Exhibit 99.1
| Oglebay Norton Company North Point Tower 1001 Lakeside Avenue, 15th Floor Cleveland, OH 44114-1151
TEL 216-861-3300 FAX 216-861-2863
www.oglebaynorton.com |
NEWS
For Immediate Release
For Further Information Contact:
JULIE A. BOLAND
VICE PRESIDENT, CHIEF FINANCIAL OFFICERAND TREASURER
216-861-8941
jboland@oglebay.onco.com
OR
STEVE PHILLIPS
EDWARD HOWARD & CO.
216-781-2400
sphillips@edwardhoward.com
Oglebay Norton Reports Third Quarter 2003 Results
CLEVELAND, OH—October 22, 2003—Oglebay Norton Company (NASDAQ: OGLE) reports its results for the third quarter and first nine months ending on September 30, 2003. Results include:
| · | Revenues for the quarter were $121.5 million compared to $123.7 million in the year-earlier period. Revenues for the nine-month period were $300.9 million compared to $298.6 million in the prior-year nine-month period. |
| · | Operating income for the quarter was $6.0 million compared to operating income of $14.5 million in the third quarter of 2002. For the 2003 nine-month period, the company reported an operating loss of $2.4 million compared to operating income of $31.5 million for the 2002 nine-month period. Results for the 2003 nine-month period include a $13.1 million asset impairment charge taken in the second quarter to reduce the net book value of the Performance Minerals segment’s Specialty Minerals operation. |
| · | Net income for the quarter, including an income tax benefit of $5.2 million, primarily from a reversal of 1999 tax-year reserves, was $325,000, or $0.06 per diluted share. That compares to net income of $2.0 million, or $0.40 per diluted share, for the third quarter last year. Net loss for the nine months, including the impact of the second-quarter 2003 asset impairment charge and the $1.4 million after-tax cumulative effect charge for asset retirement obligations, was $23.3 million, or $4.57 per share, compared to net income of $74,000, or $0.01 per share, for the same period last year. |
| • | Earnings before interest, taxes, depreciation and amortization (EBITDA) were $18.8 million compared to $24.7 million in the third quarter 2002. EBITDA for the nine-month period was $39.3 million compared to $55.8 million in the year-earlier nine-month period. (See attached financial tables for GAAP reconciliation.) |
Oglebay Norton President and Chief Executive Officer Michael D. Lundin commented: “We took two critical steps during the third quarter that are intended to help us reach our goal of restructuring our debt and better positioning us for the future. First, we entered into agreements with our bank group and senior secured note holders to amend the company’s credit agreements. These amended agreements provide us with relief on restrictive covenants, restore our ability to draw on our credit facility to fund operations, and enable us to focus on a longer-term restructuring plan. Second, as part of this restructuring, management announced its intention to focus on a smaller set of core businesses – our limestone and limestone fillers operations. We believe these operations offer the most significant business development opportunities. As part of that decision, management announced its intention to sell the company’s lime and mica operations.”
Commenting on the third quarter results, Lundin said, “Revenues for the quarter were down slightly, primarily reflecting continued weak demand for limestone and shipping services from our Great Lakes Minerals segment. This decrease was partially offset by increases in sales from our Performance Minerals and Global Stone segments. The decrease in the company’s operating income for the quarter reflects lower income from the Great Lakes Minerals segment, as well as increased general, administrative and selling expenses.”
The increase in general, administrative and selling expenses for the quarter and the year to date is a result of higher retirement costs, legal and consulting fees related to operational restructuring and negotiations with the company’s senior secured lenders and bad debt reserves. Legal and consulting fees totaled $1.7 million for the quarter and $2.6 million for the first nine months of 2003.
The Great Lakes Minerals segment’s revenues for the quarter decreased to $52.0 million from $58.5 million in the third quarter 2002. Excluding the addition of Erie Sand & Gravel, the segment’s revenue declined 21% quarter over quarter. The decrease was primarily due to lower limestone shipments from the segment’s quarries and decreased shipments on the segment’s fleet resulting from reduced demand. Operating income for the third quarter decreased to $3.3 million in 2003 from $8.5 million in the prior year. The decrease in operating income was primarily a result of reduced revenues and the effect of lower volumes on gross margin.
