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 quarterly period ended December 31, 1994
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to
_________
Commission file number 1-9838
NS GROUP, INC.
Exact name of registrant as specified in its charter
KENTUCKY 61-0985936
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
Number)
Ninth and Lowell Streets, Newport, Kentucky 41072
(Address of principal executive offices)
Registrant's telephone number, including area code (606)
292-6809
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 _____
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Common stock, no par value 13,809,413
(Class) (Outstanding at January 31, 1995)
NS GROUP, INC.
INDEX
PART I FINANCIAL INFORMATION PAGE
Item 1 -- Financial Statements
Condensed Consolidated Balance Sheets . . . . . . . . 3
Condensed Consolidated Statements of Operations . . . 4
Condensed Consolidated Statements of Cash Flows . . . 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 -- Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . 10
PART II OTHER INFORMATION
Item 6 -- Exhibits and Reports on Form 8-K . . . . 21
NS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1994 AND SEPTEMBER 24, 1994
(Dollars in thousands)
(Unaudited)
December 31, September 24,
1 9 9 4 1 9 9 4
CURRENT ASSETS
Cash and cash equivalents $ 1,799 $ 4,405
Short-term investments 38,567 40,071
Accounts receivable, less allowance for
doubtful accounts of $578 and $637,
respectively 39,666 42,651
Inventories 41,729 32,290
Other current assets 17,103 16,793
Total current assets 138,864 136,210
PROPERTY, PLANT AND EQUIPMENT 265,708 262,721
Less - accumulated depreciation (107,043) (102,182)
158,665 160,539
OTHER ASSETS 18,377 18,578
Total assets $315,906 $315,327
CURRENT LIABILITIES
Notes payable $ 31,231 $ 28,872
Accounts payable 33,234 27,312
Other current liabilities 17,547 19,281
Current portion of long-term debt 17,368 15,543
Total current liabilities 99,380 91,008
LONG-TERM DEBT 131,323 138,110
DEFERRED TAXES 9,331 9,745
COMMON SHAREHOLDERS' EQUITY
Common stock, no par value, 40,000,000 shares
authorized; 13,809,413 shares issued and
outstanding 48,988 48,988
Common stock options and warrants 277 262
Unrealized gain (loss) on available for sale
securities (806) (124)
Retained earnings 27,413 27,338
Total common shareholders' equity 75,872 76,464
Total liabilities and shareholders'
equity $315,906 $315,327
The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
NS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED
DECEMBER 31, 1994 AND DECEMBER 25, 1993
(Dollars in thousands, except per share amounts)
(Unaudited)
DECEMBER 31, DECEMBER 25,
1 9 9 4 1 9 9 3
NET SALES $93,489 $71,959
COST AND EXPENSES
Cost of products sold 81,999 64,168
Selling and administrative expenses 6,932 5,980
Operating income 4,558 1,811
OTHER INCOME (EXPENSE)
Gain on sale of subsidiary - 35,292
Interest expense (5,356) (5,011)
Interest income 532 459
Other, net 389 553
Income before income taxes and
cumulative effect of a change in
accounting principle 123 33,104
PROVISION FOR INCOME TAXES 48 13,078
Income before cumulative effect of
a change in accounting principle 75 20,026
CUMULATIVE EFFECT, AS OF SEPTEMBER 25,
1993, OF A CHANGE IN THE METHOD OF
ACCOUNTING FOR INCOME TAXES - 1,715
Net income $ 75 $21,741
PER COMMON SHARE
Income before cumulative effect of
a change in accounting principle $ .01 $1.46
Cumulative effect of a change in the
method of accounting for income taxes - .12
Net income $ .01 $1.58
WEIGHTED AVERAGE SHARES OUTSTANDING 13,809,413 13,742,596
The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
NS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED
DECEMBER 31, 1994 AND DECEMBER 25, 1993
(Dollars in thousands)
(Unaudited)
DECEMBER 31, DECEMBER 25,
1 9 9 4 1 9 9 3
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 75 $21,741
Adjustments to reconcile net income
to net cash flows from operating activities:
Depreciation and amortization 5,020 4,661
Increase in deferred taxes 4 1,906
Gain on sale of subsidiary - (35,292)
Decrease in accounts receivable, net 2,985 1,102
Increase in inventories (9,439) (7,393)
(Increase) decrease in other current assets (310) 2,332
Increase in accounts payable 5,922 4,045
Increase (decrease) in accrued liabilities (1,734) 7,643
Net cash flows from operating activities 2,523 745
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of subsidiary - 50,426
Cash dividend from sold subsidiary - 6,818
Increase in property, plant and equipment, net (2,987) (1,242)
Increase in other assets (374) (4,777)
(Increase) decrease in short-term investments 1,504 (50,119)
Net cash flows from investing activities (1,857) 1,106
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in notes payable 2,359 3,593
Proceeds from issuance of long-term debt - 431
Repayments on long-term debt (4,962) (1,733)
Increase in deferred financing costs (669) (50)
Proceeds from issuance of common stock - 642
Net cash flows from financing activities (3,272) 2,883
Net increase (decrease) in cash and cash
equivalents (2,606) 4,734
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,405 5,797
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,799 $10,531
Cash paid during the period for:
Interest $ 7,218 $ 4,959
Income taxes $ 700 $ -
The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
NS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Principles of Consolidation
The condensed consolidated financial statements include
the accounts of NS Group, Inc. and its wholly-owned
subsidiaries (the Company): Newport Steel Corporation
(Newport), Koppel Steel Corporation (Koppel), Erlanger
Tubular Corporation (Erlanger), Imperial Adhesives, Inc.
(Imperial), Northern Kentucky Management, Inc., Northern
Kentucky Air, Inc. and NSub I, Inc., formerly known as
Kentucky Electric Steel Corporation. All significant
intercompany balances and transactions have been eliminated.
The accompanying information reflects, in the opinion
of management, all adjustments (which consist only of normal
recurring adjustments) necessary to present fairly the
results for the interim periods. Reference should be made
to NS Group, Inc.'s Form 10-K for the fiscal year ended
September 24, 1994 for additional footnote disclosure,
including a summary of significant accounting policies.
