UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
----------------------
or
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ___________.
Commission File Number: 333-56217.
ISG Resources, Inc.
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(Exact name of registrant as specified in its charter)
Utah 87-0619697
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
136 East South Temple, Suite 1300, Salt Lake City, Utah 84111
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(Address of principal executive offices) (Zip Code)
(801) 236-9700
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(Registrant's telephone number, including area code)
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 (or for such shorter period that the
registrant was required to file such reports) [ X ] Yes [ ] No, and (2) has been
subject to such filing requirements for the past 90 days [ X ] Yes [ ] No.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
As of October 31,1999 :
------------------
Classes of Common Stock Number of shares outstanding
- -------------------------- ----------------------------
Common Stock, $1 par value 100
<PAGE>
ISG Resources, Inc.
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INDEX TO FORM 10-Q
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements Page
Unaudited Condensed Consolidated Balance Sheets --
September 30, 1999 and December 31, 1998 ............................1
Unaudited Condensed Consolidated Statements of Operations --
Three months ended September 30, 1999 and 1998 and
Nine months ended September 30, 1999 and 1998 ........................2
Unaudited Condensed Consolidated Statements of Cash Flows --
Nine months ended September 30, 1999 and 1998 ........................4
Notes to Unaudited Condensed Consolidated Financial Statements .......5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ........................7
Item 3. Quantitative and Qualitative Disclosure about Market Risk
There have been no significant changes since the annual report Form
10-K filed for the year ended December 31, 1998.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ....................................11
<PAGE>
<TABLE>
<CAPTION>
ISG Resources, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
September 30, December 31,
1999 1998
----------------- -----------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ - $ -
Accounts receivable:
Trade, net of allowance for doubtful accounts of
$320,494 and $170,000, respectively 28,505,840 14,975,729
Retainage 196,080 660,609
Other 665,462 296,966
Deferred tax asset 69,352 251,355
Inventories 2,651,370 387,258
Other current assets 1,207,592 645,969
Total current assets 33,295,696 17,217,886
Property, plant and equipment, net of accumulated depreciation of
$6,967,469 and $3,562,086, respectively 33,663,657 28,139,108
Intangible assets, net 155,289,855 140,835,640
Other assets 5,357,856 5,539,102
Total assets $ 227,607,064 $ 191,731,736
- ----------------------------------------------------------------------================= =================
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 9,573,237 $ 4,066,487
Accrued liabilities:
Payroll 1,679,697 1,801,657
Interest 4,672,879 2,106,054
Other 2,987,799 1,534,971
Income taxes payable 3,664,961 422,963
Other current liabilities 714,253 500,000
----------------- -----------------
Total current liabilities 23,292,826 10,432,132
Long-term debt 133,500,000 110,000,000
Deferred tax liability 40,070,648 41,286,434
Other liabilities 2,308,194 2,488,954
Shareholders' equity:
Common stock, par value $1 per share; 100 shares authorized,
issued and outstanding 100 100
Additional paid-in capital 24,999,950 24,999,950
Retained earnings 3,435,346 2,524,166
----------------- -----------------
Total shareholders' equity 28,435,396 27,524,216
----------------- -----------------
Total liabilities and shareholders' equity $ 227,607,064 $ 191,731,736
================= =================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ISG Resources, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
Three Months
Ended September 30,
---------------------------------------
1999 1998
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<S> <C> <C>
Revenues:
Product revenues $ 38,608,195 $ 29,631,145
Service revenues 10,286,648 10,657,757
------------------ ------------------
48,894,843 40,288,902
Costs and expenses:
Cost of product revenues, excluding depreciation 24,795,355 18,865,834
Cost of service revenues, excluding depreciation 7,761,827 7,463,023
Depreciation and amortization 3,174,575 2,526,337
Selling, general and administrative expenses 4,741,251 4,832,517
New product development 566,575 -
------------------ ------------------
41,039,583 33,687,711
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Operating income 7,855,260 6,601,191
Interest income 11,762 46,482
Interest expense (3,419,021) (2,866,840)
Other income and expense 32,249 842
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Income before income taxes 4,480,250 3,781,675
Income tax expense (2,044,376) (1,564,922)
------------------ ------------------
Net income $ 2,435,874 $ 2,216,753
================== ==================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ISG Resources, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
Nine Months
Ended September 30,
---------------------------------------
