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 QUARTER ENDED SEPTEMBER 27, 1997
OR
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 1-3258
LUKENS INC.
50 South First Avenue
Coatesville, PA 19320-0911
(610) 383-2000
Incorporated in Delaware
I.R.S. Employer Identification Number 23-2451900
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
SHARES OUTSTANDING AS OF OCTOBER 31, 1997
Common Stock, $.01 Par Value, 14,941,227
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Statements of Earnings
(Dollars and shares in thousands except per share amounts)
<TABLE>
<CAPTION>
THIRD QUARTER YEAR-TO-DATE
Thirteen Weeks Ended Thirty-nine Weeks Ended
September 27, September 28, September 27, September 28,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net Sales $ 243,371 234,421 749,736 754,548
Operating Costs and Expenses
Cost of products sold 225,583 223,192 697,673 711,999
Selling and administrative expenses 12,210 13,089 37,622 40,955
Unusual item - work force reduction provision -- -- -- 10,782
--------- --------- --------- ---------
Total operating costs and expenses 237,793 236,281 735,295 763,736
Operating Earnings (Loss) 5,578 (1,860) 14,441 (9,188)
Interest expense 4,932 4,135 14,464 12,030
--------- --------- --------- ---------
Earnings (Loss) Before Income Taxes 646 (5,995) (23) (21,218)
Income tax expense (benefit) (Note 5) 513 (1,908) 641 (7,023)
--------- --------- --------- ---------
Net Earnings (Loss) $ 133 (4,087) (664) (14,195)
--------- --------- --------- ---------
Dividend requirements for preferred stock (504) (499) (1,504) (1,495)
Net Earnings (Loss) Applicable to Common Stock $ (371) (4,586) (2,168) (15,690)
--------- --------- --------- ---------
Earnings (Loss) Per Common Share
Primary $ (.03) (.31) (.15) (1.06)
Fully diluted $ (.03) (.31) (.15) (1.06)
Common Shares and Equivalents Outstanding
Primary 14,807 14,796 14,806 14,778
Fully diluted 16,240 16,258 16,247 16,286
Cash Dividends on Common Stock - Per Share (Note 6) $ .50 .50 1.00 1.00
--------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these statements.
1
<PAGE>
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
September 27, December 28,
1997 1996
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 4,549 10,282
Receivables, less allowance of $7,622 in 1997 and $7,750 in 1996 122,574 92,356
Inventories
Products finished and in process 131,292 116,477
Raw materials 26,785 27,762
Supplies 5,076 4,686
--------- ---------
163,153 148,925
Deferred income taxes (Note 5) 13,724 13,129
Prepaid expenses and other 1,487 1,964
--------- ---------
Total current assets 305,487 266,656
Plant and Equipment 965,507 953,753
Less accumulated depreciation 455,562 420,427
--------- ---------
Net plant and equipment 509,945 533,326
Intangible Assets, net of accumulated amortization of $10,776 in 1997
and $9,114 in 1996 54,455 57,158
Deferred Income Taxes (Note 5) 32,886 29,937
Other Assets 1,319 1,674
--------- ---------
Total Assets $ 904,092 888,751
--------- ---------
Liabilities and Stockholders' Investment
Current Liabilities
Accounts payable $ 91,857 92,252
Accrued employment costs 46,640 46,603
Other accrued expenses (Note 7) 29,562 23,765
Current maturities of long-term debt 5,949 4,878
--------- ---------
Total current liabilities 174,008 167,498
Long-Term Debt (Note 4) 272,050 248,695
Retirement Benefits
Pensions 47,479 43,995
Medical and life insurance 149,929 148,479
Other Liabilities (Note 7) 16,494 22,015
--------- ---------
Total liabilities 659,960 630,682
Commitments and Contingencies (Note 7)
Redeemable Stock
Series preferred stock, 1,000,000 shares authorized
Series B ESOP convertible preferred
(470,862 shares outstanding in 1997 and 480,018 in 1996) 28,252 28,801
Deferred compensation - ESOP (12,188) (15,374)
--------- ---------
Total redeemable stock 16,064 13,427
Stockholders' Investment
Common stock, 40,000,000 shares authorized and 15,813,259 issued 158 158
Capital in excess of par value (Note 3) 87,174 86,002
