SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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 0-3855
LACLEDE STEEL COMPANY
(Exact name of Registrant as specified in its charter)
Delaware 43-0368310
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.
One Metropolitan Square, St. Louis, Missouri 63102
(Address of principal executive offices)
(Zip code)
314-425-1400
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if
changed since last report)
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.
Yes X No
As of July 31, 1998 there were 4,056,140 shares of $.01
par value common stock outstanding.<PAGE>
LACLEDE STEEL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Data)
Second Quarter EndeYear to Date
June 30, June 30,
1998 1997 1998 1997
Net sales 76,840 78,722 161,395 159,568
Costs and expenses:
Cost of products sold 76,718 71,180 154,356 145,050
Selling, general and adm. exp. 3,312 3,251 6,755 6,610
Depreciation 1,712 1,918 3,423 3,860
Interest expense, net 2,714 2,345 5,392 4,772
Unusual charges (credits) 25,434 -- 27,902 (987)
Total costs and expenses 109,890 78,694 197,828 159,305
Earnings (loss) before income taxes (33,050) 28 (36,433) 263
Provision for income taxes 32,418 19 31,073 119
Net earnings (loss) (65,468) 9 (67,506) 144
Preferred stock dividend requirement (93) (94) (187) (188)
Net loss - common shareholders (65,561) (85) (67,693) (44)
Basic and diluted
net loss per share (16.16) (0.02) (16.69) (0.01)
- 1 -
<PAGE>
LACLEDE STEEL COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In Thousands)
Jun. 30, Dec. 31,
1998 1997
Current Assets:
Cash and cash equivalents $ 195 $ 186
Accounts receivable, less allowances 38,024 40,282
Prepaid expenses 1,606 1,238
Inventories:
Finished 43,057 45,823
Semi-finished 16,833 18,166
Raw materials 6,047 4,681
Supplies 12,885 14,136
Total inventories 78,822 82,806
Total Current Assets 118,647 124,512
Non-Current Assets:
Intangible pension asset 13,167 14,652
Other intangible assets 2,047 2,119
Bond funds in trust 2,385 2,385
Prepaid pension contributions 1,895 5,441
Deferred income taxes -- 45,400
Notes receivable -- 3,396
Other 4,489 4,897
Total Non-Current Assets 23,983 78,290
Plant and Equipment, at cost 219,293 239,670
Less - accumulated depreciation 130,089 128,652
Net Plant and Equipment 89,204 111,018
Total Assets $ 231,834 $ 313,820
- - 2 -
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Jun. 30, Dec. 31,
1998 1997
Current Liabilities:
Accounts payable $ 47,309 $ 42,682
Accrued compensation 6,272 6,269
Current portion of long-term debt 1,085 1,085
Bank credit facility 83,966 1,271
Accrued costs of pension plans 13,577 13,577
Other 3,487 3,729
Total Current Liabilities 155,696 68,613
Non-Current Liabilities:
Accrued costs of pension plans 34,831 36,864
Accrued postretirement medical benefits 74,268 75,864
Other 2,691 2,221
Total Non-Current Liabilities 111,790 114,949
Long-Term Debt:
Bank credit facility -- 83,827
Revenue bonds 23,330 23,330
Other 2,000 2,000
Total Long-Term Debt 25,330 109,157
Stockholders' Equity (Deficit):
Preferred stock, no par value, authorized 2,000,000
shares; issued and outstanding 416,667 shares 83 83
Common stock, $0.01 par value, authorized 25,000,000
shares; issued and outstanding 4,056,140 shares 41 41
Capital in excess of par value 59,576 59,763
Accumulated deficit (82,813) (15,307)
Minimum pension liability adjustment (37,869) (23,479)
Total Stockholders' Equity (Deficit) (60,982) 21,101
Total Liabilities and Stockholders' Equity (Deficit) $ 231,834 $ 313,820
- 3 -
<PAGE>
LACLEDE STEEL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Six Months Ended
June 30,
1998 1997
Cash flows from operating activities:
Net earnings (loss) $(67,506) $144
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation 3,423 3,860
Other charges 4,889 --
Impairment loss - plant & equipment 21,362 --
Gain on sale of facility -- (987)
Change in deferred income taxes 31,010 60
Changes in assets and liabilities that
provided (used) cash, net of effects from sale of facility:
Accounts receivable 2,258 2,085
Inventories 3,984 1,726
Accounts payable and accrued expenses 4,270 (2,621)
Accrued pension cost 3,923 4,440
