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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 the quarter ended August 31, 1996 Commission file number 1-1499
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EAGLE-PICHER INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
OHIO 31-0268670
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
580 Walnut Street, P. O. Box 779, Cincinnati, Ohio 45201
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code 513-721-7010
(Not Applicable)
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 twelve months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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11,040,932 shares of common capital stock, par value $1.25 per share, were
outstanding at October 11, 1996.
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TABLE OF CONTENTS
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.................................... 3
Consolidated Statement of Income............................ 3
Consolidated Balance Sheet.................................. 4
Consolidated Statement of Cash Flows........................ 6
Notes to Consolidated Financial Statements.................. 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings....................................... 14
Item 3. Defaults Upon Senior Securities......................... 14
Item 6. Exhibits and Reports on Form 8-K........................ 14
Signature........................................................ 16
Exhibit Index.................................................... 17
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands except per share amounts)
Three Months Ended Nine Months Ended
August 31 August 31
------------------- -----------------------
1996 1995 1996 1995
---- ---- ---- ----
Net Sales .......................... $216,400 $210,723 $660,108 $633,704
-------- -------- -------- --------
Operating Costs and Expenses:
Cost of products sold .............. 182,088 177,082 550,728 527,028
Selling and administrative ......... 20,948 19,619 63,364 58,394
-------- -------- -------- --------
203,036 196,701 614,092 585,422
-------- -------- -------- --------
Operating Income ................... 13,364 14,022 46,016 48,282
Adjustment for asbestos litigation . 502,197 - 502,197 -
Gain on sale of investment ......... - 11,505 - 11,505
Interest expense ................... (449) (459) (1,398) (1,446)
Other income ....................... 392 558 749 964
-------- -------- -------- --------
Income Before Reorganization
Items and Taxes .................. 515,504 25,626 547,564 59,305
Reorganization items ............... 439 (132) 529 (888)
-------- -------- -------- --------
Income Before Taxes ................ 515,943 25,494 548,093 58,417
Income Taxes ..................... 1,782 2,100 5,668 5,215
-------- -------- -------- --------
Net Income ......................... $514,161 $ 23,394 $542,425 $ 53,202
======== ======== ======== ========
Income per Share ................... $ 46.57 $ 2.12 $ 49.13 $ 4.82
======== ======== ======== ========
See accompanying notes to the consolidated financial statements.
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EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
ASSETS August 31 Nov. 30
1996 1995
---------- ----------
CURRENT ASSETS
Cash and cash equivalents .................. $ 113,452 $ 93,330
Receivables, less allowances ............... 130,565 127,044
Income tax refund receivable ............... 679 4,402
Inventories:
Raw materials and supplies ............... 38,828 42,140
Work in process .......................... 30,864 23,349
Finished goods ........................... 17,221 18,158
---------- ----------
86,913 83,647
Prepaid expenses ........................... 13,271 17,695
---------- ----------
Total current assets ................. 344,880 326,118
---------- ----------
PROPERTY, PLANT AND EQUIPMENT ................ 461,096 441,957
Less accumulated depreciation .............. 302,378 286,139
---------- ----------
Net property, plant and equipment .... 158,718 155,818
DEFERRED INCOME TAXES ........................ 75,824 62,824
OTHER ASSETS ................................. 33,015 35,313
---------- ----------
Total Assets ......................... $ 612,437 $ 580,073
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable ........................... $ 35,722 $ 40,318
Long-term debt - current portion ........... 2,513 1,525
Income taxes ............................... 1,940 4,789
Other current liabilities .................. 37,455 35,991
---------- ----------
Total current liabilities ............ 77,630 82,623
---------- ----------
LIABILITIES SUBJECT TO COMPROMISE ............ 2,159,904 2,662,530
LONG-TERM DEBT - less current portion ........ 17,382 19,103
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS .. 22,425 21,720
OTHER LONG TERM LIABILITIES .................. 4,604 5,405
---------- ----------
Total liabilities .................... 2,281,945 2,791,381
---------- ----------
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EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
August 31 Nov. 30
1996 1995
---------- ---------
SHAREHOLDERS' EQUITY (DEFICIT)
Common shares - par value $1.25 per share
authorized 30,000,000 shares, issued
11,125,000 shares $ 13,906 $ 13,906
Additional paid-in capital 36,378 36,378
Accumulated deficit (1,718,864) (2,261,289)
Unrealized gain on investments 294 333
Foreign currency translation 691 1,277
--------- ---------
(1,667,595) (2,209,395)
Cost of 84,068 common treasury shares (1,913) (1,913)
--------- ---------
Total Shareholders' Equity (Deficit) (1,669,508) (2,211,308)
Total Liabilities and Shareholders' Equity
(Deficit) $612,437 $580,073
======== ========
See accompanying notes to the consolidated financial statements.
