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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

Commission file number: 000-32665

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

Oglebay Norton Company

(Exact name of Registrant as specified in its charter)

Registrant’s telephone number, including area code: (216) 861-3300

Securities registered pursuant to Section 12(g) of the Act:

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of Registrant’s knowledge, in any amendment to this Form 10-K. Yes x    No ¨

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ¨    No x

The aggregate market value of voting stock held by non-affiliates of the Registrant at June 30, 2003 (calculated by excluding the total number of shares reported under Item 12 hereof) was $14,163,607.

Number of Shares of Common Stock outstanding at February 25, 2004: 5,059,581.

PART I

A.    (1)    Voluntary Petition Under Chapter 11 of U.S. Bankruptcy Code and Current Events

On February 23, 2004, the Company and all of its wholly owned subsidiaries filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The Company intends to continue operations without interruption and fulfill its commitments to its employees, retirees and customers during the reorganization process. The Company intends to seek emergence from Chapter 11 as rapidly as possible with a new, de-levered capital structure that will enable the Company to move forward on its strategic operating plan.

In furtherance of the Company’s goal of emerging from Chapter 11 as expeditiously as possible, prior to the filing, the Company reached an agreement in principle, subject to certain conditions, with a majority of the holders of its $100,000,000 Senior Subordinated Notes to exchange their notes for equity. The agreement also contemplates having certain of them make a new equity investment in the reorganized Company. Additionally, prior to filing Chapter 11, the Company accepted a commitment for a new credit facility that, among other things, would retire its existing bank debt. A hearing to approve the payment of the new commitment fee for this new facility is scheduled for April 7, 2004.

On February 25, 2004, U.S. Bankruptcy Judge Joel B. Rosenthal of the United States Bankruptcy Court for the District of Delaware in Wilmington entered an order granting interim approval for the Company to utilize cash collateral and to borrow up to $40,000,000 from a $75,000,000 debtor-in-possession (DIP) credit facility. The Company obtained the DIP facility from a syndicate that includes various members of its pre-petition bank group. The judge’s order provides the Company access to the liquidity necessary to continue operations without disruption and meet its obligations to its suppliers, customers and employees during the Chapter 11 reorganization process. A final hearing on approval of the $75,000,000 DIP facility is scheduled for April 7, 2004.

On February 24, 2004, the Bankruptcy Court also entered a variety of orders designed to afford the Company a smooth transition into Chapter 11 and permit the Company to continue operating on a normal basis post-petition. Among others, the Court entered orders authorizing the Company to continue its consolidated cash management system, pay employees their accrued pre-petition wages and salaries, honor the Company’s obligations to its customers and pay some or all of the pre-petition claims of certain vendors that are critical to the continued operations of the Company, subject to certain restrictions. The relief granted in these orders has facilitated the Company’s transition into Chapter 11 and has allowed the Company to continue its operations uninterrupted.

While the Company is in Chapter 11, investments in its securities continue to be highly speculative. Shares of the Company’s common stock have little or no value and will likely be canceled. Additionally, the Company’s shares were delisted from trading on the NASDAQ National Market effective at the opening of business on March 3, 2004. The Company’s shares continue to trade as an Other OTC issue under the symbol OGLEQ.

Notwithstanding the progress made to date by the Company towards achieving its restructuring goals, at this time, the ability of the Company to complete a financial restructuring is uncertain and subject to substantial risk. Furthermore, the form and timing of any financial restructuring is uncertain. There can be no assurance that the Company will be successful in achieving its goals, or that any measures that are achievable will result in sufficient improvement to the Company’s financial position. Accordingly, until the time that the Company emerges from bankruptcy and a sufficient financial restructuring is completed, there will be substantial doubt about the Company’s ability to continue as a going concern. In the event that a financial restructuring is not completed, the Company could be forced to sell a significant portion of its assets to retire debt outstanding or, under certain circumstances, to cease operations.

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As previously disclosed, management had been in discussions to sell its mica and lime operations. Management remains in active discussions to sell the Company’s mica operations; however, the Company has chosen to cease its efforts to sell its lime operations, as many of the potential new equity investors and new lenders have indicated that they want the Company to retain the lime business.

(2)    About The Company

Oglebay Norton Company, with origins dating back to 1854 and headquartered in Cleveland, Ohio, mines, processes, transports and markets industrial minerals and aggregates. The Company was reorganized as an Ohio corporation in 2001. The principal offices of the Company are located at North Point Tower, 1001 Lakeside Avenue, 15th Floor, Cleveland, Ohio 44114-1151. The primary North American Industry Classification System (NAICS) codes for the Company are 21231, 21232 and 48311. The Company mines, processes, and delivers industrial minerals from its strategically located, proven long-life reserves of high-quality limestone, industrial sand and mica. The Company also owns related mineral extraction equipment, processing plants and transportation equipment, including marine vessels and docks, trucks, railway lines and equipment. With these assets, the Company serves a broad customer base primarily in four major categories: building products, energy, environmental and industrial. The Company enjoys a significant market share in each of its core markets, benefiting from long-term relationships with market-leading customers, many of whom have multi-year purchase contracts with the Company.

The Company operates its businesses as three reporting segments focused on its key markets served. The segments align operations which share business strategies, are related by geography and product mix, and reflect the way management evaluates the operating performance of its businesses. The composition of the segments and measure of segment profitability is consistent with that used by the Company’s management.

The operations are reported as: Great Lakes Minerals, Global Stone and Performance Minerals. Great Lakes Minerals mines and distributes limestone from three facilities located in northern Michigan. Great Lakes Minerals also holds one of the largest fleets of self-unloading vessels on the Great Lakes, which is currently comprised of 12 vessels, operates two trans-loading dock facilities, and provides transportation services for limestone, as well as coal and iron ore. Global Stone mines and processes limestone and manufactures lime at six operations in the mid-Atlantic and southeastern United States and one operation in the Great Lakes region. Performance Minerals mines and processes industrial sands and mica at eight operations located in Ohio, North Carolina and the southwestern United States. The Company believes that it is one of the five largest producers of lime and one of the ten largest producers of limestone in the United States. Management also believes that the Company is the fourth largest producer of industrial sands and the largest producer of muscovite mica in the United States.

Additional information relating to financial and operating data on a segment basis is set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Part II hereof and in Note L to the Consolidated Financial Statements contained in Part III hereof. For a description of revenues and other financial information by geographic region, see Note L to the Consolidated Financial Statements contained in Part III hereof.

(3)    Business Strategy

On February 23, 2004, the Company filed for protection under Chapter 11 of the U.S. Bankruptcy Code. The Company’s short-term strategy for 2004 is to focus on serving its customers, reorganizing its capital structure and emerging from bankruptcy expeditiously. The Company has retained a third-party financial restructuring advisor to explore various financial alternatives and anticipates executing on a structure which eliminates a significant portion of debt in exchange for new equity. Longer-term, the Company’s strategy is to enhance its market leadership position and maximize profitability and cash flows through the following actions:

Capitalize on its strategic location and ownership of quality limestone reserves in the Great Lakes region.     The strategic location of the Company’s limestone reserves on the Great Lakes allows the Company to leverage

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logistics services and delivery of its limestone to customers in the Great Lakes region. The Company mines, processes and transports limestone to its own docks or directly to customers on a delivered cost per ton basis at highly competitive rates. This can be accomplished either by owning its fleet of marine vessels, as the Company does now, or by means of long-term contracts. The acquisition of Erie Sand and Gravel, Inc. (Erie Sand and Gravel) in January 2003 further solidifies the Company’s position in the eastern Great Lakes region and expands the geographic scope of customers available to the segment. The Great Lakes Minerals segment attempts to maximize the efficiency of its fleet of marine vessels by negotiating contracts and dispatching vessels to facilitate backhauls of coal and other bulk commodities. The vessel pooling agreement with American Steamship Company initiated in January 2002 further enhances the Company’s abilities to optimize marine transportation logistics on the Great Lakes, both for itself and its customers.

Capitalize on demand for industrial minerals for building materials.    The Company has secured significant regional market share in the building materials market, particularly with respect to construction aggregates and industrial fillers markets. Limestone, industrial sands and mica are used to varying degrees by building materials manufacturers as filler material in paint, joint compound, roofing shingles, carpet backing and floor and ceiling tiles. Additionally, the Company’s limestone is used as aggregates in major construction projects such as highways, schools, hospitals, shopping centers and airport expansions. The Company intends to capitalize on its strong presence in selected regional building materials markets by increasing its business with existing customers, expanding its customer base and providing a broader selection of products for customers to purchase.

Capitalize on increasing demand for minerals for environmental remediation.    Public focus over environmental issues have resulted in an increase in the demand for lime and limestone used in environmental clean-up applications, including flue gas desulphurization, municipal waste sludge treatment, industrial water treatment, drinking water treatment and hazardous waste remediation. The Clean Air Act, for example, requires the reduction of emissions, particularly sulfur, from coal-fired power plants and certain other industrial processes. Ground limestone and lime are the principal agents used in the desulphurization process. These applications require limestone with specific chemical composition and a high degree of reactivity. The Company believes that its strategically located, long-lived mineral reserves of high quality calcium carbonate and dolomitic limestone are uniquely positioned to meet these requirements, enabling the Company to capitalize on this increasing demand now and well into the future.

Capitalize on market opportunities in the energy segment.    The Company’s industrial sands products are well positioned in the market place to serve the demand for high-purity silica sands used by oil and gas well service companies in the shallow-well and deep-well fracturing process. The Company’s Great Lakes Minerals segment has continued to increase its share of coal transported in its vessels for use by electric utilities in the Great Lakes region.

B.    Principal Products and Services

(1)    Great Lakes Minerals

The Company’s Great Lakes Minerals segment mines limestone at three quarries located in northern Michigan and distributes it throughout the Great Lakes region. All three quarries have access to the Great Lakes and ship a majority of their output via marine vessel. The segment holds one of the largest reserves of metallurgical and chemical quality high-calcium carbonate and dolomitic limestone in the world and distributes these reserves on one of the largest fleets of self-unloading vessels on the Great Lakes. The fleet, which is currently comprised of 12 vessels, provides transportation services for limestone as well as for coal and iron ore. Additionally, the segment operates dock terminals in Cleveland, Ohio and Erie, Pennsylvania, which are important points of distribution on the Great Lakes, and a sand dredging operation in Erie, Pennsylvania.

Industry

Limestone accounts for about three-quarters of crushed stone production in the United States. Crushed limestone has five primary end uses: construction aggregates and building materials, chemical and metallurgical

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processes, cement and lime manufacturing, environmental and agricultural. As transportation costs are significant in this industry, competition is limited based on geography. Chemical make-up of limestone varies by deposit, resulting in certain quarries having limited ability to meet performance specifications of certain end uses, such as flue gas desulphurization. Products from the Great Lakes Minerals segment are used primarily as aggregate for construction of schools, hospitals, shopping centers and highways; as an environmental cleaning agent for flue gas desulphurization, waste water treatment and soil stabilization; and as an essential chemical component in the manufacture of steel, paper and glass.

In general, demand for crushed limestone correlates with general economic cycles, principally new construction demand and government spending on highway construction and other infrastructure projects. The segment’s long-lived mineral reserves and processing facilities allow capacity to meet increased demand during up-turns in general economic activity. Demand for vessel transportation on the Great Lakes is also related to general economic cycles and more particularly to construction activity and industrial production in the Great Lakes region. The business in the Great Lakes Minerals segment is seasonal. It is affected by weather conditions, such as the waterways freezing over, the closing/opening of the locks between the lakes, and water levels of the lakes and rivers. These factors cause the actual number of days of operation to vary each year. Annually, the locks are required by law to close on January 15 and re-open around March 25, unless otherwise prescribed by the U.S. Coast Guard. Management believes that the overall Great Lakes shipping market in which its fleet competes operated at less than full capacity in 2003, 2002 and 2001, after approaching full capacity for the prior five years. Management believes that the Great Lakes shipping market will operate at less than full capacity again in 2004.

Operations

The Great Lakes Minerals segment operates four open pit quarries, 12 self-unloading vessels and two dock facilities, and has access to several additional docks on the Great Lakes. The Company assesses mineral reserves at all of its quarries and mines utilizing external consulting geologists and mining engineers. The large reserves of the Great Lakes Minerals segment have been extensively mapped, and this mapping is regularly updated to provide the customer with specified, consistent-quality product. Limestone is extracted from the quarries by traditional drilling and blasting techniques. Following extraction, trucks or trains are used to deliver the “as-blasted” limestone to a primary crusher. It is then processed through several stages of crushing and screening to size products that can be sold as chemical limestone or aggregates.