Pension cash funding (5,814) (5,957)
Accrued postretirement medical benefits (1,596) (1,100)
Other assets and liabilities 281 604
Net cash provided by operating activities 484 2,254
Cash flows from investing activities:
Capital expenditures (2,958) (771)
Proceeds from sale of equipment 3,625 --
Proceeds from sale of facility -- 9,319
Payment received on note from sale of facility -- 200
Net cash provided by investing activities 667 8,748
Cash flows from financing activities:
Net repayments under revolving credit (496) (9,285)
Payments on long-term debt (636) (1,717)
Payment of financing costs (10) (7)
Net cash used in financing activities (1,142) (11,009)
Cash and cash equivalents:
Net increase (decrease) during the period 9 (7)
At beginning of year 186 143
At end of period $195 $136
- - 4 -
<PAGE>
LACLEDE STEEL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(In Thousands Except Per Share Data)
6 Months Year
Ended Ended
Jun. 30, Dec. 31,
1998 1997
Preferred stock
(416,667 shares issued)
Beginning balance $ 83 $ 83
Sale of convertible preferred stock -- --
Ending balance 83 83
Common stock - $0.01 par value
(4,056,140 shares issued)
Beginning balance 41 41
Change in period -- --
Ending balance 41 41
Capital in excess of par value
Beginning balance 59,763 60,138
Dividend on convertible preferred stock (187) (375)
Ending balance 59,576 59,763
Accumulated deficit
Beginning balance (15,307) (12,300)
Net loss (67,506) (3,007)
Ending balance (82,813) (15,307)
Minimum pension liability
Beginning balance (23,479) (30,717)
Change in period (14,390) 7,238
Ending balance (37,869) (23,479)
Total Stockholders' Equity (Deficit) at End
Of Period $(60,982) $ 21,101
- - 5 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The accompanying unaudited consolidated financial statements
include the accounts of Laclede Steel Company and its wholly-owned
subsidiaries. All intercompany accounts and transactions
have been eliminated. The consolidated financial statements
reflect all adjustments (such adjustments are of a normal
recurring nature unless otherwise disclosed in these interim
financial statements) which are in the opinion of Management
necessary for a fair statement of the results for the interim
periods.
The financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.
The Company's continuation as a going concern is dependent upon
its ability to generate sufficient cash flow to meet its
obligations on a timely basis. The Company's ability to
generate such cash flow requires it to (a) maintain and comply
with the terms of its Loan and Security Agreement; (b) maintain
sales levels; (c) avoid significant sales price decreases; (d)
reduce costs and improve operating performance; and (e)
successfully implement significant portions of its
restructuring plan. Refer to Item 2 - Management's Discussion
and Analysis for discussion of the Company's restructuring
plan.
NOTE 2 - UNUSUAL CHARGES (CREDITS)
Unusual charges in the second quarter and first half of 1998
include the following (millions of dollars):
Second First Six
Quarter Months
Impairment Loss - HTMR Facility $15.4 $15.4
Impairment Loss - Memphis Plant 6.0 6.0
Retirement of Executive Officers
and Severance Pay 2.7 4.9
Restructuring Expenses 1.3 1.6
$25.4 $27.9
In December 1997, the Company idled its High Temperature Metal
Recovery facility ("HTMR") after the facility became inoperable
due to an accident. This facility was used to dispose of the
EAF dust generated in the Melt Shop at the Alton Plant. During
1998, the Company has disposed of the EAF dust through
alternative methods. Management has completed an evaluation of
the HTMR facility to determine the economic feasibility of
repairing and operating the unit, and determined that the HTMR
unit currently cannot function on an economically feasible
basis. Therefore an impairment loss of $15.4 million has been
recorded in the second quarter of 1998. The impairment loss
for the Memphis Plant is related to the decision to consolidate
- 6 -<PAGE>
Wire Operations at the Fremont Plant and shut down the Memphis
Plant. The assets of the Memphis Plant have been made
available for sale; operations will be discontinued by the end
of the third quarter.
