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 _____March 31, 2000______
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: ___________
ISG Resources, Inc.
-------------------
(Exact name of registrant as specified in its charter)
Utah 87-0327982
----------------------- ------------
(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
---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(801) 236-9700
---------------------------------
(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 _April 30,2000_:
Classes of Common Stock Number of shares outstanding
----------------------- ----------------------------
Common Stock, no par value 100
<PAGE>
ISG Resources, Inc.
------------
INDEX TO FORM 10-Q
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements Page
Condensed Consolidated Balance Sheets --
March 31, 2000 and December 31, 1999 1
Unaudited Condensed Consolidated Statements of Operations --
Three months ended March 31, 2000 and 1999 2
Unaudited Condensed Consolidated Statements of Cash Flows --
Three months ended March 31, 2000 and 1999 3
Notes to Unaudited Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
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, 1999.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
<PAGE>
<TABLE>
<CAPTION>
ISG Resources, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
March 31, December 31,
2000 (Unaudited) 1999
---------------- -------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ - $ -
Accounts receivable:
Trade, net of allowance for doubtful accounts of
$346,000 and $329,000, respectively 19,559,671 21,167,616
Retainage 157,053 176,000
Other 1,224,069 502,058
Deferred tax asset 211,287 316,161
Inventories 4,820,453 4,055,425
Other current assets 934,165 829,661
Total current assets 26,906,698 27,046,921
Property, plant and equipment, net of accumulated depreciation of
$9,060,658 and $7,893,374,
respectively 35,152,770 33,584,188
Intangible assets, net 155,462,844 153,952,547
Debt issuance costs, net 4,671,642 4,826,010
Other assets 1,210,073 1,052,845
Total assets $ 223,404,027 $ 220,462,511
- -------------------------------------------------------------------=================================================
Liabilities and shareholders' equity Current liabilities:
Accounts payable $ 8,920,871 $ 10,409,583
Accrued liabilities:
Payroll 1,843,011 1,288,732
Interest 4,649,462 2,190,471
Other 1,308,589 1,828,537
Income taxes (receivable) payable (40,245) 1,705,678
Other current liabilities 742,887 652,119
-----------------------------------------------
Total current liabilities 17,424,575 18,075,120
Long-term debt 141,000,000 133,500,000
Deferred tax liability 38,544,231 39,158,249
Payable to Industrial Services Group 643,983 643,983
Other liabilities 1,789,850 1,923,355
Shareholders' equity:
Common stock, no par value; 100 shares
authorized, issued and outstanding 25,000,050 25,000,050
Retained earnings (998,662) 2,161,754
-----------------------------------------------
Total shareholders' equity 24,001,388 27,161,804
-----------------------------------------------
Total liabilities and shareholders' equity $ 223,404,027 $ 220,462,511
===============================================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ISG Resources, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
Three Months Ended
March 31,
-------------------------------------------
2000 1999
-------------------------------------------
<S> <C> <C>
Revenues:
Product revenues $ 24,467,256 $ 21,383,560
Service revenues 8,050,948 8,052,932
-------------------------------------------
32,518,204 29,436,492
Costs and expenses:
Cost of product revenues, excluding depreciation 19,121,080 15,061,491
Cost of service revenues, excluding depreciation 5,616,412 5,889,541
Depreciation and amortization 3,287,045 3,068,236
New product development 611,689 332,912
Selling, general and administrative expenses 4,801,269 4,795,871
-------------------------------------------
33,437,495 29,148,051
-------------------------------------------
Operating income (loss) (919,291) 288,441
Interest income 7,525 9,631
Interest expense (3,538,505) (3,187,911)
Other income 41,090 13,446
-------------------------------------------
Loss before income taxes (4,409,181) (2,876,393)
Income tax benefit 1,248,765 1,032,770
-------------------------------------------
Net loss $ (3,160,416) $ (1,843,623)
===========================================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ISG Resources, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