Transportation costs represent a significant portion of the overall delivered price of limestone. Limestone quarried at the segment’s operations are delivered, for the most part, by marine vessel, enabling the stone to be shipped to major markets located in excess of 800 miles away at a competitive price. The Company is the largest and only fully integrated producer and bulk transporter of limestone on the Great Lakes. The Company can mine, process and transport stone to the Company’s own docks or directly to customers on a delivered cost per ton basis using its own services or under long-term contracts.

Substantially all of the transportation services of the Company’s vessel fleet are conducted between U.S. ports on the Great Lakes. The largest vessels in the fleet transport primarily iron ore and coal. Smaller vessels can be scheduled with more flexibility and tend to be better suited to transport limestone. In early 2002, the Company entered into a pooling agreement with American Steamship Company, which operates a fleet of 12 modern, self-unloading Great Lakes vessels comparable in size to the Company’s fleet. The agreement combines the operations and customers of the two fleets to achieve more efficient overall operations and better customer service. With the pooling of vessels, the Company realizes improved trade patterns for all cargo, including limestone, resulting in more efficient deployment and reduced delays across the combined fleet and better service to the customers of both companies. The agreement provides for the coordination of dispatch and other fleet operations but does not involve any transfer of assets.

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The Great Lakes Minerals segment operates a bulk material dock facility in Cleveland, Ohio under an agreement with the Cleveland-Cuyahoga County Port Authority that was extended in 2002 through March 2017. The dock facility operates throughout the year, receiving cargo from Great Lakes vessels, storing it as needed, and transferring it for further shipment via rail or water transportation. In 2003, the Port Authority concluded the relocation of an automated vessel loader to the dock facility. The new loader enables the Company to trans-load iron ore pellets from its larger vessels to smaller vessels for delivery up the Cuyahoga River to a major customer. As a result of the vessel loader project, the Port Authority has postponed prior plans to construct a new access road that will enable the facility to trans-ship cargoes by truck as well as rail and water. If the access road is constructed, the Company expects that the new road will enable limestone delivery by truck, expanding its ability to serve the limestone market. It is uncertain at this time when the Port Authority will resume plans for the access road construction.

The Erie Sand and Gravel operation does not operate a quarry. The majority of its product is received from the segment’s quarries in Michigan via marine vessel to a bulk materials dock in Erie, Pennsylvania, for distribution into local markets. The operation has a vessel that dredges sand from Lake Erie, which is screened and sold into local markets as a filler in concrete and other construction applications. Additionally, the Erie dock is a distribution point for other products including salt and coke breeze. The addition of Erie Sand and Gravel expands the geographic scope of the segment to the northwest Pennsylvania and western New York regions.

Customers

The segment’s primary customers include purchasers and producers of construction aggregate and chemical limestone, integrated steel manufacturers, for whom the fleet transports iron ore, limestone and coal, and electric utility companies, for whom the fleet transports coal. The Company has long-established relationships with many of these customers and provides services to many of them pursuant to long-term contracts. The Company estimates that approximately 70% of the tonnage hauled by the vessel fleet was shipped pursuant to multi-year contracts. The Company estimates that, for 2003, industrial and chemical, building materials and construction, and energy customers accounted for approximately 44%, 41% and 15%, respectively, of this business segment’s revenue.

Since the acquisition of Michigan Limestone in 2000, the Company has moved to diversify the fleet’s shipping patterns in order to reduce its dependence on iron ore and the integrated steel industry. As recently as the late 1990s, iron ore accounted for as much as 60% of the fleet’s revenues. In 2003, iron ore shipments accounted for approximately 47% of the fleet’s revenues (46% and 45% in 2002 and 2001, respectively). Coal accounted for approximately 36% of the fleet’s revenues in 2003 compared with 32% in 2002 and 31% in 2001. Shipments of limestone accounted for an estimated 16% of the fleet’s revenues in 2003, compared with approximately 22% in 2002 and 23% in 2001. Approximately 70% of the limestone transported by the pooled fleet in 2003 came from the segment’s quarries.

Competition

The building materials and construction aggregate industry in North America is highly fragmented. Many active operations are small scale or wayside locations operated by state or local governments, usually to meet the requirements of highway contracts in more remote locations. There also are a number of large companies in the industry, including Vulcan Materials Corporation, Martin Marietta Materials Inc. and Lafarge Corporation whose operations are often centered on a particular geographic region. The Company’s Great Lakes Minerals operations are centered on the Great Lakes region in this fashion and compete primarily with LaFarge Corporation, which has facilities in the same geographic region. Given that transportation costs represent a significant portion of the overall cost of lime and limestone products, competition generally occurs among participants in close geographic proximity. Additionally, the scarcity of high-purity limestone deposits on which the required zoning, extraction and emission permits can be obtained serves to limit competition from startup operations within this limestone market. The physical characteristics and purity of the limestone can be a distinguishing competitive factor for chemical limestone and price is an important factor for both chemical limestone and construction aggregate.

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The most important competitive factors impacting the segment’s marine transportation services are price, customer relationships and customer service. Management believes that customers are generally willing to continue to use the same carrier assuming such carrier provides satisfactory service with competitive pricing. The Company’s fleet directly competes only among U.S. flag Great Lakes vessels because of the U.S. federal law known as the Jones Act. The Jones Act requires that cargo moving between U.S. ports be carried in a vessel that was built in the United States, has a U.S. crew, and is owned (at least 75%) by U.S. citizens or corporations. As a result, Canadian-flagged Great Lakes vessels or foreign-flag oceanic vessels do not carry dry bulk cargo between U.S. ports. Moreover, the size limitation imposed by the Welland canal prevents large oceanic vessels from entering the Great Lakes. The competitive landscape has remained relatively stable over the last ten years. There were approximately 56 and 60 U.S. flag vessels in service in 2003 and 2002, respectively. The Company is expected to continue to lay up some of its vessels in 2004 as a result of efficiencies realized from the pooling arrangement with American Steamship Company.

The pooled fleet will principally compete against two other similar-sized U.S. flag Great Lakes commercial fleets in 2004: The Interlake Steamship Company and The U.S.S. Great Lakes Fleet. The fleet also competes with certain companies that operate smaller captive fleets and, to a lesser extent, with rail and truck transportation companies serving the Great Lakes region.

(2)    Global Stone

Through a series of transactions in 2000, 1999 and 1998, the Company acquired businesses that now form its Global Stone segment. These operations supply lime, crushed and ground limestone, construction aggregates and chemical limestone to a broad customer base in a variety of industries. The segment’s products are used primarily as a filler in building materials, as an environmental cleaning agent for flue gas desulphurization, waste water treatment and soil stabilization, as a chemical in steel-making, paper-making and glass-making, and as an aggregate for construction of highways, shopping centers, hospitals and schools.

Industry

Lime is a value-added product, derived from limestone, and is widely used in a variety of manufacturing processes and industries, including iron and steel, pulp and paper, chemical, air purification, sewage, water and waste treatments, agricultural and construction. The wide range of end-uses and markets for lime offer some protection from the economic cycles experienced by individual sectors such as the steel industry. Additionally, a high proportion of lime is sold into end-uses that, unlike some construction-related end-uses, have year-round requirements largely unaffected by the weather. Limestone accounts for about three-quarters of crushed stone production in the United States. Transportation costs can be significant in this industry; therefore, competition is limited based on geography. Additionally, many of these applications require stone with specific chemical composition and a high degree of reactivity. Crushed limestone has four primary end uses: construction aggregates and building materials; chemical and metallurgical processes; cement and lime manufacturing; and agricultural purposes. High-purity chemical limestone like that processed by the segment may be processed into value-added products, such as lime or limestone fillers, or sold as chemical limestone for use in manufacturing products as diverse as poultry feed mixtures, fiberglass and roofing shingles. Fillers, which are finely ground limestone powders, are used in a wide range of manufacturing processes including vinyl flooring, carpet backing, adhesives, sealants and joint compound.

Operations

The Company’s Global Stone business segment produces products for the following primary end uses: construction aggregates and building materials, environmental, chemical and metallurgical processes, cement and lime manufacturing, and agricultural. The segment has seven lime and/or limestone operations in North America that collectively extract and process high-purity limestone. These operations are primarily centered in northwest Georgia and along the Interstate 81 corridor from southern Pennsylvania through Virginia and Tennessee.

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The segment currently operates eight open pit quarries and four underground mines. Limestone is extracted from the quarries and mines by traditional drilling and blasting techniques. In an open pit quarrying operation, the high-purity limestone is often covered by an overburden of construction grade limestone that must first be removed. This overburden is used whenever possible to produce construction aggregates, usually in a dedicated crushing plant, in order to offset the overall cost of extracting high-purity limestone. Following extraction, trucks are used to deliver the “as-blasted” limestone to a primary crusher. It is then processed through several stages of crushing and screening to size products that are saleable as chemical limestone and aggregates or ready for further processing into lime, fillers and other value-added products. The Company assesses mineral reserves at all of its quarries and mines utilizing external consulting geologists and mining engineers.

High-purity limestone is processed into lime by heating it in a kiln. At December 31, 2003, the Company believes its daily lime production capacity was approximately 2,800 tons. The capacity over a 24-hour period cannot be projected over a full calendar year because kilns require regular planned outages for maintenance and equipment and is subject to unplanned outages customary with any mechanical plant. Typically, a kiln will operate between 92%-96% of the available hours in any year. High-purity limestone is processed into fillers through grinding into course, medium or fine grades. The segment primarily competes in course ground filler products used in the manufacture of roofing shingles and carpet backing.

Customers

In general, demand for lime and limestone correlates to general economic cycles, principally new construction demand, population growth rates and government spending on highway construction and other infrastructure projects, which affect the demand for our customers’ products and services. This business segment has a broad customer base covering all sectors of the demand for lime and limestone. These customers vary by the type of limestone products they demand: lime, chemical limestone or construction aggregate. The Company estimates that building materials and construction, environmental, and industrial and chemical customers account for approximately 58%, 22%, and 20%, respectively, of this business segment’s revenue.

Transportation cost represents a significant portion of the overall cost of lime and limestone. As a result, the majority of lime and limestone production is sold within a 200-mile radius of the producing facility, while aggregates tend to be sold within a 50-mile radius. At certain of the segment’s locations asphalt manufacturing customers have located their processing plants on the Company’s property. The Company believes that its Global Stone lime and limestone operations are strategically located near major markets for their products and holds a significant share of these markets.

Competition

The building materials and construction aggregate industry in North America is highly fragmented. Many of the active operations are small scale or wayside locations operated by state or local governments, usually to meet the requirements of highway contracts in more remote locations. There also are a number of large companies in the industry, including Vulcan Materials Corporation, Martin Marietta Materials Inc. and Lafarge Corporation, whose operations are often centered on a particular geographic region. The most important competitive factors are price and ability to meet spikes in demand.

Lime is primarily purchased under annual contracts. For many customers, the cost of lime is quite small in comparison to their overall production costs. For 2003, the Company estimates that it was the fifth largest producer of lime in North America, with the eight largest producers accounting for approximately 80% of total industry capacity. The Company’s business segment accounted for approximately 4% of the total North American market. The four largest companies with which the Company competes are privately owned. The most important competitive factors are the inherent quality and characteristics of the lime, price and ability to meet spikes in demand.

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Given that transportation cost represents a significant portion of the overall cost of lime and limestone products, competition generally occurs among participants in close geographic proximity. In addition, the scarcity of high-purity limestone deposits on which the required zoning, extraction and emission permits can be obtained serves to limit competition from startup operations within the limestone market.

(3)    Performance Minerals

The Company’s Performance Minerals business segment is engaged in the mining and processing of high-quality specialty mineral products, primarily industrial sands and muscovite mica. The segment’s businesses are focused on markets where excellent technical service and support are important to customers. Additionally, the segment’s businesses share common end-use markets in building products and a geographic focus on the Southwestern United States. The Company believes that the segment is the fourth-largest producer of industrial sands in the United States and the largest producer of muscovite mica in North America. In September 2003, management announced its intention to sell the mica business. Active discussions are underway, but there is no definitive agreement at this time.

Performance Minerals’ products include: (i) fracturing sands, which are used by oil and gas well service and exploration companies in the well fracturing process to hold rock structures open; (ii) specialty construction/industrial sands, which are used in the construction industry; (iii) silica flour used in the manufacture of building materials such as roofing shingles, stucco, mortar and grout, and in fiberglass and ceramics; (iv) whole grain sands and silica flour used in glass-making; (v) recreational sands, which are used in the construction of golf courses and other recreation fields, as well as in general landscaping applications; (vi) foundry sands, which are used in ferrous and non-ferrous metal die casting; (vii) filtration sands, which are used in liquid filtration systems; (viii) coated sand for industrial abrasive uses; and (ix) mica products used as a functional filler in building materials such as joint compound, coatings and paints, as well as in the manufacture of numerous industrial and consumer products, including automotive sound deadening materials, thermoplastics and cosmetics.

