<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended January 31, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
------------------- ------------------
COMMISSION FILE NUMBER 333-59037
LODESTAR HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3903875
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
30 ROCKEFELLER PLAZA, SUITE 4225
NEW YORK, NEW YORK 10112
(Address of principal executive offices) (Zip Code)
(606) 255-4006
(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), and (2) has been subject to such
filing requirements for the past 90 days.
[X] YES [ ] NO
Number of shares outstanding of each of the registrant's classes of common
stock, as of March 17, 1999:
COMMON STOCK, $1.00 PAR VALUE 1000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C>
TABLE OF CONTENTS 1
PART I FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Consolidated Balance Sheets- January 31, 1999 and
October 31, 1998 2
Consolidated Statements of Operations - Three Months
Ended January 31, 1999 and 1998 3
Consolidated Statements of Cash Flows - Three Months
Ended January 31, 1999 and 1998 4
Notes To Consolidated Financial Statements 5
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 7
PART II OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURE 13
</TABLE>
1
<PAGE>
PART I FINANCIAL INFORMATION
ITEM I - FINANCIAL INFORMATION
LODESTAR HOLDINGS, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
January 31, 1999 October 31, 1998
---------------- ----------------
(in thousands, except share data)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 1,323 14,949
Accounts receivable 26,425 29,874
Inventories 12,107 9,550
Prepaid expenses and other 3,807 4,092
--------- -------
Total current assets 43,662 58,465
Property,plant and equipment, net 106,454 95,498
Coal and ash disposal contracts in excess of market net of
accumulated amortization of $5,741 and $5,058 41,067 41,750
Other assets 18,758 18,065
--------- -------
$ 209,941 213,778
--------- -------
--------- -------
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
Current installments of long-term debt $ 750 --
Accounts payable 22,725 25,161
Accrued expenses 26,230 32,411
--------- -------
Total current liabilities 49,705 57,572
Long-term debt, excluding current installments 155,056 150,000
Other non-current liabilities 45,203 40,789
--------- -------
Total liabilities 249,964 248,361
--------- -------
Stockholder's deficit:
Common stock, $1.00 par value. Authorized, issued and
outstanding 1,000 shares 1 1
Additional paid-in capital 5,000 5,000
Accumulated deficit (43,868) (38,428)
Accumulated other comprehensive loss - minimum
pension liability adjustment (1,156) (1,156)
--------- -------
Total stockholder's deficit (40,023) (34,583)
Commitments and contingencies
--------- -------
$ 209,941 213,778
--------- -------
--------- -------
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
2
<PAGE>
LODESTAR HOLDINGS, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------
January 31, 1999 January 31,1998
---------------- ---------------
(in thousands)
<S> <C> <C>
Coal sales and related revenue $ 57,430 71,588
Operating costs:
Cost of revenues 48,668 57,786
Depreciation, depletion
and amortization 6,969 5,964
General and administrative 2,544 2,565
------ ------
58,181 66,315
------ ------
Operating (loss) income (751) 5,273
Interest expense, net (4,690) (2,421)
------ ------
(Loss) income before income taxes (5,441) 2,852
Income taxes -- (1,141)
------ ------
Net (loss) income $ (5,441) 1,711
------ ------
------ ------
</TABLE>
The accompanying notes are an integral part of these consolidated statements of
operations.
3
<PAGE>
LODESTAR HOLDINGS, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------
January 31,1999 January 31,1998
--------------- ---------------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (5,441) 1,711
Adjustments to reconcile net income (loss) to
net cash from (used in) operating activities:
Depreciation, depletion and amortization 6,969 5,964
Loss on sale/disposal of property plant
and equipment 11 35
Amortization of deferred financing fees 270 159
Imputed interest 114 542
Changes in operating assets and liabilities:
Accounts receivable 3,449 1,787
Inventories (2,010) (2,239)
Prepaid expenses and other current assets 271 (2,806)
Other assets (1,052) 1,387
Accounts payable (2,436) (5,889)
Accrued expenses (6,941) 1,456
Other non-current liabilities (379) 972
------- -----
Net cash from (used in) operating
activities (7,175) 3,079
------- -----
Cash flows from investing activities:
Cost of acquisitions, net of liabilities
incurred (5,384) --
Capital expenditures (1,750) (985)
Proceeds from sales of property, plant and
equipment 683 7
------- -----
Net cash used in investing activities (6,451) (978)
------- -----
Cash flows from financing activities:
Principal payments on long-term obligations -- (983)
Increase in amounts due to related parties -- 341
------- -----
Net cash used in financing activities -- (642)
------- -----
Net increase (decrease) in cash (13,626) 1,459
Cash at beginning of period 14,949 3,056
------- -----
Cash at end of period $ 1,323 4,515
------- -----
------- -----
Supplemental cash flow disclosures:
Interest paid $ 8,625 1,679
------- -----
------- -----
Property, plant and equipment and inventory acquired
through debt incurred and liabilities assumed $ 11,246 --
------- -----
------- -----
</TABLE>
The accompanying notes are an integral part of these consolidated statements of
cash flows.