1999 1998
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<S> <C> <C>
Revenues:
Product revenues $ 91,079,134 $ 61,185,559
Service revenues 27,384,259 25,182,606
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118,463,393 86,368,165
Costs and expenses:
Cost of product revenues, excluding depreciation 60,908,108 39,731,751
Cost of service revenues, excluding depreciation 19,980,978 18,853,424
Depreciation and amortization 9,269,686 6,094,443
Selling, general and administrative expenses 14,524,123 9,662,437
New product development 1,409,474 -
------------------ ------------------
106,092,369 74,342,055
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Operating income 12,371,024 12,026,110
Interest income 32,940 138,692
Interest expense (9,940,393) (6,341,291)
Other income and expense 27,150 3,563
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Income before income taxes 2,490,721 5,827,074
Income tax expense (1,579,541) (2,761,293)
------------------ ------------------
Net income $ 911,180 $ 3,065,781
================== ==================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ISG Resources, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
Nine Months
Ended September 30,
1999 1998
--------------- ---------------
<S> <C> <C>
Operating activities
Net income $ 911,180 $ 3,065,781
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 9,269,686 6,094,443
Amortization of debt issuance costs 522,665 300,061
Loss (gain) on sale of fixed assets 28,213 (5,989)
Deferred income taxes (1,020,378) (1,407,724)
Changes in operating assets and liabilities:
Receivables (11,233,394) (10,159,498)
Inventories (958,643) -
Other current and non-current assets (527,182) 876,869
Accounts payable 4,028,939 4,369,628
Accrued expenses 6,608,387 4,320,102
Other current and non-current liabilities (290,883) 1,859,304
Net cash provided by operating activities 7,338,590 9,312,977
Investing activities
Purchases of property, plant and equipment (6,842,100) (4,952,079)
Proceeds on sale of property, plant and equipment 147,326 192,368
Acquisitions of businesses, net of cash acquired (23,112,502) (77,666,940)
Purchase of intangible assets (696,165) (180,756)
Net cash used in investing activities (30,503,441) (82,607,407)
Financing activities
Proceeds from long-term debt 83,500,000 142,500,000
Payments on notes payable and long-term debt (60,000,000) (66,000,000)
Debt issuance costs incurred (335,149) (5,526,722)
Net cash provided by financing activities 23,164,851 70,973,278
Net decrease in cash and cash equivalents - (2,321,152)
Cash and cash equivalents at beginning of period - 3,068,980
Cash and cash equivalents at end of period $ - $ 747,828
=============== ===============
Cash paid for interest $ 6,850,903 $ 812,522
=============== ===============
Cash paid (received) for income taxes $ (689,716) $ 2,780,785
=============== ===============
See accompanying notes.
</TABLE>
<PAGE>
ISG RESOURCES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
These financial statements reflect the consolidated financial position and
results of operations of ISG Resources, Inc., (the "Company"), and its wholly
owned subsidiaries, Pneumatic Trucking, Inc. ("Pneumatic") and Best Masonry and
Tool Supply, Inc. ("Best"), as of and for the quarter and nine months ended
September 30, 1999. All significant intercompany accounts and transactions have
been eliminated in consolidation.
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments, consisting of normal recurring
adjustments, necessary to present fairly the financial position, results of
operations and cash flows of the Company, for the respective periods presented.
The results of operations for the three and nine-month periods ended September
30, 1999 are not necessarily indicative of the results which may be expected for
any other interim period or for the year as a whole.
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Certain information and footnote disclosures normally included in financial
statements presented in accordance with generally accepted accounting principles
have been condensed or omitted. The accompanying unaudited interim condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes in the Company's Form 10-K for the
fiscal year ended December 31, 1998.
The consolidated balance sheet at December 31, 1998 was derived from audited
consolidated financial statements, but does not include all disclosures required
under generally accepted accounting principles. Certain amounts have been
reclassified to conform to the September 30, 1999 presentation.
2. New Product Development Costs
New product development costs consist of scientific research and development and
market development expenditures. Expenditures of $1,129,467 and $468,364 for the
nine months and the quarter ended September 30, 1999, respectively, were made
for research and development activities covering basic scientific research and
the application of scientific advances to the development of new and improved
products and processes. Expenditures of $280,007 and $98,211 for the nine months
and the quarter ended September 30, 1999, respectively, were made for market
development activities related to promising new and improved products and
processes identified during research and development activities. The Company
expenses all new product development costs as they are incurred.