In the first quarter of fiscal 1995, the Company
adopted the provision of Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment
Benefits" (Statement 112). The impact on the Company's
financial statements from the adoption of Statement 112 was
not material.
The Company's fiscal year ends on the last Saturday of
September. The first quarter periods of fiscal 1995 and
1994 are 14 and 13 week periods, respectively.
Note 2: Inventories
At December 31, 1994 and September 24, 1994,
inventories stated at the lower of LIFO (last-in, first-out)
cost or market represent approximately 36% and 27% of total
inventories before the LIFO reserve, respectively.
Inventories consist of the following components ($000's):
DECEMBER 31, SEPTEMBER 24,
1 9 9 4 1 9 9 4
Raw materials $10,280 $ 6,699
Semi-finished and
finished goods 33,623 27,695
43,903 34,394
LIFO reserve (2,174) (2,104)
$41,729 $32,290
Note 3: Commitments and Contingencies
The Company has various commitments for the purchase of
materials, supplies and energy arising in the ordinary
course of business.
Newport is a co-defendant in a claim for breach of
implied warranty in the United States District Court for the
Southern District of Texas arising from the failure of two
joints of welded pipe during testing of an offshore
pipeline. The plaintiff is seeking damages in excess of $5
million for costs associated with replacing the entire
pipeline and lost production revenues. The Company believes
that it has meritorious defenses to this claim. Insurance
may be available for a portion, but not all, of any award
for damages. In addition, the Company is subject to various
other claims, lawsuits and administrative proceedings
arising in the ordinary course of business with respect to
commercial, product liability and other matters, which seek
remedies or damages. Based upon its evaluation of available
information, management does not believe that any such
matters are likely, individually or in the aggregate, to
have a material adverse effect upon the Company's
consolidated financial position, results of operations or
cash flows. The ultimate effect of those matters, however,
individually or in the aggregate, on the Company's
consolidated results of operations and cash flows may be
materially impacted by the amount and timing of charges to
operations as well as the amount and timing of cash flow
requirements resulting from new information as it becomes
available.
The Company is subject to federal, state and local
environmental laws and regulations, including, among others,
the Resource Conservation and Recovery Act (RCRA), the Clean
Air Act, the 1990 Amendments to the Clean Air Act (the 1990
Amendments), the Clean Water Act and all regulations
promulgated in connection therewith, including those
concerning the discharge of contaminants as air emissions or
waste water effluents and the disposal of solid and/or
hazardous wastes such as electric arc furnace dust. As
such, the Company is from time to time involved in
administrative and judicial proceedings and administrative
inquiries related to environmental matters.
As with other similar mills in the industry, the
Company's steel mini-mills produce dust which contains lead,
cadmium and chromium, which is classified as a hazardous
waste. The Company currently collects the dust resulting
from its electric arc furnace operations through emission
control systems and recycles it through a waste recycling
firm using EPA-approved processes. The Company also has on
its property at Newport a permitted hazardous waste disposal
facility.
During the fourth quarter of fiscal 1993, Newport shut
down its melt shop operations for nineteen days when it was
discovered that a radioactive substance was accidentally
melted, resulting in the contamination of the melt shop's
electric arc furnace emission control facility, or "baghouse
facility". A similar incident occurred in the third quarter
of fiscal 1992 and shut down Newport's melt shop facilities
for twenty-three days. The occurrences of the accidental
melting of radioactive materials have not resulted in any
notice of violations from federal or state environmental
regulatory agencies. The Company is investigating and
evaluating various issues concerning storage, treatment and
disposal of the radiation contaminated baghouse dust;
however a final determination as to method of treatment and
disposal, cost and further regulatory requirements cannot be
made at this time. Depending on the ultimate timing and
method of treatment and disposal, which will require
appropriate federal and state regulatory approval, the
actual cost of disposal could substantially exceed current
estimates and the Company's insurance coverage. As of
December 31, 1994, claims recorded in connection with
disposal costs exhaust available insurance coverage. Based
on current knowledge, management believes the recorded gross
reserves of $4.4 million for disposal costs pertaining to
these incidents are adequate.
In September 1994, the Company received a proposed
Consent Agreement from the EPA relating to an April 1990
RCRA facility assessment (the Assessment) completed by the
EPA and the Pennsylvania Department of Environmental
Resources. The Assessment was performed in connection with
a permit application pertaining to landfill that is adjacent
to the Koppel facilities. The Assessment identified
potential releases of hazardous constituents at or adjacent
to the Koppel facilities prior to the Company's acquisition
of the Koppel facilities. The proposed Consent Agreement
establishes a schedule for investigating, monitoring,
testing and analyzing the potential releases.
Contamination documented as a result of the investigation
may require cleanup measures. Pursuant to various indemnity
provisions in agreements entered into at the time of the
Company's acquisition of the Koppel facilities, certain
parties have agreed to indemnify the Company against various
known and unknown environmental matters. While such parties
have not at this time acknowledged full responsibility for
potential costs under the proposed Consent Agreement, the
Company believes that the indemnity provisions provide for
it to be fully indemnified against all matters covered by
the proposed Consent Agreement, including all associated
costs, claims and liabilities.
Subject to the uncertainties concerning the proposed
Consent Agreement and the storage and disposal of the
radiation contaminated dust, the Company believes that it is
currently in compliance with all known material and
applicable environmental regulations.
Regulations under the 1990 Amendments to the Clean Air
Act that will pertain to the Company's operations are
currently not expected to be promulgated until 1997 or
later. The Company cannot predict the level of required
capital expenditures or operating costs resulting from
future environmental regulations such as those forthcoming
as a result of the 1990 Amendments. However, the Company
believes that while the 1990 Amendments may require
additional expenditures, such expenditures will not have a
material impact on the Company's business or consolidated
financial position for the foreseeable future.
Capital expenditures for fiscal 1995 relating to
environmental control facilities are not expected to be
material, however, such expenditures could be influenced by
new and revised environmental regulations and laws.
