<PAGE>
1995
SECOND QUARTER
F O R M 1 0 - Q
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, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-983
NATIONAL STEEL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 25-0687210
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4100 Edison Lakes Parkway, Mishawaka, IN 46545-3440
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): 219-273-7000
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
----- -----
The number of shares outstanding of the Registrant's Common Stock $ .01 par
value, as of July 28, 1995, was 43,286,156 shares.
<PAGE>
NATIONAL STEEL CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
----
Statements of Consolidated Income -
Three Months Ended June 30, 1995 and 1994 3
Statements of Consolidated Income -
Six Months Ended June 30, 1995 and 1994 4
Consolidated Balance Sheets -
June 30, 1995 and December 31, 1994 5
Statements of Consolidated Cash Flows -
Six Months Ended June 30, 1995 and 1994 6
Statements of Changes in Consolidated
Stockholders' Equity and Redeemable
Preferred Stock-Series B -
Six Months Ended June 30, 1995 and
Year Ended December 31, 1994 7
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
PART II. OTHER INFORMATION
Legal Proceedings 15
Submission of Matters to a Vote of Security Holders 17
Exhibits and Reports on Form 8-K 17
2
<PAGE>
PART I. - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NATIONAL STEEL CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(In Thousands of Dollars, Except Per Share Amounts)
(Unaudited)
THREE MONTHS
ENDED JUNE 30,
1995 1994
-------- --------
<S> <C> <C>
NET SALES $736,611 $650,682
Cost of products sold 620,804 573,919
Selling, general and administrative 37,261 31,132
Depreciation, depletion and amortization 35,348 35,589
Equity income of affiliates (142) (209)
-------- --------
INCOME FROM OPERATIONS 43,340 10,251
Other (Income) Expense
Interest and other financial income (3,884) (973)
Interest and other financial expense 14,066 15,778
-------- --------
10,182 14,805
-------- --------
INCOME (LOSS) BEFORE INCOME TAXES 33,158 (4,554)
Income tax provision (credit) 2,841 (5,395)
-------- --------
NET INCOME 30,317 841
Less preferred stock dividends 2,739 2,740
-------- --------
Net income (loss) applicable to Common Stock $ 27,578 $ (1,899)
======== ========
PER SHARE DATA APPLICABLE TO COMMON STOCK:
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK $ .64 $ (.05)
======== ========
Weighted average shares outstanding (in thousands) 43,276 36,361
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
NATIONAL STEEL CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(In Thousands of Dollars, Except Per Share Amounts)
(Unaudited)
SIX MONTHS
ENDED JUNE 30,
1995 1994
---------- ----------
<S> <C> <C>
NET SALES $1,489,287 $1,273,420
Cost of products sold 1,239,520 1,145,578
Selling, general and administrative 71,576 67,558
Depreciation, depletion and amortization 72,181 69,690
Equity (income) loss of affiliates (1,523) 14
Restructuring Charge 5,336 -0-
---------- ----------
INCOME (LOSS) FROM OPERATIONS 102,197 (9,420)
Other (Income) Expense
Interest and other financial income (6,632) (1,554)
Interest and other financial expense 28,142 31,974
Litigation judgment -0- (110,972)
---------- ----------
21,510 (80,552)
---------- ----------
INCOME BEFORE INCOME TAXES 80,687 71,132
Income tax provision (credit) 5,676 (7,720)
---------- ----------
NET INCOME 75,011 78,852
Less preferred stock dividends 5,479 5,480
---------- ----------
Net income applicable to Common Stock $ 69,532 $ 73,372
========== ==========
PER SHARE DATA APPLICABLE TO COMMON STOCK:
NET INCOME APPLICABLE TO COMMON STOCK $ 1.65 $ 2.02
========== ==========
Weighted average shares outstanding (in thousands) 42,126 36,361
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
NATIONAL STEEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars, Except Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
JUNE 30, DECEMBER 31,
1995 1994
----------- -----------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 263,083 $ 161,946
Receivables - net 292,289 292,869
Inventories:
Finished and semi-finished products 268,282 261,480
Raw materials and supplies 114,179 106,532
----------- -----------
382,461 368,012
----------- -----------
Total current assets 937,833 822,827
Investments in affiliated companies 58,340 57,676
Property, plant and equipment 3,455,586 3,360,467
Less: Allowances for depreciation,
depletion and amortization (2,039,097) (1,966,539)
----------- -----------
1,416,489 1,393,928
Other assets 236,382 224,954
----------- -----------
TOTAL ASSETS $ 2,649,044 $ 2,499,385
=========== ===========
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 222,065 $ 272,586
Accrued liabilities 302,671 289,943
Long term obligations and related party indebtedness
due within one year 173,354 35,669
----------- -----------
Total current liabilities 698,090 598,198
Long term obligations 350,276 360,375
Long term indebtedness to related parties 169,496 310,409
Other long term liabilities 837,555 810,292
Redeemable Preferred Stock - Series B 65,780 66,530
Stockholders' equity
Common Stock - par value $.01:
Class A - authorized 30,000,000 shares; issued
and outstanding 22,100,000 shares 221 221
Class B- authorized 65,000,000 shares; issued
and outstanding 21,176,156 shares in 1995
and 14,261,100 shares in 1994 212 143
Preferred Stock - Series A 36,650 36,650
Additional paid-in-capital 465,190 360,525
Retained earnings (deficit) 25,574 (43,958)
----------- -----------
Total stockholders' equity 527,847 353,581
----------- -----------
TOTAL LIABILITIES, REDEEMABLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY $ 2,649,044 $ 2,499,385
=========== ===========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
NATIONAL STEEL CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
SIX MONTHS
ENDED JUNE 30,
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 75,011 $ 78,852
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 72,181 69,690
Carrying charges related to facility sales
and plant closings 12,153 14,781
Equity (income) loss of affiliates (1,523) 14
Dividends from affiliates 900 900
Postretirement benefits 22,679 27,590
Deferred income taxes (17,815) (10,800)
Cash provided (used) by working capital items:
Receivables 580 (40,401)
