<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
LACLEDE STEEL COMPANY
_____________________________________________
For the Quarter Ended MARCH 31, 2000 Commission File Number 0-3855
DELAWARE 43-0368310
_________________________________________ ________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
440 NORTH 4TH STREET
SUITE 300
ST. LOUIS, MISSOURI 63102
_________________________________________ ________________________
(Address of principal executive office) (Zip Code)
(314) 425-1400
________________________________
(Registrant's Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days:
Yes [ X ]
No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
At March 31, 2000, the number of shares outstanding of the registrant's
only class of common stock was 4,056,140 shares with a par value of
$.01.
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PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
LACLEDE STEEL COMPANY
AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In Thousands Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
------------------------ ------------------------
2000 1999 2000 1999
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 58,040 $ 59,901 $ 117,449 $ 128,009
--------- -------- --------- ---------
Costs and expenses:
Cost of products sold 55,258 54,434 111,811 117,387
Selling and administrative expenses 2,690 2,893 5,620 6,110
Depreciation 1,508 1,541 3,013 3,184
Interest expense * 1,693 1,806 3,262 4,258
Other charges (credits) -- -- (373) 9,907
Total costs and expenses 61,149 60,674 123,333 140,846
--------- -------- --------- ---------
Reorganization costs 800 1,543 2,266 2,453
--------- -------- --------- ---------
Loss before income taxes (3,909) (2,316) (8,150) (15,290)
Provision for income taxes 87 112 62 94
--------- -------- --------- ---------
Net loss (3,996) (2,428) (8,212) (15,384)
Preferred stock dividend requirement -- (94) -- (188)
(Contractual dividends - $188 in first
half of 2000)
--------- -------- --------- ---------
Net loss - common shareholders $ (3,996) $ (2,522) $ (8,212) $ (15,572)
========= ======== ========= =========
Basic and diluted
net loss per share $ (0.98) $ (0.62) $ (2.02) $ (3.84)
========= ======== ========= =========
*Contractual Interest $ 2,237 $ 1,860 $ 4,350 $ 4,366
========= ======== ========= =========
</TABLE>
See Notes to the Consolidated Financial Statements
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LACLEDE STEEL COMPANY
AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
(Unaudited)
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
March 31, September 30,
ASSETS 2000 1999
-------------- --------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 205 $ 205
Accounts receivable, less allowances 32,242 37,956
Prepaid expenses 3,156 4,130
Inventories:
Finished 38,698 34,298
Semi-finished 9,013 7,082
Raw materials 8,432 4,627
Supplies 10,499 11,593
-------------- --------------
Total inventories 66,642 57,600
-------------- --------------
Total current assets 102,245 99,891
-------------- --------------
-------------- --------------
NON-CURRENT ASSETS 6,600 6,353
-------------- --------------
PLANT AND EQUIPMENT, At cost 218,733 218,327
Less - accumulated depreciation 135,991 134,500
-------------- --------------
Net plant and equipment 82,742 83,827
-------------- --------------
TOTAL $ 191,587 $ 190,071
============== ==============
</TABLE>
See Notes to the Consolidated Financial Statements
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LACLEDE STEEL COMPANY
AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
(Unaudited)
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Per Share Data)
<TABLE>
<CAPTION>
March 31, September 30,
LIABILITIES AND STOCKHOLDERS' DEFICIT 2000 1999
--------------- ----------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 13,919 $ 10,421
Accrued compensation 4,862 4,162
Current portion of long-term debt 63,682 61,877
Other 3,367 2,955
--------------- ----------------
Total current liabilities 85,830 79,415
--------------- ----------------
--------------- ----------------
NON-CURRENT LIABILITIES 7,595 6,392
--------------- ----------------
LIABILITIES SUBJECT TO COMPROMISE:
Accounts payable & accrued expenses 50,333 50,294
Accrued postretirement medical benefits 69,169 70,626
Accrued costs of pension plans 43,974 40,341
Long-term debt 25,990 25,990
Other 2,894 2,999
--------------- ----------------
Total liabilities subject to compromise 192,360 190,250
--------------- ----------------
STOCKHOLDERS' 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 59,420 59,420
Accumulated deficit (128,684) (120,472)
Minimum pension liability adjustment (25,058) (25,058)
--------------- ----------------
Total stockholders' deficit (94,198) (85,986)
--------------- ----------------
TOTAL $ 191,587 $ 190,071
=============== =================
</TABLE>
See Notes to the Consolidated Financial Statements
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LACLEDE STEEL COMPANY
AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In Thousands)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
--------------------------------------
2000 1999
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (8,212) $ (15,384)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 3,013 3,184
Gain on sale of facility (373) --
Reorganization items 2,266 2,453
Other charges -- 11,738
Change in deferred income taxes -- --
Changes in assets and liabilities that provided (used) cash:
Accounts receivable 5,714 3,746
Inventories (9,042) 4,633
Accounts payable and accrued expenses 3,639 4,887
Accrued pension cost 3,672 3,829
Pension cash funding -- (604)
Accrued postretirement medical benefits (1,457) (1,596)
Other assets and liabilities 2,059 1,777
-------------- --------------
Net cash provided by operating activities before Reorganization Items 1,279 18,663
-------------- --------------
Operating Cash Flow from Reorganization Items -
Bankruptcy related professional fees paid (1,324) (1,212)
-------------- --------------
Net cash provided by (used in) operating activities (45) 17,451
-------------- --------------
Cash flows provided by investing activities:
Capital expenditures (2,381) (482)
Proceeds from sale of assets 621 833
-------------- --------------
Net cash provided by (used in) investing activities (1,760) 351
-------------- --------------
Cash flows from financing activities:
Net borrowings (repayments) under bank facility 1,805 (17,637)
Payment of financing costs -- (100)
-------------- --------------
Net cash provided by (used in) financing activities 1,805 (17,737)
-------------- --------------
Cash and cash equivalents:
Net increase during the period -- 65
At beginning of year 205 192
-------------- --------------
At end of period $ 205 $ 257
============== ==============
</TABLE>
See Notes to the Consolidated Financial Statements
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LACLEDE STEEL COMPANY AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED
MARCH 31, 2000 AND 1999
1. GENERAL
The accompanying unaudited consolidated financial statements include the
accounts of Laclede Steel Company and its subsidiaries (the "Company").
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 results of operations for the six months ended March 31, 2000 are not
necessarily indicative of the results to be expected for the full fiscal
year ending September 30, 2000. The financial results for the fiscal year
ending September 30, 2000 are subject to annual audit. The Quarterly
Report on Form 10-Q should be read in conjunction with the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 1999.
2. BANKRUPTCY PROCEEDINGS
On November 30, 1998, as a result of deterioration in steel demand and
selling prices, recurring losses, capital deficiency and funding
requirements of its defined benefit pension plans, Laclede Steel Company
and subsidiaries filed voluntary petitions for reorganization under
Chapter 11 of the United States Bankruptcy Code (the "Code"). The Company
is operating as debtors-in-possession under the Code, which protects it
from its creditors pending reorganization under the jurisdiction of the
Bankruptcy Court. As a debtors-in-possession, the Company is authorized to
operate its business but may not engage in transactions outside the
ordinary course of business without approval of the Bankruptcy Court. A
statutory creditors committee has been appointed in this Chapter 11 case.
As part of the Chapter 11 reorganization process, the Company has
attempted to notify all known or potential creditors of the Chapter 11
filing for the purpose of identifying all prepetition claims against the
Company.
In the Chapter 11 case, substantially all of the liabilities as of the
filing date are subject to settlement under a plan of reorganization.
Generally, actions to enforce or otherwise effect repayment of all
prepetition liabilities as well as all pending litigation against the
Company are stayed while the Company continues its business operations as
debtors-in-possession. Schedules have been filed by the Company with the
Bankruptcy Court setting forth the assets and liabilities of the debtors
as of the filing date as reflected in the Company's accounting records.
Differences between amounts reflected in such schedules and claims filed
by creditors will be investigated and amicably resolved or adjudicated
before the Bankruptcy Court. The ultimate amount and settlement terms for
such liabilities are subject to a plan of reorganization, and accordingly,
are not presently determinable.
Under the Bankruptcy Code, the Company may elect to assume or reject real
estate leases, employment contracts, personal property leases, service
contracts and other executory pre-
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petition contracts, subject to Bankruptcy Court review. The Company cannot
presently determine or reasonably estimate the ultimate liability that may
result from rejecting leases or from filing of claims for any rejected
contracts, and no provisions have been made for the majority of these
items.
