)
-------------------------- ---------------------------
Beneficial Owner Number Percentage Number Percentage
- ------------------------------------------------------- ---------- ------------- ---------- --------------
<S> <C> <C> <C> <C>
Roger C. Fritz......................................... 2,500 * + -
Manager - Information Systems
Leo E. Ehrensberger.................................... 2,000 * + -
Controller (St. Marys)
</TABLE>
- ------------------
+ This Prospectus Supplement and the accompanying Prospectus relate to all
shares and shares issuable upon the exercise of options held by the
individual. In the event such individual sold all such shares, the amount
of beneficial ownership of shares reflected in this table would be zero.
* Less than 0.1%.
(1) Unless otherwise noted, each stockholder has sole voting and investment
power with respect to the shares shown.
(2) Unless otherwise noted, amounts may include shares of Common Stock issuable
upon the exercise of fully vested stock options.
(3) For a discussion of the position, office or other material relationship
between the Company and the Selling Stockholder, see "Management" and
"Certain Transactions" in the accompanying Prospectus.
(4) Mr. Howe was elected to the Company's Board of Directors in April 1996.
(5) Includes 27,500 shares issuable upon the exercise of options, 20,000 of
which are vested and exercisable.
(6) Includes 10,000 shares issuable upon the exercise of options, 2,500 of
which are vested and exercisable.
(7) Includes 22,500 shares issuable upon the exercise of options, 7,500 of
which are vested and exercisable.
(8) Includes 15,000 shares issuable upon the exercise of options, 7,500 of
which are vested and exercisable.
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Fiscal 1996 Financial Data
Earnings from continuing operations for fiscal 1996 were $14.3 million, or
$1.67 per share, compared with $12.3 million, or $1.59 per share in fiscal 1995.
Weighted average common and common equivalent shares were 10.7% higher in fiscal
1996. An extraordinary charge of $2.2 million associated with the repurchase of
$28.2 million in 11.5% Senior Notes due 2003 reduced fiscal 1996 net income to
$12.1 million, or $1.42 per share.
Net sales for fiscal 1996 were $259.4 million, versus $241.5 million in
fiscal 1995, a 7.4% increase. Graphite electrode product sales increased 12.0%
over the prior year to $179.9 million for fiscal 1996, while calcium carbide
product sales decreased 1.7% to $79.5 million for the current year. Within the
graphite electrode products segment, graphite electrode net sales for fiscal
1996 were $134.0 million, versus $119.4 million in fiscal 1995, a 12.2%
increase. Graphite electrode sales were higher due to a 7.6% increase in the
average net sales price of graphite electrodes which resulted from price
increases which took effect during the second half of fiscal 1996. Also,
graphite electrode shipments for fiscal 1996 increased to 105.3 million pounds,
a 4.5% increase over fiscal 1995. Needle coke sales for fiscal 1996 were $16.5
million, versus $18.6 million in fiscal 1995, an 11.3% decrease. The decline in
needle coke sales was the result of the Company using more needle coke
internally for electrode production. The effect of lower shipments was partially
offset by an 8.3% increase in needle coke prices, which resulted from price
increases implemented in January 1996. Other graphite specialty sales increased
30.2% in fiscal 1996 to $29.5 million, principally due to increased sales of
bulk graphite to SGL Carbon Corporation ("SGL Corp."). Sales to SGL Corp. were
$15.6 million in fiscal 1996 versus $9.9 million in fiscal 1995. Sales to SGL
Corp. are at cost under a supply agreement which began in January 1995 and has a
term of approximately three years. Within the calcium carbide products segment,
pipeline acetylene sales were $28.1 million, an increase of 3.2% compared to
fiscal 1995, on a 3.1% increase in shipments. Desulfurization sales decreased
3.9% to $24.7 million due to a 2.6% decrease in shipments and a 1.7% decrease in
the net sales price, which were due to increased competition in this market. In
addition, sales of electrically calcined anthracite coal in fiscal 1996
decreased 20.8% to $2.6 million due to a 24.1% decrease in shipments.