Inventories (14,449) 29,827
Accounts payable (50,521) (51,652)
Accrued liabilities 12,497 23,517
Other 7,162 5,981
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 118,855 148,299
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment (95,119) (90,105)
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (95,119) (90,105)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Class B Common Stock 104,734 ---
Debt repayments (13,327) (54,348)
Borrowings --- 87,950
Payment of released Weirton benefit liabilities (8,008) (8,979)
Dividend payments on Preferred Stock-Series A (1,999) (1,999)
Dividend payments on Preferred Stock-Series B (860) (87)
Payment of unreleased Weirton liabilities and
their release in lieu of cash dividends on
Preferred Stock-Series B (3,139) (3,139)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 77,401 18,625
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 101,137 76,819
Cash and Cash Equivalents, Beginning of the Period 161,946 5,322
----------- -----------
CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 263,083 $ 82,141
=========== ===========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
NATIONAL STEEL CORPORATION AND SUBSIDIARIES
STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY
AND REDEEMABLE PREFERRED STOCK - SERIES B
(In Thousands of Dollars)
(Unaudited)
REDEEMABLE
COMMON COMMON PREFERRED ADDITIONAL RETAINED TOTAL PREFERRED
STOCK - STOCK - STOCK - PAID-IN- EARNINGS STOCKHOLDERS' STOCK -
CLASS A CLASS B SERIES A CAPITAL (DEFICIT) EQUITY SERIES B
-------- -------- --------- ---------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1994 $221 $143 $36,650 $360,314 $(207,366) $ 189,962 $68,030
Net income 168,512 168,512
Amortization of excess of book
value over redemption value
of Redeemable Preferred Stock
- Series B 1,500 1,500 (1,500)
Cumulative dividends on Preferred
Stocks - Series A and B (12,538) (12,538)
Exercise of stock options 211 211
Minimum pension liability 5,934 5,934
---- ---- ------- -------- --------- --------- -------
BALANCE AT DECEMBER 31, 1994 221 143 36,650 360,525 (43,958) (353,581) 66,530
Net income 75,011 75,011
Amortization of excess of book
value over redemption value
of Redeemable Preferred Stock
- Series B 750 750 (750)
Cumulative dividends on Preferred
Stocks - Series A and B (6,229) (6,229)
Issuance of Common Stock - Class B 69 104,665 104,734
---- ---- ------- -------- --------- --------- -------
BALANCE AT JUNE 30, 1995 $221 $212 $36,650 $465,190 $ 25,574 $ 527,847 $65,780
==== ==== ======= ======== ========= ========= =======
</TABLE>
See notes to consolidated financial statements.
7
<PAGE>
NATIONAL STEEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995 (Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The consolidated financial statements of National Steel Corporation and its
majority owned subsidiaries (the "Company") presented herein are unaudited.
However, in the opinion of management, such statements include all adjustments
necessary for a fair presentation of the results for the periods indicated. All
such adjustments made were of a normal recurring nature, except for the items
discussed in Notes 2 and 3. The financial results presented for the three and
six month periods ended June 30, 1995 are not necessarily indicative of results
of operations for the full year. The Annual Report of the Company on Form 10-K
for the year ended December 31, 1994 (the "1994 Form 10-K") contains additional
information and should be read in conjunction with this report.
Certain items in prior years have been reclassified to conform with the current
year presentation.
NOTE 2 - RESTRUCTURING CHARGE
Reduction in Workforce - During the fourth quarter of 1994, the Company
finalized and implemented a plan that resulted in a workforce reduction of
approximately 400 salaried nonrepresented employees. Accordingly, a
restructuring charge of $34.2 million, $25.6 million net of tax, was recorded
during the fourth quarter of 1994. This charge and the amount reserved was
comprised of retiree medical benefits ("OPEB") of $22.0 million, severance of
$10.9 million, a pension credit of $1.8 million and other charges totaling $3.1
million.
During the first quarter of 1995, the Company recorded, as expected, an
additional restructuring charge of $5.3 million, $3.6 million net of tax, as a
result of the various elections made by the terminated employees during the
first quarter of 1995. This charge was comprised of OPEB's of $4.5 million,
severance of $1.6 million, and a pension credit of $.8 million.
The following represents the components of the $34.2 million reserve recorded at
December 31, 1994, the cash utilizations during the first six months of 1995,
the components of the additional $5.3 million restructuring charge recorded
during the first quarter of 1995 and the balance of the reserve at June 30,
1995.
<TABLE>
<CAPTION>
BALANCE BALANCE
DECEMBER 31, CASH JUNE 30,
1994 UTILIZATIONS ADJUSTMENTS 1995
------------- ------------- ----------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
OPEB $22.0 $ 0.0 $ 4.5 $26.5
Severance 10.9 (11.6) 1.6 .9
Pensions (1.8) 0.0 (0.8) (2.6)
Other 3.1 (1.2) 0.0 1.9
----- ------ ----- -----
$34.2 $(12.8) $ 5.3 $26.7
===== ====== ===== =====
</TABLE>
The remaining OPEB and pension balances will require the utilization of cash
over the retirement lives of the affected employees. The remaining aggregate
balance of $2.8 million related to severance and other charges will require the
utilization of cash within the 1995 fiscal year. The Company does not expect to
record any additional charges associated with this reduction in workforce.
8
<PAGE>
NOTE 3 - LITIGATION JUDGMENT
Bessemer & Lake Erie Railroad (the "B&LE") Litigation Judgment - On January 24,
1994, the United States Supreme Court denied the B&LE's petition for certiorari
in the Iron Ore Antitrust Litigation, thus sustaining the Company's judgment
against the B&LE. On February 11, 1994, the Company received $111.0 million,
including interest, in satisfaction of this judgment. This gain has been
reclassified from Income from Operations to Other Income to more properly
reflect the trend in operating income and had no effect on net income or
earnings per share as previously reported. The Company used $40.6 million of
the proceeds to repurchase a portion of its outstanding First Mortgage Bonds.
