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 June 30, 2004
Commission File number 000-32665
OGLEBAY NORTON COMPANY
(Exact name of registrant as specified in its charter)
| Ohio | 34-1888342 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S.employer identification no.) | |
| North Point Tower, 1001 Lakeside Ave., 15th Floor, Cleveland, Ohio |
44114-1151 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code 216 861-3300
N/A
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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
| Common shares outstanding at August 6, 2004: | 5,064,149 |
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
-2-
P art I. Item 1. FINANCIAL INFORMATION
O GLEBAY NORTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(UNAUDITED)
| Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| NET SALES AND OPERATING REVENUES |
$ | 122,572 | $ | 116,506 | $ | 192,006 | $ | 179,390 | ||||||||
| COSTS AND EXPENSES |
||||||||||||||||
| Cost of goods sold and operating expenses |
91,327 | 88,884 | 145,861 | 138,428 | ||||||||||||
| Depreciation, depletion, amortization and accretion |
10,762 | 10,903 | 16,253 | 16,376 | ||||||||||||
| General, administrative and selling expenses |
9,077 | 9,827 | 18,418 | 19,902 | ||||||||||||
| Provision for restructuring, asset impairments and early retirement programs |
500 | 13,114 | 1,815 | 13,114 | ||||||||||||
| 111,666 | 122,728 | 182,347 | 187,820 | |||||||||||||
| OPERATING INCOME (LOSS) |
10,906 | (6,222 | ) | 9,659 | (8,430 | ) | ||||||||||
| Reorganization items, net |
(5,107 | ) | — | (9,672 | ) | — | ||||||||||
| Gain (loss) on disposition of assets |
2 | (6 | ) | (13 | ) | 57 | ||||||||||
| Interest expense |
(12,405 | ) | (13,102 | ) | (24,960 | ) | (26,383 | ) | ||||||||
| Other income (expense), net |
4,916 | (531 | ) | 5,009 | (2,122 | ) | ||||||||||
| LOSS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE |
(1,688 | ) | (19,861 | ) | (19,977 | ) | (36,878 | ) | ||||||||
| INCOME TAX BENEFIT |
(275 | ) | (7,280 | ) | (827 | ) | (14,638 | ) | ||||||||
| LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE |
(1,413 | ) | (12,581 | ) | (19,150 | ) | (22,240 | ) | ||||||||
| CUMULATIVE EFFECT OF ACCOUNTING CHANGE FOR ASSET RETIREMENT OBLIGATIONS (net of tax benefit of $889) |
— | — | — | (1,391 | ) | |||||||||||
| NET LOSS |
$ | (1,413 | ) | $ | (12,581 | ) | $ | (19,150 | ) | $ | (23,631 | ) | ||||
| PER SHARE AMOUNTS—BASIC AND ASSUMING DILUTION: |
||||||||||||||||
| Loss before cumulative effect of accounting change |
$ | (0.26 | ) | $ | (2.47 | ) | $ | (3.66 | ) | $ | (4.37 | ) | ||||
| Cumulative effect of accounting change for asset retirement obligations (net of tax benefit of $0.18) |
— | — | — | (0.27 | ) | |||||||||||
| Net loss per share—basic and assuming dilution |
$ | (0.26 | ) | $ | (2.47 | ) | $ | (3.66 | ) | $ | (4.64 | ) | ||||
See notes to condensed consolidated financial statements.
