UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 1, 2003
Better Minerals & Aggregates Company
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
333-32518 55-0749125
(Commission File Number) (IRS Employer Identification No.)
Route 522 North, P.O. Box 187
Berkeley Springs, West Virginia 25411
(Address of principal executive offices, including zip code)
(304) 258-2500
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Item 12. Results of Operations and Financial Condition.
On August 1, 2003, Better Minerals & Aggregates Company announced financial
results for the second quarter of 2003 and the six months ended June 30,
2003.
Significant financial and operating highlights comparing the current quarter
and year to date results to prior year are noted below:
o Net sales from continuing operations were $48.5 million in the quarter
ended June 30, 2003 as compared to $48.6 million for the
comparable period in 2002. For the six-month period ending June
30, 2003, net sales from continuing operations were $92.2 million
as compared to $91.1 million for the same period in 2002.
o Net loss from continuing operations was $7.0 million in the quarter
ended June 30, 2003 as compared to a net loss from continuing
operations of $2.3 million for the quarter ended June 30, 2002.
For the six month period ended June 30, 2003, net loss was $10.1
million as compared to a net loss from continuing operations of
$4.4 million for the same period in 2002.
o The net results of our subsidiary, Better Materials Corporation that
was sold on July 18, 2003, are reported as discontinued
operations. Net loss, after applicable taxes, for discontinued
operations, not included in the results noted above, was $0.3
million for the quarter ended June 30, 2003 as compared to net
income of $4.9 million for the quarter ended June 30, 2002.
For the six month period ended June 30, 2003, the net loss from
discontinued operations after applicable taxes was $9.0 million
as compared to a net loss of $1.9 million for the same period in
2002.
o Net loss, including the loss from discontinued operations was $7.3
million in the quarter ended June 30, 2003 as compared to net
income of $2.6 million for the same period in 2002. For the
six-month period ended June 30, 3003, net loss was $18.8 million
as compared to $14.9 million for the same period in 2002.
o We were not in compliance with our amended financial covenants included
in our senior secured credit agreement as of June 30, 2003.
Accordingly, the full amount of the outstanding principal under
the senior secured credit agreement, totaling $160.4 million on
June 30, 2003, has been classified as a current liability as of
that date. Subsequently, on July 18, 2003, we completed the sale
of our aggregates subsidiary, Better Materials Corporation, and
applied $153.4 million of the total $158.3 gross proceeds
received at closing against a substantial portion of the
principal amounts due and outstanding under the senior secured
credit agreement as of July 18, 2003. After taking into account
this reduction in borrowings under the senior secured credit
agreement, we currently have approximately $14.5 million
outstanding under our tranche C term loan under the senior
secured credit agreement. Please see our Current Report on Form
8-K dated July 18, 2003 for more information about the sale of
our aggregates business, including pro forma financial statements
reflecting the aggregates sale and the permanent reduction of
borrowings under our senior secured credit agreement.
Included in these operating results, are the following non-recurring,
pretax charges, in each case reflected in selling, general & administrative
expenses:
o Accrued costs related to severance payments and supplemental retirement
benefits for our former Chief Executive Officer, totaling $3.1
million in the quarter and six-month periods ended June 30, 2003.
o Expenses associated with our efforts to complete the sale of our
aggregates subsidiary, and expenses related to appraisals, due
diligence and other items necessary to obtain a new source of
financing for the company, totaling $1.0 million in the quarter
ended June 30, 2003 and $1.3 million in the six-month period
ended June 30, 2003.
Other significant costs reflected in these operating results include:
o The price of drier fuel used in our industrial minerals plants has
increased as the open market prices for natural gas, fuel oil and
propane have increased. For the quarter ended June 30, 2003, our
purchase price for drier fuel was $0.9 million greater than for
the same period in 2002. For the six-month period ended June 30,
2003, the purchase price of drier fuel was $1.9 million greater
than for the same period in 2002.
o In 2002 selling, general & administrative expenses included silica
litigation expenses of $0.6 million in the quarter ended June 30,
2002 and $1.2 million for the six-month period ended June 30,
2002. There were no recorded expenses for these items in the
same comparable periods in 2003 as a result of the charge to
income for estimated future litigation charges taken in December
2002. For more information on silica litigation matters, see
"Significant Factors Affecting Our Business - Silica Health Risks
and Litigation May Have a Material Adverse Effect on Our
Business" included in our Annual Report of Form 10-K for the
period ended December 31, 2002, as amended and in our Quarterly
Report on Form 10-Q for the period ended March 31, 2003, and see
our Current Report on Form 8-K dated July 18, 2003.