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EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
Nine Months Ended
August 31
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................. $ 542,425 $ 53,202
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization .... 22,990 21,872
Adjustment for asbestos litigation (502,197) -
Gain on sale of investment ....... - (11,505)
Changes in assets and liabilities:
Receivables ................... (3,521) (6,276)
Inventories ................... (3,266) (5,511)
Prepaid expenses .............. 4,424 (10,724)
Deferred taxes ................ (13,000) (15,700)
Accounts payable .............. (4,596) (2,568)
Accrued liabilities ........... 1,464 3,635
Other ......................... 2,298 (4,009)
--------- --------
Net cash provided by
operating activities ........ 47,021 22,416
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investment ....... - 11,505
Capital expenditures ................... (27,842) (24,794)
Other .................................. 1,381 559
--------- --------
Net cash used in
investing activities ....... (26,461) (12,730)
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of long-term debt ............ (438) (1,894)
--------- --------
Net cash used in
financing activities ....... (438) (1,894)
--------- --------
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EAGLE-PICHER INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
Nine Months Ended
August 31
1996 1995
---- ----
Net increase in cash and cash equivalents .................... 20,122 7,792
Cash and cash equivalents, beginning of period ............... 93,330 92,606
-------- --------
Cash and cash equivalents, end of period ..................... $113,452 $100,398
======== ========
Supplemental cash flow information:
Cash paid during the year:
Interest paid ........................................... $ 1,293 $ 1,422
Income taxes paid (net of refunds received) ............. $ 17,794 $ 18,416
Cash paid during the quarter:
Interest paid ........................................... $ 451 $ 467
Income taxes paid (net of refunds received) ............. $ 10,478 $ 8,297
See accompanying notes to consolidated financial statements.
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EAGLE-PICHER INDUSTRIES, INC.
Notes to Consolidated Financial Statements
A. PROCEEDINGS UNDER CHAPTER 11
On January 7, 1991 ("petition date"), Eagle-Picher Industries, Inc.
("Company") and seven of its domestic subsidiaries each filed a voluntary
petition for relief under chapter 11 of the United States Bankruptcy Code
("chapter 11") in the United States Bankruptcy Court for the Southern District
of Ohio, Western Division, in Cincinnati, Ohio ("Bankruptcy Court"). Each filing
entity, other than EDI, Inc. and Eagle-Picher Europe, Inc., is currently
operating its business as a debtor in possession in accordance with the
provisions of the Bankruptcy Code.
An Unsecured Creditors' Committee ("UCC"), an Injury Claimants' Committee
("ICC"), an Equity Security Holders' Committee ("ESC"), and a Legal
Representative for Future Claimants ("RFC") were appointed in the chapter 11
cases. An unofficial asbestos co-defendants' committee has also been
participating in the chapter 11 cases. In accordance with the provisions of the
Bankruptcy Code, these parties have the right to be heard with respect to
transactions outside the ordinary course of business. The official committees
and the RFC typically are the entities with which the Company would negotiate
the terms of a plan of reorganization. In June 1992, a mediator was appointed by
the Bankruptcy Court to assist the constituencies in their negotiations.
On November 9, 1993, the Company reached an agreement on the principal
elements of a joint plan of reorganization. The agreement was with the ICC and
the RFC, the representatives of the holders of present and future
asbestos-related personal injury and other toxic tort claims in the Company's
chapter 11 case, and was reached with the assistance of the mediator. One of the
principal elements of the agreement was a negotiated settlement of the Company's
aggregate liability for such claims in the amount of $1.5 billion.
Throughout 1994, the Company, the ICC and the RFC (collectively, "Plan
Proponents") continued to refine the details of a joint plan of reorganization
("Original Plan"). The Original Plan was filed with the Bankruptcy Court on
February 28, 1995. The Original Plan did not have the support of the UCC or the
ESC because they did not agree with the amount of the aggregate asbestos
liability which had been negotiated and which was used in the Original Plan to
determine the allocation of the consideration to be distributed to the unsecured
creditor and shareholder classes. In order to resolve this dispute, the Company
filed a motion in July 1995 requesting that the Bankruptcy Court estimate the
Company's aggregate liability on account of present and future asbestos-related
personal injury claims. The Bankruptcy Court ruled in December 1995 that such
estimated liability is $2.5 billion ("Estimation Ruling"). The UCC, the ESC and
two individual members of the UCC filed notices of appeal of the Estimation
Ruling.