-3-
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)
ASSETS
| (UNAUDITED) | ||||||
| June 30 2004 |
December 31 2003 | |||||
| CURRENT ASSETS |
||||||
| Cash and cash equivalents |
$ | 1,303 | $ | — | ||
| Accounts receivable, net of reserve for doubtful accounts (2004 - $5,615; 2003 - $5,842) |
64,625 | 50,422 | ||||
| Inventories |
||||||
| Raw materials and finished products |
33,388 | 35,236 | ||||
| Operating supplies |
12,620 | 12,795 | ||||
| 46,008 | 48,031 | |||||
| Deferred income taxes |
3,901 | 3,901 | ||||
| Prepaid expenses and other current assets |
30,859 | 10,915 | ||||
| TOTAL CURRENT ASSETS |
146,696 | 113,269 | ||||
| PROPERTY AND EQUIPMENT |
751,166 | 746,640 | ||||
| Less allowances for depreciation, depletion and amortization |
344,604 | 332,447 | ||||
| 406,562 | 414,193 | |||||
| GOODWILL, net of accumulated amortization of $11,093 |
73,877 | 73,877 | ||||
| PREPAID PENSION COSTS |
34,175 | 35,319 | ||||
| OTHER ASSETS |
17,971 | 12,036 | ||||
| TOTAL ASSETS |
$ | 679,281 | $ | 648,694 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY
| (UNAUDITED) | ||||||||
| June 30 2004 |
December 31 2003 |
|||||||
| LIABILITIES NOT SUBJECT TO COMPROMISE |
||||||||
| CURRENT LIABILITIES |
||||||||
| Current portion of long-term debt |
$ | 245,358 | $ | 420,350 | ||||
| Accounts payable |
24,966 | 26,070 | ||||||
| Payrolls and other accrued compensation |
4,983 | 4,857 | ||||||
| Accrued expenses |
8,958 | 14,906 | ||||||
| Accrued interest expense |
6,075 | 8,392 | ||||||
| Income taxes payable |
— | 480 | ||||||
| TOTAL CURRENT LIABILITIES |
290,340 | 475,055 | ||||||
| LONG-TERM DEBT, less current portion |
— | 1,490 | ||||||
| POSTRETIREMENT BENEFITS OBLIGATIONS |
828 | 50,049 | ||||||
| OTHER LONG-TERM LIABILITIES |
2,000 | 29,500 | ||||||
| DEFERRED INCOME TAXES |
4,247 | 4,596 | ||||||
| LIABILITIES SUBJECT TO COMPROMISE |
312,204 | — | ||||||
| STOCKHOLDERS’ EQUITY |
||||||||
| Preferred stock, authorized 5,000 shares |
— | — | ||||||
| Common stock, par value $1 per share, authorized 30,000 shares; issued 7,253 shares |
7,253 | 7,253 | ||||||
| Additional capital |
9,290 | 9,312 | ||||||
| Retained earnings |
86,924 | 106,075 | ||||||
| Accumulated other comprehensive loss |
(3,773 | ) | (4,542 | ) | ||||
| 99,694 | 118,098 | |||||||
| Treasury stock, at cost – 2,250 and 2,275 shares at respective dates |
(30,032 | ) | (30,094 | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY |
69,662 | 88,004 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 679,281 | $ | 648,694 | ||||
See notes to condensed consolidated financial statements.
-4-
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(UNAUDITED)
| Six Months Ended June 30 |
||||||||
| 2004 |
2003 |
|||||||
| OPERATING ACTIVITIES |
||||||||
| Net loss |
$ | (19,150 | ) | $ | (23,631 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used for) operating activities: |
||||||||
| Cumulative effect of accounting change for asset retirement obligations, net of taxes |
— | 1,391 | ||||||
| Depreciation, depletion, amortization and accretion |
16,253 | 16,376 | ||||||
| Deferred vessel costs |
(5,068 | ) | (5,602 | ) | ||||
| Deferred winter maintenance costs |
(5,581 | ) | (6,649 | ) | ||||
| Deferred income taxes |
(827 | ) | (12,978 | ) | ||||
| Restructuring, asset impairments and early retirement programs |
1,765 | 12,336 | ||||||
| Reorganization items, net |
9,672 | — | ||||||
| Loss (gain) on disposition of assets |
13 | (57 | ) | |||||
| Increase in prepaid insurance |
(4,034 | ) | (1,407 | ) | ||||
| Increase in cash collateral |
(1,178 | ) | — | |||||
| Decrease in prepaid pension costs |
1,144 | 1,080 | ||||||
| Increase in accounts receivable |
(14,203 | ) | (4,113 | ) | ||||
| Decrease in inventories |
1,980 | 5,323 | ||||||
| Insurance Escrow |
(4,668 | ) | — | |||||
| Increase in accounts payable |
14,300 | 160 | ||||||
| Increase (decrease) in payrolls and other accrued compensation |
2,681 | (1,840 | ) | |||||
| Increase (decrease) in accrued expenses |
1,632 | (3,229 | ) | |||||
| Increase in accrued interest |
5,226 | 685 | ||||||
| Increase (decrease) in income taxes payable |
13 | (20 | ) | |||||
| Increase in postretirement benefits |
1,252 | 1,522 | ||||||
| Other operating activities |
729 | 3,890 | ||||||
| NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES |
1,951 | (16,763 | ) | |||||
| NET CASH USED FOR REORGANIZATION ITEMS |
(4,130 | ) | — | |||||
| INVESTING ACTIVITIES |
||||||||
| Capital expenditures |
(11,752 | ) | (12,445 | ) | ||||
| Acquisition of Businesses |
— | (6,831 | ) | |||||
| Proceeds from the sale of Redi-Mix |
1,225 | |||||||