The Company’s mica operation produces the widest array of mica products in North America—more than 40 different products—and is the only company currently supplying all major muscovite mica market segments. Performance Minerals also produces two other specialty minerals as a byproduct of mica production: kaolin clay and feldspathic sand.

Industry

Industrial sands, often termed “silica,” “silica sand” and “quartz sand,” are defined as high silicon dioxide content sands. While deposits of more common construction sand and gravel are widespread, industrial sand deposits are limited. The special properties of industrial sands—purity, grain size, color, inertness, hardness and resistance to high temperatures—make them often irreplaceable in a variety of industrial applications. Higher silica content allows for more specialized, higher-margin applications than construction sand and gravel. Mica, the segment’s other primary product, is highly valued for its unique physical characteristics, including color, flexibility, durability, thermal properties and weight. Mica is used as a functional filler in building materials such as joint compound, coatings and paints, as well as in the manufacture of numerous industrial and consumer products including automotive sound deadening materials, thermoplastics and cosmetics. Mica is an essential component in many applications and in some cases can command premium pricing.

In general, demand for Performance Minerals’ products is driven by a number of factors depending on end use. The three most important factors are demand for oil and natural gas, housing starts, and golf course construction activity, in the Southwestern United States where most of the Company’s industrial sand facilities are located. Oil and gas usage correlates with demand from oil and gas drilling service companies for fracturing or “frac” sands, which is the largest single market for the Company’s industrial sands. Housing starts correlate with demand for building products such as joint compound, paint, roofing shingles and grout, which are important end-uses for both mica and industrial sands. Demand for sand used in golf course construction and maintenance relates primarily to southern California locations.

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Operations

The Performance Minerals segment has eight operations, five of which having strategically located, long-lived reserves of high-purity industrial sands and muscovite mica. Three of the segments operations function as distribution and/or processing points and are supplied by either the segment’s quarries or by third-parties. The segment’s operations are located in Ohio, North Carolina and the Southwest.

The industrial sands operations include four open pit sand quarries with two integrated processing plants and one remote processing plant. In an industrial sand quarry, the extracted sand is first washed to remove impurities like clay and dirt. The sand is then dried, screened and separated into different sized granules. At certain of the facilities, the sand is also pulverized into powder for use in ceramic and other applications. All of the segment’s industrial sands operations have railroad and/or highway access.

The segment’s two mica operations are located in Kings Mountain, North Carolina and Velarde, New Mexico. The Kings Mountain complex includes two mines and three plant sites that crush, dry, screen, mill and package mica products for shipment. Products include wet ground mica, dry ground mica, flake mica and micronized mica, as well as the byproducts kaolin clay and feldspathic sand. Several different kinds of mica are surface treated with various chemicals to improve their performance in plastic products. The Velarde operation in northern New Mexico includes a surface mine and a plant that processes dry ground and flake mica. Both the Velarde and Kings Mountain sites control sufficient mica reserves to meet all expected demand for many years to come.

Customers

The segment has a broad customer base for its many industrial sands and mica products. The Company has a long relationship with the majority of its large customers in this segment. Industrial sands customers participate in the oil and gas well service, building materials, glass, fiberglass, ceramic, foundry, filtration, and golf course and recreational industries. Mica is supplied to customers in the building materials, automotive, rubber and plastics and cosmetics industries, among others.

For bulk industrial sands materials, transportation cost represents a significant portion of the overall cost, and so the majority of production is sold within a 200-mile radius of the producing facility. In contrast, for fracturing sands and most mica products, transporting the materials long distances is not economically prohibitive because of their high unit value. Fracturing sands are transported throughout the entire North American continent to satisfy current supply needs. The Company estimates that the building materials and construction markets, energy, and industrial uses accounted for approximately 36%, 28% and 34%, respectively, of the business segment’s revenue.

Competition

Competition generally occurs between participants in close geographic proximity. However, the scarcity of high-purity sand deposits for which the required zoning and extraction permits can be obtained serves to limit competition. Management estimates that the Company is the fourth largest industrial sand producer in the country and the leader in the Southwestern U.S. market. The principal competition comes primarily from three companies: Unimin Corp., U.S. Silica Co., a wholly-owned subsidiary of Better Minerals, Inc. and Fairmount Minerals Ltd. The most competitive factors include the inherent physical characteristics of the sand, price and ability to meet spikes in demand.

Due to limited sources, competition in the muscovite mica industry is international. The Company estimates that it is the largest producer of muscovite mica in North America, accounting for approximately 45% of the market. Competition comes primarily from privately held international businesses with the only public competitors in 2003 being Zemex, Inc. (acquired by Cementos Pacasmayo S.A.A. in March 2003) and Engelhard Corporation.

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C.    Environmental, Health and Safety Considerations

The Company is subject to various environmental laws and regulations imposed by federal, state and local governments. The Company is continually improving and updating its Environmental, Health and Safety Initiative and in 2002 implemented a new comprehensive program. During the year 2001, certain plant operations were closed in conjunction with the fourth quarter restructuring of the Company. As a result, the Company has incurred and may, in the future, be responsible for certain closure related expenses, including applicable reclamation of land to its original condition or to a condition as may be required by contract or law.

D.    Employees

At December 31, 2003, the Company employed approximately 1,804 people, of whom 137 are management. 47% of the Company’s employees are unionized, and the Company is party to eleven collective bargaining agreements with various labor unions. The Company believes that it maintains good relations with each of these unions. In 2004, collective bargaining agreements representing approximately 567 employees will expire. Management expects to be able to negotiate new contracts with each of these labor unions.

E.    Subsequent Events

On February 23, 2004, the Company and all of its subsidiaries filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. See Item 1, section A. (1) for further discussion.

In separate transactions during January 2004, the Company sold the Redi-Mix business unit and the vessel M/V Richard Reiss of its Erie Sand and Gravel operations to E.E. Austin & Son, Inc. and Grand River Navigation Company, Inc., respectively. The Redi-Mix business unit was comprised of Serv-All Concrete, Inc. and S&J Trucking, Inc. These assets were not considered integral to the long-term strategic direction of the Company. Proceeds from the sales were $1,225,000 for Redi-Mix and $1,800,000 for the vessel. No gain or loss on sale was recognized by the Company.

In conjunction with the sale of the Redi-Mix business unit, the Company entered into a long-term supply agreement with E.E. Austin & Son, Inc. dated January 21, 2004, pursuant to which the Company will provide certain aggregates to E.E. Austin & Son, Inc. for an initial term of fifteen years beginning on the closing date of the agreement. Additionally, the Company and E.E. Austin & Son, Inc. entered into a sublease agreement dated January 21, 2004, whereby E.E. Austin & Son, Inc. is subleasing property from the Company previously dedicated to the operation of the Redi-Mix business unit. The initial term of the sublease agreement commences on the closing date of the agreement and extends to December 31, 2019. The agreement is renewable in five-year increments thereafter, upon agreement by both parties.

11

The following map shows the locations of our quarries and operations.

12

The Company’s principal operating properties are described below. The Company’s executive offices are located at North Point Tower, 1001 Lakeside Avenue, 15^th Floor, Cleveland, Ohio 44114-1151, under a lease expiring on December 31, 2013. The total area involved is approximately 22,329 square feet.

13

Set forth in the table below are the Company’s annual average production tonnage, using the last 3 years and an estimate of the Company’s measured and indicated reserves.

14

The Company has not included reserves that have not met the SEC Industry Guide 7 regulations. Below is additional information on potential reserves (defined as resources) that the Company has.

The average annual production tonnage rounded to zero in the above schedule, below is the actual average.

On February 23, 2004, the Company and all of its wholly owned subsidiaries filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. See Item 1, section 1.(A) for further discussion.

The Company and certain of its subsidiaries are involved in a limited number of claims and routine litigation incidental to operating its current business. In each case, the Company is actively defending or prosecuting the claims. Many of the claims are covered by insurance and none are expected to have a material adverse effect on the financial condition of the Company. While the Company is under Chapter 11 bankruptcy protection, all legal proceedings against the Company and/or its subsidiaries are stayed by operation of federal law. The following describes pending legal proceedings against the Company prior to its bankruptcy filing.

Several of the Company’s subsidiaries have been and continue to be named as defendants in a large number of cases relating to the exposure of people to asbestos and silica. The plaintiffs in the cases generally seek compensatory and punitive damages of unspecified sums based upon the Jones Act, common law or statutory product liability claims. Some of these cases have been brought by plaintiffs against the Company (or its subsidiaries) and other marine services companies or product manufacturer co-defendants. Considering the Company’s past and present operations relating to the use of asbestos and silica, it is possible that additional claims may be made against the Company and its subsidiaries based upon similar or different legal theories seeking similar or different types of damages and relief.

The suits filed pursuant to the Jones Act are filed in Federal Court and have been assigned to the Multidistrict Litigation Panel (MDL); there are approximately 700 claims, all of which are currently dormant and have been so for many years.

The Company believes that both the asbestos and silica product liability claims are covered by multiple layers of insurance policies from multiple sources and an insurance trust. In the third quarter of 2003, the Company agreed with one of its several insurers to fund an insurance trust (the Trust) to cover a significant portion of settlement and defense costs arising out of asbestos litigation. The funds were received by the Trust during 2003. The Company has access to Trust funds to cover settlements and defense costs and does not anticipate that it will have the need to cover such costs from its own funds. Additionally, the agreement provides that the Company may use up to $4,000,000 ($1,681,000 used in 2003) of the Trust’s assets to cover the cost of any other related or unrelated insurable or insurance related expenses. At December 31, 2003, the Company was a co-defendant in cases alleging asbestos-induced illness involving claims of approximately 75,000 claimants.

15

With respect to silica claims, the Company at December 31, 2003 was co-defendant in cases involving approximately 20,000 claimants. The Company has been and will continue to be responsible for funding a small percentage of all settlements and defense costs. Management believes that its share of settlements on an annual basis is not significant, although the Company continues to maintain a reserve on its balance sheet to address this contingency.

The exposure of persons to silica and the accompanying health risks have been and continue to be significant issues confronting the industrial minerals industry in general, and specifically our Performance Minerals segment. Proposed changes to standards for exposure to silica are under review by the United States Occupational Safety and Health Administration. This review could result in more stringent worker safety standards or, in the alternative, requirements for additional action on the part of silica users regarding lower permissible exposure limits for silica. More stringent worker safety standards or additional action requirements, including the costs associated with these revised standards or additional action requirements, and actual or perceived concerns regarding the threat of liability, or health risks, including silicosis, associated with silica use, may affect the buying decisions of the users of our silica products. If worker safety standards are made more stringent, if the Company is required to take additional action regarding lower permissible exposure limits for silica, or if the Company’s customers decide to reduce their use of silica products based on actual or perceived health risks or liability concerns, the Company’s operating results, liquidity and capital resources could be materially adversely affected. The extent of any material adverse effect would depend on the nature and extent of the changes to the exposure standards, the cost of meeting and our ability to meet more stringent standards, the extent of any reduction in our customer’s use of our silica products and other factors that cannot be estimated at this time.

On December 8, 2003, the Company settled a series of multi-party lawsuits and an arbitration relating to its prior involvement in Eveleth Mines. The first suit was filed on September 25, 2001, by the Company’s subsidiary, ON Marine Services Company, in the United States District Court for the Southern District of Ohio Eastern Division. The second suit was filed on February 7, 2002, by Continental Insurance Company, Transportation Insurance Company, and Transcontinental Technical Services, Inc., in the District Court for the Southern District of Ohio Eastern Division. The parties included Evtac Mining, LLC, Eveleth Taconite Company, and Ontario Eveleth Company, the current mine operator and its shareholders, an insurance carrier and one of the Company’s subsidiaries. The nature of the allegations against the Company included claims relating to the liability for retrospective premiums and duty to reimburse others for legal expenses incurred in defending settled litigation. The settlement amount was $3.65 million, payable over thirty (30) months. Evtac Mining, LLC filed for protection under the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Minnesota on May 1, 2003. The Company’s subsidiary has filed a proof of claim.

On February 20, 2004, the Company and Oglebay Norton Specialty Minerals, Inc., a wholly-owned subsidiary, were named in an action filed by Pueblo of Picuris, in the District Court of Taos County, New Mexico, seeking to quiet title to certain land upon which a mica mine is situated in Taos County, New Mexico. The action also includes a claim for money damages for allegations of trespass, denial of access, damage to property and other related claims. The Company is investigating the facts and circumstances surrounding this matter to determine if it has liability or significant risk of adverse finding.