As of December 31, 1994, the Company had environmental
remediation reserves of $4.7 million of which $4.4 million
pertain to accrued disposal costs for radiation contaminated
baghouse dust. As of December 31, 1994, the possible range
of estimated losses related to the environmental contingency
matters discussed above in excess of those accrued by the
Company is $0 to $3.0 million; however, with respect to the
proposed Consent Agreement matter, the Company cannot
estimate the possible range of losses should the Company
ultimately not be indemnified. Based upon its evaluation of
available information, management does not believe that any
of the environmental contingency matters discussed above are
likely, individually or in the aggregate, to have a material
adverse effect upon the Company's consolidated financial
positions, results of operations or cash flows. However,
the Company cannot predict with certainty that new
information or developments with respect to the proposed
Consent Agreement or its other environmental contingency
matters, individually or in the aggregate, will not have a
material adverse effect on the Company's consolidated
financial position, results of operations or cash flows.
Note 4: Long-Term Debt Agreements
Certain of the Company's loan agreements contain
covenants requiring maintenance of minimum net worth and
fixed charge coverage ratios. As of December 31, 1994, the
Company was not in compliance with such covenants, but
received waivers from its lenders as well as amendments to
the agreements that the Company believes will enable it to
comply with such covenants for the foreseeable future.
NS GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The Company operates in two separate business segments:
specialty steel and industrial adhesives. Within the
specialty steel segment are the operations of Newport, a
manufacturer of welded tubular steel products and hot rolled
coils; Koppel, a manufacturer of seamless tubular steel
products, SBQ products and semi-finished steel products; and
Erlanger, a tubular steel product finishing operation. The
Company's specialty steel products consist of: (i) seamless
and welded OCTG products primarily used in oil and natural
gas drilling and production operations; (ii) line pipe used
in the transmission of oil, gas and other fluids; (iii) SBQ
products primarily used in the manufacture of heavy
industrial equipment; and (iv) hot rolled coils which are
sold to service centers and other manufacturers for further
processing. Within the adhesives segment are the operations
of Imperial, a manufacturer of industrial adhesives
products.
In October 1993, the Company sold KES, a manufacturer
of SBQ products, to a newly formed public company in
exchange for $45.6 million in cash and 400,000 shares
(approximately 8%) of the newly formed public company, then
valued at $4.8 million. Reference is made to Note 2 to the
audited annual Consolidated Financial Statements included in
the Company's Form 10-K for the fiscal year ended September
24, 1994 concerning the Company's sale of KES.
Results of Operations
The Company's net sales, cost of products sold and
operating results by industry segment for the three month
periods ended December 31, 1994 and December 25, 1993 are
summarized below. The first quarters of fiscal 1995 and
1994 are 14 and 13 week periods, respectively. As such, the
increases and decreases in operating results for the
quarterly comparative periods, as discussed below, were
partially attributable to the additional week of operations
in the first quarter of fiscal 1995.
Fiscal Quarter Ended December
1994 1993
(in thousands of dollars)
Net sales
Specialty steel segment...... $84,716 $63,762
Adhesives segment............ 8,773 8,197
$93,489 $71,959
Cost of products sold
Specialty steel segment...... $75,210 $57,817
Adhesives segment............ 6,789 6,351
$81,999 $64,168
Operating income
Specialty steel segment...... $ 5,296 $ 2,153
Adhesives segment............ 273 241
Corporate allocations
and income.................. (1,011) (583)
$ 4,558 $ 1,811
Sales data for the Company's specialty steel segment
for the three month periods ended December 31, 1994 and
December 25, 1993 were as follows:
Fiscal Quarter Ended December
1994 1993
Tons shipped
Welded tubular............... 86,800 66,700
Seamless tubular............. 27,900 20,400
SBQ.......................... 42,800 33,900
Other........................ 12,100 9,500
169,600 130,500
Net sales ($000's)
Welded tubular............... $38,751 $27,806
Seamless tubular............. 21,786 17,750
SBQ.......................... 19,459 14,346
Other........................ 4,720 3,860
$84,716 $63,762
First Quarter Fiscal 1995 Compared with First Quarter
Fiscal 1994
Net sales for the first quarter of fiscal 1995
increased $21.5 million, or 29.9%, from the first quarter of
fiscal 1994, to $93.5 million. Specialty steel segment net
sales increased $20.9 million and the adhesives segment net
sales increased $0.6 million. The overall increase in
specialty steel segment net sales was the result of both
higher average selling prices and increased shipment levels.
In August and September 1994, the Company followed most
other domestic tubular product manufacturers in announcing
selling price increases ranging from $20 to $40 per ton
(depending on the product type) for seamless and welded OCTG
and line pipe products, effective for new orders shipped
after October 1, 1994. The Company also announced a $10 per
ton price increase for SBQ products for new orders shipped
after October 1, 1994. The changes in the Company's average
selling prices resulting from the announced price increases
are more fully discussed below. For the Company's OCTG and
line pipe products, the increase in shipments was partially
due to a decline in the level of import activity.
Welded tubular net sales for the first quarter of
fiscal 1995 increased $10.9 million, or 39.4%, on a volume
increase of 30.1% from the first quarter of fiscal 1994.
The increase in welded tubular net sales and shipments was
due partially to an overall 7.0% increase in average selling
prices for all welded tubular products and a decline in
import levels over the prior fiscal year first quarter.
Fiscal 1995 first quarter overall average selling prices
also increased 4.0% over fiscal 1994 fourth quarter.
Average selling prices for welded OCTG products increased
$28 per ton, or 6.1% and $16 per ton, or 3.4% over the first
and fourth quarters of fiscal 1994, respectively, to $490
per ton for the first quarter of fiscal 1995. Average
selling prices for welded line pipe increased $29 per ton,
or 6.5% and $10 per ton, or 2.2% over the first and fourth
quarters of fiscal 1994, respectively, to $473 per ton for
the first quarter of fiscal 1995.
Seamless tubular net sales for the first quarter of
fiscal 1995 increased $4.0 million, or 22.7% on a volume
increase of 36.8% from the first quarter of fiscal 1994.