The Global Stone segment’s revenues for the quarter were $45.8 million, up from $43.1 million in the 2002 third quarter. The increase in revenues and operating income is attributable to strong demand for all product lines. Operating income in the quarter was $5.1 million compared to $4.5 million in last year’s third quarter.
The Performance Minerals segment’s revenues for the quarter were $25.4 million compared to $23.2 million in the same period last year. The increase in revenues reflects increased demand for frac sand from oil service companies in the California market. Operating income for the quarter was down slightly to $3.5 million due to higher FAS 143 reclamation costs.
Lundin added: “We continue to identify and implement measures to contain costs, increase productivity and improve working capital efficiency, especially inventory management.
Some of the measures we have taken have improved our cash position but have had a negative effect on operating income.”
Lundin concluded: “Obtaining the support of our senior lenders to amend the company’s credit agreements last month has given us the opportunity to now move forward with our business plans. We are actively seeking buyers for certain company assets and continue to develop restructuring alternatives with our financial advisors. We are encouraged by the options we have identified that would enable us to restructure our debt and execute our business plan. Ideally, we would hope to find a solution that creates value for all stakeholders. We believe such a resolution is possible, but it is, of course, only one of several possible outcomes.”
Oglebay Norton Company, a Cleveland, Ohio-based company with a 149-year heritage, provides essential minerals and aggregates to a broad range of markets, from building materials and home improvement to the environmental, energy and metallurgical industries. The company’s website is located atwww.oglebaynorton.com.
A Note re EBITDA: EBITDA numbers are presented here to provide additional information and are not a measure of financial performance under accounting principles generally accepted in the United States (GAAP). Management believes that EBITDA information is useful to the readers of its financial statements because it is a primary measure used by its banking group to assess the performance of the Company and to set covenant levels. A reconciliation of EBITDA to operating (loss) income, the most directly comparable GAAP-based measure of financial performance, may be found in the attached financial tables.
Mr. Lundin will host a conference call at 11:00 a.m. Eastern Daylight Time on Thursday, October 23, 2003 which will be webcast live in listen only mode via the Oglebay Norton Company website. It also will be available for replay starting at 2:00 p.m. EDT, October 23, 2003 until 8:00 P.M. EDT, Thursday, November 6, 2003 on the website and via MCI WorldCom conferencing services. To access the live or taped webcast, go to the Oglebay Norton Company website atwww.oglebaynorton.com and click the conference call button on the investor relations home page. To access the replay via telephone, dial 1-800-964-3380. The access code is: LUNDIN.
Certain statements contained in this release are “forward-looking” in that they reflect management’s expectations and beliefs regarding the future performance of the Company and its operating segments. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company, which could cause actual results to differ materially from such statements. There can be no assurance that a successful restructuring and/or sale of assets can be accomplished, and that it will provide adequate liquidity for the Company
to sufficiently improve its financial position. Weather, particularly in the Great Lakes region, water levels, energy, fuel and oil prices, steel production, changes in the demand for the Company’s products due to changes in technology, Great Lakes and Mid-Atlantic construction activity, the California economy and population growth rates in the Southwestern United States, the outcome of negotiations of labor agreements, the loss or bankruptcy of major customers or insurers, changes in environmental law, and changes in asbestos or silica product liability litigation filed in the United States and determinations by a court or jury against the Company’s interest all can impact revenues and earnings. Some of our customers have filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. We do not expect that these reorganizations will have a material impact on the Company’s financial condition. Please refer to the Company’s current and subsequent SEC filings under the Securities and Exchange Act of 1934, as amended, for further information.