Litigation is inherently unpredictable and subject to many uncertainties. Adverse court rulings, determinations of liability or retroactive or prospective changes in the law could affect claims made against the Company and encourage or increase the number and nature of future claims and proceedings. Together with reserves recorded and available insurance, pending litigation is not expected to have a material adverse effect on the Company’s operations, liquidity or financial condition.

No matter was submitted to a vote of the Company’s security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year covered by this report.

16

PART II

The Company’s common stock was traded on the NASDAQ National Market (NASDAQ/NMS Symbol: OGLE) during 2003. The Company had 286 shareholders of record at February 25, 2004. The Company’s shares were delisted from trading on the NASDAQ National Market, effective at the opening of business on March 3, 2004, as a result of the Company’s Chapter 11 bankruptcy filing. The Company’s shares continue to trade as an Other OTC issue under the symbol OGLEQ. The following is a summary of the market range for each quarterly period in 2003 and 2002 for the Company’s common stock. The Company’s amended bank agreement on the Senior Credit Facility and Syndicated Term Loan prohibit the payment of cash dividends; accordingly there were no dividends declared or paid in 2003 or 2002.

As of February 25, 2004, the share price was $.71 per share.

On October 25, 2002, the Company issued $75.0 million in Senior Secured Notes due October 25, 2008 to accredited investors in a private transaction exempt from registration requirements under Section 4(2) of the Securities Act of 1933. Additional information relating to the Senior Secured Notes is set forth in Note G to the Consolidated Financial Statements contained in Part III hereof.

17

OGLEBAY NORTON COMPANY AND SUBSIDIARIES

(Dollars and shares in thousands, except per share amounts)

Results for 2003 include Erie Sand and Gravel from its acquisition date in early January of 2003 and do not include the Lawn and Garden business unit of the Global Stone segment subsequent to its sale in the fourth quarter of 2003. Results for 2000 include Michigan Limestone Operations and Global Stone Portage from their respective dates of acquisition during the second and third quarters of 2000, respectively. Results for 1999 include Global Stone Winchester and Specialty Minerals from their respective dates of acquisition during the first and fourth quarters of 1999, respectively.

18

Financial Condition

Liquidity, Capital Resources and Current Events

On February 23, 2004, the Company and all of its wholly owned subsidiaries filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The Company intends to continue operations without interruption and fulfill its commitments to its employees, retirees and customers during the reorganization process. The Company intends to seek emergence from Chapter 11 as rapidly as possible with a new, de-levered capital structure that will enable the Company to move forward on its strategic plan.

Beginning in 1998, the Company incurred significant debt in connection with a series of acquisitions. These acquisitions, which transitioned the Company into a diversified industrial minerals company, also resulted in a highly-leveraged balance sheet. When the U.S. economy slipped into recession in 2001, the debt became an increasing financial burden. Over the past three years, the Company has been impacted particularly by the decline of the nation’s integrated steel industry, rising energy costs and adverse market conditions in certain segments of the commercial and residential building materials markets. Together, these factors resulted in decreased demand for limestone and mica from the Company’s quarries and for the services of its Great Lakes fleet. . The continuing losses aggravated the already significant debt load. As of December 31, 2003, the Company had $421,840,000 in debt outstanding ($420,350,000 of debt in current liabilities) on 2003 net sales and operating revenues of $404,229,000.

The Company, during 2003 and continuing into 2004, has been engaged in discussions with its lenders, note holders, consultants and others to determine the best way to restructure its debt, while preserving the greatest value for all stakeholders. Ultimately, management of the Company concluded that it was not possible to adequately restructure the Company’s debt outside of court protection.

In furtherance of the Company’s goal of emerging from Chapter 11 as expeditiously as possible, prior to the filing, the Company reached an agreement in principle, subject to certain conditions, with a majority of the holders of its $100,000,000 Senior Subordinated Notes (Sub-Notes) to exchange their notes for equity. The agreement also contemplates having certain of them make a new equity investment in the reorganized company. Additionally, prior to filing Chapter 11, the Company accepted a commitment for a new credit facility that, among other things, would retire its existing bank debt. A hearing to approve the payment of the commitment fee for the new facility is scheduled for April 7, 2004.

On February 25, 2004, U.S. Bankruptcy Judge Joel B. Rosenthal of the United States Bankruptcy Court for the District of Delaware in Wilmington entered an order granting interim approval for the Company to utilize cash collateral and to borrow up to $40,000,000 from a $75,000,000 debtor-in-possession (DIP) credit facility. The Company obtained the DIP facility from a syndicate that includes various members of its pre-petition bankgroup.

The judge’s order provides the Company access to the liquidity necessary to continue operations without disruption and meet its obligations to its suppliers, customers and employees during the Chapter 11 reorganization process. A final hearing on approval of the $75,000,000 DIP facility is scheduled for April 7, 2004.

On February 24, 2004, the Bankruptcy Court also entered a variety of orders designed to afford the Company a smooth transition into Chapter 11 and permit the Company to continue operating on a normal basis post-petition. Among others, the Court entered orders authorizing the Company to continue its consolidated cash

19

Financial Condition—(Continued)

management system, pay employees their accrued pre-petition wages and salaries, honor the Company’s obligations to its customers and pay some or all of the pre-petition claims of certain vendors that are critical to the continued operations of the Company, subject to certain restrictions. The relief granted in these orders has facilitated the Company’s transition into Chapter 11 and has allowed the Company to continue its operations uninterrupted.

While the Company is in Chapter 11, investments in its securities will be highly speculative. Shares of the Company’s common stock have little or no value and will likely be canceled. Furthermore, the Company’s shares were delisted from trading on the NASDAQ National Market effective at the opening of business on March 3, 2004. The Company’s shares continue to trade as an Other OTC issue under the symbol OGLEQ.

Notwithstanding the progress made to date by the Company toward achieving its restructuring goals, at this time, the ability of the Company to complete a financial restructuring is uncertain and subject to substantial risk. Furthermore, the form and timing of any financial restructuring is uncertain. There can be no assurance that the Company will be successful in achieving its goals, or that any measures that are achievable will result in sufficient improvement to the Company’s financial position. Accordingly, until the time that the Company emerges from bankruptcy and a sufficient financial restructuring is completed, there will be substantial doubt about the Company’s ability to continue as a going concern. In the event that a financial restructuring is not completed, the Company could be forced to sell a significant portion of its assets to retire debt outstanding or, under certain circumstances, to cease operations.

The Company intends to continue to pursue the strategic operating plan it put in place over the last two years but has been unable to execute fully due to the financial issues it has faced. The strategic operating plan is based on the core competencies of the Company of extracting, processing and providing minerals. The Company plans to expand its current markets and develop new markets for its limestone and limestone fillers, while maximizing the profitability of its sand, lime and marine businesses.

As previously disclosed, management had been in discussions to sell its mica and lime operations. While management remains in active discussions to sell the Company’s mica operations, the Company has chosen to cease its efforts to sell its lime operations, as nearly all of the potential new equity investors and new lenders have indicated that they want the Company to retain this business.

The Company is party to Syndicated Term Loan, Senior Credit Facility, Vessel Term Loan and Senior Secured Notes Agreements (the Agreements) with its syndicated banking group, vessel lenders and senior secured note holders. Under the Agreements, the Company is required to comply with various financial-based covenants. At times during the second and third quarters of 2003, the Company was not in compliance with covenants that required the Company to maintain a minimum level of earnings before interest, taxes, depreciation and amortization (EBITDA), a maximum level of total debt and senior debt to EBITDA, a minimum cash flow coverage ratio, a minimum level of net worth (except for the Senior Secured Notes, with which the Company remained in compliance), and a minimum interest coverage ratio. In anticipation of this non-compliance, the Company obtained waivers from its syndicated banking group and senior secured note holders. These waivers expired on August 15, 2003, while negotiations for amendments (the Amendments—see discussion below) to the Agreements were still ongoing.

Furthermore, as announced on August 1, 2003, the Company chose to defer the interest payment due August 1, 2003 on its Sub-Notes, pending the outcome of the Amendment negotiations. As a result of the deferral of the interest payment on the Sub-Notes, the Company’s ability to draw on its credit availability was at the discretion of its syndicated banking group until such time that the Amendments were completed. Since the Company did not make the interest payment on the Sub-Notes prior to the expiration of the 30-day grace period ended August 31, 2003 allowed under the Sub-Notes indenture agreement, the Company was also in default of the Sub-Notes at that time.

20

Financial Condition—(Continued)

On September 11, 2003, the Company entered into amendments with its syndicated banking group and senior secured note holders. The Amendments restored the Company’s ability to draw on its Senior Credit Facility to fund operations and to make the interest payment due August 1, 2003 on the Sub-Notes (which payment was made on September 29, 2003), provided for less-restrictive quarterly covenant requirements going forward, and removed the requirement for the Company to maintain interest rate protection on at least 50% of the Syndicated Term Loan and Senior Credit Facility. The Amendments required the Company to repay at least $100,000,000 of debt from the proceeds of permitted asset sales by February 25, 2004, increased the applicable margin charged on the Company’s LIBOR-based interest rate by 150 basis points, required monthly settlement of LIBOR-based interest (as opposed to quarterly settlement), and established a dominion of funds arrangement, whereby the daily cash receipts of the Company are collected by its banking group into a centralized bank account and are used to service the outstanding balance of the Senior Credit Facility. Additionally, the Amendments increased the rate of payment-in-kind interest on the Senior Secured Notes by 100 basis points.

As a result of the Company’s decision to not repay $100,000,000 in debt from proceeds of permitted asset sales by February 25, 2004, the Company is in default of the Syndicated Term Loan, Senior Credit Facility, Senior Secured Notes, Senior Subordinated Notes and Vessel Term Loan. Accordingly, the related balance of $419,495,000, which represents substantially all of the Company’s debt, has been included in current liabilities at December 31, 2003 on the Consolidated Balance Sheet.

The Syndicated Term Loan and Senior Credit Facility mature on October 31, 2004. The pricing features and covenants of the Senior Credit Facility and the Syndicated Term Loan are the same. The most restrictive covenants, in addition to the requirement to repay at least $100,000,000 in debt through permitted asset sales by February 25, 2004, on the Senior Credit Facility and Syndicated Term Loan require the Company to maintain a (1) minimum level of earnings before interest, taxes, depreciation and amortization (EBITDA), (2) maximum leverage ratio, (3) minimum cash flow coverage ratio, (4) minimum interest coverage ratio (5) minimum level of net worth and (6) limitation on capital expenditures and prohibition of the payment of cash dividends by the Company.

The $75,000,000 Senior Secured Notes mature on October 25, 2008 with scheduled amortization in 2007 and 2008 (50% of the original principal in each year). Interest on the notes includes a 13% per annum cash payment, payable quarterly, and a 6% per annum payment-in-kind. The Senior Secured Notes contain financial covenants that, though similar in nature, are less restrictive than those of the Senior Credit Facility and Syndicated Term Loan.

Both the Senior Credit Facility and Syndicated Term Loan are secured by liens senior to the liens securing the Senior Secured Notes. The Senior Credit Facility, Syndicated Term Loan and Senior Secured Notes are senior to the Company’s Sub-Notes, which mature in February 2009 and have a fixed interest rate of 10%. The Vessel Term Loan contains covenants that match the Senior Credit Facility and Syndicated Term Loan. Semi-annual principal payments from January 15, 2004 through January 15, 2007 range from $853,000 to $1,055,000, increasing yearly; and a final principal payment of $7,650,000 is due on July 15, 2007.

The Company’s operating activities provided cash of $700,000 in 2003 compared to $17,998,000 in 2002 and $23,245,000 in 2001. The 96% decrease in cash provided by operating activities between 2003 and 2002 was primarily due to the effects of decreased net income and increased cash interest payments, partially offset by a decrease in inventory and accounts receivable during 2003 (as opposed to increases during 2002). Additionally, the Company received $7,855,000 in income tax refunds in 2002 ($3,000 in 2003). The 97% decrease between 2003 and 2001 was primarily the result of decreased net income, increased cash interest payments and a lesser decease in accounts receivable balances during the year, partially offset by a decrease in inventory balances (as opposed to an increase in 2001).

21

Financial Condition—(Continued)

Expenditures for property and equipment totaled $19,165,000 in 2003 compared to $20,016,000 and $26,875,000 in 2002 and 2001, respectively. The decreases in capital expenditures between the three years were primarily the result of cost controlling measures intended to conserve capital. Expenditures for the replacement of existing property and equipment were $13,433,000 in 2003. Expansion projects amounted to $2,577,000, with the remaining $3,155,000 expenditure for quarry development. Expenditures for property and equipment for 2004 are currently expected to approximate $23,500,000. Management expects that the proportion of 2004 capital expenditures for expansion projects, replacement and quarry development will be consistent with 2003 levels. The increase is primarily because of a scheduled expansion project at the Global Stone segment’s Portage, Indiana, operating location and an increase in planned maintenance activities. The Company has no material commitments for capital projects in 2004 or beyond.