4
<PAGE>
LODESTAR HOLDINGS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months ended January 31, 1999 and 1998
(Unaudited - in thousands)
(1) Basis of Presentation
The accompanying consolidated financial statements have been prepared from
the accounting records of Lodestar Holdings, Inc. and its subsidiaries (the
Company), without audit pursuant to the rules and regulations of the
Securities and Exchange Commission. Lodestar Holdings, Inc. is a wholly
owned subsidiary of The Renco Group, Inc. (Renco). The consolidated
financial statements reflect all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management, necessary
for a fair statement of results for the interim periods presented. The
results of operations presented for the three month period ended January
31, 1999, are not necessarily indicative of the results to be expected for
the full year.
(2) Inventories
Inventories consist of the following at January 31,1999 and
October 31, 1998:
<TABLE>
<CAPTION>
January 31, October 31,
1999 1998
----------- -----------
<S> <C> <C>
Coal $ 8,891 6,067
Materials and supplies 3,216 3,483
------- -----
$12,107 9,550
------- -----
------- -----
</TABLE>
(3) Acquisition of Assets of Colonial Coal Company, Inc.
On January 15, 1999, Lodestar acquired coal inventory, mining rights,
leases of real property, and equipment from Colonial Coal Company, Inc.
(Colonial), a mining company in Eastern Kentucky. The consideration to
Colonial was $5,384 in cash paid at the closing, periodic deferred payment
obligations of $5,806, and the assumption of $5,440 in reclamation and
other liabilities.
5
<PAGE>
LODESTAR HOLDINGS, INC.
AND SUBSIDIARIES
(4) Subchapter S Corporation Election
On January 15, 1999, Renco filed an election with the consent of its
shareholders with the Internal Revenue Service to change its taxable status
from that of a subchapter C corporation to that of a subchapter S
corporation, effective November 1, 1998. At the same time, Renco elected
for the Company to be treated as a qualified subchapter S subsidiary
(QSSS). Most states in which the Company operates will follow similar tax
treatment. QSSS status requires the ultimate shareholders to include their
pro rata share of the Company's income or loss in their individual tax
returns. The Company will continue to provide for state and local income
taxes for the taxing jurisdictions which do not recognize QSSS status;
however, management believes this is not material to the Company.
(5) Commitments and Contingencies
A significant customer (the Customer) of the Company is involved in
litigation with the utility for which the Customer generates power. The
Customer is alleging underpayment by the utility pursuant to the contract
in place. The Customer's ability to meet its financial obligations,
including those under its contract with the Company, may be adversely
affected to the extent the Customer is not successful in its litigation. As
of January 31, 1999, the Company has receivables from the Customer totaling
$10,801 ($5,689 of which is classified as current and $5,112 of which is
classified long term). The Company also has contracts with the Customer to
sell coal and dispose of coal ash. These contracts were part of the
intangible asset recorded in connection with the March 14, 1997 purchase of
the capital stock of Costain Coal Inc. and its subsidiaries (subsequently
renamed Lodestar Energy, Inc.) by Lodestar Holdings, Inc. As of January 31,
1999, the net amount capitalized for these contracts with the Customer is
approximately $15,761. Management of the Company does not consider any loss
with regard to these assets probable or estimable at this time.
6
<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Lodestar Holdings, Inc. (the Company) was formed in August 1996 to acquire all
of the capital stock of Costain Coal Inc. from Costain America Inc. (the
Acquisition). The Acquisition, which was effective March 14, 1997, was accounted
for using the purchase method of accounting. After the Acquisition, Costain
Coal, Inc. was renamed Lodestar Energy, Inc. (Lodestar). On May 15, 1998 the
Company sold and issued (the Notes Offering) $150.0 million of 11.5% Senior
Notes due 2005 (the Notes).
Lodestar Holdings, Inc. is a holding company whose wholly owned direct and
indirect subsidiaries include Lodestar Energy, Inc., Eastern Resources, Inc. and
Industrial Fuels Minerals Company. These subsidiaries guarantee the Notes. The
assets, equity, income and cash flows of other non-guarantor subsidiaries are
inconsequential (I.E. individually and combined less than 3% of the Lodestar
Holdings, Inc. totals). Lodestar Holdings, Inc. has no operations or assets
separate from its investment in its subsidiaries. Accordingly, separate
financial information of the subsidiaries is not considered necessary to
include, as in management's opinion, it would not be material to investors.
