<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1999
COMMISSION FILE NUMBER: 1-12881
LONE STAR TECHNOLOGIES, INC.
(A DELAWARE CORPORATION)
15660 N. DALLAS PARKWAY, SUITE 500
DALLAS, TEXAS 75248
972/386-3981
I.R.S. EMPLOYER IDENTIFICATION NUMBER: 75-2085454
Indicate by a 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 .
--- ---
As of October 15, 1999, the number of shares of Common Stock outstanding at
$1.00 par value per share was 22,586,373.
================================================================================
<PAGE>
LONE STAR TECHNOLOGIES, INC.
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Item 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statements of Earnings................................................3
Consolidated Balance Sheets........................................................4
Consolidated Statements of Cash Flows..............................................5
Notes to Consolidated Financial Statements.........................................6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS...............................................7
Results of Operations..............................................................8
Financial Condition and Liquidity..................................................9
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...............................10
Item 5. OTHER INFORMATION.................................................................10
Item 6. REPORTS ON FORM 8-K...............................................................10
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
LONE STAR TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited; in millions, except share data)
For the Quarter Ended For the Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues $ 99.5 88.9 $ 240.4 368.9
Cost of goods sold (92.6) (98.8) (236.2) (355.7)
----------------------------------------------------------------
Gross earnings (loss) 6.9 (9.9) 4.2 13.2
Selling, general and administrative expenses (3.9) (5.1) (11.3) (15.3)
----------------------------------------------------------------
Operating earnings (loss) 3.0 (15.0) (7.1) (2.1)
Interest income 0.5 0.4 1.3 1.4
Interest expense (1.4) (1.2) (3.3) (2.8)
Other expense (0.1) - (0.3) -
----------------------------------------------------------------
Earnings (loss) before income tax 2.0 (15.8) (9.4) (3.5)
Income tax - 0.2 - -
----------------------------------------------------------------
NET EARNINGS (LOSS) $ 2.0 (15.6) $ (9.4) (3.5)
==========================================================================================================================
Per common share - basic:
NET EARNINGS (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ 0.09 (0.69) $ (0.42) (0.15)
==========================================================================================================================
Per common share - diluted:
NET EARNINGS (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ 0.09 (0.69) $ (0.42) (0.15)
==========================================================================================================================
</TABLE>
See accompanying notes.
3
<PAGE>
LONE STAR TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions, except share data)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 17.0 $ 20.9
Short-term investments 1.2 3.1
Accounts receivable, net 56.7 36.3
Current inventories, net 82.6 88.9
Other current assets 3.6 3.7
------------------------------
TOTAL CURRENT ASSETS 161.1 152.9
Marketable securities 15.4 9.0
Property, plant, and equipment, net 150.5 157.8
Other noncurrent assets 15.6 16.1
------------------------------
TOTAL ASSETS $ 342.6 $ 335.8
==================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Current portion of term loan $ 2.0 $ -
Accounts payable 47.4 15.8
Accrued liabilities 20.3 25.6
------------------------------
TOTAL CURRENT LIABILITIES 69.7 41.4
------------------------------
Term loan 7.5 -
Revolving credit facility 25.8 46.0
Postretirement benefit obligations 43.2 41.5
Other noncurrent liabilities 16.0 17.8
------------------------------
TOTAL LIABILITIES 162.2 146.7
------------------------------
Commitments and contingencies (See Note 7) - -
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value
(authorized: 10,000,000 shares, issued: none) - -
Common stock, $1 par value
(authorized: 80,000,000 shares, issued: 23,061,864) 23.1 23.1
Capital surplus 209.9 209.9
Accumulated other comprehensive loss (12.8) (12.8)
Retained deficit (24.9) (15.5)
Treasury stock (475,491 and 566,116 common shares, respectively) (14.9) (15.6)
------------------------------
TOTAL SHAREHOLDERS' EQUITY 180.4 189.1
------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 342.6 $ 335.8
==================================================================================================
</TABLE>
See accompanying notes.