Pursuant to the terms of the 1993 labor agreement between the Company and the
United Steelworkers of America (the "USWA"), approximately $11 million of the
proceeds were deposited into a Voluntary Employee Benefits Association trust
established to fund the Company's OPEB obligation with respect to USWA
represented employees. The Company did not recognize any income taxes
associated with these proceeds, other than alternative minimum tax of $3.1
million, as regular federal income tax expense was offset by the utilization of
previously reserved tax assets.
NOTE 4 - PRIMARY OFFERING OF CLASS B COMMON STOCK AND USE OF PROCEEDS TO PREPAY
DEBT
On February 1, 1995, the Company completed a primary offering of 6,900,000
shares of Class B Common Stock, bringing the total number of shares of Class B
Common Stock issued and outstanding to 21,176,156. Subsequent to the offering,
NKK Corporation, through its ownership of all 22,100,000 issued and outstanding
shares of Class A Common Stock, holds 67.6% of the combined voting power of the
Company. The remaining 32.4% of the combined voting power is publicly held.
The issuance and sale of the additional shares of Class B Common Stock generated
net proceeds of approximately $104.7 million. During the third quarter 1995,
the Company will use all of the proceeds from this offering, along with an
additional amount which will be funded from the Company's available cash, to
prepay a portion of the related party debt associated with the rebuild of the
No. 5 Coke Oven Battery serving the Great Lakes Division.
NOTE 5 - ENVIRONMENTAL AND LEGAL PROCEEDINGS
The Company's operations are subject to numerous laws and regulations relating
to the protection of human health and the environment. Because these
environmental laws and regulations are quite stringent and are generally
becoming more stringent, the Company has expended, and can be expected to expend
in the future, substantial amounts for compliance with these laws and
regulations.
It is the Company's policy to expense or capitalize, as appropriate,
environmental expenditures that relate to current operating sites.
Environmental expenditures that relate to past operations and which do not
contribute to future or current revenue generation are expensed. With respect
to costs for environmental assessments or remediation activities, or penalties
or fines that may be imposed for noncompliance with such laws and regulations,
such costs are accrued when it is probable that liability for such costs will be
incurred and the amount of such costs can be reasonably estimated.
The Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA'), and similar state superfund statutes generally
impose joint and several liability on present and former owners, operators,
transporters and generators for remediation of contaminated properties,
regardless of fault. The Company and certain of its subsidiaries are involved
as a potentially responsible party ("PRP") at a number of off-site CERCLA or
state superfund site proceedings. At some of these sites, any remediation costs
incurred by the Company would constitute liabilities for which FoxMeyer Health
Corporation ("FOX") is required to indemnify the Company ("FOX Environmental
Liabilities"). In addition, at some of these sites, the Company does not have
sufficient information regarding the nature and extent of the contamination, the
wastes contributed by other PRPs, or the required remediation activity to
estimate its potential liability.
In connection with those sites involving FOX Environmental Liabilities, in
January 1994, the Company received $10.0 million from FOX as an unrestricted
prepayment for such liabilities for which the Company recorded $10.0 million as
a liability in its consolidated balance sheet. The Company is required to repay
FOX portions of the $10.0 million to the extent the Company's expenditures for
such FOX Environmental Liabilities do not meet specified levels by certain dates
over a twenty year period. At both June 30, 1995 and December 31, 1994, the
balance recorded as prepaid FOX Environmental Liabilities totaled $10.0 million.
9
<PAGE>
The Company has also recorded the reclamation and other costs to restore its
coal and iron ore mines at its shutdown locations to their original and natural
state, as required by various federal and state mining statutes.
Since the Company has been conducting steel manufacturing and related operations
at numerous locations for over sixty years, the Company potentially may be
required to remediate or reclaim any contamination that may be present at these
sites. The Company does not have sufficient information to estimate its
potential liability in connection with any potential future remediation at such
sites. Accordingly, the Company has not accrued for such potential
liabilities.
As any of these environmental matters discussed above progress or the Company
becomes aware of additional matters, the Company may be required to accrue
charges in excess of those previously accrued. However, although the outcome of
any of the matters described, to the extent they exceed any applicable reserves,
could have a material adverse effect on the Company's results of operations and
liquidity for the applicable period, the Company has no reason to believe that
such outcomes, whether considered individually or in the aggregate, will have a
material adverse effect on the Company's financial condition. The Company
recorded environmental liabilities aggregating approximately $17.7 million and
$17.1 million at June 30, 1995 and December 31, 1994, respectively.
Since 1989, the United States Environmental Protection Agency (the "EPA") and
the eight Great Lakes states have been developing the Great Lakes Initiative,
which will impose water quality standards that are even more stringent than the
best available technology standards currently being enforced. On March 23,
1995, the EPA published the final "Water Quality Guidance for the Great Lakes
System" (the "Guidance Document"). The Guidance Document establishes minimum
water quality standards and other pollution control policies and procedures for
waters within the Great Lakes System. Although the full impact of the Guidance
Document is not yet known, preliminary studies conducted by the American Iron
and Steel Institute prior to the original publication of the Guidance Document
in proposed form in April 1993 estimated that the potential capital cost for a
fully integrated steel mill to comply with draft standards under the Great Lakes
Initiative could range from approximately $50 million to $175 million and the
potential annual operating and maintenance cost would be approximately 15% of
the estimated capital cost. Until the impact of the Guidance Document can be
fully analyzed, the Company is unable to determine whether such estimates are
accurate and whether the Company's actual costs for compliance will be
comparable. Although the Company believes only the Great Lakes Division would
be required to incur significant costs for compliance, there can be no
assurances that such compliance will not have a material adverse effect on the
Company's financial condition.