<PAGE>
3. Inventories
Inventories are valued at lower of cost (computed on the average, first-in,
first-out or last-in, first-out method), or net realizable value. Inventories
consist of:
September 30, December 31,
1999 1998
---------------- ----------------
Raw Materials $ 73,299 $ -
Finished Goods 2,578,071 387,258
---------------- ----------------
$ 2,651,370 $ 387,258
================ ================
4. Intangible Assets
Intangible assets consist of the following:
September 30, December 31,
1999 1998
---------------- ----------------
Goodwill $ 63,528,397 $ 44,018,454
Contracts 98,448,026 97,960,644
Patents and licenses 2,787,431 2,471,584
Assembled work force 2,700,233 2,700,233
---------------- ----------------
167,464,087 147,150,915
Less accumulated amortization (12,174,232) (6,315,275)
---------------- ----------------
$ 155,289,855 $ 140,835,640
================ ================
Amortization is provided over the estimated period of benefit, using the
straight-line method, ranging from 8 to 25 years.
5. Long-term Debt
Long-term debt consists of the following:
September 30, December 31,
1999 1998
---------------- ----------------
10% Senior Subordinated Notes
due 2008 $ 100,000,000 $ 100,000,000
Secured Credit Facility 33,500,000 10,000,000
---------------- ----------------
$ 133,500,000 $ 110,000,000
================ ================
On April 30, 1999, the Secured Credit Facility was increased from $35,000,000 to
$50,000,000. At September 30, 1999, $16,500,000 was unused and available under
the Secured Credit Facility.
6. Subsequent Event
On October 26, 1999, the Company acquired all of the outstanding stock of Lewis
W. Osborne, Inc. together with an affiliated company, United Terrazzo Supply
Co., Inc. and certain associated real property (collectively "Osborne") for
approximately $1,400,000, net of $400,000 cash acquired, for total consideration
of $1,800,000. Osborne is engaged in the wholesale distribution of building
supplies.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of
operations should be read in conjunction with the Unaudited Condensed
Consolidated Financial Statements and Notes thereto included elsewhere herein.
General
ISG Resources, Inc. (the "Company") is the leading manager and marketer of coal
combustion products ("CCPs") throughout North America. The Company generates
revenues from marketing products to its customers and providing materials
management, engineering and construction services to its clients. The Company's
strategic objectives include the maintenance and expansion of long-term
contractual relationships, the increase in product sales and applications
through cross-marketing and further technological advances and the pursuit of
strategic acquisitions.
On January 7, 1999, the Company acquired all of the outstanding stock of Best
Masonry and Tool Supply ("Best") for approximately $13.3 million and paid off
outstanding debt of Best approximating $2.4 million. Best is engaged in the
retail and wholesale distribution of masonry construction materials to
residential and commercial contractors from its Texas and Georgia locations.
Best also produces its own brand named formulas of manufactured masonry
products. With the acquisition of Best, the Company is expanding its activities
to the manufacture and retail sale of products that include CCPs as raw
materials and, thus, increasing the demand and usage of CCPs in various building
products industries.
On May 27, 1999, the Company completed the acquisition of all the outstanding
stock of Mineral Specialties, Inc ("Mineral Specialties"). The consideration
paid consisted of approximately $1.3 million in cash. On June 7, 1999, the
Company completed the acquisition of all outstanding stock of Irvine Fly Ash,
Inc. ("Irvine"). The consideration paid consisted of approximately $6.0 million
in cash. With the acquisitions of Mineral Specialties and Irvine, the Company
acquired key competitors in diverse geographic regions that will complement and
strengthen the Company's products and services offered.
During 1998, the Company completed the acquisitions of several CCP companies, as
discussed in Form 10-K for the year ended December 31, 1998. These acquisitions
as well as the acquisitions of Best, Mineral Specialties and Irvine (the "1999
Acquisitions"), (collectively, the "Acquisitions"), were accounted for under the
purchase method of accounting and, accordingly, the results of operations of the
respective companies have been included in the consolidated financial statements
since the respective acquisition dates. Accordingly, the financial condition and
results of operations of the Company after the Acquisitions is not directly
comparable to the historical financial condition or results of operations.
The Company's revenues are subject to a pattern of seasonal fluctuation,
concurrent with the construction industry. Because the Company's products are
used as raw materials in other products, the amount of revenue generated during
the year generally depends upon a number of factors, including the level of road
and other construction using concrete, weather conditions affecting the level of
construction, general economic conditions, and other factors beyond the
Company's control.