For fiscal 1996, operating income was $30.7 million, versus $30.4 million
in fiscal 1995. Last year's operating income included $3.4 million of
non-recurring consulting income, versus $0.3 million in fiscal 1996. Fiscal
1996's operating income also includes a $1.0 million favorable utility rate
settlement. The increase in
SS-3
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fiscal 1996 operating income before these non-recurring items resulted from
higher shipments of graphite electrodes and higher selling prices of graphite
electrodes and needle coke, partially offset by the effects of lower needle coke
shipments, lower calcium carbide product sales and higher decant oil costs,
which were 11.4% higher in fiscal 1996. See "Risk Factors - Limited Availability
and Pricing of Needle Coke Feedstocks" in the accompanying Prospectus.
In September 1996, Nicholas T. Kaiser, the Chairman, Chief Executive
Officer and President of the Company advised the Board of Directors that he
intends to retire for personal reasons in the near future, upon the selection of
his successor and the completion of a transition period. Mr. Kaiser, who is 62,
will continue as a director of the Company.
The following table reflects certain financial data of the Company as of
and for the quarter and fiscal year ended July 31, 1996 and 1995:
<TABLE>
<CAPTION>
Quarter ended July 31, Fiscal Year Ended July 31,
------------------------------ -------------------------------
1996 1995 1996 1995
-------------- -------------- --------------- --------------
(Amounts in thousands, except share & per share information)
-------------- -------------- -------------- --------------
(Unaudited)
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales ................................ $65,908 $63,962 $259,394 $241,456
Cost of goods sold ....................... 54,466 52,775 214,396 198,160
Selling, general and administrative ...... 3,569 3,465 12,837 13,932
Other compensation ...................... 298 419 1,772 2,315
Other income ............................. (55) (1,227) (308) (3,358)
-------------- -------------- --------------- --------------
Operating income .................... 7,630 8,530 30,697 30,407
Special financing expenses (A) ........... -- 154 889 357
Interest expense ......................... 2,084 2,661 9,073 10,518
-------------- -------------- --------------- --------------
Income before income taxes .......... 5,546 5,715 20,735 19,532
Provision for income taxes ............... 1,559 2,091 6,416 7,206
-------------- -------------- --------------- --------------
Income from continuing operations ... 3,987 3,624 14,319 12,326
Discontinued operations, net of tax
provision (B) ....................... -- -- -- 16,382
Extraordinary loss, net of tax benefit (C) (177) -- (2,177) --
-------------- -------------- --------------- --------------
Net income ..................... $3,810 $3,624 $12,142 $28,708
============== ============== =============== ==============
Earnings Per Share Information:
Weighted average common and common
equivalent shares ................... 8,757,068 7,778,682 8,577,451 7,747,756
Income from continuing operations ........ $0.46 $0.47 $1.67 $1.59
Net income (B) (C)....................... $0.44 $0.47 $1.42 $3.71
</TABLE>
Balance Sheet Summary:
<TABLE>
<CAPTION>
July 31, 1996 July 31, 1995
---------------- ---------------
<S> <C> <C>
Cash, cash equivalents and short-term investments (D) ........ $26,724 $42,656
Total assets ................................................. 212,870 214,409
Long-term debt ............................................... 81,763 110,000
Stockholders' equity ......................................... 74,808 43,012
</TABLE>
A Represents accounting, legal, printing and other fees incurred in
connection with stock offerings.
B Fiscal 1995 includes the net gain and net operating results of the graphite
specialty products business sold in January 1995.
C The quarter and fiscal year ended July 31, 1996 include the net charges for
the premiums paid and the write-off of deferred financing costs associated
with the repurchases of Senior Notes.
D Includes commercial paper as of July 31, 1996.
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