# # #
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
(000's, except per share amounts) | ||||||||||||||||
NET SALES AND OPERATING REVENUES | $ | 121,527 | $ | 123,653 | $ | 300,917 | $ | 298,600 | ||||||||
COST AND EXPENSES | ||||||||||||||||
Cost of goods sold and operating expenses | 91,030 | 89,745 | 229,458 | 215,874 | ||||||||||||
Depreciation, depletion, amortization and accretion | 11,908 | 10,562 | 28,284 | 24,934 | ||||||||||||
General, administrative and selling expenses | 12,545 | 8,889 | 32,447 | 26,331 | ||||||||||||
Provision for restructuring, asset impairments and early retirement programs | — | — | 13,114 | — | ||||||||||||
| 115,483 | 109,196 | 303,303 | 267,139 | |||||||||||||
OPERATING INCOME (LOSS) | 6,044 | 14,457 | (2,386 | ) | 31,461 | |||||||||||
(Loss) gain on disposition of assets | (1 | ) | (17 | ) | 56 | 55 | ||||||||||
Interest expense | (13,319 | ) | (10,618 | ) | (39,702 | ) | (31,109 | ) | ||||||||
Other income (expense), net | 2,421 | (313 | ) | 299 | (739 | ) | ||||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE | (4,855 | ) | 3,509 | (41,733 | ) | (332 | ) | |||||||||
INCOME (BENEFIT) TAXES | (5,180 | ) | 1,494 | (19,818 | ) | (406 | ) | |||||||||
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE | 325 | 2,015 | (21,915 | ) | $ | 74 | ||||||||||
CUMULATIVE EFFECT OF ACCOUNTING CHANGE FOR ASSET RETIREMENT OBLIGATIONS (net of tax benefit of $889) | — | — | (1,391 | ) | — | |||||||||||
NET INCOME (LOSS) | $ | 325 | $ | 2,015 | $ | (23,306 | ) | $ | 74 | |||||||
PER SHARE AMOUNTS—BASIC AND ASSUMING DILUTION: | ||||||||||||||||
Income (loss) before cumulative effect of accounting change | $ | 0.06 | $ | 0.40 | $ | (4.30 | ) | $ | 0.01 | |||||||
Cumulative effect of accounting change for asset retirement obligations | ||||||||||||||||
(net of tax benefit of $0.18) | — | — | (0.27 | ) | — | |||||||||||
Net income (loss) per share—basic and assuming dilution | $ | 0.06 | $ | 0.40 | $ | (4.57 | ) | $ | 0.01 | |||||||
EBITDA | $ | 18,783 | $ | 24,656 | $ | 39,265 | $ | 55,773 | ||||||||
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
| September 30 | December 31 | |||||
| 2003 | 2002 | |||||
(000's) | ||||||
ASSETS | ||||||
Current assets | $ | 142,241 | $ | 123,316 | ||
Property and equipment, net | 419,730 | 437,258 | ||||
Prepaid pension costs | 36,087 | 37,695 | ||||
Other assets | 89,747 | 89,198 | ||||
| $ | 687,805 | $ | 687,467 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current portion of long-term debt* | $ | 131,587 | $ | 2,343 | ||
Other current liabilities | 53,140 | 66,571 | ||||
Current liabilities | 184,727 | 68,914 | ||||
Long-term debt | 310,878 | 393,005 | ||||
Postretirement benefit obligations | 49,941 | 47,808 | ||||
Deferred income taxes | 11,691 | 26,769 | ||||
Other long-term liabilities | 34,322 | 35,470 | ||||
Stockholders' equity | 96,246 | 115,501 | ||||
| $ | 687,805 | $ | 687,467 | |||
| * | At September 30, 2003, includes the Company's Senior Credit Facility, which was amended during the third quarter of 2003 to include a dominion of funds, whereby the daily cash receipts of the Company are collected by its banking group into a centralized bank account and used to service the outstanding debt. The Company may then borrow on its availability from the credit facility on a daily basis to fund its operating needs |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