The Company expects the Pension Benefit Guaranty Corporation ("PBGC") to
assume its obligations under its defined benefit pension plans for its
salaried and hourly employees, which would result in the PBGC becoming one
of its largest unsecured creditors. The termination of these plans will be
an integral part of the plan of reorganization. As of November 30, 1998,
the Company had a significant unfunded obligation related to these pension
plans. The Company has made no contributions to the pension plans since
filing Chapter 11 on the basis that the Company believes prepetition
pension obligations can only be paid with Bankruptcy Court approval or as
part of a plan of reorganization. The disposition of the Company's
postretirement medical obligations has not as yet been finally determined
and these obligations have been included as liabilities subject to
compromise. Pursuant to the provisions of the Bankruptcy Code, the Company
continues to incur the cost of the postretirement medical plans. The
Bankruptcy Court has approved the payment of certain prepetition
liabilities such as employee wages and benefits. The Bankruptcy Court has
also allowed for the retention of legal and financial professionals. These
professional fees represent the majority of reorganization items recorded
in the consolidated statements of operations and, to the extent unpaid,
are liabilities not subject to compromise.
At the time of filing Chapter 11, the Company's receivables, inventory,
and certain plant and equipment were pledged as collateral under a Loan
and Security Agreement with a bank group. Subsequent to the filing, with
the approval of the Bankruptcy Court, the Company entered into an amended
Loan And Security Agreement with the banks (the "DIP Facility"), which
provides for borrowing up to $85 million. The DIP Facility provides for
revolving credit based on eligible receivables and inventory similar to
the previous Loan and Security Agreement. In addition, virtually all
assets of the Company have been granted as collateral to the Loan and
Security Agreement, except for certain assets of Laclede Chain
Manufacturing Company. As of March 31, 2000 the Company had unused
availability under the DIP Facility of approximately $3.6 million.
The Company's DIP Facility is scheduled to terminate on June 30, 2000.
As the result of delays in filing a plan of reorganization, the Company
does not anticipate exit from bankruptcy before the current expiration
date of the DIP Facility. Discussions have been held with the banks about
the extension of the DIP Facility under the same terms until September
30, 2000. While the Company expects that the termination date of the DIP
Facility will be extended, an agreement with the banks has not yet been
executed.
The Company is seeking financing to replace the DIP Facility and
provide additional security upon exit from bankruptcy ("exit financing").
However, at this time there can be no assurance that such financing will
be available. In the event such exit financing cannot be secured, the
Company may not be able to successfully reorganize.
The Company's consolidated financial statements have been prepared in
accordance with the American Institute of Certified Public Accountants
(AICPA) Statement of Position 90-7 (SOP 90-7), "Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code". In addition the
consolidated financial statements have been prepared using accounting
principles applicable to a going concern, which contemplates the
realization of assets and the payment of liabilities in the ordinary
course of business. As a result of the Chapter 11 filing, such
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<PAGE> 8
realization of assets and liquidation of liabilities is subject to
uncertainty. The financial statements include reclassifications made to
reflect the liabilities which have been deferred under the Chapter 11
proceedings as "Liabilities Subject to Compromise". Certain accounting and
business practices have been adopted that are applicable to companies that
are operating under Chapter 11.
The Company intends to present a plan of reorganization to the Bankruptcy
Court to reorganize the Company's businesses and to restructure the
Company's obligations. Under the provisions of the Bankruptcy Code, the
Company had the exclusive right to file such plan at any time during the
120-day period following November 30, 1998, which exclusive right has
been extended to May 15, 2000. Although the Company does not anticipate
requesting further extensions of the exclusivity period, circumstances
may cause the Company to request a further extension and, if so, there
can be no assurance that Bankruptcy Court would grant such further
extension. While management believes the Company has made adequate
provision for the liabilities to be incurred in connection with Chapter
11 claims, there can be no assurance as to the amount of the ultimate
liabilities, the impact of such liabilities on a plan of reorganization
or how such liabilities will be treated in a plan of reorganization. The
Company's continued existence is also dependent on its ability to achieve
future profitable operations, the assumption of the Company's obligations
under its defined benefit plans by the PBGC, continued compliance with
all debt covenants under the DIP Facility, and obtaining exit financing.