Earnings invested (Note 6) 154,615 171,730
Foreign currency translation adjustments (1,307) (1,332)
Deferred compensation - restricted stock (Note 3) (2,294) --
Repurchased stock, at cost (872,032 shares in 1997 and 1,010,988 in 1996)
(Note 3) (10,278) (11,916)
--------- ---------
Total stockholders' investment 228,068 244,642
--------- ---------
Total Liabilities and Stockholders' Investment $ 904,092 888,751
--------- ---------
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE>
Consolidated Statements of Cash Flows
(Dollars in thousands)
<TABLE>
<CAPTION>
YEAR-TO-DATE
Thirty-nine Weeks Ended
September 27, September 28,
1997 1996
<S> <C> <C>
Operating Activity
Net earnings (loss) $ (664) (14,195)
Adjustments to Reconcile Net Earnings (Loss) to
Cash Flow (Used for) From Operating Activity
Depreciation and amortization 38,760 36,940
Income taxes deferred (679) (10,713)
Provision for uncollectible accounts 4,260 5,329
Retirement benefit funding less than expense 5,459 12,959
Changes in working capital affecting operations
Accounts receivable (30,856) 11,316
Inventories (14,228) 14,064
Prepaid expenses and other 477 (1,177)
Accounts payable (4,086) (28,793)
Accrued expenses (6,253) (12,517)
Other, net (62) 1,615
-------- --------
Cash flow (used for) from operating activity (7,872) 14,828
Financing Activity
Long-term debt
Proceeds from issuance of notes -- 74,538
Other borrowed 27,800 --
Other repaid (271) (34,664)
Dividends paid (12,817) (12,854)
Proceeds from stock options exercised -- 802
Other, net -- (537)
-------- --------
Net from financing activity 14,712 27,285
Investing Activity
Capital expenditures (13,948) (45,590)
Proceeds from sale of assets/subsidiaries 996 420
Other, net 379 (912)
-------- --------
Net for investing activity (12,573) (46,082)
Cash and Cash Equivalents
Increase (decrease) (5,733) (3,969)
Start of period 10,282 11,056
-------- --------
End of period $ 4,549 7,087
-------- --------
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share amounts)
1. Basis of Presentation
The financial statements are unaudited but reflect all adjustments
(consisting of normal recurring accruals) which are, in the opinion of
management, necessary to a fair statement of the results for the interim
periods presented. The preparation of our financial statements in
conformity with generally accepted accounting principles requires estimates
and assumptions that affect the reported amounts and contingency
disclosures. These financial statements should be read in conjunction with
the financial statements and related notes in the 1996 Annual Report to
Stockholders. Results from any interim period are not necessarily
indicative of the results for a full year.
2. Future Accounting Changes
In February 1997, Statement of Financial Accounting Standards (SFAS) No.
128, "Earnings per Share," was issued. This statement specified the
computation, presentation and disclosure requirements for earnings per
share (EPS). The main objectives of the statement were to simplify the EPS
calculation and to make EPS comparable on an international basis. Effective
in the 1997 Annual Report, primary and fully diluted EPS will be replaced
by basic and diluted EPS. Prior period results will be restated. A
significant difference is that basic EPS no longer assumes potentially
dilutive securities in the computation. Calculating EPS under the new
method would have an immaterial impact on 1996 and 1997 EPS figures.
In 1997, Lukens will also adopt SFAS No. 129, "Disclosure of Information
about Capital Structure." This statement was issued in conjunction with the
earnings per share statement discussed above and was intended to centralize
capital structure disclosure requirements and to expand the number of
companies subject to the requirements. Since we were in compliance with the
existing capital structure disclosure requirements, we do not expect to
materially change our disclosures under the new standard.
In June 1997, SFAS No. 130, "Reporting Comprehensive Income," was released.