Three Months Ended
March 31,
2000 1999
---------------------------
<S> <C> <C>
Operating activities
Net loss $(3,160,416) $ (1,843,623)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 3,287,045 3,068,236
Amortization of debt issuance costs 179,368 162,261
Loss (gain) on disposal of fixed assets 46,306 (1,950)
Deferred income taxes (509,144) (164,740)
Changes in operating assets and liabilities:
Receivables 1,702,923 (1,867,866)
Inventory (256,171) (961,247)
Other current and non-current assets (115,177) 130,167
Accounts payable and accrued expenses 587,850 4,451,273
Other current and non-current liabilities (1,937,508) (2,488,336)
Net cash provided by (used in) operating activities (174,924) 484,175
Investing activities
Purchases of property, plant and equipment (2,235,907) (2,926,501)
Proceeds on sale of property, plant and equipment 10,331 -
Acquisitions of businesses, net of cash acquired (4,946,717) (13,077,884)
Purchase of intangible assets - (684,287)
Acquisition costs incurred on future acquisitions (127,783) -
Net cash used in investing activities (7,300,076) (16,688,672)
Financing activities
Proceeds from long-term debt 52,500,000 26,500,000
Payments on long-term debt (45,000,000) (10,000,000)
Debt issuance costs incurred (25,000) -
Net cash provided by financing activities 7,475,000 16,500,000
Net increase in cash and cash equivalents 295,503
Cash and cash equivalents at beginning of period - -
Cash and cash equivalents at end of period $ - $ 295,503
====================================
Cash paid for interest $ 895,950 $ 461,493
====================================
Cash paid (received) for income taxes $ 1,079,035 $ (923,445)
- -------------------------------------------------------------------------====================================
See accompanying notes.
</TABLE>
<PAGE>
ISG RESOURCES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
ISG Resources, Inc., a Utah corporation (the "Company"), is a wholly owned
subsidiary of Industrial Services Group, Inc. ("ISG"). ISG was formed in
September 1997 and acquired the stock of JTM Industries, Inc. ("JTM") on October
14, 1997. In 1998, JTM acquired the stock of Pozzolanic Resources, Inc.
("Pozzolanic"), Power Plant Aggregates of Iowa, Inc. ("PPA"), Michigan Ash Sales
Company d.b.a. U.S. Ash Company, together with two affiliated companies, U.S.
Stabilization, Inc., and Flo Fil Company, Inc., (collectively, "U.S. Ash"), and
Fly Ash Products Inc. ("Fly Ash Products"). Effective January 1, 1999, JTM,
Pozzolanic, PPA, U.S. Ash, Fly Ash Products and their wholly owned subsidiaries
merged with and into the Company. Pneumatic Trucking, Inc. ("Pneumatic"), a
wholly owned subsidiary of Michigan Ash Sales Company, was not merged into ISG
Resources, Inc. Therefore, Pneumatic became a wholly owned subsidiary of the
Company.
In 1999, the Company acquired the stock of Best Masonry & Tool Supply ("Best"),
Mineral Specialties, Inc. ("Specialties"), Irvine Fly Ash, Inc. ("Irvine"),
Lewis W. Osborne, Inc. ("Osborne"), United Terrazzo Supply Co., Inc.
("Terrazzo"), and Magna Wall, Inc. ("Magna Wall") and sold all of the
outstanding stock of Pneumatic.
On March 2, 2000, the Company acquired directly and indirectly through ISG
Manufactured Products, Inc., a newly formed wholly-owned subsidiary of the
Company, all of the partnership interest of Don's Building Supply L.L.P. (Don's)
for approximately $5,400,000 in cash, subject to future purchase price
adjustments. Don's is engaged in the retail and wholesale distribution of
construction materials to residential and commercial contractors primarily in
the State of Texas.
The purchase price of Don's was allocated based on estimated fair values of
assets and liabilities at the date of acquisition. Goodwill resulting from the
difference between the purchase price plus acquisition costs and the net assets
acquired totaled approximately $3,776,000 and is being amortized on a
straight-line basis over 20 years.
The following pro forma combined financial information reflects operations as if
Don's and the related financing transactions had occurred as of January 1, 1999.
The pro forma combined financial information is presented for illustrative
purposes only, does not purport to be indicative of the Company's results of
operations as of the date hereof and is not necessarily indicative of what the
Company's actual results of operations would have been had the acquisition and
the financing transactions been consummated on such date.