3. OTHER CHARGES (CREDITS)
Unusual charges (credits) in the six months included the following
(thousand of dollars):
<TABLE>
<CAPTION>
For the Six Months
Ended March 31,
------------------------
2000 1999
-------- --------
<S> <C> <C>
Sale of Madison, IL Facility ................. $ (373) $ --
Curtailment Loss on Pensions ................. -- 11,738
Lawsuit Settlement - Electrodes .............. -- (1,831)
-------- --------
Total ........................................ $ (373) $ 9,907
======== ========
</TABLE>
In December, 1999, the Company sold its Madison, Illinois facility for
$621,000 which resulted in a gain of $373,000.
Due to the probability that the hourly and salaried pension plans will be
terminated by the PBGC, the Company has recorded an $11,738,000
curtailment loss in the quarter ended December 31, 1998. The Company
recorded income of $1,831,000 in the December 31, 1998 quarter from
settlements in connection with class action lawsuits involving electrode
manufacturers.
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<PAGE> 9
4. PER SHARE DATA
Per share amounts have been calculated based on weighted average shares
outstanding of 4,056,140. Prior to the bankruptcy filing, net loss per
share was computed by dividing the net loss after deducting preferred
dividend requirements by the weighted average shares of common stock
outstanding.
5. SUSPENSION OF STEEL-MAKING OPERATIONS
On March 31, 2000, a structural failure occurred at the Company's Melt
Shop at its Alton Plant. While the operating furnace and related equipment
was not damaged, extensive damage was done to the structure of the
building and the surrounding area. In addition, furnace dust (K601), which
is regulated as hazardous waste, escaped from collapsed ductwork, but is
confined to the site.
As a result of this accident, steel production at the Alton Plant has been
suspended for an indefinite period of time. The Company has in place
property and environmental insurance, which after payment of the $100,000
deductible amount, it believes to be adequate to cover its losses. It also
maintains business interruption insurance for the period the electric melt
shop is out of service, which it believes to be adequate. However, the
claims process can be lengthy, and its outcome cannot be predicted with
certainty.
The suspension of operations affects only the steel production facilities
at the Alton Plant. All other operations, including finishing operations
at the Alton Plant, will continue, utilizing existing semi-finished and
finished inventories. In addition, the Company is in the process of
arranging for the purchase of semi-finished steel to support its bar and
pipe operations.
* * * * * *
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<PAGE> 10
ITEM 2.
LACLEDE STEEL COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The discussion and analysis below should be read in conjunction with the
unaudited consolidated financial statements of the Company and the notes to the
unaudited consolidated financial statements included elsewhere in the Form 10-Q.
As described in Note 2 to the unaudited consolidated financial statements, the
Company filed voluntary petitions for reorganization under Chapter 11 of the
United States Bankruptcy Code on November 30, 1998. For more information see
Note 2 as well as the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1999.
On March 31, 2000, a structural failure occurred at the Company's Melt Shop at
its Alton Plant. While the operating furnace and related equipment was not
damaged, extensive damage was done to the structure of the building and the
surrounding area. In addition, furnace dust (K601), which is regulated as
hazardous waste, escaped from collapsed ductwork, but is confined to the site.
As a result of this accident, steel production at the Alton Plant has been
suspended for an indefinite period of time. The Company has in place property
and environmental insurance, which after payment of the $100,000 deductible
amount, it believes to be adequate to cover its losses. It also maintains
business interruption insurance for the period the electric melt shop is out of
service, which it believes to be adequate. However, the claims process can be
lengthy, and its outcome cannot be predicted with certainty.
The suspension of operations affects only the steel production facilities at the
Alton Plant. All other operations, including finishing operations at the Alton
Plant, will continue, utilizing existing semi-finished and finished inventories.
In addition, the Company is in the process of arranging for the purchase of
semi-finished steel to support its bar and pipe operations.
The Company currently intends to present a plan of reorganization to the
Bankruptcy Court to reorganize the Company's businesses and to restructure the
Company's balance sheet at the earliest practicable date. Although management
expects to file a plan of reorganization, there can be no assurance at this time
that a plan of reorganization will be approved or confirmed by the Bankruptcy
Court, or that such plan will be consummated. The Bankruptcy Court has granted
the Company's request to extend its exclusive right to file a plan of
reorganization through May 15, 2000. Although the Company does not anticipate
requesting further extensions of the exclusivity period, circumstances may cause
the Company to request a further extension and, if so, there can be no assurance
the Bankruptcy Court would grant such further extension. If the exclusivity
period were to expire or be terminated, other interested parties, such as
creditors of the Company, would have the right to propose alternative plans of
reorganization. The Company currently intends to present a
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plan of reorganization that will eliminate existing preferred and common stock.