Comprehensive income is a concept that includes the total of net earnings
(loss) reported in the Consolidated Statements of Earnings, plus revenues,
expenses, gains and losses that are recognized directly in the
stockholders' investment section of the Consolidated Balance Sheets. The
purpose of the statement was to more prominently highlight comprehensive
income items and to report a total amount for a reporting period. Effective
in 1998, Lukens will be required to disclose comprehensive income and its
components within our financial statements. Prior period financial
statements will be restated for comparative purposes.
4
<PAGE>
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," was also issued in June of 1997. Beginning in 1998,
disclosures will be based on the way management organizes business segments
to make decisions about resource allocation and to measure performance.
Disclosures will include interim reporting requirements. Previously
reported information will be restated for comparative purposes. Based on
our initial review of the reporting and disclosure requirements, we do not
expect to materially change our segment disclosures under the new standard.
3. Compensation Plans - Restricted Stock
The Board of Directors approved the issuance of performance vested
restricted stock to certain officers and other executives as part of an
incentive compensation program. During the first quarter of 1997, 134,000
restricted shares were awarded. The shares carry voting and dividend rights
and were recorded at fair market value on the grant date. A corresponding
charge to deferred compensation was recorded in the stockholders'
investment section of the Consolidated Balance Sheets. The deferred
compensation balance was subsequently adjusted for the change in the
quarter-end market price of Lukens common stock and for compensation
expense recognized. The awards vest at the end of three years, contingent
on continued employment and the achievement of performance goals that are
tied to Lukens' total shareholder return relative to other steel companies.
4. Financial Instruments - Notes Payable
During the second quarter of 1997, Standard & Poor's lowered its rating
from BBB+ to BBB on $150,000 of Lukens notes due in 2004 and on $75,000 of
Medium-Term Notes, Series A, due in 2006. The Standard & Poor's outlook
remains characterized as stable in the third quarter.
During the third quarter of 1997, Moody's lowered its rating from Baa2 to
Baa3 on the notes payable discussed above.
5. Income Taxes
Year-to-date results were used to develop the effective tax rates in 1997
and 1996. Consequently, the third quarter effective rates included the
impact of changing rates from the second quarter. At the end of three
quarters in 1997, income tax expense was recognized on a loss before income
taxes. The expense represented the impact of state taxes and non-deductible
expenses that offset the tax benefit generated from the loss.
Because of the unusual nature of the 1996 work force reduction provision,
the tax impact of 36.4 percent was recognized separately in the second
quarter 1996 income tax provision. Excluding the work force provision, an
effective rate of 29.9 percent was applied to 1996 results for the first
three quarters.
5
<PAGE>
During the second quarter of 1997, a settlement was reached in the Internal
Revenue Service audits of 1993 and 1994. With the payment of the audit
assessment in the third quarter, audits were completed through 1994.
During the third quarter of 1997, the 1997 Taxpayer Relief Act (1997 TRA)
was enacted. Changes to the Federal tax structure included a restructuring
of the depreciable lives used in the alternative minimum tax calculation.
Additionally, the net operating loss carryback period was reduced to two
years and the carryforward period was increased to 20 years. These changes
will become effective in the coming years and will likely have a favorable
impact on the tax position of Lukens. The enactment of the 1997 TRA did not
require any recognition in the 1997 tax provision for the remeasurement of
our deferred tax balances or for changes to the estimated amount of 1997
Federal taxes payable.
6. Stockholders' Investment
Due to the timing of the Board of Directors meetings, two quarterly common
stock dividends totaling $.50 per share were declared in the third quarters
of 1997 and 1996. Common stock dividends declared totaled $1.00 per share
in both 1997 and 1996.
7. Commitments and Contingencies
During the second quarter of 1997, a tentative settlement was reached in a
Superfund remediation contingency where Lukens was designated a potentially
responsible party. The obligation for the Superfund site was previously
recognized in the fourth quarter of 1996. The tentative settlement resulted
in a reclassification from other long-term liabilities to other accrued
expenses in the Consolidated Balance Sheets.
The company is party to various claims, disputes, legal actions and other
proceedings involving product liability, contracts, equal employment
opportunity, occupational safety, environmental issues and various other
matters. In the opinion of management, the outcome of these matters should
not have a material adverse effect on the consolidated financial condition
or results of operations of the company.