Quarter Ended March 31
2000 1999
------------------ --------------------
Revenues $ 33,347,899 $ 30,722,559
Net income (loss) $ (3,238,937) $ (1,849,261)
These financial statements reflect the consolidated financial position and
results of operations of the Company and its wholly owned subsidiaries. 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 an interim period 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, 1999.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin (SAB) 101, Revenue Recognition in Financial Statements. The effective
date of SAB 101 is the second fiscal quarter ending after December 15, 1999.
This SAB clarifies proper methods of revenue recognition given certain
circumstances surrounding sales transactions. The Company continues to evaluate
the impact of SAB 101, but believes it is in compliance with the provisions of
the SAB and accordingly, does not expect SAB 101 to have a material effect on
its financial statements.
The consolidated balance sheet at December 31, 1999 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 March 31, 2000 presentation.
2. Description of Business
The Company operates two principal business segments: coal combustion product
(CCP) management and building materials manufacturing and distribution. The CCP
division purchases, removes and sells fly ash and other by-products of coal
combustion to producers and consumers of building materials and construction
related products throughout the United States. The building materials division
manufactures and distributes masonry construction materials to residential and
commercial contractors primarily in Texas, California, Georgia and Florida.
3. New Product Development Costs
New product development costs consist of scientific research and development and
market development expenditures. Expenditures of $510,136 and $255,167 for the
three months ended March 31, 2000 and March 31, 1999, respectively, were made
for research and development activities covering basic scientific research and
application of scientific advances to the development of new and improved
products and processes. Expenditures of $101,553 and $77,745 for the three
months ended March 31, 2000 and March 31, 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.
4. Inventories
The Company accounts for inventory balances using the lower of cost or market
method on a first-in, first-out basis. Inventories consist of:
March 31, December 31,
2000 1999
--------------------- ---------------------
Raw Materials $ 355,328 $ 234,073
Finished Goods 4,465,125 3,821,352
--------------------- ---------------------
$4,820,453 $ 4,055,425
===================== =====================
5. Intangible Assets
Intangible assets consist of the following:
March 31, December 31,
2000 1999
--------------------- ---------------------
Goodwill $ 67,866,786 $64,313,512
Contracts 98,522,146 98,522,146
Patents and licenses 2,787,431 2,787,431
Assembled work force 2,700,233 2,700,233
--------------------- ---------------------
171,876,596 168,323,322
Less accumulated amortization (16,413,752) (14,370,775)
--------------------- ---------------------
$ 155,462,844 $153,952,547
===================== =====================
Amortization is provided over the estimated period of benefit, using the
straight-line method, ranging from 8 to 25 years.
6. Long-term Debt
Long-term debt consists of the following:
March 31, December 31,
2000 1999
--------------------- ----------------
10% Senior Subordinated Notes
due 2008 $100,000,000 $ 100,000,000
Secured Credit Facility 41,000,000 33,500,000
--------------------- ----------------
$141,000,000 $ 133,500,000
===================== ================
At March 31, 2000, $9.0 million was unused and available under the Secured
Credit Facility.
7. Reportable Segments
As discussed in note 2, the Company operates in two reportable segments: the CCP
division and the building materials division. The CCP division consists
primarily of three operating units that manage and market CCPs in North America.
The building materials division consists of five legal entities, Best, Osborne,
Terrazzo, Magna Wall, and Don's. The Company's two reportable segments are
managed separately based on fundamental differences in their operations. Such
segment disclosures were not originally presented in 1999 because the Company
did not begin to evaluate its business in this manner until after companies in
the building materials division were fully integrated. The first quarter 1999
information is presented below for comparative purposes.
The Company evaluates performance based on profit or loss from operations before
depreciation, amortization, income taxes and interest expense (EBITDA). The
Company derives a majority of its revenues from CCP sales and the chief
operating decision makers rely on EBITDA to assess the performance of the
segments and make decisions about resources to be allocated to the segments.
Accordingly, EBITDA is included in the information reported below. Certain
expenses are maintained at the Company's corporate headquarters and are not
allocated to the segments. Such expenses primarily include interest expense,
corporate overhead costs, certain non-recurring gains and losses and intangible
asset amortization. Inter-segment sales are generally accounted for at cost and
are eliminated in consolidation.
The building materials division includes financial data for Best only for the
three months ended March 31, 1999, as Osborne, Terrazzo, Magna Wall and Don's
were acquired subsequent to the first quarter of 1999. Amounts included in the
"Other" column include financial information for the Company's corporate, R&D
and other administrative business units.