While the Company intends to propose some type of warrant or option interest in
the reorganized company for current stockholders in its plan of reorganization,
there can be no assurance that the Company's proposal will be accepted or, if
accepted, whether such warrant or option will have any material value.
Liquidity and Capital Resources
During the six months ended March 31, 2000, operating activities provided $1.3
million in cash reflecting increases in inventory of $9.0 million, decreases in
accounts receivable of $5.7 million, increases in accounts payable and accrued
expenses of $3.6 million, and increases in accrued pension cost of $3.7 million.
Cash flow used in financing activities consisted of a $1.8 million net increase
in revolving credit borrowings under the Company's bank facility.
Under the terms of the Bankruptcy case, liabilities in the amount of $192.4
million are subject to compromise under a plan of reorganization. Pursuant to
the provisions of the Bankruptcy Code and during the pendency of the Bankruptcy
proceeding, the Company does not intend to make contributions to its pension
plans. Generally, actions to enforce or otherwise effect repayment of all
prepetition liabilities as well as all pending litigation against the Company
are stayed while the Company continues its business operations as
debtors-in-possession. The ultimate amount and settlement terms for such
liabilities are subject to a plan of reorganization, and accordingly, are not
presently determinable.
The Company's projections indicate that availability under the
debtor-in-possession facility should be adequate to finance its operations until
exit from bankruptcy, assuming extension of the DIP Facility as discussed in
Note 2, no material reduction in the company's sales or no material increase in
overall costs of operations. In addition, the facility should be adequate to
finance all planned capital expenditures, which, under terms of the DIP
Facility, cannot exceed $2.7 million for the three months ending June 30, 2000.
Although the Company believes that anticipated cash flows from future
operations, proceeds from the melt shop insurance claim, and borrowings under
the DIP Facility should provide sufficient liquidity for the Company to meet its
debt service requirements, satisfy covenants under the DIP Facility and fund
ongoing operations, there can be no assurance these or other possible sources
will be adequate.
The Company is seeking financing to replace the DIP Facility and provide
additional liquidity upon exit from bankruptcy. However, at this time there
can be no assurance that such financing will be available. In the event such
exit financing cannot be secured, the Company may not be able to successfully
reorganize.
Results of Operations
Net Sales:
Net sales decreased by $1.9 million or 3.1% in the quarter ended March 31, 2000
compared to the same period of the prior year. Steel shipments decreased 7.0%
during the quarter ending March 31, 2000 compared to the prior year; however,
average sales prices for steel products increased slightly during the quarter
compared to the prior year.
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<PAGE> 12
Net sales decreased by $10.6 million or 8.2% in the six months ended March 31,
2000 compared to the same period of the prior year, as steel shipments decreased
3.7% and average sales prices for steel products decreased 2.4%.
Chain product sales sustained a 25.6% decrease in the six months ended March 31,
2000 compared to the same six months of the prior year. This was due to reduced
sales of anti-skid devices for trucks and automobiles, which were adversely
affected by a mild winter.
The cost of products sold increased 1.5% in the quarter ended March 31, 2000
compared to the same period of the prior year, despite the lower shipments
discussed above. This reflects a 25% increase in the cost of the Company's
principal raw material, ferrous scrap.
The cost of products sold decreased $5.6 million or 4.8% in the six months ended
March 31, 2000 compared to the same period of the prior year, reflecting lower
sales volume of steel and chain products, partially offset by higher scrap
prices.
Operating Expenses:
Selling and administrative expenses decreased from $6.1 million for the six
months ended March 31, 1999 to $5.6 million for the six months ended March 31,
2000, and from $2.9 million for the quarter ended March 31, 1999 to $2.7 million
for the quarter ended March 31, 2000, primarily as a result of reductions in the
salaried workforce.
The decrease of $1.0 million in interest expense in the first six months of
fiscal 2000 compared to the prior year is reflective of a decreased average
outstanding balance as well as the discontinuance on November 30, 1998 of
recording interest expense on unsecured and undersecured prepetition debt
pursuant to SOP 90-7. Contractual interest was $2.2 million and $1.9 million for
the quarters ended March 31, 2000 and 1999, respectively.