6
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
(Dollars in thousands)
Changes in Financial Condition during
the Thirty-nine Weeks Ended September 27, 1997
Capital Structure
Cash and cash equivalents totaled $4,549 at the end of the third quarter, a
decrease of $5,733 from the end of 1996. Working capital of $131,479 was up
$32,321 from the end of 1996. Higher accounts receivable and inventories were
partially offset by an increase in other accrued expenses. The current ratio was
1.8 at the end of the quarter and 1.6 at year-end 1996.
Included in other accrued expenses at the end of the third quarter was an
environmental reserve that was reclassified during the second quarter of 1997
from other liabilities in the long-term section of the Consolidated Balance
Sheets. The reclassification reflected a tentative settlement agreement
negotiated in the second quarter for a Superfund site where we were designated a
potentially responsible party.
Debt at the end of the third quarter was $277,999, an increase of $24,426 from
the beginning of the year. The increase reflected borrowings under our revolving
credit agreement. Based on conditions at the end of the quarter, additional
borrowings were limited to approximately $38,000 under the committed line of
credit covenant. The ratio of long-term debt to capital was 55.8 percent, which
compared to 51.7 percent at year-end 1996.
The Board of Directors approved the issuance of performance vested restricted
stock to certain officers and other executives as part of an incentive
compensation program. During the first quarter of 1997, 134,000 restricted
shares were awarded. The shares carry voting and dividend rights and were
recorded at fair market value on the grant date. A corresponding charge to
deferred compensation was recorded in the stockholders' investment section of
the Consolidated Balance Sheets. The deferred compensation balance was
subsequently adjusted for the change in the quarter-end market price of Lukens
common stock and for compensation expense recognized. The awards vest at the end
of three years, contingent on continued employment and the achievement of
performance goals that are tied to Lukens' total shareholder return relative to
other steel companies.
During the second quarter of 1997, Standard & Poor's lowered its rating from
BBB+ to BBB on $150,000 of Lukens notes due in 2004 and on $75,000 of
Medium-Term Notes, Series A, due in 2006. The Standard & Poor's outlook remains
characterized as stable in the third quarter. During the third quarter of 1997,
Moody's lowered its rating from Baa2 to Baa3 on the notes payable discussed
above.
7
<PAGE>
Liquidity
Operating activity required cash of $7,872 for the first three quarters compared
to cash flow from operating activity of $14,828 in the comparable 1996 period.
Higher cash requirements in 1997 were due to increased working capital
requirements.
Financing activity generated $14,712 with net borrowings of $27,529 partially
offset by dividend payments of $12,817. Investing activity required $12,573,
primarily for capital expenditures of $13,948.
Profitability in the fourth quarter of 1997 is dependent on the continuation of
strong shipments in the Carbon & Alloy Group. The improvement in stainless
selling prices achieved during the first half of the year began to erode during
the third quarter and we anticipate the downward trend will continue for the
balance of the year. We expect that depressed prices will continue to limit
results in the Stainless Group. Results should benefit from our continued focus
on cost reduction initiatives and increased utilization of key facilities from
the capital expenditure program.
In addition to the earnings factors discussed above, our inventory reduction
plan will be key to producing a capital structure at the end of 1997 that is
similar to year-end 1996. The relatively high level of inventories at the end of
the 1997 third quarter was partially attributable to the start-up of the wide
anneal and pickle line, located in Massillon, Ohio. It will be difficult to
attain cash flow levels comparable to 1996 without the significant reduction in
inventory planned for the fourth quarter.
During the first half of 1997, integration of the Steckel Mill Advanced Rolling
Technology (SMART(R)) system, located in Conshohocken, Pennsylvania, and the
wide anneal and pickle line was initiated. Although shipments from the wide
anneal and pickle line almost doubled during the third quarter, utilization of
the facility is anticipated to continue to be low for the balance of the year.
Order backlog was $117,800 at the end of the third quarter, which was 8 percent
lower than year-end 1996 order backlog and slightly lower than at the same time
last year.
In the long term, Lukens relies on the ability to generate sufficient cash flows
from operating activity to fund investing and financing requirements and to
maintain a target long-term debt-to-capital ratio of 35 percent. Primarily
because of our aggressive capital expenditure program, we continue to exceed our
target long-term debt-to-capital ratio.