Charges for retirements and severance pay include approximately
$2.6 million and $4.7 million respectively, in the second
quarter and first six months of 1998 related to former officers
of the Company. The majority of these charges are non-cash in
nature and are related to the accounting requirements for the
Key Employee Retirement Plan. Restructuring expenses include
consulting fees incurred in connection with the Company's
restructuring plan, and non-cash accounting accruals related to
the Company's sub-lease of a portion of its Corporate office
space.
In February 1997, the Company sold the assets of its electric
weld structural and mechanical tubing operation, located in
Benwood, West Virginia. Cash proceeds from the sale of these
assets, which consist primarily of equipment and inventory,
totaled approximately $11.0 million. This transaction resulted
in a gain on sale of equipment of $987 thousand recorded in
February 1997.
NOTE 3 - INCOME TAXES
At March 31, 1998 the Company had net deferred tax assets of
$46.7 million. Statement of Financial Accounting Standards No.
109 "Accounting for Income Taxes" requires that deferred tax
assets be reduced by a valuation allowance if it is more likely
than not that some portion or all of the deferred tax assets
will not be realized. In evaluating the deferred tax asset at
December 31, 1997 and March 31, 1998, Management believed that
Company-wide cost reductions and productivity improvements
previously implemented would return the Company to
profitability in 1998. However, in view of the operating
losses reported for the second quarter of 1998, Management no
longer anticipates profitable operations for the year 1998.
Furthermore 1998 will be the Company's fourth successive loss
year. Therefore a valuation allowance of $46.7 million has
been recorded in the second quarter of 1998, of which $32.4
million is reported as a provision for income taxes. The
remaining portion, which relates to the minimum pension
liability adjustment, has been reported as an adjustment to
stockholders' equity.
NOTE 4 - PER SHARE DATA
Per share amounts have been calculated based on weighted
average shares outstanding of 4,056,140. Net loss per share
for 1998 and 1997 were computed by dividing the net earnings
after deducting preferred dividend requirements by the weighted
average shares outstanding.
The financial results for 1998 are subject to annual audit.
- 7 -<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
In the first half of 1998 operating activities provided $0.5
million in cash. Net losses, after adjustment for depreciation,
unusual charges and the valuation allowance for deferred income
taxes, used $6.8 million in cash. This was offset by accounts
receivable and inventory decreases totaling $6.2 million, and
increases in accounts payable and accrued expenses of $4.3
million.
In January 1998 the Company completed the sale and leaseback
transaction for the Ladle Metallurgy Facility at the Alton Plant.
This final step of the sale and leaseback transaction provided
the Company with $3.6 million in cash.
At June 30, 1998, $76.0 million in borrowings were
outstanding under the Company's revolving credit portion of its
bank credit facility, with unused availability of $1.5 million.
Amounts available under this facility were utilized early in the
third quarter of 1998 to cover outstanding short-term
commitments, primarily trade accounts payable.
As a result of the losses reported in the second quarter, it
was necessary for the Company to amend its Loan and Security
Agreement ("Loan Agreement") with its Banks to obtain a waiver of
financial covenant violations relating to operating results and
net worth. The Company was able to obtain the waiver, and has
reached agreement with its Banks on a revised total credit
facility of $85.0 million, including new financial covenants for
the second half of 1998. The amendment to the Loan Agreement
provides that financial covenants for periods after December 31,
1998 are to be reset based on financial information available
later in the year. Because the financial covenants have not as
yet been determined for periods after December 31, 1998 the
Company is unable to demonstrate that it expects to be in
compliance with the Loan Agreement for periods after December 31,
1998. Therefore in accordance with SEC and accounting
regulations the Company has classified amounts due under the Loan
Agreement as a current liability.