As discussed in Note 3, the Company recorded other credits of $373 thousand in
the six months ended March 31, 2000 relating to the sale of a facility, and
received proceeds from the settlement of a lawsuit of $1.8 million in the six
months ended March 31, 2000. Due to the probability that the hourly and salaried
pension plans will be terminated by the PBGC, the Company recorded an $11.7
million curtailment loss in the six-month period ended March 31, 1999. (See
Notes to the Unaudited Consolidated Financial Statements.)
Year 2000:
Y2K Subsequent Events - On December 31, 1999 the Company completed a systematic
shut down of its Alton Plant Operations and successfully completed a systematic
start-up on January 1, 2000 without any material effects to the Company or its
operations. As of May 10, 2000, no significant customer, vendor or operational
issues relating to year 2000 readiness have arisen that would have a material
effect on the Company, its operations, financial position, or cash flow in
future periods.
Based on the Company's current assessment, the costs of addressing potential
problems are not currently expected to have a material adverse impact on the
Company's financial position, results of operations or cash flows in future
periods. If the Company or its customers or vendors identify year 2000 issues in
the future, however, and are unable to resolve such issues in a timely manner,
it could
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<PAGE> 13
result in a material financial risk. Accordingly, the Company plans to devote
the necessary resources to resolve any remaining significant year 2000 issues in
a timely manner.
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 and previous reports, 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: statements regarding the overall demand for steel;
statements regarding the ability to maintain sales prices; statements regarding
productivity improvement programs; statements regarding the Company's
profitability; statements regarding future borrowing capacity; statements
regarding Year 2000 compliance and statements regarding future pension funding
requirements. In addition, statements containing expressions such as "believes,"
"anticipates" or "expects" used in the Company's periodic reports on Forms 10-K,
10-Q and 8-K filed with the SEC are intended to identify forward-looking
statements.
Forward-looking statements by the Company and its management are based on
estimates, projections, beliefs and assumptions of management and are not
guarantees of future performance. The Company disclaims any obligation to update
or revise any forward-looking statement based on the occurrence of future
events, the receipt of new information, or otherwise. 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, 10-Q and 8-K and 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 cost reduction and productivity improvement programs; increased
domestic or foreign steel competition; decreases in the market value of the
Company's qualified pension plan assets; increases in financing costs, labor
relations, and adverse developments in the timing or results from the Company's
current business plan.
Furthermore, the Chapter 11 bankruptcy filings introduce numerous uncertainties
which may affect the Company's businesses, results of operations and prospects.
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<PAGE> 14
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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 October 21, 1998. (Incorporated
by reference to Exhibit (3)(b) in Registrant's Form 10-K for
the Transition Period January 1, 1998 to September 30, 1998.)
(4)(a) Registrant's Postpetition Loan and Security Agreement dated
December 1, 1998. (Incorporated by reference to Exhibit (4)(e)
in Registrant's Form 10-K for the Transition Period January 1,
1998 to September 30, 1998.)
(4)(b) First Amendment to Postpetition Loan and Security Agreement
dated December 23, 1998. (Incorporated by reference to Exhibit
(4)(f) in Registrant's Form 10-K for the Transition Period
January 1, 1998 to September 30, 1998.)
(4)(c) Second Amendment to Postpetition Loan and Security Agreement
dated July 1, 1999. (Incorporated by reference to Exhibit (4)
(e) in Registrant's Quarterly Report on Form 10-Q for the
period ended June 30, 1999.)
(4)(d) Third Amendment to Postpetition Loan and Security Agreement
dated December 17, 1999. (Incorporated by reference to Exhibit
(4) (d) in Registrant's Form 10-K for the fiscal year ended
September 30, 1999.)
(b) Reports on Form 8-K. The following report on Form
8-K was recently filed:
On April 5, 2000 a report on Form 8-K, Item 5, was filed
reporting the results of a structural failure that occurred at
the Registrant's Alton, Illinois Melt Shop Facility
- 14 -
<PAGE> 15
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
- --------------------------------------------------------------------------------
/s/ Michael H. Lane
- --------------------------------------------------------------------------------
Michael H. Lane
Executive Vice President
Chief Financial Officer
Duly Authorized Officer and
Principal Financial Officer
Date: May 10, 2000
-------------------------------------------------
- 15 -
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