The Company is involved in various non-environmental legal proceedings most of
which occur in the normal course of its business. The Company does not believe
that the proceedings will have a material adverse effect, either individually or
in the aggregate, on the Company's financial position. However, with respect to
certain of the proceedings, if reserves prove to be inadequate and the Company
incurs a charge to earnings, such charge could have a material adverse effect on
the Company's results of operations for the applicable period. Certain other
proceedings, if decided adversely to the Company, could have a material adverse
effect on cash flows. See "Part II, Item 1 - Legal Proceedings".
NOTE 6 - INCOME TAXES
The Company's effective tax rate is lower than the federal statutory rate
primarily because of the continued utilization of available operating loss
carryforwards. As such, the Company anticipates paying alternative minimum tax
at an effective rate of 18.5% in 1995.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - COMPARISON OF THE THREE-MONTH PERIODS ENDED JUNE 30,
1995 AND 1994
Blast Furnace Reline
- --------------------
The B Blast Furnace at the Company's Granite City Division temporarily ceased
production on April 7, 1995 to undergo a planned reline which was completed in
July. During the first quarter of 1995, the Company stockpiled inventories in
anticipation of the outage. Therefore shipments during the second quarter were
not unfavorably impacted. The Company estimates that this outage unfavorably
impacted second quarter results of operations by approximately $17 million.
Net Sales
- ---------
Net sales for the second quarter of 1995 totalled $736.6 million, an improvement
of $85.9 million, or 13.2%, compared to the corresponding period in 1994. This
increase in sales is primarily attributable to a 5.8% increase in shipments
along with an increase in realized selling prices which was somewhat offset by
an unfavorable shift in product mix to lower margin hot rolled products.
Steel shipments for the second quarter of 1995 were 1,348,000 tons compared to
the 1,274,000 tons shipped during the same period in 1994. This improvement is
attributable to a number of factors, including an overall increase in demand for
the Company's products as well as improved operating practices.
Cost of Products Sold
- ---------------------
The Company's cost of products sold as a percentage of net sales declined from
88.2% during the second quarter of 1994, to 84.3% during the corresponding 1995
period. This decrease is reflective of improvements in productivity and quality
as well as an increase in production volumes.
Raw steel production was 1,337,000 net tons during the second quarter of 1995, a
6.8% decrease compared to the 1,434,000 net tons produced during the same 1994
period.
Other (Income) Expense
- ----------------------
Financing Costs - Net financing costs of $10.2 million during the second quarter
of 1995 represents a 31.2% decrease compared to net financing costs of $14.8
million during the corresponding 1994 period. This decrease is primarily
attributable to higher short term investment earnings resulting from the receipt
of cash generated by the issuance of 6.9 million shares of Class B Common Stock,
coupled with a decrease in interest expense as a result of the reduction in
debt.
Income Taxes
- ------------
The Company's effective tax rate is lower than the federal statutory rate
primarily because of the continued utilization of available operating loss
carryforwards. As such, the Company anticipates paying alternative minimum tax
at an effective rate of 18.5% in 1995.
11
<PAGE>
COMPARISON OF THE SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND 1994
Net Sales
- ---------
Net sales for the first half of 1995 totalled $1.5 billion, a 17.0% increase
when compared to the first half of 1994. This increase was attributable to both
an increase in shipments and realized selling prices which was somewhat offset
by an unfavorable product mix shift to lower margin hot rolled products. Steel
shipments for the first half of 1995 were 2,770,000 tons, a 10.5% increase from
the 2,507,000 tons shipped during the corresponding 1994 period. Raw steel
production increased to 2,923,000 tons, a 4.6% increase from the 2,795,000 tons
produced during the six month period ended June 30, 1994.
Cost of Products Sold
- ---------------------
Cost of products sold as a percentage of net sales decreased from 90.0 % in the
first half of 1994 to 83.2% for the corresponding 1995 period. This decrease is
reflective of improvements in realized selling prices, product mix and
performance yields, as well a reduction in product costs.
Restructuring Charge
- --------------------
As described above in note 2 to the Financial Statements, during the fourth
quarter of 1994, the Company finalized and implemented a plan that resulted in a
workforce reduction of approximately 400 salaried nonrepresented employees
resulting in a restructuring charge of $34.2 million, $25.6 million net of tax,
being recorded during the fourth quarter of 1994.
During the first quarter of 1995, the Company recorded, as expected, an
additional restructuring charge of $5.3 million, $3.6 million net of tax, as a
result of the various elections made by the terminated employees during the
first quarter of 1995. This charge was comprised of OPEB's of $4.5 million,
severance of $1.6 million, and a pension credit of $.8 million.
The following represents the components of the $34.2 million reserve recorded at
December 31, 1994, the cash utilizations during the second quarter of 1995, the
components of the additional $5.3 million restructuring charge recorded during
the first quarter of 1995 and the balance of the reserve at June 30, 1995.
<TABLE>
<CAPTION>
BALANCE BALANCE
DECEMBER 31, CASH JUNE 30,
1994 UTILIZATIONS ADJUSTMENTS 1995
------------ ------------ ----------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
OPEB $22.0 $ 0.0 $ 4.5 $26.5
Severance 10.9 (11.6) 1.6 .9
Pensions (1.8) 0.0 (0.8) (2.6)
Other 3.1 (1.2) 0.0 1.9
----- ------ ----- -----
$34.2 $(12.8) $ 5.3 $26.7
===== ====== ===== =====
</TABLE>
The remaining OPEB and pension balances will require the utilization of cash
over the retirement lives of the affected employees. The remaining aggregate
balance of $2.8 million related to severance and other charges will require the
utilization of cash within the 1995 fiscal year. The Company does not expect to
record any additional charges associated with this reduction in workforce.
12
<PAGE>
Other (Income) Expense
- ----------------------
Financing Costs - Net financing costs of $21.5 million during the first six
months of 1995 represents a 29.3% decrease compared to net financing costs of
$30.4 million during the corresponding 1994 period. This decrease is primarily
attributable to higher short term investment earnings resulting from the receipt
of cash generated by the issuance of 6.9 million shares of Class B Common Stock,
coupled with a decrease in interest expense as a result of the reduction in
debt.