As a result of the Estimation Ruling, on April 9, 1996, the Plan Proponents
filed a First Amended Consolidated Plan of Reorganization, which was similar to
the Original Plan except that the Court-determined estimated liability for
asbestos-related personal injury claims of $2.5 billion was utilized to
determine the allocation of the consideration to be distributed to the unsecured
creditor and shareholder classes under the Plan. The Plan Proponents filed a
Second Amended Consolidated Plan of Reorganization on July 17, 1996. This Plan
was similar to the First Amended Plan except that it provided that holders of
environmental and other prepetition unsecured claims (excluding asbestos and
lead-related claims) could elect, in part, the form of the consideration they
would receive with respect to their claims under the Plan. On August 28, 1996,
the Plan Proponents filed a Third Amended Plan of Reorganization ("Plan"), and
the Bankruptcy Court entered an order approving the Disclosure Statement
relating to the Plan.
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The Plan, which is based on a settlement of $2.0 billion for the Company's
liability for present and the future asbestos-related personal injury claims,
was filed jointly by the Plan Proponents and is supported by the UCC. Pursuant
to the Bankruptcy Court's order approving the Disclosure Statement, voting to
accept or reject the Plan by the various classes of creditors entitled to vote
has commenced and must be completed by November 4, 1996. The order also set a
hearing to consider confirmation of the Plan for November 13, 1996.
The Plan contemplates a resolution of the Company's liability for all
present and future asbestos-related personal injury claims and certain other
tort claims. These claims will be assumed and resolved by an independently
administered claims trust ("Trust"). Based on the settlement of $2.0 billion for
the Company's liability with respect to present and future asbestos-related
personal injury claims, the Company's estimate that all other prepetition
unsecured claims aggregate approximately $157 million, and the expected value of
the equity of the reorganized Company, the Company anticipates that each holder
of prepetition general unsecured claims, including environmental claims, will
receive a distribution having a value equal to approximately 33% of its claims.
Such distribution will be paid 1/2 in cash and 1/2 in notes having a three-year
maturity.
Pursuant to the Plan, the Trust will receive consideration consisting of
cash, notes and all of the common stock of the reorganized Company. Based upon
the above assumptions, the Company estimates that the aggregate value of the
consideration to be distributed to the Trust is equal to approximately 33% of
the $2.0 billion settlement amount for the Company's liability for present and
future asbestos-related personal injury claims.
Pursuant to the Plan, claims entitled to priority under the Bankruptcy Code
and convenience claims (pre-petition general unsecured claims of $500 or less or
claims that are reduced to that amount) will be paid in full, in cash. The Plan
also provides for the resolution and discharge of all asbestos-related property
damage claims, as further discussed in Note B below. Under the Bankruptcy Code,
shareholders are not entitled to any distribution under a plan of reorganization
unless all classes of pre-petition creditors receive satisfaction in full of
their allowed claims or accept a plan which allows shareholders to participate
in the reorganized company or to receive a distribution. Under the Plan,
existing shareholders will receive no distributions and their shares will be
canceled.
Following the Estimation Ruling, the Company filed a motion in the
Bankruptcy Court seeking an order directing the United States Trustee to disband
the ESC on the basis that existing equity holders do not have an economic
interest in the chapter 11 cases. In January 1996, the Bankruptcy Court ruled
that the ongoing activities of the ESC shall be limited to pursuing its appeal
of the Estimation Ruling. In September 1996, the U.S. District Court for the
Southern District of Ohio, Western Division, affirmed the Estimation Ruling, as
modified by the $2.0 billion settlement of the asbestos-related personal injury
liability referred to above. The Company has been advised that, as a consequence
of such ruling, the ESC will consent to the entry of an order disbanding it.
The accompanying consolidated financial statements have been prepared on a
going concern basis which contemplates continuity of operations, realization of
assets and liquidation of liabilities in the ordinary course of business. The
liabilities subject to compromise listed above have been reported on the basis
of the expected amount of the allowed claims even though they may be settled for
lesser amounts. The asbestos liability within Liabilities Subject to Compromise
has been adjusted in the third quarter of 1996 to reflect the $2.0 billion
settlement amount. Upon confirmation of a plan of reorganization, the Company
would utilize the "fresh-start" reporting principles contained in the AICPA's
Statement of Position 90-7, which would result in adjustments relating to the
amounts and classification of recorded assets and liabilities, determined as of
the plan confirmation date. Pursuant to the Plan, the ultimate consideration to
be received by the unsecured creditors will be substantially less than the
amounts shown in the accompanying Consolidated Balance Sheet.