| Nine Months Ended September 30 | ||||||||
| 2003 | 2002 | |||||||
(000's) | ||||||||
NET CASH USED FOR OPERATING ACTIVITIES | $ | (18,016 | ) | $ | (4,503 | ) | ||
INVESTING ACTIVITIES | ||||||||
Capital expenditures | (14,458 | ) | (15,060 | ) | ||||
Acquisition of Erie Sand and Gravel Company | (6,831 | ) | — | |||||
Proceeds from the disposition of assets | 383 | 850 | ||||||
NET CASH USED FOR INVESTING ACTIVITIES | (20,906 | ) | (14,210 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Net additions of long-term debt | 42,669 | 16,534 | ||||||
Financing costs | (4,503 | ) | (128 | ) | ||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 38,166 | 16,406 | ||||||
Decrease in cash and cash equivalents | (756 | ) | (2,307 | ) | ||||
Cash and cash equivalents, January 1 | 756 | 2,307 | ||||||
CASH AND CASH EQUIVALENTS, September 30 | $ | — | $ | — | ||||
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
CONDENSED SEGMENT INFORMATION (UNAUDITED)
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
(000's) | ||||||||||||||||
NET SALES AND OPERATING REVENUES | ||||||||||||||||
Great Lakes Minerals | $ | 51,968 | $ | 58,508 | $ | 103,404 | $ | 107,777 | ||||||||
Global Stone | 45,756 | 43,076 | 133,397 | 125,915 | ||||||||||||
Performance Minerals | 25,357 | 23,164 | 66,675 | 67,615 | ||||||||||||
Less: intersegment revenues | (1,554 | ) | (1,095 | ) | (2,559 | ) | (2,707 | ) | ||||||||
TOTAL NET SALES AND OPERATING REVENUES | $ | 121,527 | $ | 123,653 | $ | 300,917 | $ | 298,600 | ||||||||
OPERATING INCOME (LOSS) | ||||||||||||||||
Great Lakes Minerals | $ | 3,338 | $ | 8,482 | $ | 4,119 | $ | 14,942 | ||||||||
Global Stone | 5,113 | 4,490 | 12,820 | 13,596 | ||||||||||||
Performance Minerals | 3,539 | 3,951 | (4,324 | ) | 11,182 | |||||||||||
SEGMENT OPERATING INCOME | 11,990 | 16,923 | 12,615 | 39,720 | ||||||||||||
Corporate and Other | (5,946 | ) | (2,466 | ) | (15,001 | ) | (8,259 | ) | ||||||||
TOTAL OPERATING INCOME (LOSS) | $ | 6,044 | $ | 14,457 | $ | (2,386 | ) | $ | 31,461 | |||||||
EBITDA | ||||||||||||||||
Great Lakes Minerals | $ | 9,014 | $ | 14,076 | $ | 15,395 | $ | 25,380 | ||||||||
Global Stone | 8,848 | 7,723 | 23,617 | 23,165 | ||||||||||||
Performance Minerals | 5,960 | 5,644 | 14,769 | 16,103 | ||||||||||||
SEGMENT EBITDA | 23,822 | 27,443 | 53,781 | 64,648 | ||||||||||||
Corporate and Other | (5,039 | ) | (2,787 | ) | (14,516 | ) | (8,875 | ) | ||||||||
TOTAL EBITDA | $ | 18,783 | $ | 24,656 | $ | 39,265 | $ | 55,773 | ||||||||
OGLEBAY NORTON COMPANY AND SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME TO EBITDA (UNAUDITED)
EBITDA is presented in the Condensed Consolidated Statement of Operations (Unaudited) and the Condensed Segment Information (Unaudited) to provide additional information and is not a measure of financial performance under accounting principles generally accepted in the United States (GAAP). Management believes that EBITDA information is useful to the readers of its financial statements because it is a primary measure used by its banking group to assess the performance of the Company and to set covenant levels. A reconciliation of operating income (loss), the most directly comparable GAAP-based measure of financial performance, to EBITDA follows:
