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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 2, 1999 (July 28, 1999)
NATIONAL STEEL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-983 25-0687210
(Commission File Number) (IRS Employer 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
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ITEM 5. OTHER EVENTS
National Steel Corporation issued a press release on July 28, 1999 announcing
it's second quarter 1999 earnings. A copy of this press release is attached
hereto as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit 99.1 Press release dated July 28, 1999.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATIONAL STEEL CORPORATION
Date: August 2, 1999 By: /s/ Glenn H. Gage
---------------------------------------
Glenn H. Gage
Senior Vice President and Chief
Financial Officer
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News Release
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Media Contact: Clarence Ehlers
(219) 273-7327
Analyst/Investor Contact: Joseph A. Rainis
(219) 273-7158
NATIONAL STEEL ANNOUNCES OPERATING PROFIT
FOR SECOND QUARTER 1999
Mishawaka, IN, July 28, 1999--National Steel Corporation (NYSE: NS) today
reported operating profit of $2.9 million for the second quarter of 1999
compared to $26.8 million for the same quarter of 1998. Although shipments
exceeded the prior year level, operating profit in the most current period was
impacted by the lingering effects of high levels of low-priced imported steel
and above normal inventories at steel service centers which continued to
suppress average selling prices. In addition, the previously announced major
reline of the "A" blast furnace at Granite City, which was completed in June
1999, reduced operating income by approximately $7 million in the quarter.
Higher net financing costs, primarily due to the recent $300 million bond
offering, contributed to the net loss of $4.6 million for the second quarter of
1999, or $0.11 per diluted common share, compared to net income of $26.5
million, or $0.61 per diluted common share, for the second quarter of 1998. Net
sales in the second quarter of 1999 decreased to $707.3 million from $747.8
million during the same period in 1998 as average selling prices declined 7%
from year ago levels.
"I was pleased with our improvement during the quarter and our ability to earn a
profit on an operating basis. Our efforts to improve our product mix and reduce
expenses combined with our increased volume has us well positioned for the
future," said Chairman and Chief Executive Officer, Yutaka Tanaka.
FINANCIAL POSITION AND LIQUIDITY
Cash and cash equivalents of $249 million along with an additional $261 million
available from short-term credit facilities resulted in total liquidity of $510
million at June 30, 1999. Capital expenditures of $144 million in the first
half of 1999, primarily related to a new coating facility currently under
construction at the Great Lakes facility and the blast furnace reline at Granite
City, represented the major use of cash during the period.
OTHER MATTERS
National Steel announced on July 22, 1999 that it had reached tentative
agreement with the United Steelworkers of America on a new five-year Basic Labor
Agreement. The existing Basic Labor Agreement expires on July 31, 1999.
Details of the tentative agreement are being withheld, pending approval by the
Company's Board of Directors, the Basic Steel Industry Conference Advisory Board
and the executive board of the United Steelworkers of America and ratification
by the covered membership.
-more-
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"We are pleased that we were able to reach an agreement, thereby avoiding any
disruption of our operations. This tentative agreement is in the best interests
of both the Company and its employees, as well as our customers, suppliers,
shareholders and the communities in which we have plants and offices," said Mr.
Tanaka.
The Company's Year 2000 compliance effort has been substantially completed with
only minimal work remaining, including the development and review of a
contingency plan which is expected to be completed by the end of the third
quarter.
During the second quarter, the Company earned awards from two of its major
customers. The General Motor's "People Make Quality Happen" award was earned
for analytical efforts put forth by employees of National Steel during joint
problem solving activities at a General Motors Plant during 1998. Additionally,
Mitsubishi announced that National Steel is the recipient of the Superior
Supplier Award which recognizes superior quality, delivery and service that we
provided to Mitsubishi during the past year. These awards, following the award
announced during the first quarter from Toyota for quality performance, continue
to emphasize the progress the Company has made in its focus on the customer.
Earlier this month the Department of Commerce entered into settlement agreements
with both Brazil and Russia that suspend the investigation and the imposition of
duties with regard to the trade cases which were filed last year relative to
unfairly traded hot-rolled product imports. Although these suspension
agreements place quotas on exports by these countries to the U.S. market, the
agreements will still allow foreign producers to continue trading unfairly and
further injure American producers. The domestic steel industry, including
National Steel, continues to support the strong enforcement of U.S. trade laws
and believes that the suspension of trade cases, over the objections of
petitioners, undermines the effectiveness and credibility of U.S. trade laws.
In June, National Steel, along with several other domestic steelmakers and the
United Steelworkers of America, filed trade cases on cold-rolled carbon steel
product imports. These cases were filed against countries which represented
over 63% of total cold-rolled product imports in 1998 and allege dumping margins
of as high as 122 percent and subsidy margins of as high as 101 percent. The
Company is hopeful that the Department of Commerce and the International Trade
Commission will agree with the petitions and that our nation's trade laws are
fully enforced and strongly opposes any settlement that results in a suspension
agreement.