The increase in seamless tubular net sales and shipments was
partially attributable to increased sales from product line
expansion in the first quarter of fiscal 1995 and a decline
in imports compared to the prior fiscal year first quarter.
Average selling prices for all seamless tubular products for
the first quarter of fiscal 1995 declined 10.2% from the
first quarter of fiscal 1994, due partially to strong
pricing of seamless OCTG products in the first quarter of
fiscal 1994 which then declined during the balance of fiscal
1994 and to changes in product mix, including the
introduction of new products with lower average selling
prices. However, fiscal 1995 first quarter average selling
prices for all seamless tubular products increased 5.7% from
the fourth quarter of fiscal 1994. Average selling prices
for seamless OCTG products declined $99 per ton, or 11.0%
from the first quarter of fiscal 1994 but increased $24 per
ton, or 3.1% from the fourth quarter of fiscal 1994 to $805
per ton for the first quarter of fiscal 1995. Average
selling prices for seamless line pipe for the first quarter
of fiscal 1995 decreased 1.7% from the first quarter of
fiscal 1994 but increased 1.0% from the fourth quarter of
fiscal 1994 to $590 per ton for the first quarter of fiscal
1995.
Price and volume levels in the domestic tubular market
are primarily dependent on the level of drilling activity in
the United States and abroad, the level of foreign imports,
as well as general economic conditions. According to Baker
Hughes, Inc., the average number of oil and natural gas
drilling rigs in operation in the United States (rig count)
decreased 4.5%, from 862 in the first quarter of fiscal 1994
to 823 in the first quarter of fiscal 1995. The rig count,
however, increased 5.5% from the fourth quarter of fiscal
1994. On June 30, 1994, the Company and six other U.S.
steel companies filed antidumping petitions against imports
of OCTG products from seven foreign nations. The cases ask
the U.S. government to take action to offset injury to the
domestic OCTG industry from unfairly traded imports. The
antidumping petitions were filed against OCTG imports from
Argentina, Austria, Italy, Japan, Korea, Mexico and Spain.
The Company also joined in filing countervailing duty cases
charging subsidization of OCTG imports from Austria and
Italy. In August, 1994, the International Trade Commission
(ITC) voted unanimously that there was reasonable indication
of material injury which warranted further investigation of
the petitions. In December 1994 and January 1995, the
International Trade Administration of the United States
Department of Commerce issued certain favorable preliminary
determinations concerning the existence and extent of
dumping and subsidization and imposed significant
preliminary tariffs on imports from Austria, Italy and Japan
and minor preliminary tariffs on imports from Argentina and
Korea. Final determinations by the Department of Commerce
are expected in the summer of 1995. The United States ITC
will then assess whether dumping and subsidization have
caused or threatened to cause material injury to the United
States OCTG industry. While the Company cannot predict the
outcome of the cases at this time, the Company believes that
a favorable final ruling could continue to have a positive
impact on shipments and selling prices of certain of the
Company's products.
Price increases and improvements in tubular product
shipments will continue to also be highly dependent on the
level of drilling activity in the United States and abroad
as well as the level of activity in the steel industry and
the general state of the economy.
SBQ product net sales for the first quarter of fiscal
1995 increased $5.1 million, or 35.6% on a volume increase
of 26.3% from the first quarter of fiscal 1994. SBQ product
average selling prices increased $30 per ton, or 7.2% from
the first quarter of fiscal 1994 to $454 per ton for the
first quarter of fiscal 1995. SBQ product volume and prices
have increased as a result of stronger market demand in the
first quarter of fiscal 1995 as compared to the fiscal 1994
first quarter. Fiscal 1995 first quarter average selling
prices were also up $13 per ton, or 2.9% over the fiscal
1994 fourth quarter. Other product shipments and sales were
primarily attributable to shipments of hot rolled coils.
Average selling prices for hot rolled coils increased $38
per ton, or 10.8% and $43 per ton, or 12.4% over the first
and fourth quarters of fiscal 1994, respectively, to $391
per ton for the first quarter of fiscal 1995. The increase
in average selling prices of hot rolled coils was primarily
attributable to strong market demand for these products.
Increases in shipments and net sales of SBQ products and hot
rolled coils will be largely dependent on the general state
of the economy and the overall strength of the steel
industry.
Gross profit for the first quarter of fiscal 1995
increased $3.7 million from the first quarter of fiscal 1994
for a gross profit margin of 12.3% in fiscal 1995 compared
to 10.8% in the first quarter of fiscal 1994. Gross profit
for the specialty steel segment increased $3.6 million for a
gross profit margin of 11.2% compared to 9.3% in the first
quarter of fiscal 1994. The increase in specialty steel
segment gross profit and margin was attributable to improved
operating efficiencies resulting from increased production
volume at both Koppel and Newport as well as an increase in
average selling prices of welded tubular products and SBQ
products, as discussed above. These improvements were
partially offset by lower seamless tubular average selling
prices and a 3.2% increase in the Company's average steel
scrap costs over the first quarter of fiscal 1994.
The adhesives segment gross profit increased $0.1
million from the first quarter of fiscal 1994 for a gross
profit margin of 22.6%, virtually unchanged from the first
quarter of fiscal 1994.
Selling and administrative expenses increased $1.0
million but declined as a percentage of net sales from 8.3%
in the first quarter of fiscal 1994 to 7.4% in fiscal 1995.
The overall increase in selling and administrative expenses
was primarily attributable to increased production and sales
volumes.
As a result of the above factors, operating income
increased by $2.8 million, from $1.8 million in the first
quarter of fiscal 1994 to $4.6 million in the first quarter
of fiscal 1995. The specialty steel segment earned an
operating profit of $5.3 million in the first quarter of
fiscal 1995 compared to $2.2 million in the first quarter of
fiscal 1994. Of the $5.3 million specialty steel operating
profit, Newport and Erlanger earned an operating profit of
$2.8 million compared to an operating loss of $0.9 million
in the first quarter of fiscal 1994. The improvement was
primarily attributable to improved operating efficiencies
due to greater production and sales volume as well as
increased welded tubular average selling prices, as
discussed above. Koppel earned an operating profit of $2.5
million compared to operating profit of $3.1 million in the
first quarter of fiscal 1994. The decline was partially
attributable to a decline in seamless tubular average
selling prices as discussed above as well as increases in
the cost of labor and raw materials, partially offset by
improved operating efficiencies from increased production
volume. In November 1994, the Company signed a five year
labor agreement, effective November 1, 1994, with the United
Steelworkers of America for the Koppel hourly work force
which includes a net increase in labor costs of
approximately 3% per year. The Company estimates this
contract will result in an average increase in labor costs
at Koppel of approximately $0.5 million per year. The
adhesives segment earned an operating profit of $0.3
million, virtually unchanged from the first quarter of
fiscal 1994.