In 2003, the Company incurred $4,762,000 in deferred financing costs related to the amendment of the Senior Credit Facility, Syndicated Term Loan and Senior Secured Notes. In 2002, the Company incurred $8,413,000 of deferred financing costs related to the execution of the Senior Secured Notes agreement and amendment of the Senior Credit Facility and Syndicated Term Loan. In 2001, the Company incurred $1,734,000 of deferred financing costs related to the amendment of the Senior Credit Facility and Syndicated Term Loan.

In 2003, the Company’s additional borrowings exceeded debt repayments by $22,044,000, while, in 2002 and 2001, the Company’s additional borrowings exceeded debt repayments by $6,576,000 and $10,295,000, respectively. In all three years, additional borrowings were primarily used to fund capital expenditures and financing costs. Furthermore, additional borrowings were used in 2003 to fund the Erie Sand and Gravel acquisition and were reduced from the sale of the Lawn and Garden business unit.

Prior to their amendment in September 2003, the Company’s Senior Credit Facility and Syndicated Term Loan required interest rate protection on fifty-percent of the Company’s senior secured debt. Accordingly, the Company entered into interest rate swap agreements in 2000 to limit the effect of increases in the interest rates on variable rate debt. The differential between fixed and variable rates is recorded as an increase or decrease to interest expense. The effect of the these agreements was to fix the Company’s interest rate exposure, including the applicable margin charged the Company on its LIBOR-based interest rate, at 12.97% on the $50,000,000 (22%) hedged portion of the Company’s Senior Credit Facility and Syndicated Term Loan at December 31, 2003. At December 31, 2003, the Company had one such interest rate swap remaining with a notional value of $50,000,000, which expires on June 30, 2004.

As a result of falling LIBOR-based interest rates, interest expense increased $7,446,000, $9,967,000 and $5,176,000 in 2003, 2002 and 2001, respectively, because of these interest rate swaps. The other expense $3,096,000 charge in 2001 primarily represents the mark-to-market valuation of swaps that did not qualify as hedging instruments under Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities” during the first quarter of 2001. See Note G to the consolidated financial statements for a further description of the Company’s swap agreements.

22

Financial Condition—(Continued)

The following tables provide information about the Company’s derivative and other financial instruments that are sensitive to changes in interest rates, which include interest rate swaps and debt obligations. For debt obligations, the table presents cash flows and related weighted average interest rates by the original contracted maturity dates. Based upon the default of our current debt agreements, $420,350,000 is classified as a current liability on the Consolidated Balance Sheet. For interest rate swaps, the table presents notional amounts and weighted average LIBOR interest rates by contractual maturity dates. Notional amounts are used to calculate the contractual payments to be exchanged under the contract. Weighted average variable rates are based on implied forward LIBOR rates in the yield curve, plus a 6.00% margin at December 31, 2003 and a 4.25% margin at December 31, 2002 for variable rate long-term debt. The Company does not hold or issue financial instruments for speculative purposes.

The Company did not declare a cash dividend during 2003 and 2002, as 2001 amendments to the Company’s Senior Credit Facility and Syndicated Term Loan prohibit the payment of cash dividends. The Company declared dividends of $0.60 per share and dividends paid were $2,983,000 during 2001.

At December 31, 2003, the Company re-evaluated assumptions used in determining postretirement pension and health care benefits. The weighted-average discount rate was adjusted from 7.00% to 6.50% to better reflect market rates. Additionally, the annual rate of increase in the per capita cost of covered health care benefits was revised to 10.00% (pre-65) and 6.00% (post-65), decreasing gradually to 5.00% (the pre-65 rate in 2009 and the post-65 rate in 2006) at December 31, 2003 from 8.25% (pre-65) and 6.00% (post-65), with the pre-65 rate decreasing gradually to 6% in 2006 and the post-65 rate remaining constant at December 31, 2002. These changes resulted in an increase in the benefit obligation of $3,994,000 for the pension plans and $6,819,000

23

Financial Condition—(Continued)

($1,199,000 related to the revision of the per capita cost of covered health care benefits) for the postretirement health care plan. Though these changes will increase the Company’s pension and postretirement expense in 2004, the impact is not expected to be material. The fair value of the Company’s pension plan assets increased $12,139,000 during 2003, and that increase is estimated to result in an $886,000 reduction in pension expense in 2004.

At December 31, 2002, the Company re-evaluated assumptions used in determining postretirement pension and health care benefits. The weighted-average discount rate was adjusted from 7.25% to 7.00% to better reflect market rates. The decrease resulted in an increase in the projected benefit obligation of $2,230,000 for the pension plans and $1,580,000 for the postretirement health care plan. Though the change in the discount rate will increase the Company’s pension and postretirement expense in 2003, the impact is not expected to be material. The fair value of the Company’s pension plan assets declined $18,564,000 during 2002, and that decline resulted in approximately $1,910,000 in additional pension expense in 2003.

At December 31, 2001, the Company re-evaluated assumptions used in determining postretirement pension and health care benefits. The weighted-average discount rate was adjusted from 8.0% to 7.25% to better reflect market rates. The revised discount rate resulted in an increase in the projected benefit obligation of $6,128,000 for the pension plans and $4,620,000 for the postretirement health care plan. The Company’s fair value of pension plan assets declined by $10,328,000 during 2001, and that decline resulted in approximately $1,250,000 in additional pension expense in 2002.

In conjunction with the Company’s 2001 annual meeting, the Company’s stockholders approved the re-incorporation of the Company as an Ohio corporation and certain changes to the Company’s capital structure. The changes included an increase in the number of authorized shares from 10,000,000 to 30,000,000 and the replacement of existing unissued preferred stock with 5,000,000 shares of “blank check” preferred stock. The term “blank check” preferred stock refers to stock for which designations, preferences, conversion rights, participation and other rights, including voter rights (subject to some limitations established by law), qualifications, limitations, and restrictions may be determined by the board of directors. The articles of incorporation establish restrictions on the blank check preferred stock relating to the conversion price and the number of common shares into which the preferred stock may be converted in order to limit the dilution to holders of common stock. No blank check preferred stock was issued or outstanding at December 31, 2003 or 2002.

The purchase price of the Company’s Michigan Limestone operation, which was acquired by the Company in the second quarter of 2000, includes contingent payments subject to achieving certain operating performance parameters through 2011. The Company accrued contingent payments of $2,100,000, $3,072,000 and $3,050,000 at December 31, 2003, 2002 and 2001, respectively, representing additional purchase price and an increase to recorded mineral reserves. The remaining contingent payments can be as high as $24,000,000 in total, with a maximum payment of $4,000,000 in any one year. Contingent payments will be recorded as additional mineral reserves up to the appraised value of the reserves, and thereafter to goodwill. Under the terms of the purchase agreement, upon a change in control, including bankruptcy, the former owners may have the right to accelerate the remaining payments. The amount and timing of these payments are presently in negotiation and remain uncertain.

The Company’s President and Chief Executive Officer, Michael D. Lundin, was one of the former owners of Michigan Limestone. Mr. Lundin receives an 18.6% share of contingent payments, which totaled $391,000, $571,000 and $568,000 in 2003, 2002 and 2001, respectively. Mr. Lundin was not an executive officer of the Company prior to the Michigan Limestone acquisition.

Several of the Company’s subsidiaries have been and continue to be named as defendants in a large number of cases relating to the exposure of people to asbestos and silica, which have been stayed by the Chapter 11 filings. The plaintiffs in the cases generally seek compensatory and punitive damages of unspecified sums based

24

Financial Condition—(Continued)

upon the Jones Act, common law or statutory product liability claims. Some of these cases have been brought by plaintiffs against the Company (or its subsidiaries) and other marine services companies or product manufacturer co-defendants. Considering the Company’s past and present operations relating to the use of asbestos and silica, it is possible that additional claims may be made against the Company and its subsidiaries based upon similar or different legal theories seeking similar or different types of damages and relief. The suits filed pursuant to the Jones Act are filed in Federal Court and have been assigned to the Multidistrict Litigation Panel (MDL); there are approximately 700 claims, all of which are currently dormant and have been so for many years.

The Company believes that both the asbestos and silica product liability claims are covered by multiple layers of insurance policies and an insurance trust from multiple sources. In the third quarter of 2003, the Company agreed with one of its several insurers to fund a settlement insurance trust (the Trust) to cover a significant portion of settlement and defense costs arising out of asbestos litigation. The Company has access to Trust funds to cover asbestos settlements and defense costs and does not anticipate that it will have the need to cover such costs from its own funds. Accordingly, the $2,408,000 (or $0.29 per share, assuming dilution) reserve for asbestos claims related to insolvent insurers recorded at the end of 2002 has been reversed, as has an $845,000 (or $0.10 per share, assuming dilution) increase to this reserve provided during the first half of 2003. Additionally, the agreement provides that the Company may use up to $4,000,000 ($1,681,000 used in 2003) of the Trust’s assets to cover the cost of any other related or unrelated insurable or insurance related expense. At December 31, 2003, the Company was a co-defendant in cases alleging asbestos-induced illness involving claims of approximately 75,000 claimants.

With respect to silica claims, the Company at December 31, 2003 was co-defendant in cases involving approximately 20,000 claimants. The Company has been and will continue to be responsible for funding a small percentage of all settlements and defense costs. Management believes that its share of settlements on an annual basis is not significant, although the Company continues to maintain a reserve on its balance sheet to address this contingency.

The exposure of persons to silica and the accompanying health risks have been and continue to be significant issues confronting the industrial minerals industry in general, and specifically our Performance Minerals segment. Proposed changes to standards for exposure to silica are under review by the United States Occupational Safety and Health Administration. This review could result in more stringent worker safety standards or, in the alternative, requirements for additional action on the part of silica users regarding lower permissible exposure limits for silica. More stringent worker safety standards or additional action requirements, including the costs associated with these revised standards or additional action requirements, and actual or perceived concerns regarding the threat of liability, or health risks, including silicosis, associated with silica use, may affect the buying decisions of the users of our silica products. If worker safety standards are made more stringent, if the Company is required to take additional action regarding lower permissible exposure limits for silica, or if the Company’s customers decide to reduce their use of silica products based on actual or perceived health risks or liability concerns, the Company’s operating results, liquidity and capital resources could be materially adversely affected. The extent of any material adverse effect would depend on the nature and extent of the changes to the exposure standards, the cost of meeting and our ability to meet more stringent standards, the extent of any reduction in our customer’s use of our silica products and other factors that cannot be estimated at this time.

During the fourth quarter of 2003, the Company settled a series of multi-party law suits and an arbitration relating to its prior involvement in Eveleth Mines. The parties included the current mine operator and its shareholders, an insurance carrier and one of the Company’s subsidiaries. The nature of the allegations against the Company included claims relating to the liability for retrospective premiums and duty to reimburse others for legal expenses incurred in defending settled litigation. Under the settlement, the Company has agreed to pay $3,650,000 to the insurance carrier, with an initial payment of $1,000,000 made in December 2003 and the remainder payable in monthly installments through March 2006. Accordingly, the Company has recorded a

25

Financial Condition—(Continued)

liability of $2,462,000 on the Consolidated Balance Sheet at December 31, 2003, representing the present value of the required future payments. The Company maintains recourse against the current operator, Eveleth Mines LLC (d.b.a. EVTAC Mining), for its share of the total settlement with the insurance carrier. However, since EVTAC Mining filed for protection under Chapter 11 of the U.S. Bankruptcy Code in May 2003, the Company has fully reserved for the $2,239,000 due from EVTAC Mining.

Litigation is inherently unpredictable and subject to many uncertainties. Adverse court rulings, determinations of liability or retroactive or prospective changes in the law could affect claims made against the Company and encourage or increase the number and nature of future claims and proceedings. Together, with reserves recorded and available insurance, pending litigation is not expected to have a material adverse effect on the Company’s operations, liquidity or financial condition.

Off-Balance Sheet Arrangements

The Company has stand-by letters of credit totaling $9,270,000 at December 31, 2003, with no balance outstanding as of December 31, 2003.

Contractual Obligations (2)

Acquisitions and Dispositions

On October 27, 2003, as part of its ongoing business restructuring, the Company sold the Lawn and Garden business unit of its Global Stone operating segment to Oldcastle Retail, Inc. (Oldcastle). The sales price was $10,000,000 of value subject to working capital adjustments. Based upon those working capital adjustments, the Company received $6,871,000 in cash at closing. The net book value of the Lawn and Garden business unit at the closing date, including an allocation of the Global Stone segment’s goodwill of $3,316,000, was $10,057,000. The Company recognized a loss on sale of assets of $3,692,000 during the fourth quarter of 2003.