5
<PAGE>
LONE STAR TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
<TABLE>
<CAPTION>
For the Quarter Ended For the Nine Months Ended
September 30, September 30
1999 1998 1999 1998
----------------------------------------------------
<S> <C> <C> <C> <C>
BEGINNING CASH AND CASH EQUIVALENTS $ 20.7 15.9 $ 20.9 14.2
=========================================================================================================================
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) 2.0 (15.6) (9.4) (3.5)
ADJUSTMENTS TO RECONCILE NET EARNINGS (LOSS) TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 4.2 4.0 12.5 11.7
Accounts receivable, net (14.8) 26.7 (20.4) 33.7
Current inventories, net (5.1) 6.2 6.3 (24.6)
Accounts payable and accrued liabilities 19.8 (27.3) 26.3 (36.8)
Other (0.4) (1.2) (0.5) (1.0)
----------------------------------------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 5.7 (7.2) 14.8 (20.5)
----------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1.2) (3.7) (4.2) (14.5)
Short-term investments (0.1) 2.0 1.9 3.1
Marketable securities (4.4) 2.0 (6.4) 6.0
----------------------------------------------------
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES (5.7) 0.3 (8.7) (5.4)
----------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt (0.5) - (0.5) -
Proceeds from long-term debt - - 10.0 -
Initial borrowings under new revolving credit facility - - 34.0 -
Net borrowings (payments) under revolving credit facility (3.2) 4.0 (10.2) 25.0
Net payments under old revolving credit facility - - (44.0) -
Treasury stock purchases - (0.4) - (1.9)
Issuance of common stock 0.1 0.7 1.3
----------------------------------------------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (3.7) 3.7 (10.0) 24.4
----------------------------------------------------
Net decrease in cash and cash equivalents (3.7) (3.2) (3.9) (1.5)
ENDING CASH AND CASH EQUIVALENTS $ 17.0 12.7 $ 17.0 12.7
=========================================================================================================================
</TABLE>
See accompanying notes.
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1
In the opinion of management, the unaudited consolidated financial
statements include all adjustments (consisting of only normal, recurring
adjustments) necessary to present fairly the financial position as of
September 30, 1999 and the cash flows and the results of operations for the
three months and nine months ended September 30, 1999 and 1998. Unaudited
financial statements are prepared on a basis substantially consistent with
those audited for the year ended December 31, 1998. The results of operations
for the interim periods presented may not be indicative of total results for
the full year. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules
and regulations promulgated by the Securities and Exchange Commission.
However, management believes that the disclosures contained herein are
adequate to make the information presented not misleading. Certain
reclassifications of prior period amounts have been made to conform with the
current period. The unaudited financial statements should be read in
conjunction with the audited financial statements and accompanying notes in
Lone Star Technologies, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1998.
NOTE 2 - BUSINESS SEGMENTS DATA
<TABLE>
<CAPTION>
(in millions) (in millions)
For the Quarter Ended For the Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
OILFIELD PRODUCTS
Net revenues $ 51.3 46.8 $ 118.5 225.7
Operating earnings (loss) - (9.2) (8.6) 1.8
Identifiable assets 152.2 213.2 152.2 213.2
Capital expenditures 0.7 1.9 1.8 7.9
Depreciation and amortization 2.3 2.2 6.6 6.8
SPECIALTY TUBING
Net revenues $ 32.0 30.2 $ 88.4 97.8
Operating earnings 5.0 (3.2) 7.6 1.4
Identifiable assets 130.3 124.0 130.3 124.0
Capital expenditures 0.5 1.7 2.4 6.4
Depreciation and amortization 1.5 1.5 5.1 4.2
FLAT ROLLED STEEL AND OTHER TUBULAR PRODUCTS
Net revenues $ 16.2 11.9 $ 33.5 45.4
Operating loss (1.2) (1.6) (4.0) (2.6)
Identifiable assets 21.9 18.3 21.9 18.3
Capital expenditures - 0.1 - 0.2
Depreciation and amortization 0.4 0.3 0.8 0.7
CORPORATE AND OTHER NON-SEGMENTS
Net revenues $ - - $ - -
Operating loss (0.8) (1.0) (2.1) (2.7)
Identifiable assets 38.2 33.8 38.2 33.8
CONSOLIDATED TOTALS
Net revenues $ 99.5 88.9 $ 240.4 368.9
Operating earnings (loss) 3.0 (15.0) (7.1) (2.1)
Identifiable assets 342.6 389.3 342.6 389.3
Capital expenditures 1.2 3.7 4.2 14.5
Depreciation and amortization 4.2 4.0 12.5 11.7
</TABLE>
7
<PAGE>
NOTE 3 - LONE STAR STEEL COMPANY ("STEEL") REVOLVING CREDIT AGREEMENT
On March 16, 1999, Steel entered into a $90.0 million revolving line of credit
and a three year $10.0 million term loan. Under the revolving credit facility,
Steel can borrow an amount based on a percentage of eligible accounts receivable
and inventories, reduced by outstanding letters of credit. At September 30,
1999, borrowings totaled $35.3 million including $9.5 million on the term loan
with a remaining availability of $60.3 million. At Steel's option, the interest
rate is the prime lending rate plus 1.0% or the LIBOR plus 3.0%. Steel also pays
a 0.375% per annum fee on the unused portion of the credit facility. The term
loan is repayable in quarterly installments of $0.5 million, plus interest at
the prime lending rate plus 1.5% or the LIBOR plus 3.5%. Steel's assets other
than real estate secure these loans.