Interest expense increased $0.3 million, primarily as a
result of an increase in the average borrowing and interest
rates under the Company's lines of credit. The increase in
average borrowings was partially attributable to an increase
in the level of business activity.
As a result of the above factors, net income was $0.1
million, or $.01 per share in the first quarter of fiscal
1995 compared to $21.7 million in the first quarter of
fiscal 1994. Fiscal 1994 first quarter net income includes
a one-time after-tax gain on the sale of KES of $21.5
million, or $1.57 per share, and income of $1.7 million, or
$.12 per share, relating to the adoption of a new accounting
standard.
On January 3, 1995, the hot strip mill at Newport was
shut down when a 5000-HP motor failed, which then
necessitated the shutdown of the pipe mills for
approximately ten days. The hot strip mill was back in
operation the last week of January, when replacement
components were put in service. In the interim, Newport
acquired hot rolled coils from a third party to supplement
material supply to its pipe mills. In addition, Newport
continued to produce slabs from its melt shop, some of which
were shipped to a third party for conversion to coils. The
Company has insurance in place for replacement and
installation of the motor and related equipment as well as
for business interruption. The Company estimates that this
interruption may negatively impact sales product mix as well
as second quarter shipments by up to 5,000 tons; however,
management believes that this interruption will not have a
material impact on the results of operations or cash flows
of the Company.
Liquidity and Capital Resources
Working capital at December 31, 1994 was $39.5 million
compared to $45.2 million at September 24, 1994. The
current ratio at December 31, 1994 was 1.40 to 1 compared to
1.50 to 1 at September 24, 1994. At December 31, 1994, the
Company had cash and short-term investments totaling $40.4
million compared to $44.5 million at September 24, 1994. At
December 31, 1994, the Company had aggregate lines of credit
available for borrowing of $34.9 million, including a $16.2
million line of credit restricted for use at Koppel, of
which a total of $31.0 million was outstanding. These lines
have interest rates ranging from 1/2% to 1 1/2% over prime
and expire in fiscal 1995 and 1996. At December 31, 1994,
approximately $8.3 million in cash and short-term
investments were restricted, primarily in connection with
cash collateralized letters of credit. The Company is
negotiating a new three year, $45.0 million working capital
facility which would replace its existing credit line
agreements. There can be no assurance that the new facility
will be entered into, however; the Company believes that it
will have sufficient credit facilities to meet its working
capital needs for the next twelve months.
Cash flows from operating activities were $2.5 million
in the first quarter of fiscal 1995 compared to $0.7 million
in the first quarter of fiscal 1994. The Company recorded
net income of $0.1 million in the first quarter of fiscal
1995 compared to a fiscal 1994 first quarter net loss of
$1.5 million before the effect of the sale of KES and the
adoption of Statement 109, resulting in a $1.6 million
increase in operating cash flow over the first quarter of
fiscal 1994. The major use of cash in operating activities
in the first quarter of fiscal 1995 was an increase in
inventories of $9.4 million that was primarily the result of
unusually low levels of inventory at fiscal year end due to
scheduled maintenance outages at Newport. Offsetting this
use was $3.0 million in cash flows resulting from a decrease
in accounts receivable, $5.0 million in non-cash
depreciation charges and $5.9 million resulting from an
increase in accounts payable. Accounts payable increased
primarily due to the increase in inventories and a general
increase in business activities.
Fiscal 1994 first quarter cash flows from operating
activities, before the effect of the sale of KES and the
adoption of Statement 109, was primarily impacted by a $2.3
million decrease in other current assets resulting from the
sale of land held for development and an increase in
accounts payable which were offset by an increase in
inventories. The increase in inventories and accounts
payable was the result of unusually low levels at the end of
fiscal 1993, partially due to a fiscal 1993 fourth quarter
shutdown at Newport. The increase in accrued liabilities
includes approximately $8.9 million in accrued income taxes
related to the gain on the sale of KES.
As a result of the sale of KES in the first quarter of
fiscal 1994, the Company received $45.6 million in cash and
$4.8 million in common stock of the new entity. In
addition, the Company received $6.8 million in cash from the
new entity in satisfaction of a dividend declared by KES
prior to the sale. A portion of the cash proceeds has been
utilized to fund the fiscal 1994 operating loss. The
remaining cash proceeds are invested in short-term
investments and will be utilized for general corporate
purposes, including capital expenditures, as necessary. The
Company intends to hold as an available-for-sale investment
the common stock acquired in the sale of KES. As of
December 31, 1994 and September 24, 1994, such common stock
was recorded at $3.5 million and $4.6 million, respectively,
and resulted in a direct after-tax charge to common
shareholders' equity of $0.7 million in the first quarter of
fiscal 1995.
The Company incurred $3.0 million in capital
expenditures during the first quarter of fiscal 1995,
primarily related to improvements to and acquisition of
machinery and equipment in the specialty steel segment. The
Company currently estimates that capital spending in fiscal
1995 will approximate $14.0 million. It is anticipated that
capital spending will be funded through cash flow from
operations, available borrowing sources, as well as
available cash and short-term investments.
Net cash flows used by financing activities were $3.3
million in the first quarter of fiscal 1995. During the
quarter the Company made scheduled payments on long-term
debt obligations of $5.0 million and increased its
borrowings under its lines of credit by $2.4 million.
Scheduled long-term debt maturities are $15.5 million, $19.0
million and $18.6 million for fiscal 1995, 1996 and 1997
respectively. However, the Company is pursuing a refinancing
of a significant portion of its long-term debt. See "Other
Matters."