In conjunction with the sale of the Lawn and Garden business unit, the Company entered into a long-term supply agreement with Oldcastle dated October 27, 2003, pursuant to which the Company will provide certain raw materials at market price to Oldcastle for an initial term of ten years beginning on the closing date of the agreement, with a renewal option for an additional ten-year period.

The Company and Oldcastle also entered into a lease and operation of equipment agreement dated October 27, 2003, whereby certain areas of the Company’s York, Pennsylvania, operations previously dedicated to Lawn and Garden operations are being leased at market rates to Oldcastle through December 31, 2005.

26

Financial Condition—(Continued)

In early January 2003, the Company acquired all of the outstanding common shares and other ownership interests in a group of companies together known as Erie Sand and Gravel Company (Erie Sand and Gravel) for $6,831,000 in cash and $4,069,000 in assumed debt, which was refinanced at closing. The acquisition included fixed assets of $5,446,000 and goodwill of $4,149,000. Erie Sand and Gravel operates a dock, a bulk products terminal, a Great Lakes self-unloading vessel, a sand dredging and processing operation, a ready-mix concrete mixing facility and a trucking company that distribute construction sand and aggregates in the northwest Pennsylvania/western New York region. The net assets and results of operations of Erie Sand and Gravel are included within the Company’s Great Lakes Minerals segment.

The Erie Sand and Gravel acquisition was accounted for under the purchase method of accounting. The purchase price has been allocated based on estimated fair values at the date of acquisition. Since the acquisition took place at the beginning of 2003, pro forma effects were not material to reported net loss and net loss per share, basic and assuming dilution.

In addition to the sale of the Lawn and Garden business unit in 2003, the Company received proceeds of $387,000 and recorded pretax gains of $6,000 from miscellaneous asset sales. In 2002, the Company received proceeds of $2,304,000 from the sale of non-strategic mineral processing operations in the Performance Minerals segment and other miscellaneous asset sales. In connection with the sale of non-strategic mineral processing operations, $959,000 (or $0.12 per share net loss, assuming dilution) of proceeds received in excess of the net book value of the underlying assets was recorded within the provision for restructuring, asset impairments and early retirement programs on the Consolidated Statement of Operations. Additionally, the Company recorded pretax gains of $55,000 in 2002 related to other miscellaneous asset sales. In 2001 the Company received proceeds of $326,000 and recorded pretax gains of $64,000 from miscellaneous asset sales.

Subsequent Events

In separate transactions during January 2004, the Company sold two assets of its Erie Sand and Gravel operations (the Redi-Mix business unit and the vessel M/V Richard Reiss) to E.E. Austin & Son, Inc. and Grand River Navigation Company, Inc., respectively. The Redi-Mix business unit was comprised of Serv-All Concrete, Inc. and S&J Trucking, Inc. These assets were not considered integral to the long-term strategic direction of the Company. Proceeds from the sales were $1,225,000 for Redi-Mix and $1,800,000 for the vessel. No gain or loss on sale was recognized by the Company.

In conjunction with the sale of the Redi-Mix business unit, the Company entered into a long-term supply agreement with E.E. Austin & Son, Inc. dated January 21, 2004, pursuant to which the Company will provide certain aggregates at market price to E.E. Austin & Son, Inc. for an initial term of fifteen years beginning on the closing date of the agreement. Additionally, the Company and E.E. Austin & Son, Inc. entered into a sublease agreement dated January 21, 2004, whereby E.E. Austin & Son, Inc. is subleasing property from the Company previously dedicated to the operation of the Redi-Mix business unit. The initial term of the sublease agreement commenced in January 2004 and extends to December 31, 2019. The agreement is renewable in five-year increments thereafter, upon agreement by both parties.

27

Results of Operations

See discussion above regarding the Company’s bankruptcy filing on February 23, 2004.

The Company’s net sales and operating revenues were $404,229,000, $400,572,000 and $404,211,000 in 2003, 2002 and 2001, respectively. Operating loss in 2003 was $6,647,000 compared with operating income of $34,625,000 in 2002 and $15,208,000 in 2001. The 2003 operating loss includes a $13,114,000 pretax asset impairment charge (or $1.57 per share, assuming dilution) to reduce the net book value of the Performance Minerals segment’s Specialty Minerals operation to its estimated fair value. The Company reported a net loss in 2003 of $33,192,000 (or $6.48 per share, assuming dilution) compared to a net loss of $6,608,000 (or $1.32 per share, assuming dilution) in 2002 and $18,815,000 (or $3.76 per share, assuming dilution) in 2001. In addition to the impairment charge discussed above, 2003 net loss includes an after-tax charge of $1,391,000 (or $0.27 per share, assuming dilution) for the cumulative effect of accounting change for asset retirement obligations under SFAS No. 143, “Accounting for Asset Retirement Obligations,” which the Company adopted at January 1, 2003.

The $3,657,000 (1%) increase in net sales and operating revenues in 2003 compared with 2002 was primarily attributed to (1) an increase in demand for aggregate and limestone and an increase in pricing for lime in the Company’s Global Stone segment; (2) the acquisition of Erie Sand and Gravel in January 2003; (3) increased demand for frac sand from oil and gas service companies from the Company’s Performance Minerals segment; and (4) the addition of two significant building materials customers at the Performance Minerals segment’s Orange County, California operating location.

These increases to net sales and operating revenues were partially offset by decreased volume demand in the Company’s Great Lakes Minerals segment, resulting in decreased limestone shipments from the segment’s quarries and decreased shipments of limestone and iron ore on the segment’s fleet of vessels. Additionally, volume demand for muscovite mica in the Performance Minerals showed continued softness in 2003 and the Company sold the Lawn and Garden business unit of its Global Stone segment in the fourth quarter of 2003.

2003 net sales and operating revenues were flat in comparison to 2001. 2003 benefited from increased volume demand for aggregates and limestone of the Global Stone segment and the Erie Sand and Gravel acquisition, however, these benefits were offset by decreased volume demand in the Great Lakes Minerals segment and decreased volume demand for industrial and recreational sand and muscovite mica from the Performance Minerals segment as compared to 2001. Additionally, the Company sold the Lawn and Garden business unit of the Global Stone segment in the fourth quarter of 2003 and closed three non-strategic operating locations in early 2002 as part of the fourth quarter 2001 restructuring. Though frac sand sales from the Performance Minerals segment are lower for the full year in 2003 as compared to 2001, the Company did experience a rebound in the frac market during the second half of 2003.

Although the Company continues to benefit from its restructuring activities of 2001, its ongoing cost reduction measures and the pooling agreement with American Steamship Company, operating income decreased $41,272,000 between 2002 and 2003 primarily for the following reasons: (1) a pretax asset impairment charge to reduce the net book value of the Performance Minerals segment’s Specialty Minerals operation to its estimated fair value; (2) decreased revenues and the effect of lower volumes on gross margins of the Great Lakes Minerals segment’s limestone quarries and vessels; (3) planned decreases in production volumes to reduce inventory levels primarily in the Global Stone and Performance Minerals operating segments; (4) increased general, administrative and selling expenses (see discussion below); (5) an increase in depreciation, depletion, amortization and accretion expense primarily as a result of adopting SFAS No. 143, depreciation of recent capital expenditures, the acquisition of Erie Sand and Gravel and increased capitalized stripping amortization at the Global Stone segment’s Luttrell, Tennessee, operating location; (6) an increase in the cost of providing health benefits to active employees; (7) higher energy prices; (8) lower water levels on the Great Lakes; and (9) the effects of poor weather conditions in early 2003, including flooding at the Global Stone segment’s operating locations in Luttrell, Tennessee, and around Buchanan, Virginia, and increased energy usage as a result of severe cold in the Great Lakes and Mid-Atlantic regions.

28

Results of Operations—(Conditions)

Operating income decreased $21,855,000 between 2001 and 2003 primarily due to many of the same factors/trends discussed above, including decreased revenues and the effect of lower volumes on gross margins of the Great Lakes Minerals segment’s limestone quarries and vessels, planned decreases in production volumes to reduce inventory levels, increased general, administrative and selling expenses, an increase in depreciation, depletion, amortization and accretion, an increase in the cost of providing health benefits to active employees, higher energy prices, and the effects of poor weather conditions in early 2003. These decreases to operating income between 2001 and 2003 were partially offset by a decrease in the provision for restructuring, asset impairments and early retirement programs and the cessation of goodwill amortization ($2,931,000 in 2001) at January 1, 2002 under SFAS No. 142, “Goodwill and Other Intangible Assets.”

Additionally, interest expense increased between all three years and net loss for 2003 includes a $3,692,000 pretax loss on sale of the Global Stone segment’s Lawn and Garden business unit (partially offset by a decrease in other expense—see discussion below). Furthermore, net loss for 2003 includes an after-tax charge of $1,391,000 (or $0.27 per share, assuming dilution) for the cumulative effect of accounting change for asset retirement obligations under SFAS No. 143. Interest costs have continued to rise as a result of the financial condition of the Company, which has contributed to an increase in both the weighted-average cost of debt and outstanding debt balances (see discussion below).

The Company operates its businesses as three reporting segments focused on its key markets served. The segments align operations that share business strategies and that are related by geography and product mix and reflect the way management evaluates the operating performance of its business. The operations are reported as: Great Lakes Minerals, which is the largest and only fully integrated producer and bulk transporter of limestone on the Great Lakes and combines the Company’s Michigan Limestone, Marine Services and Erie Sand and Gravel operations; Global Stone, whose lime, limestone fillers, chemical limestone and construction aggregate businesses operate primarily in the Southeast and Mid-Atlantic regions; and Performance Minerals, which mines and processes specialized industrial minerals, primarily high-purity silica sands and muscovite mica. The operating results of the Company’s business segments for 2003, 2002 and 2001 are discussed below.

Great Lakes Minerals

Net sales and operating revenues of the Great Lakes Minerals segment were $147,291,000 in 2003 compared to $156,920,000 in 2002 and $152,106,000 in 2001. For comparison purposes, excluding Erie Sand and Gravel, which was acquired in January 2003, net sales decreased approximately 12% and 9% in 2003 compared to 2002 and 2001, respectively. These decreases were primarily due to decreased volume demand in the Great Lakes region, which resulted in decreased limestone shipments from the segment’s quarries and decreased iron ore and limestone shipments on the segment’s fleet of vessels. Demand was down with the majority of the Company’s customers, plus demand with some significant customers of the segment was significantly reduced during 2003. Several vessels were laid-up during the year in light of the reduction in economic activity around the Great Lakes region. In 2002 the segment began selling a higher percentage of its products at a delivered price, including freight, which partially offset the effects of reduced demand on 2003 and 2002 net sales and operating revenues.

Cost of goods sold and operating expenses totaled $116,992,000, $113,636,000 and $113,230,000 in 2003, 2002 and 2001, respectively. As a percentage of net sales and operating revenues, cost of goods sold and operating expenses were 79% in 2003 compared with 72% in 2002 and 74% in 2001. The 7% and 5% increase in cost of goods sold and operating expenses as a percentage of net sales and operating revenues in 2003 compared to both 2002 and 2001, respectively, was primarily due to the effect of lower volumes on gross margins of the segment’s limestone quarries and vessels, an increase in the cost of providing health benefits to active employees, lower water levels, and the addition of Erie Sand and Gravel, which is a lower gross margin business than the segment’s quarries and vessels. These increases were partially offset by benefits derived from the pooling arrangement with American Steamship.

29

Results of Operations—(Conditions)

The segment’s operating income for 2003 was $4,990,000 compared with $18,858,000 in 2002 and $15,421,000 in 2001. The 74% and 68% decrease in 2003 operating income as compared to both 2002 and 2001, respectively, was primarily the result of the decrease in net sales and operating revenues and the increase in cost of goods sold and operating expenses as a percentage of net sales and operating revenues discussed above. Additionally, the cost of providing retirement benefits and bad debt expense both increased. Bad debt expense increased $2,006,000 between 2003 and 2002 and $1,721,000 between 2003 and 2001, primarily to reflect the increased risk of doubtful collection regarding two steel-related customers who filed for Chapter 11 bankruptcy protection during 2003 and one limestone customer experiencing financial difficulties. Operating income in 2003 benefited from decreased expense for management bonuses in light of the financial condition of the Company.