The Company, through its wholly owned subsidiary Lodestar, is engaged in the
mining and marketing of bituminous coal used principally for the generation of
electricity, as well as for other industrial applications. As of January 31,
1999, Lodestar controlled the mineral rights through lease or ownership at
sixteen mines. Three of the mines are in Western Kentucky (all underground) and
thirteen in Eastern Kentucky (eight underground and five surface). Lodestar also
owns and operates an ash disposal facility in Eastern Kentucky. Lodestar's
Western Kentucky coal product is mid to high sulfur and competes primarily in
the regional utility market. Lodestar's Eastern Kentucky coal product, as
compared to its Western Kentucky coal product, is generally higher in energy (as
measured in British thermal units (Btu's)) content and lower in sulfur content,
and is marketed in the Eastern, South Central and Great Lakes regions of the
United States.
7
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED JANUARY 31, 1999 COMPARED WITH THREE MONTHS ENDED
JANUARY 31, 1998.
The following table summarizes the tons shipped by region and other operating
data for the Company for the periods presented.
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------
January 31, 1999 January 31, 1998
---------------- ----------------
( TONS IN THOUSANDS )
<S> <C> <C>
REGION
Eastern Kentucky 918 1,047
Western Kentucky 1,304 1,624
West Virginia -- 152
----- -----
Total 2,222 2,823
----- -----
OTHER OPERATING DATA:
Coal sales and related revenue per
ton shipped $ 25.85 25.36
Cost of coal sales and related
revenues per ton shipped $ 21.90 20.47
Coal sales revenue per ton shipped $ 23.38 23.27
Cost of coal sales revenues per
ton shipped $ 20.50 18.85
</TABLE>
COAL SALES AND RELATED REVENUE for the three months ended January 31, 1999 (the
1999 Period) were $57.4 million, a decrease of $14.2 million or 19.8% compared
to the three months ended January 31, 1998 (the 1998 Period). The related
revenue component was $5.5 million in the 1999 Period and $5.9 million in the
1998 Period, representing $.4 million of the total $14.2 million decrease. Coal
sales revenue decreased by $13.8 million, which primarily was the result of a
21.3% decrease in the volume of tons shipped. Coal sales revenue per ton shipped
was $23.38 in the 1999 Period compared to $23.27 in the 1998 Period. The 601,000
tonnage decline in coal shipped for the 1999 Period was due to reduced
production levels at the Western Kentucky Smith underground operations and the
closure of the Western Kentucky Smith surface operations and the West Virginia
mining operations. Additionally, Eastern Kentucky volume was slightly reduced
during the 1999 Period because three of the surface operations were being
developed, and had not reached full productive capacity.
COST OF REVENUES for the 1999 Period was $48.7 million, a decrease of $9.1
million or 15.8% compared to the 1998 Period. The $9.1 million reduction in
cost is primarily the result of 601,000 fewer sold tons during the 1999
Period, offset by an overall increase in the cost per ton shipped of $1.43
compared to the 1998 Period. The 1999 Period cost of revenues reflect the
benefit of a $2.8 million, or $1.26 per ton shipped, reduction in equipment
lease expense associated with the buyout of those obligations with the
proceeds of the Notes. Accordingly, adjusted for such benefit, cost of
revenues were $2.69 per ton higher during the 1999 Period. The most
significant factor contributing to the increased costs was a $3.31 increased
cost per ton at the Western Kentucky Baker mine, which accounted for 1.1
million tons shipped in both the 1998 and 1999 Periods. The higher
8
<PAGE>
costs were due to 2.8% less salable yield, lower productivity primarily
associated with thinner seams, and a $.8 million increase in the cost of
equipment repairs and maintenance. The costs per ton at the Eastern Kentucky
operations were substantially unchanged during the periods with the benefit of
the reduced lease expense being offset by higher mining ratios (cubic yards of
overburden removed to salable tons of coal produced) during the 1999 Period.
DEPRECIATION, DEPLETION, AND AMORTIZATION for the 1999 Period increased from the
1998 Period by $1.0 million. The primary reason for this increase was
depreciation as a result of capital equipment additions during the interim
twelve months including $27.5 million, which was capitalized in conjunction with
the buyout of leases with the proceeds of the Notes.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES during the 1999 Period decreased
slightly compared to the 1998 Period. There were no material variances between
the periods presented.