Certain of the Company's loan agreements contain
covenants restricting the payment of dividends to its
shareholders. Under the most restrictive of these
covenants, retained earnings available for dividends are
computed under a formula which is based in part on the
earnings and losses of the Company after fiscal 1988. Under
this covenant, the Company is currently prohibited from
paying dividends to its shareholders. In addition, certain
of the Company's loan agreements contain covenants requiring
maintenance of minimum net worth and fixed charge coverage
ratios. As of December 31, 1994, the Company was not in
compliance with such covenants, but received waivers from
its lenders as well as amendments to the agreements that the
Company believes will enable it to comply with such
covenants for the foreseeable future.
The Company believes that its current available cash
and short-term investments, its cash flow from operations
and borrowing sources will be sufficient to meet its
anticipated operating cash requirements, including capital
expenditures, for at least the next twelve months.
Inflation
The Company believes that inflation has not had a
material effect on its results of operations to date.
Generally, the Company experiences inflationary increases in
its costs of raw materials, energy, supplies, salaries and
benefits and selling and administrative expenses. Except
with respect to significant increases in steel scrap prices
as discussed herein, the Company has generally been able to
pass these inflationary increases through to its customers.
Other Matters
Legal Matters
Newport is a co-defendant in a claim for breach of
implied warranty in the United States District Court for the
Southern District of Texas arising from the failure of two
joints of welded pipe during testing of an off-shore
pipeline. The plaintiff is seeking damages in excess of $5
million for costs associated with replacing the entire
pipeline and lost production revenues. The Company believes
that it has meritorious defenses to this claim, although no
assurances can be given as to the outcome of this case.
Insurance may be available for a portion, but not all, of
any award for damages. In addition, the Company is subject
to various other claims, lawsuits and administrative
proceedings arising in the ordinary course of business with
respect to commercial, product liability and other matters,
which seek remedies or damages. Based upon its evaluation
of available information, management does not believe that
any such matters are likely, individually or in the
aggregate, to have a material adverse effect upon the
Company's consolidated financial position, results of
operations or cash flows. The ultimate effect of these
matters, however, individually or in the aggregate, on the
Company's consolidated results of operations and cash flows
may be materially impacted by the amount and timing of
charges to operations as well as the amount and timing of
cash flow requirements resulting from new information as it
becomes available.
Environmental Matters
The Company is subject to federal, state and local
environmental laws and regulations, including, among others,
RCRA, the Clean Air Act, the 1990 Amendments, the Clean
Water Act and all regulations promulgated in connection
therewith, including those concerning the discharge of
contaminants as air emissions or waste water effluents and
the disposal of solid and/or hazardous wastes such as
electric arc furnace dust. As such, the Company is from
time to time involved in administrative and judicial
proceedings and administrative inquiries related to
environmental matters.
As with other similar mills in the industry, the
Company's steel mini-mills produce dust which contains lead,
cadmium, and chromium and is classified as a hazardous
waste. The Company currently collects the dust resulting
from its electric arc furnace operations through emission
control systems and recycles it through a waste recycling
firm using EPA-approved processes. The Company also has on
its property at Newport a permitted hazardous waste disposal
facility.
The occurrences of accidental melting of radioactive
materials previously discussed have not resulted in any
notice of violations from federal or state environmental
regulatory agencies. The Company is investigating and
evaluating various issues concerning storage, treatment and
disposal of the radiation contaminated baghouse dust;
however, a final determination as to method of treatment and
disposal, cost and further regulatory requirements cannot be
made at this time. Depending on the ultimate timing and
method of treatment and disposal, which will require
appropriate federal and state regulatory approval, the
actual cost of disposal could substantially exceed current
estimates and the Company's insurance coverage. As of
December 31, 1994, claims recorded in connection with
disposal costs exhaust available insurance coverage. Based
on current knowledge, management believes the recorded gross
reserves of $4.4 million for disposal costs pertaining to
these incidents are adequate.
In September 1994, the Company received a proposed
Consent Agreement from the EPA relating to an April 1990
RCRA facility assessment (the "Assessment") completed by the
EPA and the Pennsylvania Department of Environmental
Resources. The Assessment was performed in connection with
a permit application pertaining to a landfill that is
adjacent to the Koppel facilities. The Assessment
identified potential releases of hazardous constituents at
or adjacent to the Koppel facilities prior to the Company's
acquisition of the Koppel facilities. The proposed Consent
Agreement establishes a schedule for investigating,
monitoring, testing and analyzing the potential releases.
Contamination documented as a result of the investigation
may require cleanup measures. Pursuant to various indemnity
provisions in agreements entered into at the time of the
Company's acquisition of the Koppel facilities in fiscal
1991, certain parties agreed to indemnify the Company
against various known and unknown environmental matters.
While such parties have not at this time acknowledged full
responsibility for potential costs under the proposed
Consent Agreement, the Company believes that the indemnity
provisions provide for it to be fully indemnified against
all matters covered by the proposed Consent Agreement,
including all associated costs, claims and liabilities.
Subject to the uncertainties concerning the proposed
Consent Agreement and the storage and disposal of the
radiation contaminated baghouse dust, the Company believes
it is in compliance in all material respects with all
applicable environmental regulations.
Regulations resulting from the 1990 Amendments that
will pertain to the Company's electric arc furnace
operations are currently not expected to be promulgated
until 1997 or later. The Company cannot predict the level
of required capital expenditures resulting from future
environmental regulations such as those forthcoming as a
result of the 1990 Amendments. However, the Company
believes that while the 1990 Amendments may require
additional expenditures, such expenditures will not have a
material impact on the Company's business or consolidated
financial position for the foreseeable future. Capital
expenditures during fiscal 1995 for the Company's
environmental control facilities are not expected to be
material; however, such expenditures could be influenced by
new and revised environmental laws and regulations.