Management now believes that the Company will not have
operating profits for 1998. As a result, the Company has
developed a restructuring plan to improve operating results and
enhance financial flexibility. The plan includes actions to
increase short-term cash flow as well as a program to reorganize
operations and improve operating efficiency for the long-term.
- 8 -<PAGE>
The Company has held discussions with certain trade
creditors with regard to outstanding accounts payable balances.
The terms of repayment have not yet been finalized, but the
Company anticipates that amortization will not begin until the
second quarter of 1999. These creditors are continuing to supply
materials to the Company.
The plan to reorganize operations and improve operating
efficiencies includes the consolidation of Wire and Tubular
Operations, improvement in operations in the Melt Shop and Bar
Mill at the Alton Plant, and consolidation of certain
administrative functions. As a first step, in May 1998 the Board
of Directors approved the program to consolidate Wire Operations
by authorizing the shutdown of the Memphis Wire Plant and the
transfer of all oil tempered wire production to the Fremont
facility. The Memphis Wire Plant has incurred significant losses
over the past several years.
The Company's tubular products are currently produced at the
Alton and Fairless Plants, with finishing operations also
performed at the Vandalia Plant. With current production and
shipping requirements, the Alton and Fairless Plants are each
operating at levels substantially below capacity. Management is
studying a plan to consolidate pipe-making operations, at either
the Alton or Fairless Plants, in order to improve production
efficiencies and reduce the overall costs. The Company has also
made changes in the senior management of the tubular products
group.
The Company is also developing a program to improve the
operating efficiency of the Melt Shop and 14" Bar Mill at the
Alton Plant. Realization of these improvements will require the
cooperation of the United Steelworkers' Union and the Company is
discussing the situation with the Union on an ongoing basis.
The Company recently agreed to a sub-lease of approximately
one-half of its corporate office space. As a result a number of
sales and administrative positions have been relocated to the
Alton Plant, improving efficiency and lowering corporate overhead
costs.
The Company's continuation as a going concern is dependent
upon its ability to generate sufficient cash flow to meet its
obligations on a timely basis. The Company's ability to generate
such cash flow requires it to (a) maintain and comply with the
terms of its Loan Agreement; (b) maintain sales levels; (c) avoid
significant sales price decreases; (d) reduce costs and improve
operating performance; and (e) successfully implement significant
portions of its restructuring plan. While every effort is being
made to accomplish the above, there can be no assurance that it
will be successful.
- 9 -<PAGE>
By letter dated August 4, 1998, Nasdaq informed the Company
that its Common Stock would be removed from the Nasdaq National
Market System if the continued listing requirements are not met
by the Company or a plan for the Company's prompt compliance is
not submitted to Nasdaq on or before August 18, 1998. Current
Nasdaq NMS continued listing requirements include the requirement
that an issuer maintain net tangible assets of at least $4.0
million. Consequently the Company currently is out of compliance
with the listing requirements and the Company does not anticipate
that it will remain on the Nasdaq system.
When the Company is removed from the Nasdaq system, trading
in the Common Stock will thereafter be conducted in the over-the-counter market
on an electronic bulletin board established for
securities that do not meet the Nasdaq inclusion requirements, or
alternatively in what are commonly referred to as the "pink
sheets". As a result, an investor will find it more difficult to
dispose of, or to obtain accurate quotations as to the price of
the Company's securities. Consequently, removal from the Nasdaq
system could affect the ability or willingness of broker-dealers
to sell the Company's securities and the ability of purchasers of
the Company's securities to sell their securities in the
secondary market.
Results of Operations
Net sales increased by $1.8 million or 1.1% in the first
half of 1998 compared to the first half of 1997, primarily as a
result of a 3.0% increase in steel shipments. The cost of
products sold increased by $9.3 million or 6.4% in the first half
of 1998 compared to the first half of 1997, reflecting higher
shipments and higher production costs discussed below.
Net sales decreased by $1.9 million or 2.4% in the second
quarter of 1998 versus the 1997 second quarter, primarily as the
result of a weaker product mix. The second quarter cost of
products sold increased by $5.5 million or 7.8%, reflecting the
higher production costs discussed below.