Information about reportable segments, and reconciliation of such information to
the consolidated totals as of and for the three months ended March 31, 2000 and
March 31, 1999, is as follows:
<TABLE>
<CAPTION>
Building
CCP Materials Other Consolidated
Total
---------------- ---------------- ----------------- -------------------
<S> <C> <C> <C> <C>
Three months ended 3/31/00:
Revenue $ 24,945,989 $ 7,461,903 $ 110,312 $ 32,518,204
EBITDA 4,154,152 822,169 (2,559,952) 2,416,369
Total Assets 47,702,704 25,518,972 150,182,351 223,404,027
Expenditures for PP&E 1,960,426 88,710 186,771 2,235,907
Three months ended 3/31/99:
Revenue $ 24,400,724 $ 4,768,883 $ 266,885 $ 29,436,492
EBITDA 4,440,511 837,318 (1,898,048) 3,379,781
Total Assets 45,403,746 17,945,961 148,947,713 212,297,420
Expenditures for PP&E 2,695,963 8,757 221,781 2,926,501
</TABLE>
<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., a Utah corporation (the "Company"), is a wholly owned
subsidiary of Industrial Services Group, Inc. ("ISG"). ISG was formed in
September 1997 and acquired the stock of JTM Industries, Inc. ("JTM") on October
14, 1997. In 1998, JTM acquired the stock of Pozzolanic Resources, Inc.
("Pozzolanic"), Power Plant Aggregates of Iowa, Inc. ("PPA"), Michigan Ash Sales
Company d.b.a. U.S. Ash Company, together with two affiliated companies, U.S.
Stabilization, Inc., and Flo Fil Company, Inc., (collectively, "U.S. Ash"), and
Fly Ash Products Inc. ("Fly Ash Products"). Effective January 1, 1999, JTM,
Pozzolanic, PPA, U.S. Ash, Fly Ash Products and their wholly owned subsidiaries
merged with and into the Company. Pneumatic Trucking, Inc. ("Pneumatic"), a
wholly owned subsidiary of Michigan Ash Sales Company, was not merged into ISG
Resources, Inc. Therefore, Pneumatic became a wholly owned subsidiary of the
Company.
In 1999, the Company acquired the stock of Best Masonry & Tool Supply ("Best"),
Mineral Specialties, Inc. ("Specialties"), Irvine Fly Ash, Inc. ("Irvine"),
Lewis W. Osborne, Inc. ("Osborne"), United Terrazzo Supply Co., Inc.
("Terrazzo"), and Magna Wall, Inc. ("Magna Wall") (collectively, the
"Acquisitions") and sold all of the outstanding stock of Pneumatic.
On March 2, 2000, the Company acquired directly and indirectly through ISG
Manufactured Products, Inc., a newly formed wholly-owned subsidiary of the
Company, all of the partnership interest of Don's Building Supply L.L.P. (Don's)
for approximately $5,400,000 in cash. Don's is engaged in the retail and
wholesale distribution of construction materials to residential and commercial
contractors primarily in the State of Texas.
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 operates two principal business segments: coal combustion product
(CCP) management and building materials manufacturing and distribution. The CCP
division purchases, removes and sells fly ash and other by-products of coal
combustion to producers and consumers of building materials and construction
related products throughout the United States. The building materials division
manufactures and distributes masonry construction materials to residential and
commercial contractors primarily in Texas, California, Georgia and Florida.
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 March 31, 2000 compared to Three Months Ended March 31, 1999
Revenues. Revenues were $32.5 million in the first quarter of 2000, representing
an increase of $3.1 million or 10.5%, as compared to revenues of $29.4 million
in the first quarter of 1999. Product revenues increased to $24.5 million in the
first quarter of 2000 from $21.4 million in the first quarter of 1999,
representing an increase of $3.1 million or 14.4%. Service revenues remained
constant at $8.1 in the first quarter of 2000 and 1999. The increase in product
revenues in the first quarter of 2000 is primarily due to the Acquisitions.