As of December 31, 1994, the Company had environmental
remediation reserves of $4.7 million, of which $4.4 million
pertain to accrued disposal costs for radiation contaminated
baghouse dust. As of December 31, 1994, the possible range
of estimated losses related to the environmental contingency
matters discussed above in excess of those accrued by the
Company is $0 to $3.0 million; however, with respect to the
proposed Consent Agreement matter, the Company cannot
estimate the possible range of losses should the Company
ultimately not be indemnified. Based upon its evaluation of
available information, management does not believe that any
of the environmental contingency matters discussed above are
likely, individually or in the aggregate, to have a material
adverse effect upon the Company's consolidated financial
position, results of operations or cash flows. However, the
Company cannot predict with certainty that new information
or developments with respect to the proposed Consent
Agreement or its other environmental contingency matters,
individually or in the aggregate, will not have a material
adverse effect on the Company's consolidated financial
position, results of operations or cash flows.
Other
The Company is currently pursuing a refinancing of a
significant portion of is long-term debt through a proposed
sale of $125 million senior secured notes due 2003 (the
Offering). Completion of the Offering would substantially
reduce principal amortization requirements until the
maturity of the senior secured notes. Completion of the
Offering is subject to the Securities and Exchange
Commission allowing the registration of the senior secured
notes to become effective, the entering into a firm
commitment with the underwriters and the existence of market
conditions acceptable to the Company.
PART II -- OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
a) Exhibits - Reference is made to the Index to
Exhibits, which is incorporated herein by
reference.
b) Reports on Form 8-K - None.
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.
NS GROUP, INC.
Date: February 3, 1995 By: /s/Clifford R. Borland
Clifford R. Borland
President
Date: February 3, 1995 By: /s/John R. Parker
John R. Parker
Vice President and Treasurer
INDEX TO EXHIBITS
Number Description
4(a) Note Agreement dated as of November 15, 1989 and
amended as of October 3, 1990, between Newport Steel
Corporation and the Purchasers named therein and related
agreements, filed as Exhibit 4(a) to Registrant's Form 10-K
for the fiscal year ended September 30, 1989, Filed No. 1-
9838, and incorporated herein by this reference; Second and
Third Amendment Agreements, dated May 11, 1992 and November
24, 1992, respectively, filed as Exhibit 4(a) to
Registrant's Form 10-K for the fiscal year ended September
26, 1992, File No. 1-9838, and incorporated herein by this
reference; Fourth Amendment Agreement dated February 8,
1993, filed as Exhibit 4(a) to Registrant's Form 10-Q for
the quarterly period ended March 27, 1993, File No. 1-9838,
and incorporated herein by this reference; Fifth Amendment
Agreement dated August 17, 1994, filed as Exhibit 4(a) to
Registrant's Form 10-K for the fiscal year ended September
24, 1994, File No. 1-9838, and incorporated herein by this
reference; and Sixth Amendment Agreement dated January 17,
1995, filed herewith
4(d) Loan Agreement dated as of October 4, 1990 between
Koppel Steel Corporation and General Electric Capital
Corporation, filed as Exhibit 4.3 to Registrant's Current
Report on Form 8-K dated October 18, 1990, File No. 1-9838,
and incorporated herein by this reference; amendment dated
September 27, 1991, filed as Exhibit 4(d) to Registrant's
Form 10-K for the fiscal year ended September 28, 1991, File
No. 1-9838, and incorporated herein by this reference;
Second Amendment to Loan Agreement dated September 26, 1992,
filed as Exhibit 4 (d) to Registrant's Form 10-K for the
fiscal year ended September 26, 1992, File No. 1-9838, and
incorporated herein by this reference; Third Amendment to
Loan Agreement, dated September 24, 1993, filed as Exhibit
4(d) to Registrant's Form 10-K for the fiscal year ended
September 24, 1994, File No. 1-9838, and incorporated herein
by this reference; and Fourth Amendment to Loan Agreement,
dated January 18, 1995, filed herewith
27 Financial Data Schedule
Exhibit 4(a)
NS GROUP, INC.
NEWPORT STEEL CORPORATION
Ninth and Lowell Streets
Newport, Kentucky 41072
SIXTH AMENDMENT AGREEMENT
January 17, 1995
To the Trustee and Noteholders
Whose Names are set forth on
the Signature Pages hereto:
Ladies and Gentlemen:
Reference is made to (i) those certain Note Agreements
dated as of November 15, 1989 as amended by those certain
Amendment Agreements dated as of October 3, 1990, May 11,
1992, November 24, 1992, February 8, 1993 and August 17,
1994 (the "Amendment Agreements" and, as so amended, the
"Note Agreement") between the undersigned Newport Steel
Corporation (the "Company") and the respective purchasers of
$45,000,000 in aggregate principal amount of the Company's
10.40% Senior Secured Notes due November 15, 1999 (the
"Notes") and (ii) that certain Guaranty Agreement dated as
of November 15, 1989 as amended by the Amendment Agreements
(the "Guaranty Agreement") pursuant to which the undersigned
NS Group, Inc. (the "Guarantor") has guaranteed, inter alia,
payment of the Notes. The Company and the Guarantor have
requested the Noteholders named on the signature pages
hereto (the "Noteholders") and the Trustee to agree to a
further amendment to the Guaranty Agreement; and the
Noteholders and the Trustee have agreed to such amendments
on the terms and conditions hereinafter set forth. (Unless
otherwise expressly provided herein, capitalized terms used
herein shall have the same respective meanings as were
assigned to each under the Note Agreement and the Guaranty
Agreement.)
In consideration of the foregoing and of the mutual
covenants hereinafter set forth, the Company, the Guarantor,
the Trustee and the Noteholders agree as follows:
1. Section 6.5(a) of the Guaranty Agreement is modified to
read in its entirety as follows:
6.5 Funded Debt to Total Capitalization.
(a) The Guarantor will not permit the aggregate
amount of the Funded Debt of the Guarantor
and its Subsidiaries, determined on a
consolidated basis, outstanding at the end of
any fiscal quarter of the Guarantor to exceed
the percentage of Total Capitalization at
such time indicated below:
For Any Quarter in Fiscal 1995........67.5%
For Any Quarter after Fiscal 1995.....65.0%
2. The modification set forth herein shall become
effective upon the occurrence of the following:
(i) each Noteholder and the Trustee shall have
signed and returned to the Company and the
Guarantor a copy of this Sixth Amendment
Agreement;
(ii) all proceedings taken in connection with the
execution of this Sixth Amendment Agreement
and all documents and papers relating thereto
shall be satisfactory to each Noteholder and
its counsel; and each Noteholder and its
counsel shall have received copies of such
documents and papers as it or they may
reasonably request in connection therewith,
all in form and substance satisfactory to
each Noteholder and its counsel.