A decline in contribution from the tubular product line was
the single most important factor in the operating losses reported
for the second quarter and first six months of 1998. A decrease
in average selling prices, as well as production inefficiencies
partially related to an inventory reduction program, adversely
affected performance.
In the second quarter of 1998 a decision was made to
increase maintenance expenditures above normal levels at the
Alton Plant in an effort to improve equipment reliability on an
ongoing basis. These unbudgeted maintenance expenditures were
- 10 -<PAGE>
charged to operating expenses in the second quarter. The
contribution from Chain operations in the first half of 1998 was
significantly below 1997, reflecting lower sales of traction
chain products related to a poor winter season. An increase in
average selling prices improved the contribution from SBQ Bars in
the first half of 1998.
The unusual charges in the second quarter and first half of
1998, summarized in Note 2 to the Consolidated Financial
Statements, are partially related to the Company's overall plan
to improve cash flow, strengthen the balance sheet and enhance
financial flexibility discussed under Liquidity and Capital
Resources.
The increase in interest expense in the first half of 1998
is the result of the increase in average bank borrowings
outstanding, and a slight increase in average interest rates.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions
of the Private Securities Litigation Reform Act of 1995
The foregoing Management's Discussion and Analysis and other
portions of this report on Form 10-Q, contain various "forward-looking
statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Sections 21E of the
Securities Exchange Act of 1934, as amended, which represent the
Company's expectations or beliefs concerning future events,
including the following: the overall demand for steel; the
ability to maintain sales prices; productivity improvement
programs; increases in the costs of ferrous scrap; increases in
pension costs; increases in other materials and costs of
production; increases in financing costs; labor relations;
increased domestic or foreign steel competition; the Company's
long-term profitability; and future borrowing capacity. In
addition, statements containing expressions such as "believes,"
"anticipates" or "expects" used in the Company's periodic reports
on Forms 10-K and 10-Q filed with the SEC are intended to
identify forward-looking statements. The Company cautions that
these and similar statements included in this report and in
previously filed periodic reports including reports filed on
Forms 10-K and 10-Q are further qualified by important factors
that could cause actual results to differ materially from those
in the forward-looking statement, including, without limitation,
the following: decline in sales prices for steel products;
increases in the cost of steel scrap; failure to obtain
significant benefits from the Company's completed cost reduction
and productivity improvement programs; increases in pension costs
and funding requirements; increased domestic or foreign steel
competition; future borrowing capacity; and failure of the
Company to implement significant portions of its restructuring
plan.
- 11 -<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(3)(a) Registrant's Certificate of Incorporation as
restated October 28, 1996. (Incorporated by
reference to Exhibit (3) in Registrant's Quarterly
Report on Form 10-Q for September 30, 1996.)
(3)(b) By-laws of Registrant amended December 19, 1997.
(Incorporated by reference to Exhibit (3)(b) in
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997.)
(4)(a) Registrant's Loan and Security Agreement dated as
of September 7, 1994 amended and restated as of
August 20, 1997. (Incorporated by reference to
Exhibit (4)(a) in Registrant's Quarterly Report on
Form 10-Q for September 30, 1997.)
(4)(b) First Amendment dated December 30, 1997 to the
Company's Restated Loan and Security Agreement.
(Incorporated by reference to Exhibit (4)(b) in
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997.)
(4)(c) Second Amendment effective March 27, 1998 to the
Company's Restated Loan and Security Agreement.
(Incorporated by reference to Exhibit (4)(c) in
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997.)
(10)(a) Second Amendment to Restated Employment Agreement
dated as of July 29, 1998, between Laclede Steel
Company and Michael H. Lane.
- 12 -<PAGE>
Instruments with respect to long-term debt issues
have been omitted where the amount of securities
authorized under such instruments does not exceed
10% of the total consolidated assets of the
Registrant. Registrant hereby agrees to furnish a
copy of any such instrument to the Commission upon
its request.
(b) Reports on Form 8-K.