Global Stone

Net sales for the Global Stone segment were $173,272,000, $161,220,000 and $155,229,000 in 2003, 2002 and 2001, respectively. The 7% increase in net sales between 2003 and 2002 was primarily the result of continued strong volume demand across all major product lines of the segment, especially from the aggregates market in northern Virginia, and the effective implementation of price increases with the segment’s lime and carpet manufacturing customers in the first half of 2003. These increases to net sales were partially offset by the effects of the sale of the segment’s Lawn and Garden business in the fourth quarter of 2003. The 12% increase in net sales between 2003 and 2001 was primarily due to stronger volume demand for aggregates and limestone in northern Virginia, the addition of new customers in the roofing and glass fillers industries being serviced by the segment’s James River and Global Stone Portage facilities, increased volume demand for flue gas desulphurization products, and increased pricing for lime products, partially offset by the sale of the segments Lawn & Garden business in October.

Cost of goods sold for the segment totaled $137,466,000 in 2003 compared to $122,550,000 in 2002 and $118,870,000 in 2001. As a percentage of net sales, cost of goods sold was 79%, 76% and 77% in 2003, 2002 and 2001, respectively. The 3% increase in the percentage of cost of goods sold to net sales between 2003 and 2002 was primarily due to the effects of lower production volumes to reduce inventory levels, especially for lawn and garden products, the effects of poor weather conditions in early 2003, including flooding at the segment’s operating locations in Luttrell, Tennessee, and around Buchanan, Virginia, production inefficiencies and down-time related to equipment re-builds/upgrades at certain locations, additional mining costs at the segment’s York, Pennsylvania operating location because of a change in a major customer’s product specifications. The 2% increase between 2003 and 2001 was attributed to many of these same factors, partially offset by the effects of planned cost reductions and productivity enhancements at the plant level implemented in 2002 and 2003.

Operating income for the segment was $12,424,000 in 2003 compared to $15,284,000 in 2002 and $11,232,000 in 2001. The 18% decrease in operating income between 2003 and 2002, despite a 7% increase in net sales, was mainly attributed to the increase in the percentage of cost of goods sold to net sales discussed above. Additionally, depreciation, depletion, amortization and accretion expense increased between 2003 and 2002 primarily due to an increase in capitalized stripping amortization at the segment’s Luttrell, Tennessee operating location and depreciation of recent capital expenditures. Operating income in 2003 benefited from decreased expense for management bonuses in light of the financial condition of the Company. The 11% increase in operating income between 2003 and 2001 was primarily the result of the increase in net sales discussed above, the cessation of goodwill amortization at January 1, 2002 in accordance with SFAS No. 142 ($1,799,000 in 2001), decreased expense for management bonuses, and cost savings derived from the closure of the segment’s administrative office as part of the Company’s fourth quarter 2001 restructuring, partially offset by an increase in cost of goods sold as a percentage of net sales and an increased depreciation, depletion, amortization and accretion expense.

30

Results of Operations—(Conditions)

Performance Minerals

Net sales of the Performance Minerals segment were $87,662,000, $85,920,000 and $99,389,000 in 2003, 2002 and 2001, respectively. The 2% increase in net sales between 2003 and 2002 was primarily attributed to increased demand for frac sand from oil and gas service companies, the addition of two significant building materials customers at the segment’s Orange County, California, operating location, and the addition of a new product (colored sand) during 2003, partially offset by continued softness in demand for muscovite mica and the closure of three non-strategic operating locations as part of the Company’s fourth quarter 2001 restructuring. These three operations contributed $553,000 in net sales during 2002, but contributed no sales in 2003. Net sales in 2003 decreased 12% as compared to 2001 primarily because of a reduction in volume demand for recreational and industrial sands, the closure of three operating locations as part of the 2001 restructuring, and the continued softness in demand for the segment’s muscovite mica products. The three closed locations contributed $3,961,000 to 2001 net sales.

Cost of goods sold for the segment totaled $64,754,000 in 2003 compared to $61,968,000 in 2002 and $71,061,000 in 2001. As a percentage of net sales, cost of goods sold was 74%, 72% and 71% in 2003, 2002 and 2001, respectively. The 2% increase in the percentage of cost of goods sold to net sales between 2003 and 2002 was primarily due to increased energy costs, reductions in production volumes to reduce inventory levels, especially for muscovite mica products, an increase in workers compensation related expenses at certain operating locations of the segment, partially offset by the effects of continued cost control measures. The 3% increase in cost of goods sold as a percentage of net sales for 2003 compared to 2001 was primarily due to fixed production costs being spread over fewer sales, higher energy costs, reductions in production volumes to reduce inventory levels, and an increase in the cost of providing health benefits to active employees. These increases were partially offset by the closure of three lower-margin facilities as part of the Company’s fourth quarter 2001 restructuring and cost control measures implemented by the segment.

Operating loss in 2003 was $2,903,000 compared to operating income of $11,481,000 in 2002 and $13,245,000 in 2001. The operating loss in 2003 includes a non-cash, pretax impairment charge of $13,114,000 (or $1.57 per share, assuming dilution) to reduce the net book value of the segment’s Specialty Minerals operation to its estimated fair value. For comparison purposes, excluding the impairment charge, operating income in 2003 decreased 11% compared to 2002. This decrease was primarily due to the increase in the percentage of cost of goods sold to net sales discussed above and a $1,350,000 increase in depreciation and accretion expense as the result of adopting SFAS No. 143 at January 1, 2003, partially offset by the increase in net sales. For comparison purposes, excluding the impairment charge, operating income decreased 23% between 2003 and 2001 primarily because of the decrease in net sales, increase in the percentage of cost of goods sold to net sales, and additional depreciation and depletion related to the adoption of SFAS No. 143 in 2003.

These decreases to operating income between 2003 and 2001 were partially offset by the cessation of goodwill amortization at January 1, 2002 in accordance with SFAS No. 142 ($1,132,000 in 2001) and cost savings from the closure of the segment’s administrative office in Phoenix, Arizona, as part of the Company’s fourth quarter 2001 restructuring.

Depreciation, Depletion, Amortization and Accretion

The 12% increase in depreciation, depletion, amortization and accretion expense between 2003 and 2002 was primarily the result of adopting SFAS No. 143 at January 1, 2003, depreciation of recent capital expenditures, the acquisition of Erie Sand and Gravel in January 2003 and increased amortization of capitalized stripping costs at the Global Stone segment’s Luttrell, Tennessee, operating location. These same factors contributed to the 6% increase between 2003 and 2001; however, their effects were partially offset by the cessation of goodwill amortization at January 1, 2002 under SFAS No. 142. Goodwill amortization in 2001 was $2,931,000.

31

Results of Operations—(Conditions)

General, Administrative and Selling Expenses

General, administrative and selling expenses, including the provision for doubtful accounts, as a percentage of net sales and operating revenues were 11% in 2003 and 9% in both 2002 and 2001. Although the Company continues to benefit at the operating level from the closure of two subsidiary offices during its 2001 restructuring, general, administrative and selling expenses as a percentage of net sales and operating revenues increased 2% in 2003 as compared to 2002 and 2001 primarily due to legal and consulting fees related to the Company’s ongoing financial and operational restructuring, including the 2003 amendments to the Company’s senior debt agreements, an increase in the cost to provide retirement benefits, an increase to the Company’s provision for doubtful accounts primarily to reflect the increased risk of doubtful collection regarding three customers of the Great Lakes Minerals segment who filed for Chapter 11 bankruptcy protection during the third quarter of 2003, and the acquisition of Erie Sand and Gravel in January 2003. These increases to selling, general and administrative expenses in 2003 were partially offset by decreased expense for management bonuses in light of the financial condition of the Company.

Restructuring, Asset Impairments and Voluntary Early Retirement

The following summarizes the provision for restructuring, asset impairments and early retirement programs and the remaining reserve balance at December 31, 2003 (in thousands):

During the second quarter of 2003, the Company recorded a $13,114,000 pretax asset impairment charge (or $1.57 per share, assuming dilution) to reduce the net book value of the Performance Minerals segment’s Specialty Minerals operation to its estimated fair value, as determined by management based on a third-party appraisal. The charge reduced the carrying value of the operation’s land, depreciable fixed assets and mineral reserves by $2,610,000, $2,334,000 and $8,170,000, respectively. Fair values were estimated using a discounted cash flow valuation technique incorporating a discount rate commensurate with the risks involved for each group of assets. The remaining 2003 impairment charges of $158,000 were recorded in the fourth quarter to reduce the carrying value of certain idled equipment of the Global Stone segment.

During the fourth quarter of 2002, the Company recorded a $1,154,000 pretax asset impairment charge (or $0.14 per share, assuming dilution) to reduce the carrying value of certain idled fixed assets of the Performance Minerals and Global Stone segments to their estimated fair values based on expected future cash flows

32

Results of Operations—(Conditions)

(essentially zero). The impaired assets primarily represent machinery, equipment and land improvements that are currently idle and whose future operation is not integral to the long-term strategic direction of the Company.

During 2002, the Company sold non-strategic mineral processing operations closed in conjunction with the 2001 restructuring with the excess of cash proceeds over carrying value of $959,000 (or $0.12 per share net loss, assuming dilution) being included in the provision for restructuring, asset impairments and early retirement programs in the Consolidated Statement of Operations.

During the fourth quarter of 2001, the Company recorded a $11,945,000 pretax charge (or $1.46 per share net loss, assuming dilution) related to the closure of both headquarter administrative offices for the Performance Minerals and Global Stone segments, the closure of three non-strategic mineral processing operations in the Performance Minerals segment, the write down of certain non-strategic mineral reserve assets, and an implementation of an additional voluntary early retirement program. The Company recorded a $4,123,000 pretax charge (or $0.51 per share net loss, assuming dilution) in the first quarter of 2001 related to a voluntary early retirement program and the restructuring of its Performance Minerals’ Ohio-based operations.

Other

Interest expense increased 24% and 34% in 2003 as compared to 2002 and 2001, respectively. The primary factors contributing to this increase were a higher weighted-average cost of debt and higher levels of debt. The weighted-average cost of debt increased because of the higher fixed rate of interest associated with the Company’s Senior Secured Notes, which were executed in conjunction with the Company’s refinancing activities in the fourth quarter of 2002, and an increase in the margin over LIBOR paid the Company’s syndicated banking group (6.0%, 4.25% and 3.75% at December 31, 2003, 2002 and 2001, respectively). Interest expense on bank debt was $41,292,000, $30,253,000 and $32,490,000 in 2003, 2002 and 2001, respectively, including $4,094,000 in 2003 and $688,000 in 2002 for the non-cash, payment-in-kind on the Company’s Senior Secured Notes. Furthermore, the Company has not been able to take full advantage of decreasing interest rates on its variable rate debt, because the Company was required by its senior debt agreements to hedge at least 50% of its exposure to interest rate fluctuations. Interest expense on hedges was $7,446,000 in 2003 compared with $9,967,000 in 2002 and $5,176,000 in 2001. Amendments to the Company’s senior debt agreements in September 2003 no longer require the Company to hedge a portion of its interest rate risk. At December 31, 2003, the Company had one such interest rate swap remaining with a notional value of $50,000,000, which expires in June 2004. The Company does not plan on replacing this interest rate swap or entering into additional swap agreements. Amortization of fees associated with the Company’s bank amendments and refinancing activities increased to $4,894,000 in 2003 from $3,121,000 in 2002 and $1,992,000 in 2001. The remainder of interest expense in all three years was related to capital leases and notes payable.

On October 27, 2003, as part of its ongoing business restructuring, the Company sold the Lawn and Garden business unit of its Global Stone operating segment to Oldcastle Retail, Inc. (Oldcastle). The sales price was $10,000,000 of value subject to working capital adjustments. Based upon those working capital adjustments, the Company received $6,871,000 in cash at closing. The net book value of the Lawn and Garden business unit at the closing date, including an allocation of the Global Stone segment’s goodwill of $3,316,000, was $10,057,000. The Company recognized a loss on disposition of assets of $3,692,000 during the fourth quarter of 2003.

Other income, net was $2,032,000 in 2003 compared with other expense, net of $4,121,000 in 2002 and $6,768,000 in 2001. Other income in 2003 was mainly comprised of a non-cash gain of $2,408,000 (or $0.29 per share, assuming dilution) to reverse a product liability reserve recorded in 2002 and the use of a portion of the $4,000,000 in funds available from the insurance settlement trust to fund certain insurable or insurance related expenses, partially offset by non-cash charges totaling $2,239,000 (or $0.26 per share, assuming dilution) to reserve for EVTAC Mining. See discussions above for additional information related to these three matters. The primary reason for other expense in 2002 was the Company’s reserve of $2,408,000 for product liability claims,

33

Results of Operations—(Conditions)

which was reversed in 2003 because of the Trust settlement relating to product liability, as discussed in Item 3 Legal Proceedings. Other expense in 2001 included a reserve for an unsecured note receivable of $4,303,000 arising from the 1998 sale of a discontinued, steel-related business. The Company deemed this reserve necessary primarily because of the uncertain financial condition of the buyer and the buyer’s customer base, including Chapter 11 bankruptcy filings of several of the buyer’s major customers. The note was settled during the fourth quarter of 2002. Additionally, as a result of adopting SFAS No. 133, the Company recorded a charge of $3,096,000 in 2001, relating to the non-cash, mark-to-market valuation change of the Company’s interest rate swap agreements that did not qualify as hedging instruments at that time.