8
<PAGE>
Results of Operations for the Quarters Ended
September 27, 1997 and September 28, 1996
Operating Results
Third quarter operating earnings of $5,578 compared to an operating loss of
$1,860 in the third quarter of 1996. Improved results were primarily
attributable to the Carbon & Alloy Group. Sales for the third quarter were
$243,371, up 4 percent from 1996 sales of $234,421. Most of the increase in
sales resulted from higher shipments in the Carbon & Alloy Group.
Interest Expense
Interest expense of $4,932 was up 19 percent compared to 1996 expense of $4,135.
The increase primarily related to higher amounts of capitalized interest
recorded in 1996.
Income Tax Expense (Benefit)
The effective tax rate was 79.4 percent in 1997 and 31.8 percent in 1996.
Year-to-date results were used to develop the effective tax rates in 1997 and
1996. Consequently, the third quarter effective rates included the impact of
changing rates from the second quarter.
During the third quarter of 1997, the 1997 Taxpayer Relief Act (1997 TRA) was
enacted. Changes to the Federal tax structure included a restructuring of the
depreciable lives used in the alternative minimum tax calculation. Additionally,
the net operating loss carryback period was reduced to two years and the
carryforward period was increased to 20 years. These changes will become
effective in the coming years and will likely have a favorable impact on the tax
position of Lukens. The enactment of the 1997 TRA did not require any
recognition in the 1997 tax provision for the remeasurement of our deferred tax
balances or for changes to the estimated amount of 1997 Federal taxes payable.
Net Earnings (Loss)
Net earnings of $133 were recorded for the third quarter of 1997 compared to a
net loss of $4,087 for the same period in 1996.
9
<PAGE>
Business Group Results
<TABLE>
<CAPTION>
Operating
Net Sales Earnings (Loss)
3Q 1997 3Q 1996 3Q 1997 3Q 1996
<S> <C> <C> <C> <C>
Carbon & Alloy $127,469 119,567 12,686 6,896
Stainless 115,902 114,854 (3,762) (5,398)
Corporate -- -- (3,346) (3,358)
-------- -------- -------- --------
$243,371 234,421 5,578 (1,860)
======== ======== ======== ========
</TABLE>
Carbon & Alloy Group
Net sales increased 7 percent. The increase reflected higher shipments,
particularly in the carbon steel product line due to increased utilization of
the SMART system. Shipped tons were 183,000 in 1997, 15 percent higher than
159,600 tons in 1996. With the growth in carbon shipments in 1997, sales
reflected a lower-value shipment mix. The sales improvement translated into a
strong earnings improvement from the third quarter of 1996. Earnings in 1997
benefited from a continued focus on cost reduction initiatives and increased
utilization of the SMART system.
Stainless Group
The group recorded an operating loss in the third quarters of 1997 and 1996.
Depressed selling prices continued to negatively affect results. Selling prices
dropped significantly in the 1996 third quarter as the influence of imports on
the North American stainless steel market became apparent. Stainless selling
prices were at similarly low levels during the third quarter of 1997.
Sales were up slightly in 1997 with a favorable sales mix offset by a reduction
in volume for the group. Shipments of 58,700 tons in 1997 were down 7 percent
compared to 63,000 tons in 1996. Higher shipments in the hot rolled product line
were offset by lower conversion shipments.
Results of Operations for the Thirty-nine Weeks Ended
September 27, 1997 and September 28, 1996
Operating Results
Operating earnings of $14,441 through three quarters compared to an operating
loss of $9,188 in 1996. The loss in 1996 was the result of a $10,782 work force
reduction provision recorded in the second quarter. Excluding the provision for
comparison purposes, operating earnings were up significantly in 1997. Improved
results in the Carbon & Alloy Group were partially offset by an operating loss
recorded by the Stainless Group. Stainless Group results continued to be
10
<PAGE>
impacted by depressed selling prices through three quarters of the year. The
price relief achieved in the first half of the year began to erode during the
third quarter.