OPERATING INCOME (LOSS) decreased from income of $5.3 million during the 1998
Period to a loss of $.8 million during the 1999 Period primarily as a result of
the decrease in tons shipped and the increase in cost of revenues per ton
shipped.
INTEREST EXPENSE, NET was $4.7 million for the 1999 Period, an increase of $2.3
million over the 1998 Period, which reflects the impact of interest on the
Notes.
INCOME TAXES for the 1999 Period are $0 compared to $1.1 million for the 1998
Period. Due to the Company's change in tax status (See Note 4 of Notes to
Consolidated Financial Statements), the Company is generally not subject to
income taxes, and accordingly, no provision for income taxes has been recorded
during the 1999 Period.
NET INCOME (LOSS) decreased from income of $1.7 million during the 1998 Period
to a loss of $5.4 million during the 1999 Period as a result of the factors
described above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements arise from working capital requirements,
capital investments, interest payment obligations and costs of implementing its
business strategy to grow through strategic acquisitions. The Company's primary
source of liquidity is cash provided by operating activities. The Company also
has available a $120 million senior credit facility (the Senior Credit Facility)
that provides for advances by the lender to a maximum of $90.0 million, based on
specific percentages of eligible receivables and inventories, and for letters of
credit of up to $30.0 million, based on a percentage of appraised value of
equipment. As of January 31, 1999, the Senior Credit Facility was undrawn, and
$16.2 million of letters of credit were outstanding. Based upon eligible
collateral as of January 31, 1999, the net unused borrowing and letter of credit
availability on these credit lines was $25.1 million and $10.6 million,
respectively.
Cash used by the Company's operating activities for the 1999 Period was $7.2
million, compared to $3.1 million provided from the 1998 Period operating
activities. The $7.2 million used during the 1999 Period reflected the negative
impact on cash of a $7.9 million reduction in current liabilities, which
includes a $4.3 million reduction of accrued interest payable relative to the
Notes and a $2.4 million reduction of accounts payable.
9
<PAGE>
For the three months ended January 31, 1999, capital expenditures and the cost
of acquisitions funded with cash were $7.1 million. As of January 31, 1999, the
Company had capital expenditure commitments of approximately $5.6 million,
including $2.5 million for a replacement panline, which is a major component of
the Western Kentucky Baker longwall unit. This expenditure is expected to occur
in the third quarter of fiscal 1999. On average, management expects to spend
approximately $10.0 million to $15.0 million annually for capital expenditures,
of which approximately $7.0 million is required annually to maintain its current
level of operations. In fiscal 1999, the Company will expend approximately $5.0
million to acquire additional mobile equipment necessary for the mining of the
Eastern Kentucky Tug River properties acquired from Colonial. Therefore, total
capital expenditures for fiscal 1999 are expected to approximate $22.0 million.
The Company has significant indebtedness outstanding at January 31, 1999.
Management believes that cash flow from operations, in addition to availability
under the Senior Credit Facility, will be sufficient to provide for the
Company's liquidity needs for the foreseeable future. In addition, management
believes that such cash availability will be sufficient to finance projects that
will allow the implementation of its business strategy to grow through strategic
acquisitions. In general, it is expected that such projects would be financed
with specifically targeted available funds and would meet management's criteria
for cash self-sufficiency. There can be no assurance that the Company will be
successful in consummating such acquisitions.
The indenture governing the Notes and the Senior Credit Facility contains
numerous covenants and prohibitions that impose limitations on the liquidity of
the Company, including requirements that the Company satisfy certain financial
ratios and limitations on the incurrence of additional indebtedness. The ability
of the Company to meet its debt service requirements and to comply with such
covenants will be dependent upon future operating performance and financial
results which will be subject to financial, economic, political, competitive and
other factors affecting the Company, many of which are beyond its control.
ACQUISITION OF ASSETS OF COLONIAL COAL COMPANY, INC.
On January 15, 1999, Lodestar acquired inventory, mining rights, leases of real
property, and equipment from Colonial Coal Company, Inc. (Colonial), a mining
company in Eastern Kentucky, (See Note 3 of Notes to Consolidated Financial
Statements). The Company immediately began mining operations on the Tug River
properties acquired from Colonial. The mining of the Tug River properties will
result in utilization of certain mining equipment which was formerly deployed in
West Virginia.