The Company utilizes certain tax preference deductions afforded by law to mining companies. Although the amount of these deductions is materially consistent from year to year, these permanent book/tax differences can cause significant fluctuations in the Company’s effective tax rate based upon the level of pre-tax book income or loss. Additionally, during the third quarter of 2003, the Company experienced a favorable conclusion to the audit of its 1999 federal income tax return. As a result, the income tax benefit for 2003 has been increased.

Cumulative Effect of Accounting Change

At January 1, 2003, the Company adopted SFAS No. 143, which requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred and capitalized as part of the carrying amount of the long-lived asset. Over time, the liability is recorded at its present value each period through accretion expense, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, a company either settles the obligation for its recorded amount or recognizes a gain or loss.

The Company is legally required by various state and local regulations and/or contractual agreements to reclaim land disturbed by its quarrying activities and to remove buildings, land improvements and fixed equipment from certain properties. Upon adoption of SFAS No. 143 at January 1, 2003, the Company recorded asset retirement obligations totaling $5,854,000, increased net property and equipment by $3,574,000 and recognized a non-cash cumulative effect charge of $1,391,000 (net of income tax benefit of $889,000).

Asset retirement obligations were estimated for each of the Company’s operating locations, where applicable, based on the Company’s current and historical experience, adjusted for factors that an outside third-party would consider, such as inflation, overhead and profit. Estimated obligations were escalated based upon the anticipated timing of the related cash flows and the expected closure dates of the operating locations using an assumed inflation rate, and then were discounted using a credit-adjusted, risk-free interest rate.

The expected closure date of each location represents the estimated exhaustion date of remaining mineral reserves or, for leased locations, the lesser of the mineral reserve exhaustion date or lease termination date. Because the Company’s mineral reserves and lease agreements have expected lives many years into the future, an appropriate market risk premium could not be estimated or considered when escalating the estimated obligations.

The accretion of the asset retirement obligations and depreciation of the capitalized costs, which are included in depreciation, depletion, amortization and accretion on the Consolidated Statement of Operations, are being recognized over the estimated useful lives of the operating locations (i.e., to their expected closure dates). A movement of the Company’s asset retirement obligations during the year ended December 31, 2003 follows (in thousands):

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Critical Accounting Policies

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent liabilities. On a continual basis, the Company evaluates its estimates, including those related to accounts receivable reserves, inventories, intangible assets, impairment and useful lives of long-lived assets, pensions and other postretirement benefits, restructuring and voluntary early retirement program reserves, asset retirement obligations, and commitments and contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

Accounts Receivable

The Company is required to estimate the collectability of its trade and note receivables. A considerable amount of judgment is required in assessing the ultimate realization of these receivables. The Company has increased its reserve for doubtful accounts in recent periods and if the financial condition of our customers were to deteriorate, additional reserves may be required.

Contingencies

The Company is subject to proceedings, lawsuits and other claims related to environmental, labor, product liability and other matters. The Company is required to estimate the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. Determinations of the amounts or reserves required, if any, for these contingencies are made after careful analysis of each individual issue. The required reserves may change in the future because of new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters.

Postretirement Benefits

The Company’s pension and postretirement benefit costs and credits are developed from actuarial valuations. Inherent in these valuations are key assumptions including discount rates and expected return on plan assets. We consider current market conditions, including changes in interest rates, the age of our workforce and retirees, current health care costs and other factors, in selecting these assumptions. The Company has made changes to these assumptions in recent periods and future postretirement benefit costs or credits may change based upon changes in these assumptions.

Restructuring and Impairment Charges

During 2001, the Company recognized two separate charges for restructuring and a voluntary early retirement program. Inherent in these charges were estimates related to the settlement of contractual obligations and estimates related to the incremental postretirement benefits awarded to retirees. Additionally, the Company recognized asset impairment charges during 2003, 2002 and 2001. The impairment of fixed assets included estimating fair value less cost to sell.

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Critical Accounting Policies—(Continued)

Asset Retirement Obligations

Inherent in the Company’s estimate of asset retirement obligations under SFAS No. 143, which was initially adopted in the first quarter of 2003, are key assumptions, including inflation rate, discount rate, expected lives of the Company’s operating locations and third-party overhead and profit rates. The estimated obligations are particularly sensitive to the impact of changes in the expected lives and the difference between the inflation and discount rates. Changes in state and local regulations, the Company’s contractual obligations, available technology, overhead rates or profit rates would also have a significant impact on the recorded obligations.

Please review Note B to the consolidated financial statements for a more complete description of the Company’s significant accounting policies.

Cautionary Statement Regarding Forward-Looking Information

Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements concerning certain trends and other forward-looking information within the meaning of the federal securities laws. Such forward-looking statements are subject to uncertainties and factors relating to the Company’s operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company. The Company believes that the following factors, among others, could affect its future performance and cause actual results to differ materially from those expressed or implied by forward-looking statements made by or on behalf of the Company: (1) business and financial risks associated with the Company’s decision to file for protection under Chapter 11 of the U.S. Bankruptcy Code, (2) the Company’s ability to restructure its debt, and the ability of such activities to provide adequate liquidity to sufficiently improve the Company’s financial position; (3) the Company’s ability to complete its cost reduction initiatives; (4) weather conditions, particularly in the Great Lakes region, flooding, and/or water levels; (5) fluctuations in energy, fuel and oil prices; (6) fluctuations in integrated steel production in the Great Lakes region; (7) fluctuations in Great Lakes and Mid-Atlantic construction activity; (8) economic conditions in California or population growth rates in the Southwestern United States; (9) the outcome of periodic negotiations of labor agreements; (10) changes in the demand for the Company’s products due to changes in technology; (11) the loss, insolvency or bankruptcy of major customers, insurers or debtors; (12) changes in environmental laws; and (13) an increase in the number and cost of asbestos and silica product liability claims filed against the Company and its subsidiaries and determinations by a court or jury against the Company’s interest. While the Company is in Chapter 11 bankruptcy, investments in its securities will be highly speculative. Shares of the Company’s common stock have little or no value and will likely be cancelled.

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The response to this item is submitted in a separate section of this Annual Report on Form 10-K on page 23 under ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The response to this item is submitted in a separate section of this Annual Report on Form 10-K on pages F-1 through F-33.

None

Evaluation of Disclosure Controls and Procedures

The Company maintains a set of disclosure controls and procedures designed to ensure that information disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The Company’s management, with the participation of the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation, the CEO and CFO have concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

In connection with management’s evaluation, no changes during the Company’s fourth quarter ended December 31, 2003 were identified that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART III

Executive Officers of the Registrant

The Executive Officers of the Company as of February 21, 2004 were as follows:

Michael D. Lundin was elected President and Chief Executive Officer of the Company in December 2002, and has served as a Director since December 12, 2001. Additionally, Mr. Lundin has served on the Board of Directors of the United Shipping Alliance since 2002. Prior to serving as a Director of the Company, Mr. Lundin

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served as President and Chief Operating Officer, Oglebay Norton Company, from November 1, 2001, as Vice President, Michigan Operations and President, Michigan Limestone Operations, Inc., a limestone quarry operation, from April 2000 and was President and one of the owners of Michigan Limestone Operations Limited Partnership for more than five years and up until the partnership was acquired by the Company in 2000.

Julie A. Boland has served as Vice President, Chief Financial Officer and Treasurer since January 1, 2002. From 1999 until 2001, Ms. Boland was Vice President, Credit Risk Management & Advisory Group for Goldman Sachs International, a global investment banking, securities and investment management firm,; was Vice President, Fixed Income, Loan Capital Markets and served in other roles for J.P. Morgan & Co., an investment banking firm, from 1993 to 1999; and was employed as a Certified Public Accountant for Price Waterhouse, a public accounting firm, from 1988 to 1991.

Sylvie A. Bon has served as Vice President, Administration and Chief Information Officer since May 2003. Prior to that time, Ms. Bon served as Vice President, Chief Information Officer, Oglebay Norton Company, from May 1, 2002. Prior to joining the Company, Ms. Bon was employed by Avery Dennison, a global producer of office supply and self-adhesive products, where she served as Director, Information Systems, Fasson Roll Worldwide. Prior to that Ms. Bon served as Director Information Systems, Fasson Roll North America; Manager, Information Systems Avery Dennison Europe, Fasson Roll Division; and Manager Distribution and Logistics. Ms. Bon was employed by Avery Dennison for more than five years.

Michael J. Minkel was appointed Vice President, Marketing & Business Development in July 2003. Prior to that Mr. Minkel served as Vice President of Sales & Marketing, Oglebay Norton Company, from November 2002, and served Oglebay Norton Specialty Minerals, Inc. as Vice President of Sales & Marketing from 2000 until 2001 and as General Manager—Kings Mountain Operations from 2001 until 2002. Prior to joining the Company, Mr. Minkel served as President of Exploration Computer Services, an Australian software & mining-consulting firm and held various positions in the natural resource industry since 1974, including positions in coal exploration geology and mine planning, oil & gas software sales & consulting, and energy industry-related strategic information sales & consulting.

Rochelle F. Walk was elected Vice President of the Company in August 1999 and serves as General Counsel and Secretary of the Company, positions she has held since June 1998. Prior to joining the Company, she was Corporate Counsel, a Business Unit Director and Marketing Director of the Sherwin Williams Company, a global producer of paints and coatings, from 1990 to 1998 and was an attorney with the law firm Ulmer & Berne from 1986 to 1990.

Except as noted above, all executive officers of the Company have served in the capacities indicated, respectively, during the past five years. All executive officers serve at the pleasure of the Board of Directors, with no fixed term of office.

On July 18, 2003, the Company entered into a Separation Agreement and Release with Ronald J. Compiseno, former Vice President, Human Resources and officer of the Company.

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Oglebay Norton’s Board of Directors currently has eight members. The biographies of each of the Directors are included below:

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The Company’s Board of Directors has determined that Directors James T. Bartlett, Madeleine W. Ludlow, John P. O’Brien, and William G. Pryor, qualify as the Company’s “audit committee financial experts,” within the meaning of applicable Securities and Exchange Commission regulations, serving on the Company’s Audit Committee due to their experience and professional education, including their business experience listed in the above table. All members of the Company’s Audit Committee are independent under applicable Nasdaq independence standards and Rule 10A-3 under the Securities Exchange Act of 1934.

On February 23, 2004, the Company and all of its wholly owned subsidiaries filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. See Part I, Item 1, section A. (1) for further discussion.

Based on its records and information, Oglebay Norton believes that all Securities and Exchange Commission filing requirements applicable to its Directors and executive officers under Section 16(a) of the Securities Exchange Act of 1934 were met for 2003.

The Company maintains an Ethical & Legal Code of Conduct that covers all employees, including its principal executive officer, principal financial officer, and principal accounting officer, or person(s) performing similar functions. The Company’s Ethical & Legal Code of Conduct is filed with this Annual Report on Form 10-K as Exhibit 14.

During 2003, none of the executive officers or Directors of Oglebay Norton was a member of the Board of Directors or compensation committee of any other company where the relationship would be construed to constitute a committee interlock within the meaning of the rules of the Securities and Exchange Commission.

Except for the Chairman of the Board, Directors who are not employees of the Company receive a fee of $12,000 per year and $900 for each Board and committee meeting attended, including meetings of non-standing subcommittees, except for committee chairs who receive $1,200 for each committee meeting they chair. The Chairman of the Board receives annual compensation of $100,000. Except for the Chairman of the Board, Directors who are not employees of the Company also receive an annual award of 800 common shares of the Company under the Oglebay Norton Company Director Stock Plan. Directors are reimbursed for expenses they incur in attending Board and committee meetings.

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In 1998, the stockholders approved the Oglebay Norton Company Director Fee Deferral Plan. The Director Fee Deferral Plan, which was amended and restated effective January 1, 2002, permits non-employee Directors to defer all or part of the cash portion of their compensation into:

Amounts deferred into share units receive a 25% matching credit by Oglebay Norton, including a 25% matching credit for deferred dividend equivalents, but amounts deferred as cash do not receive any matching credit.

Beginning in 2002, Directors are also able to defer part or all of their annual award of common shares under the Director Stock Plan on the same terms as provided in the Director Fee Deferral Plan.

Summary Compensation Table

The table below shows individual compensation information for the Company’s Chief Executive Officer and the Company’s four most highly compensated executive officers other than the Chief Executive Officer.