Bessemer & Lake Erie Railroad (the "B&LE") Litigation Judgment - On January 24,
1994, the United States Supreme Court denied the B&LE petition to hear the
appeal in the Iron Ore Antitrust Litigation, thus sustaining a judgment in favor
of the Company against the B&LE. On February 11, 1994, the Company received
$111.0 million, including interest, in satisfaction of this judgment. This gain
has been reclassified from Income from Operations to Other Income to more
properly reflect the trend in operating income and had no effect on net income
or earnings per share as previously reported.
Other
- -----
Primary Offering of Class B Common Stock and Use of Proceeds - On February 1,
1995, the Company completed a primary offering of 6,900,000 shares of Class B
Common Stock, bringing the total number of shares of Class B Common Stock issued
and outstanding to 21,176,156. Subsequent to the offering, NKK Corporation,
through its ownership of all 22,100,000 issued and outstanding shares of Class A
Common Stock, holds 67.6% of the combined voting power of the Company. The
remaining 32.4% of the combined voting power is held by the public. The
issuance of the additional shares of Class B Common Stock generated net proceeds
of approximately $104.7 million. During the third quarter of 1995, the Company
intends to use all of the proceeds from this offering, along with an additional
amount which will be funded from the Company's available cash, to prepay a
portion of the related party debt associated with the rebuild of the No. 5 Coke
Oven Battery serving the Great Lakes Division.
Construction of Coating Lines - The Company is in the process of constructing a
$67 million coating line which will be located at the Company's Granite City
Division. The line, which is rated at 270,000 annual net tons, is expected to
be completed in twelve to fifteen months and will increase the Company's coated
product capacity to more than two million tons annually. The Company will
market products from this new coating line to the metal buildings market for use
in pre-engineered buildings and in the emerging market for residential roofing,
siding and framing. The Company intends to finance the construction of this
line by utilizing internally generated funds.
On July 25, 1995, the Company's Board of Directors approved the construction of
an additional coating facility. This second coating line, which is also rated
at 270,000 annual net tons, is intended to service the low rise construction
market. The location and financing alternatives for this second coating
facility are still being evaluated.
The construction of these two additional coating facilities is a part of the
Company's long term strategy to increase the percentage of its shipments of
higher margin products.
13
<PAGE>
LIQUIDITY AND SOURCES OF CAPITAL
The Company's liquidity needs arise primarily from capital investments, working
capital requirements and principal and interest payments on its indebtedness.
In addition to the Company's 1995 and 1993 public offerings of Class B Common
Stock and the receipt of approximately $111.0 million in February 1994 from the
satisfaction of a judgment in favor of the Company against the B&LE, the Company
has satisfied these liquidity needs with funds provided by long term borrowings
and cash provided by operations.
Cash and cash equivalents totaled $263.1 million at June 30, 1995 as compared to
$161.9 million at December 31, 1994. This increase is primarily a result of the
proceeds realized in connection with the primary offering of 6,900,000 shares of
Class B Common Stock completed on February 1, 1995. During the third quarter of
1995, the Company intends to use all of the proceeds from this offering, along
with an additional amount which will be funded from the Company's available
cash, to prepay a portion of the related party debt associated with the rebuild
of the No. 5 Coke Oven Battery serving the Great Lakes Division.
Cash Flows from Operating Activities
For the six months ended June 30, 1995, cash provided by operating activities
decreased by $29.4 million compared to the same 1994 period. Cash provided by
operating activities, excluding the effects of the restructuring charge and the
B&LE litigation judgment recorded during the first six months of 1995 and 1994,
respectively, increased by $82.1 million. This increase is primarily due to an
improvement in income from operations, which was partially offset by the impact
of working capital items, which reduced cash flows by $51.9 million for the six
month period.
Cash Flows from Investing Activities
Capital investments for the six months ended June 30, 1995 and 1994 amounted to
$95.1 and $90.1 million, respectively. The 1995 spending is largely
attributable to a planned blast furnace reline at the Granite City Division as
well as the commencement of construction of a steel coating line at the same
location. The 1994 spending was largely attributable to the completion of a
pickle line servicing the Great Lakes Division. The Company plans to invest an
additional $114.1 million during the remainder of 1995 for capital expenditures
to improve its plant and equipment.
Cash Flows from Financing Activities
Financing activities for the first six months of 1995 included the issuance of
6,900,000 shares of Class B Common Stock which generated net proceeds of $104.7
million, offset by debt repayments of $13.3 million and other payments totaling
$14.0 million. Financing activities for the first six months of 1994 included
borrowings of $88.0 million related to the completion of a pickle line servicing
the Great Lakes Division, as well as the prepayment of $40.6 million aggregate
principal amount of its outstanding First Mortgage Bonds.
Sources of Financing
The Company's available sources of liquidity consist of a Receivables Purchase
Agreement with commitments of up to $200 million and $15 million in an
uncommitted, unsecured line of credit. On May 16, 1995, the Receivables
Purchase Agreement was amended to increase the amount available under this
agreement from a maximum of $180 million to a maximum of $200 million.
Additionally, the expiration date was extended from May 16, 1997 to May 16,
2000. On June 30, 1995, there were no cash borrowings outstanding under the
Receivables Purchase Agreement, and outstanding letters of credit under the
Receivables Purchase Agreement totaled $84.9 million.
Total debt and redeemable preferred stock as a percentage of total
capitalization improved to 59.0% at June 30, 1995, as compared to 68.6% at
December 31, 1994, primarily as a result of the Company's improved net income
and the proceeds received in connection with the aforementioned stock offering.
14
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Baker's Port, Inc. v. National Steel Corporation. With respect to the matter
involving claims arising out of the sale of land in Texas to Baker's Port, Inc.