| Three Months Ended September 30, 2003 | Nine Months Ended September 30, 2003 | ||||||||||||||||||||||||||||||||||||
| Great Lakes Minerals | Global Stone | Performance Minerals | Corporate and Other | Consolidated | Great Lakes Minerals | Global Stone | Performance Minerals | Corporate and Other | Consolidated | ||||||||||||||||||||||||||||
(000's) | |||||||||||||||||||||||||||||||||||||
Operating income (loss) | $ | 3,338 | $ | 5,113 | $ | 3,539 | $ | (5,946 | ) | $ | 6,044 | $ | 4,119 | $ | 12,820 | $ | (4,324 | ) | $ | (15,001 | ) | $ | (2,386 | ) | |||||||||||||
Depreciation, depletion, amortization | |||||||||||||||||||||||||||||||||||||
and accretion | 5,678 | 3,734 | 2,420 | 76 | 11,908 | 11,254 | 10,806 | 5,998 | 226 | 28,284 | |||||||||||||||||||||||||||
Provision for restructuring, asset impairments | |||||||||||||||||||||||||||||||||||||
and early retirement programs | 13,114 | 13,114 | |||||||||||||||||||||||||||||||||||
(Loss) gain on disposition of assets | (2 | ) | 1 | 1 | (1 | ) | (1 | ) | 22 | (9 | ) | (19 | ) | 62 | 56 | ||||||||||||||||||||||
Other income, net | 2,421 | 2,421 | 299 | 299 | |||||||||||||||||||||||||||||||||
Non-cash charge to reserve for non-trade debtor | |||||||||||||||||||||||||||||||||||||
of the Company, included in other income | 784 | 784 | 2,239 | 2,239 | |||||||||||||||||||||||||||||||||
Non-cash mark-to-market expense of interest | �� | ||||||||||||||||||||||||||||||||||||
rate swaps, included in other income | 34 | 34 | 66 | 66 | |||||||||||||||||||||||||||||||||
Non-cash gain to reverse product liability reserve | |||||||||||||||||||||||||||||||||||||
resulting from settlement of insurance policies, | |||||||||||||||||||||||||||||||||||||
included in other income | (2,407 | ) | (2,407 | ) | (2,407 | ) | (2,407 | ) | |||||||||||||||||||||||||||||
EBITDA | $ | 9,014 | $ | 8,848 | $ | 5,960 | $ | (5,039 | ) | $ | 18,783 | $ | 15,395 | $ | 23,617 | $ | 14,769 | $ | (14,516 | ) | $ | 39,265 | |||||||||||||||
| Three Months Ended September 30, 2002 | Nine Months Ended September 30, 2002 | ||||||||||||||||||||||||||||||||||||
| Great Lakes Minerals | Global Stone | Performance Minerals | Corporate and Other | Consolidated | Great Lakes Minerals | Global Stone | Performance Minerals | Corporate and Other | Consolidated | ||||||||||||||||||||||||||||
(000's) | |||||||||||||||||||||||||||||||||||||
Operating income (loss) | $ | 8,482 | $ | 4,490 | $ | 3,951 | $ | (2,466 | ) | $ | 14,457 | $ | 14,942 | $ | 13,596 | $ | 11,182 | $ | (8,259 | ) | $ | 31,461 | |||||||||||||||
Depreciation, depletion, amortization and accretion | 5,618 | 3,233 | 1,686 | 25 | 10,562 | 10,466 | 9,432 | 4,975 | 61 | 24,934 | |||||||||||||||||||||||||||
(Loss) gain on disposition of assets | (24 | ) | 7 | (17 | ) | (28 | ) | 137 | (54 | ) | 55 | ||||||||||||||||||||||||||
Other expense, net | (313 | ) | (313 | ) | (739 | ) | (739 | ) | |||||||||||||||||||||||||||||
Non-cash mark-to-market (income) expense of | |||||||||||||||||||||||||||||||||||||
interest rate swaps, included in other expense | (33 | ) | (33 | ) | 62 | 62 | |||||||||||||||||||||||||||||||
EBITDA | $ | 14,076 | $ | 7,723 | $ | 5,644 | $ | (2,787 | ) | $ | 24,656 | $ | 25,380 | $ | 23,165 | $ | 16,103 | $ | (8,875 | ) | $ | 55,773 | |||||||||||||||