Form 8-K dated July 30, 1998 reporting on Item 5 -
Other Events as stated in a Press Release dated
July 30, 1998 and on Item 7 - Financial
Statements, Pro Forma Financial Information and
Exhibits.
Form 8-K dated August 6, 1998 reporting on Item 1
- Changes in Control of Registrant
- 13 -<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and
Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LACLEDE STEEL COMPANY
(Registrant)
/s/ Michael H. Lane
Michael H. Lane
Vice President - Finance
Treasurer and Secretary
Duly Authorized Officer and
Principal Financial Officer
Date: August 13, 1998
SECOND AMENDMENT TO RESTATED
EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT TO RESTATED EMPLOYMENT AGREEMENT
("Second Amendment") is made and entered into as of the 29th day
of July, 1998, by and between LACLEDE STEEL COMPANY, a Delaware
corporation ("Employer"), and MICHAEL H. LANE ("Employee").
WHEREAS, Employee and Employer previously entered into
an employment agreement as of the 19th day of October, 1994 that
was restated on the 30th day of July, 1996 ("Restated Employment
Agreement"); and
WHEREAS, the Restated Employment Agreement was
previously amended by an Amendment To Restated Employment
Agreement as of the 24th day of March, 1998 (the "First
Amendment"); and
WHEREAS, Employee and Employer desire to further amend
the Restated Employment Agreement as previously amended by the
First Amendment by making the amendments stated herein and as
amended, to reaffirm Employee's Restated Employment Agreement;
and
WHEREAS, Employee and Employer desire to set forth the
terms of Employee's continued employment with Employer, the terms
of the separation of Employee from Employer's employ at the end
of such employment and the terms of the timing of the payment of
Employee's Accrued Benefit under Employee's KERP as such terms
are hereinafter defined;
NOW, THEREFORE, in consideration of the foregoing and
the promises and agreements herein contained, the parties agree
as follows:<PAGE>
1. Employee shall continue as Vice-President Finance,
Treasurer & Secretary and as Chief Financial
Officer.
2. The termination date of Employee's employment
under Employee's Restated Employment Agreement
shall be December 31, 1999 ("Agreement Termination
Date").
3. Notwithstanding Employee's Agreement Termination
Date, anything contained in Employee's Key
Employee Retirement Agreement with Employer
(Employee's "KERP"), the Restated Employment
Agreement as amended by the First Amendment or
this Second Amendment, Employer and Employee agree
that on the first business day after Employee
ceases for any reason to be a full time employee
of the Company (Employee's "KERP Payment Date")
Employer shall authorize in writing the Trustee of
Employee's KERP to pay to Employee in a lump sum
in kind all amounts owed to Employee pursuant to
Employee's KERP. Until Employee's KERP Payment
Date, Employee shall be considered an active
employee of Employer.
4. Paragraph 5 of the First Amendment is hereby
deleted in its entirety.
5. In addition, if Employee shall remain an employee
of Employer through the Agreement Termination Date
or if Employee shall be terminated by Employer
without "cause" prior to the Agreement Termination
Date then Employer shall pay Employee two (2)
severance payments each of which shall be equal to
the sum of six (6) Monthly Payments reduced by
applicable employment taxes (the "Severance
Payments"). The first Severance Payment shall be
paid on January 2, 2000 and the second Severance
Payment shall be paid on April 1, 2000.
6. As amended by the First Amendment and subsequently
amended by this Second Amendment the Restated
Employment Agreement is hereby ratified in all
respects. If any provision of this Second
Amendment is inconsistent with any provision of
the Restated Employment Agreement as amended by
the First Amendment, then such provision of this
Second Amendment shall govern.
IN WITNESS WHEREOF, the parties hereto have executed
this Amendment as of the day and year first above
written.
______________________________
Michael H. Lane
"Employee"
LACLEDE STEEL COMPANY
By: __________________________
Thomas E. Brew, Jr. President
"Employer"<PAGE>
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<PERIOD-START> JAN-1-1998
<PERIOD-END> JUN-30-1998
<PERIOD-TYPE> 6-MOS
<CASH> 195
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0
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