Included in this Current Report on Form 8-K immediately after the signature
page are the following unaudited financial reports:
1. Consolidated, condensed statement of operations.
2. Consolidated, condensed balance sheet.
3. Consolidated, condensed statement of cash flows.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Better Minerals & Aggregates Company has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Better Minerals & Aggregates Company
Date: August 1, 2003 By: /s/ Gary E. Bockrath
Name: Gary E. Bockrath
Title: Vice President and
Chief Financial Officer
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands)
(Unaudited)
For the Quarter Ended For the Six Months Ended
June 30, June 30,
2003 2002 2003 2002
Net sales $ 48,501 $ 48,550 $ 92,166 $ 91,140
Cost of goods sold 36,583 35,996 71,611 69,465
Depreciation, depletion and amortization 3,882 4,171 7,935 7,732
Selling, general & administrative 8,137 4,416 11,825 9,232
-------- -------- -------- --------
Operating income (101) 3,967 795 4,711
Interest expense 8,373 7,906 16,376 16,098
Other income, net of interest income (275) (390) (484) (698)
-------- -------- -------- --------
Income (loss) before income taxes (8,199) (3,549) (15,097) (10,689)
Benefit for income taxes (1,187) (1,296) (5,013) (6,290)
-------- -------- -------- --------
Net income (loss) from continuing $ (7,012) (2,253) $(10,084) (4,399)
operations -------- -------- -------- --------
Income (loss) from operations of
discontinued segment, less applicable (335) 4,867 (9,013) (1,890)
income taxes of $421, $350, $896, and
$1,079
Cumulative effect of change in
accounting principle, less applicable
income taxes of $0, $0, $191, and $6,117 - - (335) 8,621
-------- -------- -------- --------
Net income (loss) $ (7,347) $ 2,614 $(18,762) $(14,910)
======== ======== ======== ========
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited
June 30, December
31,
2003 2002
ASSETS
Current assets of discontinued operations 41,075 36,431
Other current assets 62,565 56,781
Property and equipment - net 95,819 105,176
Insurance for third-party product liability claims 42,594 40,864
Debt issuance costs 9,376 9,518
Noncurrent assets of discontinued operations 172,859 173,285
Other assets 20,959 18,566
--------- ---------
Total assets $ 445,247 $ 440,621
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities of discontinued operations 12,725 9,934
Current portion of long-term debt 160,715 10,425
Other current liabilities 34,309 31,558
--------- ---------
Total current liabilities 207,749 51,917
Long-term debt 150,558 283,143
Third-party products liability claims 68,904 69,209
Noncurrent assets of discontinued operations 49,638 51,253
Other noncurrent assets 41,523 39,548
Stockholders' equity (73,125) (54,449)
--------- ---------
Total liabilities and stockholders' equity $ 445,247 $ 440,621
========= =========
BETTER MINERALS & AGGREGATES COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
For the Six Months Ended
June 30,
2003 2002
Net cash used for operating activities (11,907) (6,638)
Cash flows from investing activities:
Capital expenditures (3,662) (6,994)
Proceeds from sale of property, plant and equipment 25 264
Loans to related party (17) 58
------ ------
Net cash used for investing activities (3,654) (6,672)
Cash flows from financing activities:
Decrease in book overdraft 1,285 (69)
Issuance of long-term debt 15,236 --
Repayment of long-term debt (6,290) (5,393)
Net revolver credit agreement facility 8,200 17,350
Financing fees (804) --
Principal payments on capital lease obligations (510) (420)
------ ------
Net cash provided by financing activities 17,117 11,468
Net increase (decrease) in cash 1,556 (1,842)
Cash and cash equivalents, beginning of period 1,330 2,493
Cash and cash equivalents, ending of period $2,886 $ 651
Schedule of noncash financing activities:
Assets acquired by entering into capital lease obligations $ 194 $ 955