All statements contained in this release, other than historical information, are
forward-looking statements. A variety of factors could cause business
conditions and the Company's actual results and experience to differ materially
from those expected by the Company or expressed in the Company's forward-looking
statements. Additional information concerning these factors is available in the
Company's most recent Form 10-K for the year ended December 31, 1998.
Headquartered in Mishawaka, Indiana, National Steel is the nation's fourth
largest integrated steel company, with annual shipments of approximately six
million tons of flat rolled products. National Steel employs approximately 9,200
people. Visit National Steel's website at: www.nationalsteel.com.
The Company's consolidated statements of income, condensed balance sheets and
statements of cash flows follow:
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NATIONAL STEEL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In millions, except per share data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------ ----------------------
1999 1998 1999 1998
------- ------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 707.3 $ 747.8 $1,365.2 $1,456.3
Cost of products sold 633.6 655.4 1,240.4 1,292.8
Selling, general and administrative expense 35.6 33.5 75.3 71.6
Depreciation 35.5 32.4 68.1 63.5
Equity (income) loss of affiliates (0.3) (0.3) (0.7) (0.2)
------- ------- -------- --------
Income (loss) from operations 2.9 26.8 (17.9) 28.6
Other (income) expense
Financing costs (net) 7.7 2.9 13.0 3.7
Net gain on disposal of non-core assets -- (2.7) (0.6) (2.7)
------- ------- -------- --------
7.7 0.2 12.4 1.0
------- ------- -------- --------
Income (loss) before income taxes (4.8) 26.6 (30.3) 27.6
Income tax (credit) (0.2) 0.1 (1.6) (4.8)
------- ------- -------- --------
Net income (loss) $ (4.6) $ 26.5 $ (28.7) $ 32.4
======= ======= ======== ========
Basic earnings per share:
Net income (loss) $ (0.11) $ 0.61 $ (0.69) $ 0.75
======= ======= ======== ========
Weighted average shares outstanding (in thousands) 41,288 43,288 41,537 43,288
Diluted earnings per share:
Net income (loss) $ (0.11) $ 0.61 $ (0.69) $ 0.75
======= ======= ======== ========
Weighted average shares outstanding (in thousands) 41,288 43,354 41,537 43,340
Dividends paid per common share outstanding $ 0.07 $ 0.07 $ 0.14 $ 0.14
======= ======= ======== ========
Operating Statistics (in thousands of tons):
Shipments 1,471 1,450 2,861 2,869
Production 1,408 1,546 2,910 3,119
</TABLE>
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Exhibit 99.1
NATIONAL STEEL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions)
<TABLE>
<CAPTION>
June 30, December 31, June 30, December 31,
1999 1998 1999 1998
----------- ------------ ----------- ------------
Assets Liabilities and
Stockholders' Equity
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 249.0 $ 137.9 Current liabilities $ 505.1 $ 546.8
Receivables -- net 273.0 245.9 Long-term debt 573.3 285.8
Inventories 463.2 472.8 Other long-term
Other 25.1 21.7 liabilities 821.1 801.1
Deferred tax assets 23.3 23.3
----------- ------------ ----------- -----------
Total current assets 1,033.6 901.6 Total Liabilities 1,899.5 1,633.7
Property, plant and
Equipment--net 1,343.0 1,270.5 Stockholders' Equity 807.9 850.3
Other assets 330.8 311.9
Total Liabilities
----------- ------------ ----------- -----------
Total Assets $ 2,707.4 $ 2,484.0 and Equity $ 2,707.4 $ 2,484.0
=========== ============ =========== ===========
</TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1999 1998
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<S> <C> <C>
Cash provided by (used in) operating
activities:
Net income (loss) $ (28.7) $ 32.4
Depreciation 68.1 63.5
Working capital items:
Investments -- 15.0
Receivables (27.1) 13.9
Inventories 9.6 (59.4)
Accounts payable & accrued liabilities (42.5) (60.0)
All other 15.7 (10.2)
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(4.9) (4.8)
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Cash provided by (used in) investing
activities:
Purchases of property, plant
and equipment (net) (143.6) (63.3)
Acquisition of ProCoil (7.7) --
Net proceeds from the sale of assets 0.6 3.3
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(150.7) (60.0)
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Cash provided by (used in) financing
activities:
Repayment of debt (28.3) (19.8)
Borrowings 308.7 7.2
Repurchase of common stock (7.9) --
Common stock dividends (5.8) (6.0)
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266.7 (18.6)
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Increase (decrease) in cash
and cash equivalents 111.1 (83.4)
Cash and cash equivalents at
the beginning of the period 137.9 312.6
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Cash and cash equivalents at
the end of the period $ 249.0 $ 229.2
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</TABLE>