YEAR 2000
The Company established an internal committee in 1998 responsible for monitoring
year 2000 (Y2K) compliance with respect to its business systems. The committee,
in conjunction with an independent consulting firm, has developed a detailed
work schedule, which was finalized in January 1999. Since the majority of the
Company's information systems have been recently developed, work to be performed
in that area will be minimal. The primary risk areas which are currently being
evaluated are the embedded systems affecting mining equipment, prep plant
systems, scale system interfaces, laboratory equipment, and other
facility-specific equipment. Testing will be prioritized based on evaluated
risk. Testing of the most critical areas is scheduled to be completed in April
1999, with all testing completed by July 1, 1999. Remediation efforts, which are
not expected to be of a material nature, have begun in the second quarter of
1999. Additionally, the Company is in the process of a comprehensive review of
third party Y2K compliance efforts of its most critical vendors and customers.
Although management believes that it is unlikely that its operations will be
disrupted, contingency plans are currently being developed to address the areas
in which potential disruptions
10
<PAGE>
could be most serious. All contingency plans will be finalized during the third
quarter of fiscal 1999. To accelerate the completion of its Y2K efforts, the
Company has recently revised the scheduled work plan to increase reliance on
third party consultants. This reliance on third parties has increased projected
expenditures to achieve Y2K compliance to between $.4 million and $.6 million,
dependent on the magnitude of required remediation efforts, and without
consideration of the internal labor costs, which are not expected to be
significant. As of January 31, 1999, approximately $145,000 has been spent in
Y2K compliance efforts.
EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 131, "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 131 changes the way public
companies report information about segments of their business in their annual
financial statements and requires them to report selected segment information in
their quarterly report to stockholders. This Statement requires that companies
disclose segment data based on how management makes decisions about allocating
resources to segments and measuring their performance. This Statement is
effective for the Company in its 1999 fiscal year. The Company does not expect
the implementation of this Statement to have a material effect on its
consolidated financial statements.
In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits." SFAS No. 132 revises employers'
disclosures about pension and other postretirement benefit plans. It does not
change the measurement or recognition of those plans. This Statement is
effective for the Company in its 1999 fiscal year. The Company does not expect
the implementation of this Statement to have a material effect on its
consolidated financial statements.
FORWARD - LOOKING STATEMENTS
This report includes "forward-looking statements," within the meaning of the
Private Securities Litigation Reform Act of 1995, which involve known and
unknown risks, uncertainties and other important factors that could cause the
actual results, performance or achievements of the Company to differ materially
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such risks, uncertainties and other important
factors include, among others: general economic and business conditions;
industry capacity; demand; industry trends, including coal pricing; competition;
the loss of any significant customers or long-term contracts; availability of
qualified personnel; major equipment failures; changes in, or failure or
inability to comply with, government regulation, including, without limitation,
environmental regulations; outcome of litigation; and other factors referenced
in this report. For a detailed discussion of these factors, please refer to the
information under the caption "Risk Factors" in the Company's Registration
Statement No. 333-59037 (effective November 12, 1998). These forward-looking
statements speak only as of the date of this report. The Company expressly
disclaims any obligation or undertaking to disseminate any updates or revisions
to any forward-looking statement contained herein to reflect any change in the
Company's expectations with regard thereto or any change in events, conditions
or circumstances on which any such statement is based.
11
<PAGE>
PART II. OTHER INFORMATION
Item 6 Exhibits and reports on Form 8-K
Exhibits:
A list of exhibits required to be filed as part of this Report Form
10-Q is set forth in the "Exhibit Index", which immediately precedes
such exhibits, and is incorporated herein by reference.
Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter for which this
report is filed.
12
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the under
signed thereunto duly authorized.
Lodestar Holdings, Inc.
(Registrant)
By: /s/ Michael E. Donohue
----------------------------------
MICHAEL E. DONOHUE
Vice President and Chief
Financial Officer
(duly authorized officer and
principal financial and
accounting officer)
Date: March 17, 1999
---------------------------------
13
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
EXHIBIT NO. DESCRIPTION
- ----------------- -----------------------
27 Financial Data Schedule
</TABLE>
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> JAN-31-1999
<CASH> 1,323
<SECURITIES> 0
<RECEIVABLES> 26,425
<ALLOWANCES> 0
<INVENTORY> 12,107
<CURRENT-ASSETS> 43,662
<PP&E> 148,602
<DEPRECIATION> 42,148
<TOTAL-ASSETS> 209,941
<CURRENT-LIABILITIES> 49,705
<BONDS> 150,000
0
0
<COMMON> 1
<OTHER-SE> (40,024)
<TOTAL-LIABILITY-AND-EQUITY> 209,941
<SALES> 57,430
<TOTAL-REVENUES> 57,430
<CGS> 48,668
<TOTAL-COSTS> 58,181
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,690
<INCOME-PRETAX> (5,441)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,441)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,441)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