Results of Operations
Three Months Ended September 30, 1999 compared to Three Months Ended September
30, 1998
Revenues. Revenues were $48.9 million in the third quarter of 1999, representing
an increase of $8.6 million or 21.3%, as compared to revenues of $40.3 million
in the third quarter of 1998. Product revenues increased to $38.6 million in the
third quarter of 1999 from $29.6 million in the third quarter of 1998,
representing an increase of $9.0 million or 30.4%. Service revenues remained
fairly constant at $10.3 million in the third quarter of 1999 as compared to
$10.7 million in the third quarter of 1998, representing a decrease of $0.4
million or 3.7%. The increase in product revenues in the third quarter of 1999
is due primarily to the 1999 Acquisitions.
Cost of Product Revenues, Excluding Depreciation. Cost of product revenues,
excluding depreciation, was $24.8 million in the third quarter of 1999,
representing an increase of $5.9 million or 31.2% , as compared to cost of
product revenues, excluding depreciation, of $18.9 million in the third quarter
of 1998. This increase is due primarily to the inclusion of cost of product
revenues of the 1999 Acquisitions since their respective dates of acquisition.
As a percentage of product revenues, cost of product revenues, excluding
depreciation, remained fairly constant at 64.2% in the third quarter of 1999 as
compared to 63.9% in the third quarter of 1998.
Cost of Service Revenues, Excluding Depreciation. Cost of service revenues,
excluding depreciation, was $7.8 million in the third quarter of 1999,
representing an increase of $0.3 million or 4.0%, as compared to cost of service
revenues, excluding depreciation, of $7.5 million in the third quarter of 1998.
As a percentage of service revenues, cost of service revenues, excluding
depreciation, increased to 75.7% in the third quarter of 1999 from 70.1% in the
third quarter of 1998. This increase is due primarily to the increase in costs
of construction services.
Depreciation and Amortization. Depreciation and amortization was $3.2 million in
the third quarter of 1999, representing an increase of $0.7 million or 28.0%, as
compared to depreciation and amortization of $2.5 million in the third quarter
of 1998. This increase resulted primarily from the depreciation of fixed assets
and amortization of goodwill and other intangible assets recorded as a result of
the 1999 Acquisitions.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("SG&A") remained fairly constant at $4.7 million in the
third quarter of 1999, representing a decrease of $0.1 million or 2.1%, as
compared to SG&A expenses of $4.8 million in the third quarter of 1998.
New Product Development. New product development costs consist of scientific
research and development and market development expenditures. Expenditures of
$0.5 million were made for scientific research and development during the third
quarter of 1999 compared to none during the third quarter of 1998. Expenditures
of $0.1 million were made for market development during the third quarter of
1999 compared to none during the third quarter of 1998. The increase in new
product development costs demonstrates the Company's commitment to developing
and marketing value added products that utilize CCPs and related materials.
Interest Expense. Interest expense increased to $3.4 million in the third
quarter of 1999 from $2.9 million in the third quarter of 1998, primarily as a
result of an increase in outstanding indebtedness incurred due to the 1999
Acquisitions.
Income Taxes. Income tax expense was $2.0 million in the third quarter of 1999,
representing an increase of $0.4 million or 25.0%, as compared to income tax
expense of $1.6 million in the third quarter of 1998. This increase reflects the
increase in taxable income in the third quarter of 1999.
Net Income. As a result of the factors discussed above, net income increased to
$2.4 million in the third quarter of 1999 from $2.2 million in the third quarter
of 1998.
Nine Months Ended September 30, 1999 compared to Nine Months Ended September 30,
1998
Revenues. Revenues were $118.5 million in the first nine months of 1999,
representing an increase of $32.1 million or 37.2%, as compared to revenues of
$86.4 million in the first nine months of 1998. Product revenues increased to
$91.1 million in the first nine months of 1999 from $61.2 million in the first
nine months of 1998, representing an increase of $29.9 million or 48.9%. Service
revenues increased to $27.4 million in the first nine months of 1999 from $25.2
million in the first nine months of 1998, representing an increase of $2.2
million or 8.7%. The increase in product revenues in the first nine months of
1999 is due primarily to the Acquisitions. The increase in service revenues
reflects an increase in providing construction and other services.