Sales for the first three quarters were $749,736, down slightly from 1996 sales
of $754,548. Higher shipments in the Carbon & Alloy Group were offset by lower
selling prices in the Stainless Group.
Interest Expense
Interest expense of $14,464 was up 20 percent compared to 1996 expense of
$12,030. The increase primarily related to higher amounts of capitalized
interest recorded in 1996.
Income Tax Expense (Benefit)
Year-to-date results were used to develop the effective tax rates in 1997 and
1996. Through three quarters in 1997, income tax expense was recognized on a
loss before income taxes. The expense represented the impact of state taxes and
non-deductible expenses that offset the tax benefit generated from the loss.
Because of the unusual nature of the 1996 work force reduction provision, the
tax impact of 36.4 percent was recognized separately in the second quarter 1996
income tax provision. Excluding the work force provision, an effective rate of
29.9 percent was applied to 1996 results through three quarters.
During the third quarter of 1997, the 1997 Taxpayer Relief Act (1997 TRA) was
enacted. Changes to the Federal tax structure included a restructuring of the
depreciable lives used in the alternative minimum tax calculation. Additionally,
the net operating loss carryback period was reduced to two years and the
carryforward period was increased to 20 years. These changes will become
effective in the coming years and will likely have a favorable impact on the tax
position of Lukens. The enactment of the 1997 TRA did not require any
recognition in the 1997 tax provision for the remeasurement of our deferred tax
balances or for changes to the estimated amount of 1997 Federal taxes payable.
Net Earnings (Loss)
A net loss of $664 in 1997 compared to a net loss of $14,195 in 1996. On an
after-tax basis, the work force reduction provision reduced results by $6,859 in
1996.
11
<PAGE>
Business Group Results
<TABLE>
<CAPTION>
Operating
Net Sales Earnings (Loss)
YTD 1997 YTD 1996 YTD 1997 YTD 1996
<S> <C> <C> <C> <C>
Carbon & Alloy $379,800 366,389 33,886 2,523
Stainless 369,936 388,159 (9,646) 375
Corporate -- -- (9,799) (12,086)
-------- -------- -------- --------
$749,736 754,548 14,441 (9,188)
======== ======== ======== ========
</TABLE>
Carbon & Alloy Group
Sales for three quarters increased 4 percent. Shipped tons were 547,100 in 1997
compared to 498,800 tons in 1996. The 10 percent increase in shipped tons
reflected higher utilization of the SMART system, particularly in the carbon
product line. With the growth in carbon shipments in 1997, sales reflected a
lower-value shipment mix.
Included in 1996 results was a work force reduction charge of $6,178. Excluding
the unusual charge for comparison purposes, operating earnings improved
significantly through three quarters in 1997. Results in 1996 also included a
$3,756 charge for labor agreement signing bonuses, the impact of severe winter
weather and disruptions from the commissioning of the SMART system. Earnings in
1997 benefited from a continued focus on cost reduction initiatives, increased
utilization of the SMART system and lower scrap costs.
Stainless Group
The group recorded an operating loss through three quarters in 1997 versus
break-even operating earnings in 1996. Included in 1996 results was a work force
reduction charge of $3,695. Excluding the unusual charge for comparison
purposes, operating results deteriorated significantly in 1997. Depressed
selling prices across product lines continued to limit results.
Depressed selling prices led to a 5 percent sales decline. Shipments of 199,500
tons in 1997 compared to 203,700 tons in 1996. Higher shipments in the cold
rolled product line were offset by lower conversion shipments.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
As of the end of the quarter, approximately 40 active workers' compensation
hearing loss claims remained against Lukens Steel Company. Claims previously
reported for Washington Steel Corporation were included in the Lukens Steel
Company totals because the subsidiaries merged on December 29, 1996.
Item 4. Submission of Matters to a Vote of Security Holders.
The Board of Directors continues to consider what action it might take in
response to the two shareholder proposals approved at the 1997 Annual Meeting. A
decision on that subject will be reached by the Board once it has better
assessed how the recommended actions would impact the Company, its shareholders,
its employees and the Board's efforts to maximize value for all shareholders.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(11) Statement regarding computation of per share earnings
(27) Financial Data Schedule
(b) Reports on Form 8-K
No report on Form 8-K was filed during the quarter ended September 27,
1997.