("BPI"), previously reported in the Company's 1994 Form 10-K and Form 10-Q for
the quarter ended March 31, 1995 (the "first quarter Form 10-Q"), the parties
have tentatively agreed to a settlement of this matter. In summary, the
settlement provides that (i) the lawsuit will be dismissed with prejudice and
the parties will give each other mutual releases of all claims, (ii) BPI will
convey the subject property back to Natland Corporation ("Natland") (with the
exception that BPI will retain ownership of 7.8 acres and a two story building
situated thereon in which BPI's headquarters are located), (iii) Natland will
pay to BPI the sum of $3,500,000 ($2,150,000 at the closing and $1,350,000 when
a certain portion of the property is sold by Natland) and (iv) upon sale of the
subject property, Natland will retain the first $18,000,000 of net proceeds and
any net proceeds over $18,000,000 will be shared equally between Natland and
BPI. The settlement is subject to the parties agreeing upon and executing formal
documentation embodying the aforesaid terms. The Company anticipates that it
will record a gain upon final settlement.
Detroit Coke Corporation v. NKK Chemical USA, Inc. With respect to the matter
involving the claim of Detroit Coke Corporation ("Detroit Coke") that the
defendants supplied it with defective coal and coal blends which allegedly
caused damage to its coke making facility and environmental problems, previously
reported in the Company's 1994 Form 10-K, on or about May 12, 1995, the court
entered an order granting summary judgment in favor of the remaining defendants
as to all claims, except those claims against NKK Chemical pertaining to amounts
allegedly due for coke and coke oven gas supplied under the Coke Purchasing
Agreement between Detroit Coke and NKK Chemical. Thereafter, on June 15, 1995,
Detroit Coke moved for reconsideration of the court's May 12, 1995 Order. The
Company has submitted a memorandum of law in opposition to Detroit Coke's motion
for reconsideration. No decision has yet been rendered on this motion.
Management believes that the final disposition of the foregoing matters will not
have a material adverse effect on the Company's financial position, results of
operations or cash flows.
ENVIRONMENTAL MATTERS
The Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), and similar state superfund statutes generally
impose joint and several liability on present and former owners and operators,
transporters and generators for remediation of contaminated properties,
regardless of fault. The Company and certain of its subsidiaries are involved as
a potentially responsible party ("PRP") at a number of off-site CERCLA or state
superfund site proceedings.
Martha C. Rose Chemical Superfund Site. With reference to the matter involving
the Martha C. Rose Site in Holden, Missouri, previously reported in the
Company's 1994 Form 10-K, in March 1995, the PRP Steering Committee reserved
approximately $30 million to cover the costs of project completion,
Environmental Protection Agency ("EPA") oversight and future operations and
maintenance. The remaining $5 million of the funds previously collected will be
refunded to the various PRP's. The Company's share of this refund will be
immaterial as the Company was a de minimis party in this action.
Springfield Township Site. With reference to the matter involving the
Springfield Township Site located in Davisburg, Michigan, previously reported in
the Company's 1994 Form 10-K, personnel representing the EPA have indicated an
intention to change the soil treatment technology at the site from incineration
to a less costly and less controversial treatment method. Specifically, the EPA
is expected to amend the Record of Decision later in 1995 to authorize the use
of significantly less expensive alternative technologies, such as soil washing.
Projected cost estimates for the final remedy could be as low as $10 million (as
compared to the original estimates of $20-33 million) if soil washing rather
than incineration was implemented at this site. The impact of this reduction on
the Company's prior settlement offer has yet to be determined.
15
<PAGE>
FOX Sites.
Lowry Landfill Site. With respect to the matter involving the Lowry Landfill
Site in Aurora, Colorado, previously reported in the Company's 1994 Form 10-K
and first quarter Form 10-Q, the Alumet Partnership ("Alumet") has reached a
settlement with the EPA and the Department of Justice concerning any liability
Alumet may have with respect to this Site. The terms of the settlement are
embodied in a consent decree that was executed by both Alumet and the Department
of Justice, lodged with the District Court for the District of Colorado on July
10, 1995, and published for public comment in the Federal Register on July 25,
1995. If the consent decree is ultimately approved, Alumet will pay the sum of
$7.3 million in full settlement of all third party claims, including all claims
by the Government and by private plaintiffs (including the City and County of
Denver, Waste Management of Colorado, Inc. and Chemical Waste Management) with
respect to this matter. The Company's share of the settlement will be 50% of the
overall amount, or $3.65 million, and will be covered by the Fox $10 million
prepayment. See "Part I - Financial Information, Note 5 -Environmental and Legal
Proceedings".
Other
Great Lakes Division Outfalls Proceeding. With reference to the matter
involving certain outfalls located at the Company's Great Lakes Division
facility, including the outfalls at the 80 inch hot strip mill, previously
reported in the Company's 1994 Form 10-K and its first quarter Form 10-Q, the
Company has received ten additional letters from the U. S. Coast Guard ("USCG")
during the second quarter of 1995 regarding the planned assessment of
additional civil penalties totaling $95,000 for alleged oil discharges from
National Pollutant Discharge Elimination System ("NPDES") outfalls. The Company
paid $5,000 on July 11, 1995 in settlement by one of these ten. Discussions
with the USCG regarding the remaining $90,000 of these planned assessments are
ongoing.
Also, with reference to the Michigan Department of Natural Resources ("MDNR")
potential enforcement action with respect to exceedances of limitations at the
80 inch hot strip mill outfall, previously reported in the Company's 1994 Form
10-K, by letter dated June 19, 1995, MDNR accepted the Company's proposal to
proceed with a treatability study and preliminary engineering between July 15,
1995 and July 15, 1996. During that same period of time, the Company will
attempt to make a compliance demonstration to establish that there is no need to
proceed with an alternate control system. MDNR and the Company will be
attempting to negotiate a consent order incorporating these concepts and
resolving all remaining issues.
In connection with certain of these proceedings, the Company has only commenced
investigation or otherwise does not have sufficient information to estimate its
potential liability, if any. Although the outcomes of the proceedings described
above or any fines or penalties that may be assessed in any such proceedings, to
the extent that they exceed any applicable reserves, could have a material
adverse effect on the Company's results of operations for the applicable period,
the Company has no reason to believe that any such outcomes, fines or penalties,
whether considered individually or in the aggregate, will have a material
adverse effect on the Company's financial position or cash flows.