Cost of Product Revenues, Excluding Depreciation. Cost of product revenues,
excluding depreciation, was $60.9 million in the first nine months of 1999,
representing an increase of $21.2 million or 53.4%, as compared to cost of
product revenues, excluding depreciation, of $39.7 million in the first nine
months of 1998. This increase is due primarily to the inclusion of cost of
product revenues of the Acquisitions since their respective dates of
acquisition. As a percentage of product revenues, cost of product revenues,
excluding depreciation, increased to 66.8% in the first nine months of 1999 from
64.9% in the first nine months of 1998. This increase was primarily due to lower
margins on product revenues derived from the 1999 Acquisitions.
Cost of Service Revenues, Excluding Depreciation. Cost of service revenues,
excluding depreciation, was $20.0 million in the first nine months of 1999,
representing an increase of $1.1 million or 5.8%, as compared to cost of service
revenues, excluding depreciation, of $18.9 million in the first nine months of
1998. This increase is due primarily to the increase in service revenues during
the same time period. As a percentage of service revenues, cost of service
revenues, excluding depreciation, remained fairly constant at 73.0% in the first
nine months of 1999 from 75.0% in the first nine months of 1998.
Depreciation and Amortization. Depreciation and amortization was $9.3 million in
the first nine months of 1999, representing an increase of $3.2 million or
52.5%, as compared to depreciation and amortization of $6.1 million in the first
nine months of 1998. This increase resulted primarily from the depreciation of
fixed assets and amortization of goodwill and other intangible assets recorded
as a result of the Acquisitions.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("SG&A") were $14.5 million in the first nine months of
1999, representing an increase of $4.8 million or 49.5%, as compared to SG&A
expenses of $9.7 million in the first nine months of 1998. This increase in SG&A
expenses reflects incremental SG&A costs resulting from the operation of the
Acquisitions as well as an increase in sales and marketing efforts.
New Product Development. New product development costs consist of scientific
research and development and market development expenditures. Expenditures of
$1.1 million were made for scientific research and development during the first
nine months of 1999 compared to none during the first nine months of 1998.
Expenditures of $0.3 million were made for market development during the first
nine months of 1999 compared to none during the first nine months of 1998. The
increase in new product development costs demonstrates the Company's commitment
to developing and marketing value added products that utilize CCPs and related
materials.
Interest Expense. Interest expense increased to $9.9 million in the first nine
months of 1999 from $6.3 million in the first nine months of 1998, primarily as
a result of an increase in outstanding indebtedness.
Income Taxes. Income tax expense was $1.6 million in the first nine months of
1999, as compared to income tax expense of $2.8 million in the first nine months
of 1998. This change reflects the decrease in taxable income in the first nine
months of 1999, primarily resulting from increased interest expense.
Net Income. As a result of the factors discussed above, net income was $0.9
million in the first nine months of 1999 as compared to net income of $3.1
million in the first nine months of 1998.
Liquidity and Capital Resources
The Company financed the Acquisitions through the issuance of $100.0 million of
10% Senior Subordinated Notes due 2008 and borrowings on its Secured Credit
Facility. Operating and capital expenditures have been financed primarily
through cash flow from operations and borrowings under the Secured Credit
Facility.
At September 30, 1999, the Company had no cash and cash equivalents and $16.5
million in availability under the Secured Credit Facility. On April 30, 1999,
the Secured Credit Facility was increased from $35.0 million to $50.0 million.
In addition, the Company had working capital of approximately $11.2 million, an
increase of $4.4 million from December 31, 1998. The Company intends to make
capital expenditures over the next several years principally to construct
storage, loading and processing facilities for CCPs and to replace existing
capital equipment. During the nine months ended September 30, 1999, capital
expenditures amounted to approximately $6.8 million. Capital expenditures made
in the ordinary course of business will be funded by cash flow from operations
and borrowings under the Secured Credit Facility.
The Company anticipates that its principal use of cash will be for working
capital requirements, debt service requirements and capital expenditures. Based
upon current and anticipated levels of operations, the Company believes that its
cash flow from operations, together with amounts available under the Secured
Credit Facility, will be adequate to meet its anticipated requirements for
working capital, capital expenditures and interest payments for the next several
years. There can be no assurance, however, that cash flow from operations will
be sufficient to service the Company's debt and the Company may be required to
refinance all or a portion of its existing debt or to obtain additional
financing. These increased borrowings may result in higher interest payments.