13
<PAGE>
SIGNATURES
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
undersigned thereunto duly authorized.
LUKENS INC.
November 5, 1997 /s/ R. W. Van Sant
------------------------------------
R. W. Van Sant
Chairman and Chief Executive Officer
November 5, 1997 /s/ John C. van Roden, Jr.
------------------------------------
John C. van Roden, Jr.
Senior Vice President and Chief
Financial Officer
November 5, 1997 /s/ P. Blaine Clemens
------------------------------------
P. Blaine Clemens
Vice President and Controller
Exhibit 11
Computation of Earnings Per Common Share
(Dollars and shares in thousands except per share amounts)
<TABLE>
<CAPTION>
THIRD QUARTER YEAR-TO-DATE
Thirteen Weeks Ended Thirty-nine Weeks Ended
September 27, September 28, September 27, September 28,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Primary Earnings (Loss) per Common Share
Net earnings (loss) applicable to common stock
Net earnings (loss) $ 133 (4,087) (664) (14,195)
ESOP dividend requirements
Preferred stock dividends declared (565) (582) (1,702) (1,762)
Tax benefit on dividends - unallocated shares 61 83 198 267
-------- -------- -------- --------
Net earnings (loss) applicable to common stock $ (371) (4,586) (2,168) (15,690)
-------- -------- -------- --------
Weighted average number of common shares and
equivalents outstanding
Weighted average number of common shares outstanding 14,807 14,796 14,806 14,778
Common stock equivalents - * - * - * - *
-------- -------- -------- --------
Weighted average number of common shares and
equivalents outstanding 14,807 14,796 14,806 14,778
-------- -------- -------- --------
Primary Earnings (Loss) per Common Share $ (0.03) (0.31) (0.15) (1.06)
======== ======== ======== ========
Fully Diluted Earnings (Loss) per Common Share
Net earnings (loss) applicable to common stock
Net earnings (loss) $ -- -- -- --
Incremental cash contribution to the ESOP assuming
conversion of preferred stock to common -- -- -- --
Tax benefit on the incremental cash contribution -- -- -- --
-------- -------- -------- --------
Net earnings (loss) applicable to common stock $ -- -- --
-------- -------- -------- --------
Weighted average number of common shares and equivalents
outstanding
Weighted average number of common shares outstanding -- -- -- --
Common stock equivalents -- -- -- --
Assumed conversion of Series B ESOP preferred stock -- -- -- --
-------- -------- -------- --------
Weighted average number of common shares and equivalents
outstanding -- -- -- --
-------- -------- -------- --------
Fully Diluted Earnings (Loss) per Common Share $ (0.03)** (0.31)** (0.15)** (1.06)**
======== ======== ======== ========
<FN>
* Not applicable because it would result in an antidilutive calculation.
** Fully diluted calculation is not presented because it is antidilutive.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM LUKENS INC.
FINANCIAL STATEMENTS FOR THE THIRTY-NINE WEEKS ENDED SEPTEMBER 27, 1997, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-START> DEC-29-1996
<PERIOD-END> SEP-27-1997
<CASH> 4,549
<SECURITIES> 0
<RECEIVABLES> 130,196
<ALLOWANCES> 7,622
<INVENTORY> 163,153
<CURRENT-ASSETS> 305,487
<PP&E> 965,507
<DEPRECIATION> 455,562
<TOTAL-ASSETS> 904,092
<CURRENT-LIABILITIES> 174,008
<BONDS> 272,050
<COMMON> 158
16,064
0
<OTHER-SE> 227,910
<TOTAL-LIABILITY-AND-EQUITY> 904,092
<SALES> 749,736
<TOTAL-REVENUES> 749,736
<CGS> 697,673
<TOTAL-COSTS> 697,673
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,260
<INTEREST-EXPENSE> 14,464
<INCOME-PRETAX> (23)
<INCOME-TAX> 641
<INCOME-CONTINUING> (664)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (664)
<EPS-PRIMARY> (0.15)
<EPS-DILUTED> (0.15)
</TABLE>