16
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of stockholders was held on April 26, 1995. In connection
with the meeting, proxies were solicited pursuant to the Securities Exchange
Act. The following are the voting results on proposals considered and voted
upon at the meeting, all of which were described in the Company's Proxy
Statement dated March 16, 1995.
1. All nominees for director listed in the Proxy Statement were elected.
<TABLE>
<CAPTION>
NAME VOTES FOR VOTES WITHHELD
-------------------- ---------- --------------
<S> <C> <C>
Edwin V. Clarke, Jr. 61,896,577 967,115
V. John Goodwin 62,608,977 254,715
Masayuki Hanmyo 62,609,077 254,615
Frank Lucchino 62,696,277 167,415
Hiroshi Matsumoto 62,608,777 254,915
Keisuke Murakami 62,609,077 254,615
Osamu Sawaragi 62,609,077 254,615
Kenichiro Sekino 62,609,077 254,615
Robert J. Slater 62,696,577 167,115
</TABLE>
2. The proposal to ratify the selection of Ernst & Young LLP as the Company's
outside auditors for 1995 passed. (For 62,854,990, abstained 5,389,
against 3,313)
Effective June 30, 1995, Keisuke Murakami retired and resigned from the Board of
Directors. Effective July 1, 1995, the Board appointed Susumu Terao to fill the
vacant director position.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following is an index of the exhibits included in this Report on Form
10-Q:
10A Amendment Number One to the Receivables Purchase Agreement, dated as
of May 31, 1995, between the Company and National Steel Funding
Corporation.
27A Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the second quarter
of 1995.
17
<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.
NATIONAL STEEL CORPORATION
BY /s/ Robert M. Greer
----------------------------------------------
Robert M. Greer, Senior Vice President and
Chief Financial Officer
BY /s/ Carl M. Apel
----------------------------------------------
Carl M. Apel, Corporate Controller, Accounting
and Assistant Secretary
Date: July 28, 1995
18
<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.
NATIONAL STEEL CORPORATION
BY ________________________________________________
Robert M. Greer, Senior Vice President and
Chief Financial Officer
BY ________________________________________________
Carl M. Apel, Corporate Controller, Accounting
and Assistant Secretary
Date: July 28, 1995
<PAGE>
CONFORMED COPY
AMENDMENT NO. 1 TO RECEIVABLES PURCHASE AGREEMENT
AMENDMENT dated as of May 31, 1995 (the "Amendment") among
NATIONAL STEEL FUNDING CORPORATION, a Delaware corporation, the financial
institutions listed on the signature pages hereof, as Buyers, MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, THE FUJI BANK AND TRUST COMPANY, THE MITSUBISHI
BANK, LTD. and COMERICA BANK, as Letter of Credit Issuing Banks, J.P. MORGAN
DELAWARE, as Reserve Letter of Credit Bank, NATIONAL STEEL CORPORATION, a
Delaware corporation, as Servicer, MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent and J.P. MORGAN DELAWARE, a Delaware banking
corporation, as Structuring and Collateral Agent.
W I T N E S S E T H :
WHEREAS, the parties hereto have heretofore entered into a
Receivables Purchase Agreement dated as of May 16, 1994 (the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement to
provide for, among other things, an extension of the facility;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
specifically defined herein, each term used herein which is defined in the
Agreement shall have the meaning assigned to such terms in the Agreement.
Each reference to "hereof", "hereunder", "herein" and "hereby" and each other
similar reference and each reference to "this Agreement" and each other
similar reference contained in the Agreement shall from and after the date
hereof refer to the Agreement as amended hereby.
SECTION 2. Amendment of Section 1.01 of the Agreement.
Section 1.01 of the Agreement is amended by (a) replacing the date "May 16,
1997" in the definition of "Expiry Date" with the date "May 16, 2000", and (b)
adding "; and provided further that such letter of credit may be amended from
time to time to increase the face amount thereof" in the definition of
"Reserve Letter of Credit" after the word "Certificates" appearing in the last
line thereof.
SECTION 3. Amendment of Section 6.01(q) of the Agreement.
Section 6.01(q) of the Agreement is amended by replacing the amount
"$36,000,000" with the amount "$40,000,000".
SECTION 4. Amendment to Exhibit. The Agreement is amended by
replacing Exhibit O, Form of Reserve Letter of Credit, with an amended Exhibit
O, Form of Reserve Letter of Credit, in the form of Exhibit A hereto.
<PAGE>
SECTION 5. Additional Banks; Total Commitments. Upon execution
and delivery of this Amendment, Mellon Bank N.A. shall become a party to the
Agreement and a "Buyer" for all purposes thereof and hereof, entitled to all
rights and subject to all duties thereunder and hereunder. The Agreement is
amended so that the aggregate amount of Commitments is $200,000,000 and each
Buyer's Commitment is the amount set forth opposite its name on the signature
page hereof. The Buyer whose commitment is changed to zero shall, on the date
this Amendment becomes effective pursuant to Section 7 cease to be a "Buyer"
party to the Agreement; provided that the provisions of Section 8.03 shall
continue to inure to the benefit of such Buyer.