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Until a plan of reorganization is confirmed, however, the Company cannot be
certain of the final terms and provisions thereof or the ultimate amount
creditors will receive.
Liabilities incurred by the Company as of the petition date and subject to
compromise under a plan of reorganization are separately classified in the
Consolidated Balance Sheet and include the following (in thousands of dollars):
August 31, November 30,
1996 1995
---- ----
Asbestos liability $2,000,000 $ 2,502,511
Long-term debt (unsecured portion) 62,003 62,003
Accounts payable 41,182 41,236
Accrued and other liabilities 56,719 56,780
--------- ---------
$2,159,904 $ 2,662,530
========= =========
The net expense (income) resulting from the Company's administration of the
chapter 11 cases has been segregated from expenses related to ordinary
operations in the accompanying financial statements and includes the following
(in thousands):
Three Months Nine Months
Ended Ended
August 31 August 31
--------------- ----------
1996 1995 1996 1995
---- ---- ---- ----
Professional fees and other
expenses directly related
to bankruptcy $ 969 $ 1,539 $ 3,370 $ 4,617
Interest income (1,408) (1,407) (3,899) (3,729)
------ ------ ----- -----
$ (439) $ 132 $ (529) $ 888
====== ====== ====== =====
Interest income is attributable to the accumulation of cash and short-term
investments subsequent to the petition date.
B. LITIGATION
As discussed in Note K to the Consolidated Financial Statements included in
the Company's Annual Report and Form 10-K for the fiscal year ended November 30,
1995 and Note A above, the accompanying Consolidated Financial Statements
include an estimated liability related to personal injury claims resulting from
the Company's sale of asbestos-containing insulation products. Litigation with
respect to asbestos-related claims was stayed by reason of the chapter 11
filing.
Approximately 1,000 proofs of claim alleging asbestos-related property
damage were filed in the chapter 11 cases pursuant to the September 30, 1992 bar
date for asbestos-related claims. More than 750 of such claims have been
disallowed by the Bankruptcy Court as a result of the Company's objections. The
Company's request for disallowance of approximately 150 other asbestos-related
property damage claims is pending with the Bankruptcy Court which, if granted,
will leave fewer than 100 claims (including 4 class claims) still pending.
Under the Plan, a second trust will be established to resolve
asbestos-related property damage claims. If the class of asbestos-related
property damage claims votes to accept the Plan, such trust will be funded with
$3 million in cash. If such class votes to reject the Plan, but the Plan is
nevertheless confirmed, the trust will be funded with 10-year debentures of the
Company in an amount equal to the pro-rata share of plan consideration allocable
to asbestos-related property damage claims, based upon the Bankruptcy Court's
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estimate of the aggregate value of such claims. If such class votes to reject
the Plan, the Bankruptcy Court has set November 8, 1996 as the hearing date with
respect to the Company's motion to estimate asbestos-related property damage
claims. The Company cannot predict the outcome of such motion, however, it is a
condition to the effectiveness of the Plan that the estimated liability be no
greater than $15 million.
In September 1996, Charles Vihon, an ICC member who had also filed proofs
of claim alleging asbestos-related property damage on behalf of approximately
320 hospital members of the American Hospital Association ("Hospitals"),
withdrew as counsel for the Hospitals and resigned as a member of the ICC. As a
result of the failure of nearly all of the Hospitals to provide evidence of
their claims in accordance with the deadline set by the Bankruptcy Court, the
claims of such Hospitals are among those claims that the Bankruptcy Court has
disallowed.
In October 1996, certain other entities that had filed asbestos-related
property damage claims, including certain states and cities, filed motions with
the Bankruptcy Court requesting (i) that the Court approve the formation of an
official committee of asbestos property damage claimants and (ii) that the Court
preclude further objection to asbestos-related property damage claims. These
entities also objected to the Company's motion to estimate the value of
asbestos-related property damage claims. The Company intends to oppose such
motions and objection.
The Company is a defendant in various other litigation which was pending as
of the petition date, which was discussed in Note L to the Consolidated
Financial Statements for the fiscal year ended November 30, 1995. The Company
intends to defend all litigation claims vigorously in the manner permitted by
the Bankruptcy Code and/or applicable law. All pre-petition claims against the
Company arising from litigation must be liquidated or otherwise addressed in the
context of the chapter 11 cases and will be treated in any plan of
reorganization.