3. Except as specifically modified hereby, the Note
Agreement and the Guaranty Agreement shall remain
in full force and effect in accordance with the
terms thereof.
NS GROUP, INC.
By: /s/John R. Parker
Name: John R. Parker
Title: Vice President
and Treasurer
NEWPORT STEEL CORPORATION
By: /s/John R. Parker
Name: John R. Parker
Title: Treasurer
Agreed and Accepted:
Noteholders:
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By: _________________________
Name:
Title:
LIFE INSURANCE COMPANY OF NORTH AMERICA
By: *Cigna Investments, Inc.
By: /s/Thomas P. Shea
Name: Thomas P. Shea
Title: Vice President
INSURANCE COMPANY OF NORTH AMERICA
By: *Cigna Investments, Inc.
By: /s/Thomas P. Shea
Name: Thomas P. Shea
Title: Vice President
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY (on behalf of one or more
separate accounts)
By: CIGNA Investments, Inc.
By: /s/Thomas P. Shea
Name: Thomas P. Shea
Title: Vice President
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY
By: CIGNA Investments, Inc.
By: /s/Thomas P. Shea
Name: Thomas P. Shea
Title: Vice President
CIGNA PROPERTY AND CASUALTY INSURANCE
COMPANY
By: CIGNA Investments, Inc.
By: /s/Thomas P. Shea
Name: Thomas P. Shea
Title: Vice President
THE OHIO NATIONAL LIFE INSURANCE
COMPANY
By: _________________________
Name:
Title:
SOUTHERN FARM BUREAU ANNUITY
INSURANCE COMPANY
By: _________________________
Name:
Title:
WASHINGTON NATIONAL INSURANCE COMPANY
By: _________________________
Name:
Title:
UNITED COMPANIES LIFE INSURANCE COMPANY
By: _________________________
Name:
Title:
Trustee:
HUNTINGTON BANK OF KENTON COUNTY, INC.
By: _________________________
Name:
Title:
*This entity is either the registered owner of one or more
of the securities pertaining hereto or is a beneficial owner
of one or more of such securities owned by and registered in
the name of a nominee for that entity.
Exhibit 4(d)
Koppel Steel Corporation
Ninth and Lowell Streets
Newport, Kentucky 41072
FOURTH AMENDMENT TO LOAN AGREEMENT
January 18, 1995
General Electric Capital Corporation
1600 Summer Street - 6th Floor
Stamford, CT 06927-4000
Attn: Jeanette Chen
Reference is made to (i) that certain Loan Agreement
dated as of October 4, 1990 (as amended, the "Loan
Agreement") between the undersigned Koppel Steel Corporation
(the "Borrower") and General Electric Capital Corporation,
as Agent (in such capacity, the "Agent") for itself and
other lenders ("Lenders"). Capitalized terms used herein
and not defined herein shall have the meanings assigned to
them in the Loan Agreement. The Borrower has requested that
the Lenders and the Agent agree to this Fourth Amendment to
Loan Agreement; and the Lenders and the Agent have agreed to
such Fourth Amendment on the terms and conditions
hereinafter set forth.
In consideration of the foregoing and of the mutual
covenant hereinafter set forth, the Borrower, the Agent and
the Lenders agree as follows:
1. For the period consisting of the Borrower's 1995
Fiscal Year, the definition of Adjusted Consolidated Cash
Flow appearing under Section 1 of the Loan Agreement is
hereby amended to include any such contribution to the
Borrower during such period by NS Group as an equity
contribution to the Borrower. NS Group will provide
evidence satisfactory to GE Capital of any equity
contributions made hereunder.
2. Any Default or Event of Default of Borrower arising
under Section 6.03(a) or Section 6.03(b) of the Loan
Agreement with respect to the first quarter of Borrower's
1995 Fiscal Year is hereby deemed waived. The waiver set
forth in the preceding sentence shall be limited to the
matters expressly described therein and shall not be deemed
to waive or modify any other provisions of the Loan
Agreement or the other Loan Documents or to serve as a
consent to any other matter prohibited by the terms and
conditions thereof.
3. Except as specifically modified hereby, the Loan
Agreement shall remain in full force and effect in accordance
with the terms thereof.
KOPPEL STEEL CORPORATION
By: /s/John R. Parker
Name: John R. Parker
Title: Vice President,
Treasurer and CFO
Agreed and Accepted:
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/Jeanette L. Chen
Name: Jeanette L. Chen
Title: Vice President, GPSF
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NS GROUP,
INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR
THE THREE MONTH PERIOD ENDED DECEMBER 31, 1994, INCLUDED IN THE COMPANY'S
QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> DEC-31-1994
<CASH> 1,799
<SECURITIES> 38,567
<RECEIVABLES> 40,244
<ALLOWANCES> 578
<INVENTORY> 41,729
<CURRENT-ASSETS> 138,864
<PP&E> 265,708
<DEPRECIATION> 107,043
<TOTAL-ASSETS> 315,906
<CURRENT-LIABILITIES> 99,380
<BONDS> 131,323
<COMMON> 49,265
0
0
<OTHER-SE> 26,607
<TOTAL-LIABILITY-AND-EQUITY> 315,906
<SALES> 93,489
<TOTAL-REVENUES> 93,489
<CGS> 81,999
<TOTAL-COSTS> 81,999
<OTHER-EXPENSES> 6,932
<LOSS-PROVISION> (52)
<INTEREST-EXPENSE> 5,356
<INCOME-PRETAX> 123
<INCOME-TAX> 48
<INCOME-CONTINUING> 75
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 75
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