There can be no assurance that any such refinancing would be possible or that
any additional financing could be obtained. The inability to obtain additional
financing could have a material adverse effect on the Company.
Year 2000 Date Conversion
In general, the Year 2000 issue relates to computers and other systems being
unable to distinguish between the years 1900 and 2000 because they use two
digits, rather than four, to define the applicable year. Systems that fail to
properly recognize such information will likely generate erroneous data or cause
a system to fail possibly resulting in a disruption of operations. The Company's
products do not incorporate such date coding so the Company's efforts to address
the Year 2000 issue fall in the following three areas: (i) the Company's
information technology ("IT") systems; (ii) the Company's non-IT systems (i.e.,
machinery, equipment and devices which utilize technology which is "built in"
such as embedded microcontrollers); and (iii) third-party customers.
The Company is currently working to resolve the potential impact of the Year
2000 issue on the processing of date-sensitive data by the Company's
computerized information systems. Specifically, the Company has commenced
installation of new accounting and financial software and anticipates that this
process will be complete by the end of November, 1999. The Company is also
acquiring and installing Year 2000 compliant software upgrades in all scales
used in its operations. The Company is analyzing all other IT and non-IT systems
to determine if any other modifications or upgrades are necessary to be Year
2000 compliant. The amount charged to expense during the nine months ended
September 30, 1999, as well as the amounts anticipated to be charged to expense
related to the Year 2000 computer modifications, have not been and are not
expected to be material to the Company's financial position, results of
operations or cash flows.
The Company has evaluated Year 2000 compliance issues that may be created by
customers, suppliers and financial institutions with whom the Company does
business. Because many of the Company's suppliers are in the heavily regulated
utility arena, the Company does not expect these suppliers to experience
problems. The Company cannot guarantee that the systems of other entities will
be converted on a timely basis.
The foregoing statements are based upon management's current assumptions.
However, there can be no guarantee that these assumptions have addressed all
relevant uncertainties.
<PAGE>
ISG Resources, Inc.
_____________
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
None
Item 3. Defaults upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Item Exhibit
No. Item Title No.
---- ----------------------------------------- -------
(2) Plan of acquisition, reorganization,
arrangement, liquidation or succession:
Not Applicable
(3) Articles of Incorporation and By-Laws:
Not Applicable
(4) Instruments defining the rights of
security holders, including indentures:
Not Applicable
(10) Material Contracts: Not Applicable
(11) Statement regarding computation of per
share earnings is not required because the
relevant computations can be clearly determined
from the material contained in the Financial
Statements included herein.
(15) Letter re unaudited interim financial
information: Not Applicable
(18) Letter re change in accounting
principles: Not Applicable
(19) Report furnished to security holders:
Not Applicable
(22) Published report regarding matters
submitted to vote of security holders:
Not Applicable
(23) Consents of expert and counsel:
Not Applicable
(24) Power of attorney: Not Applicable
(27) Financial Data Schedule 27
(99) Additional Exhibits: Not Applicable
(b) Reports on Form 8-K
No Reports on Form 8-K were filed by Registrant during the
three months ended September 30, 1999.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 15, 1999 ISG RESOURCES, INC.
/s/
-----------------------------------------
J. I. Everest, II
Chief Financial Officer and Treasurer
(As both a duly authorized officer of the
Companyand as principal financial officer
of the Company)
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<CIK> 0001063018
<NAME> ISG RESOURCES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1.00
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 28,826,334
<ALLOWANCES> 320,494
<INVENTORY> 2,651,370
<CURRENT-ASSETS> 33,295,696
<PP&E> 40,631,126
<DEPRECIATION> 6,967,469
<TOTAL-ASSETS> 227,607,064
<CURRENT-LIABILITIES> 23,292,826
<BONDS> 100,000,000
0
0
<COMMON> 100
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<SALES> 91,079,134
<TOTAL-REVENUES> 118,463,393
<CGS> 60,908,108
<TOTAL-COSTS> 80,889,086
<OTHER-EXPENSES> 25,143,193
<LOSS-PROVISION> 129,566
<INTEREST-EXPENSE> 9,940,393
<INCOME-PRETAX> 2,490,721
<INCOME-TAX> 1,579,541
<INCOME-CONTINUING> 911,180
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 911,180
<EPS-BASIC> 0
<EPS-DILUTED> 0
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