The Company has resolved most of the litigation claims that were asserted
pursuant to the October 31, 1991 bar date for claims other than those arising
from the sale of asbestos-containing products. The Company has filed objections
to certain of the litigation-based claims that have not yet been resolved,
seeking to reduce the amount of such claims or eliminate them entirely. The
Company anticipates filing additional objections to other such claims if they
cannot be resolved through negotiation. These objections will be vigorously
pursued by the Company. The Company believes that its provisions for these
claims is adequate, and, in addition, the Company may have insurance coverage
for certain of them.
C. BASIS OF REPORTING FOR INTERIM FINANCIAL STATEMENTS
The unaudited financial statements included herein have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the information
presented not misleading. These financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report and Form 10-K for the fiscal year ended November 30,
1995.
The financial statements presented herewith reflect all adjustments
(consisting of normal and recurring accruals) which, in the opinion of
management, are necessary to fairly state the results of operations for the
three month and nine month periods ended August 31, 1996 and 1995. Results of
operations for interim periods are not necessarily indicative of results to be
expected for an entire year.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
Sales for the third quarter ended August 31, 1996 were $216.4 million
compared with $210.7 million for the third quarter of 1995. Operating income
declined to $13.3 million from $14.0 million for the same period last year. The
Plan, discussed in more detail in Note A to the Consolidated Financial
Statements herein, provides that the Company's estimated asbestos-related
personal injury liability is $2.0 billion rather than $2.5 billion which was
previously provided for. The Company's net income of $514.2 million or $46.57
per share in the third quarter reflects the adjustment of this liability. This
adjustment has no impact on cash flow. Net income for the third quarter of 1995,
which included a gain on the sale of an investment of $11.5 million, was $23.4
million or $2.12 per share.
Sales and operating income for the Automotive Group for the third quarter
of 1996 were approximately equal to those of the third quarter of 1995. The
Group's product mix continues to be oriented toward the truck, van and sport
utility segment of the market which has been well received by the consumer.
Intense pressure from customers to reduce pricing not only on current business,
but also on new business, is a continuing source of concern. It is anticipated
that for the upcoming model year, automotive production will be slightly lower
than the past year.
The Machinery Group experienced lower sales and operating income. The
Construction Equipment Division had reduced shipments of earth moving machinery,
although schedules are expected to improve as the year progresses. Additionally,
the competitive pressures in the marketplace for forklift trucks adversely
impacted the Division's profit margins. Somewhat offsetting these declines in
the Group were the results of the Transicoil Division which serves the aircraft,
aerospace and defense markets, and Cincinnati Industrial Machinery, a
manufacturer of industrial can-cleaning equipment. These operations experienced
improved results when compared with the third quarter of 1995.
The Industrial Group's results were more favorable than those of the
previous year. The portion of the Technologies Division in the Industrial Group
which manufacturers products for solar displays and satellite components and the
portion which manufactures boron products for the nuclear market performed well.
Recent penetration of the European nuclear market has provided an excellent
growth opportunity for boron products. The Minerals Division, which mines and
processes diatomaceous earth and perlite products primarily for high purity
filtration, continued to enjoy excellent results.
Interest expense did not change appreciably in the third quarter or the
first nine months of 1996 compared to the same periods in 1995. Contractual
interest on debt outstanding was $2.1 and $2.2 million in the third quarters of
1996 and 1995, respectively, and $6.5 and $6.7 million in the nine month periods
ended August 31, 1996 and 1995, respectively.
Interest income on the cash balances accumulated as a result of the
reorganization slightly exceeded the expenses of the reorganization effort
throughout the first nine months of 1996.
FINANCIAL CONDITION
The cash balance of the Company increased from $93.3 million at November 30,
1995 to $113.5 million at August 31, 1996, an increase of $20.2 million. One
component of this increase resulted from the reduction in the amount of customer
tooling carried on the balance sheet from $26.5 million at November 30, 1995 to
$16.7 million at August 31, 1996. It is common practice in the automotive
industry to accumulate customer tooling costs while the tooling is under
construction and to bill the customer upon its completion. It is anticipated
that the amount of customer tooling carried on the balance sheet will decline
further throughout the remainder of the year. There were increases in working
capital, which
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are typical in periods in which sales growth is experienced, which partially
offset the effects of the decrease in tooling.