SECTION 6. Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts; Effectiveness. This Amendment may be
signed in any number of counterparts, each of which shall be an original with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Amendment shall become effective as of the date hereof (i)
when the Administrative Agent shall have received duly executed counterparts
hereof signed by NSFC, the Reserve L/C Bank, the Issuing Banks, the Agents,
the Servicer and the Buyers (or, in the case of any party as to which an
executed counterpart shall not have been received, the Administrative Agent
shall have received telegraphic, telex or other written confirmation from such
party of execution of a counterpart hereof by such party) and (ii) each of the
following conditions shall have been satisfied, in form and substance
acceptable to the Agents:
(i) a good standing certificate for NSFC issued by the
Secretary of State of the State of Delaware;
(ii) (A) a copy of the resolutions of the board of directors
of NSFC certified as of the date of this Amendment by its secretary
or an assistant secretary authorizing the execution, delivery and
performance of this Amendment and approving the transactions
contemplated hereby; and (B) a certificate of the secretary or an
assistant secretary of NSFC dated the date of this Amendment and
certifying (x) the names and signatures of the officers authorized on
its behalf to execute this Amendment and any other documents to be
delivered by NSFC hereunder, (y) a copy of NSFC's by-laws, and (z)
the certificate of incorporation of NSFC;
(iii) (A) a copy of the resolutions of the board of directors of
NSC certified as of the date of this Amendment by its secretary or an
assistant secretary authorizing the execution, delivery and
performance of this Amendment and approving the transactions
contemplated hereby; and (B) a certificate of the secretary or an
assistant secretary of NSC dated the date of this Amendment and
certifying (x) the names and signatures of the officers authorized on
its behalf to execute this Amendment and any other documents to be
delivered by NSC hereunder, (y) a copy of NSC's by-laws, and (z) the
certificate of incorporation of NSC;
(iv) a good standing certificate for NSC issued by the
Secretary of State of NSC's jurisdiction of incorporation, dated a
date reasonably near the date of this Amendment;
<PAGE>
(v) opinions dated the date of this Amendment of Yukevich,
Blume & Zangrilli, counsel for NSFC and NSC in substantially the
forms of Exhibit B-1 and B-2 hereto; and covering such other matters
as the Administrative Agent may reasonably request;
(vi) the Reserve L/C Bank shall have executed and delivered to
the Collateral Agent the Reserve Letter of Credit substantially in
the form of Exhibit A hereto; and
(vii) evidence satisfactory to the Collateral Agent that the
rating assigned to the Buyer's Certificates shall have been
reaffirmed by S&P.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
NATIONAL STEEL FUNDING CORPORATION
By: /s/ William E. McDonough
Title: Treasurer
NATIONAL STEEL CORPORATION,
as Servicer
By: /s/ Robert M. Greer
Title: Senior Vice President &
Chief Financial Officer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
as Administrative Agent
By: /s/ Laura E. Reim
Title: Vice President
J.P. MORGAN DELAWARE, as
Structuring and Collateral
Agent and Reserve Letter of
Credit Issuing
Bank
By: /s/ Robert J. Henchey
Title: Vice President
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Letter of
Credit Issuing Bank
By: /s/ Laura E. Reim
Title: Vice President
THE FUJI BANK AND TRUST
COMPANY, as Letter of Credit
Issuing Bank
By: /s/ Katsuyuki Takagi
Title: Vice President
THE MITSUBISHI BANK, LTD., as
Letter of Credit Issuing
Bank
By: /s/ Hajime Kaneko
Title: Vice President & Manager
COMERICA BANK, as Letter of
Credit Issuing Bank
By: /s/ Phillip A. Coosaia
Title: Assistant Vice President
BUYERS:
Commitment: $15,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Laura E. Reim
Title: Vice President
Commitment: $15,000,000 J.P. MORGAN DELAWARE
By: /s/ Robert J. Henchey
Title: Vice President
Commitment: $30,000,000 THE FUJI BANK AND TRUST
COMPANY
<PAGE>
Commitment: $30,000,000 THE FUJI BANK AND TRUST
COMPANY
By: /s/ Katsuyuki Takagi
Title: Vice President
Commitment: $25,000,000 COMERICA BANK
By: /s/ Phillip A. Coosaia
Title: Assistant Vice
President
Commitment: $20,000,000 THE MITSUBISHI BANK, LTD.
By: /s/ Hajime Kaneko
Title: Vice President and
Manager
Commitment: $15,000,000 THE BANK OF TOKYO TRUST
COMPANY
By: /s/ Akihiko Hagura
Title: Vice President
Commitment: $15,000,000 THE DAI-ICHI KANGYO BANK,
LTD., NEW YORK BRANCH
By: /s/ Gregg Silver
Title: Vice President and
Group Leader, Asset
Securitization Group
Commitment: $15,000,000 THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
<PAGE>
By: /s/ Hiroshi Suzuki
Title: Senior Vice President
Commitment: $15,000,000 THE LONG-TERM CREDIT BANK
OF JAPAN, LTD.
By: /s/ Taisuke Hitomi
Title: Deputy General
Manager
Commitment: $15,000,000 NBD BANK, N.A.
By: /s/ Mark A. Weitzel
Title: Second Vice President
Commitment: $10,000,000 THE YASUDA TRUST AND
BANKING CO., LTD.
By: /s/ Koichi Nakayama
Title: Vice President
Commitment: $10,000,000 MELLON BANK, N.A.
By: /s/ Richard K. James
Title: Vice President
Commitment: $0 BANK OF AMERICA ILLINOIS
By: /s/ Erle R.L. Archer
Title: Vice President
TOTAL
COMMITMENTS: $200,000,000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 263,083
<SECURITIES> 0
<RECEIVABLES> 307,444
<ALLOWANCES> 15,155
<INVENTORY> 382,461
<CURRENT-ASSETS> 937,833
<PP&E> 3,455,586
<DEPRECIATION> 2,039,097
<TOTAL-ASSETS> 2,649,044
<CURRENT-LIABILITIES> 698,090
<BONDS> 519,772
<COMMON> 433
65,780
36,650
<OTHER-SE> 490,764
<TOTAL-LIABILITY-AND-EQUITY> 2,649,044
<SALES> 1,489,287
<TOTAL-REVENUES> 1,489,287
<CGS> 1,239,520
<TOTAL-COSTS> 1,239,520
<OTHER-EXPENSES> 143,787
<LOSS-PROVISION> (30)
<INTEREST-EXPENSE> 21,510
<INCOME-PRETAX> 80,687
<INCOME-TAX> 5,676
<INCOME-CONTINUING> 75,011
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 75,011
<EPS-PRIMARY> 1.65
<EPS-DILUTED> 1.65
</TABLE>