Cost of Product Revenues, Excluding Depreciation. Cost of product revenues,
excluding depreciation, was $19.1 million in the first quarter of 2000,
representing an increase of $4.0 million or 27.0% , as compared to cost of
product revenues, excluding depreciation, of $15.1 million in the first quarter
of 1999. This increase is due primarily to the inclusion of cost of product
revenues of the Acquisitions. As a percentage of product revenues, cost of
product revenues excluding depreciation, increased to 78.1% in the first quarter
of 2000 from 70.4% in the first quarter of 1999. This decrease in product
margins is primarily due to lower margins related to product revenues derived
from the Acquisitions.
Cost of Service Revenues, Excluding Depreciation. Cost of service revenues,
excluding depreciation was $5.6 million in the first quarter of 2000,
representing a decrease of $0.3 million or 4.6%, as compared to cost of service
revenues, excluding depreciation, of $5.9 million in the first quarter of 1999.
This decrease is due primarily to a decrease in sub-contracted construction
costs due to the same services being performed by personnel employed by the
Company. As a percentage of service revenues, cost of service revenues,
excluding depreciation, decreased to 70.0% in the first quarter of 2000 from
73.1% in the first quarter of 1999. This improvement in margin was primarily due
to an increase in higher margin services, such as construction and engineering.
Depreciation and Amortization. Depreciation and amortization was $3.3 million in
the first quarter of 2000, representing an increase of $0.2 million or 7.1%, as
compared to depreciation and amortization of $3.1 million in the first quarter
of 1999. This increase resulted primarily from the depreciation of fixed assets
acquired by the Company throughout 1999, 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") remained constant at $4.8 million in the first
quarter of 2000 and in the first quarter of 1999.
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 first
quarter of 2000 compared to $0.3 million during the first quarter of 1999.
Expenditures of $0.1 million were made for market development during the first
quarter of 2000 compared to $0.1 million during the first quarter of 1999. 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 $3.5 million in the first
quarter of 2000 from $3.2 million in the first quarter of 1999, primarily as a
result of an increase in outstanding indebtedness related to the Acquisitions.
Income Taxes. Income tax benefit was $1.2 million in the first quarter of 2000,
representing an increase of $0.2 million or 20.9%, as compared to income tax
benefit of $1.0 million in the first quarter of 1999. This increase reflects an
increase in the loss before taxes in the first quarter of 2000, primarily
resulting from increased interest expense, increased new product development
costs, increased depreciation and amortization expense, and an increase in cost
of product revenues.
Net Income. As a result of the factors discussed above, net loss increased to
$3.2 million in the first quarter of 2000 from $1.8 million in the first quarter
of 1999.
Liquidity and Capital Resources
The Company financed all of its 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 March 31, 2000, the Company had no cash and cash equivalents and $9.0 million
in availability under the Secured Credit Facility. In addition, the Company had
working capital of approximately $9.5 million, an increase of $0.5 million from
December 31, 1999. 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 three
months ended March 31, 2000, capital expenditures amounted to approximately $2.2
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.
<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
A report on Form 8-K was filed March 17, 2000 in connection
with the acquisition of Don's Building Supply, Inc.
<PAGE>
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: May 15, 2000 ISG RESOURCES, INC.
/s/ J.I. Everest
---------------------------------
J. I. Everest, II
Chief Financial Officer and Treasurer
(As both a duly authorized officer of the
Company and as principal financial officer
of the Company)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001063018
<NAME> ISG RESOURCES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1.000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 19,905,671
<ALLOWANCES> 346,000
<INVENTORY> 4,820,453
<CURRENT-ASSETS> 26,906,698
<PP&E> 44,213,428
<DEPRECIATION> 9,060,658
<TOTAL-ASSETS> 223,404,027
<CURRENT-LIABILITIES> 17,424,575
<BONDS> 100,000,000
0
0
<COMMON> 0
<OTHER-SE> 24,001,388
<TOTAL-LIABILITY-AND-EQUITY> 223,404,027
<SALES> 24,467,256
<TOTAL-REVENUES> 32,518,204
<CGS> 19,121,080
<TOTAL-COSTS> 24,737,492
<OTHER-EXPENSES> 8,700,004
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,538,505
<INCOME-PRETAX> (4,409,182)
<INCOME-TAX> 1,248,765
<INCOME-CONTINUING> (3,160,417)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,160,417)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