Capital expenditures totaled $8.7 million in the third quarter of 1996 and
$27.8 million for the nine months ended August 31, 1996 compared to $10.8
million and $24.8 million in the respective periods of 1995. The Company
currently expects, however, that the total amount of capital expenditures in the
1996 fiscal year will be comparable to that of 1995.
The Plan, discussed in Notes A and B to the Consolidated Financial
Statements herein, provides for the satisfaction and discharge of the Company's
pre-petition liabilities (Liabilities Subject to Compromise) and, upon the
effective date of the Plan, will provide the reorganized company with a capital
structure appropriate for an industrial products company which should enable the
Company to access financing in the debt and credit markets. A confirmation
hearing with respect to the Plan currently is scheduled for November 13, 1996.
There are several conditions and other matters which must be resolved in order
to have the Plan confirmed and become effective. Accordingly, it is difficult to
predict with certainty when a plan will be confirmed and become effective.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On August 28, 1996, the Bankruptcy Court approved the Disclosure Statement
which the Company submitted in connection with the Third Amended Consolidated
Plan of Reorganization ("Plan"). The Plan and Order approving the Disclosure
Statement are further discussed in Notes A and B to the Consolidated Financial
Statements contained herein.
Following the close of the quarter, on September 26, 1996, the U.S.
District Court for the Southern District of Ohio, Western Division, affirmed the
Estimation Ruling, as modified by the $2.0 billion settlement of the
asbestos-related personal injury liability, reflected in the Disclosure
Statement submitted in connection with the Plan. The Estimation Ruling and the
appeals filed with respect to the Estimation Ruling are discussed in Note A to
the Consolidated Financial Statements contained herein and were discussed in the
Company's Report on Form 10-K for the fiscal year ended November 30, 1995 and
Report on Form 10-Q for the quarter ended May 31, 1996.
Following the close of the quarter, on September 9, 1996, the Company filed
a motion with the Bankruptcy Court requesting that the Court estimate the
Company's aggregate liability on account of the asbestos-related property damage
claims filed in the Company's chapter 11 case, in the event that the class of
asbestos-related property damage claimants votes to reject the Plan. The
Bankruptcy Court has scheduled a hearing for November 8, 1996 with respect to
such motion.
Following the close of the quarter, on October 2, 1996, certain holders of
asbestos-related property damages claims filed motions with the Bankruptcy
Court requesting (i) that the Court approve the formation of an official
committee of asbestos property damage claimants and (ii) that the Court preclude
further objection to asbestos-related property damage claims. These entities
also objected to the Company's motion to estimate the aggregate value of
asbestos-related property damage claims. The Company intends to oppose such
motions and objection.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
The chapter 11 filings constituted a default under substantially all of
the Company's and it affiliates' senior securities. The obligations under the
Company's pre-petition credit facility and other obligations owing to the
lenders who were party to the pre-petition credit facility have been addressed
in the debtor in possession financing agreement approved by the Bankruptcy Court
on May 24, 1991. At that time, certain of such obligations were repaid and the
remaining of such obligations were deemed to be post-petition.
With respect to certain other secured obligations, the Company (or its
affiliates) have been making settlements or "adequate protection" payments
approved by orders of the Bankruptcy Court.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
4(b)(iii) - Second Amendment to Credit Agreement, dated as of July
12, 1996.
27 - Financial Data Schedule.
(b) Reports on Form 8-K
Report on Form 8-K (File 1-1499), dated July 19, 1996, in which the
Company reported that on July 17, 1996, the Company and seven of its
domestic subsidiaries filed a Second Amended Consolidated Plan of
Reorganization in their chapter 11 cases pending before the U.S.
Bankruptcy Court for the Southern District of Ohio, Western Division
(the Bankruptcy Court).
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Report on Form 8-K (File 1-1499), dated August 29, 1996 in which the
Company reported that on August 28, 1996, the Company and seven of its
domestic subsidiaries filed a Third Amended Consolidated Plan of
Reorganization in their chapter 11 cases pending before the Bankruptcy
Court. The Bankruptcy Court also entered an order approving the
Disclosure Statement in connection with the Plan.
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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.
EAGLE-PICHER INDUSTRIES, INC.
/s/ David N. Hall
----------------------------------------
David N. Hall,
Senior Vice President - Finance and
Chief Financial Officer
DATE: October 11, 1996
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EXHIBIT INDEX
Exhibit No. Description
4(b)(iii) Second Amendment to Credit Agreement,
dated as of July 12, 1996
27 Financial Data Schedule (submitted
electronically to the Securities
and Exchange Commission for its
information)
17