NOTE 4 - EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income by the weighted
average number of shares of common stock. The numbers of shares used to compute
basic earnings per share for the three months ended September 30, 1999 and 1998,
respectively, were 22.6 million and 22.5 million, and the nine months ended
September 30, 1999 and 1998, were 22.5 million and 22.5 million, respectively.
Diluted earnings per share is computed by dividing net income by the weighted
average number of shares of common stock and other dilutive securities. The
numbers of shares used to compute dilutive earnings per share for the three
months ended September 30, 1999 were 22.9 million. Dilutive securities (stock
options) equivalent to .2 million, .3 million, and .3 million shares of common
stock were outstanding during the three months ended September 30, 1998 and nine
months ended September 30, 1999 and 1998 respectively. These shares were not
included in the computation of diluted earnings per share. Lone Star
Technologies, Inc. (Lone Star) had losses in those periods and the effect of
including the dilutive securities in earnings per share would have been
anti-dilutive.
NOTE 5 - INVENTORIES
At September 30, 1999, inventories totaled $110.1 million before LIFO reserves
and were composed of finished goods, $27.1 million; work in process, $33.8
million; and raw materials and supplies, $49.2 million. Net of LIFO reserves of
$20.3 million, inventories were $89.8 million, of which $7.2 million (consisting
of supplies and spare parts) were classified as noncurrent assets.
NOTE 6 - CASH, INVESTMENTS, AND MARKETABLE SECURITIES
Lone Star's cash equivalents include highly liquid investments in a fund
consisting of U.S. government and related agencies obligations with original
maturities of less than three months. Short-term investments consist of U.S.
government and related agencies obligations with maturities at purchase greater
than three months and up to one year. Marketable securities consist of U.S.
government and related agencies obligations with maturities at purchase greater
than one year and up to two years. Lone Star's total cash equivalents,
short-term investments and marketable securities, the weighted average maturity
of which is less than one year, are classified as held-to-maturity because Lone
Star has the intent and ability to hold them to maturity.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Steel has various commitments for the purchase of raw materials, certain tubular
goods, supplies, services, and energy arising in the ordinary course of
business. The majority of these commitments are for a period of less than one
year.
Steel's operations are subject to numerous environmental laws. The three major
areas of regulation are air quality, water quality, and solid and hazardous
waste management. The primary governmental oversight agencies include the Texas
Natural Resource Conservation Commission and the Environmental Protection
Agency. Steel has agreements with these agencies to conduct numerous
environmental studies and to develop plans to ensure continuous compliance with
applicable laws and regulations. Steel is engaged in various ongoing
environmental studies, monitoring programs, and capital projects. Steel believes
that its environmental expenditures will continue to fall within its
contemplated operating and capital plans.
NOTE 8 - INCOME TAXES
Lone Star had federal tax net operating loss carryforwards of approximately
$245.6 million at December 31, 1998, a portion of which may be related to
American Federal Bank (AFB), a previous subsidiary of Lone Star, and subject
to an agreement with the Federal Deposit Insurance Corporation (FDIC) whereby
Lone Star may be required to pay the
8
<PAGE>
FDIC for certain tax benefits. Because of the net losses for the nine months
ended September 30, 1999, no provisions for taxes were recognized for the
three months and nine months ended September 30, 1999. A recovery of
alternative minimum tax of $.2 million was recognized for the three months
ended September 30, 1998. If not utilized, the net operating loss
carryforwards will expire between years 2003 and 2013.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Lone Star is a management and holding company whose principal operating
subsidiary, Steel, manufactures and globally markets oilfield products
consisting of casing, tubing and line pipe to the oil and gas drilling
industry, specialty tubing products to automotive, fluid power, and other
markets for various mechanical applications, and flat rolled steel and other
tubular products to domestic industrial markets. Although oil and natural gas
prices have increased and the active rig count has substantially increased in
the third quarter, oil and gas markets remain volatile and uncertainty exists
regarding the future levels of oil and gas prices and related drilling
activity. Therefore, no assurance can be given regarding the extent of future
demand for Steel's oilfield products.
RESULTS OF OPERATIONS
Revenues of $99.5 million for the three months ended September 30, 1999
increased 12% from the third quarter of 1998. Revenues comprised $51.3
million from oilfield products, $32.0 million from specialty tubing products,
and $16.2 million from flat rolled steel and other tubular products,
representing an increase of 10%, 6%, and 36%, respectively.
Revenues for the first nine months of 1999 of $240.4 million were 35% lower
than the same 1998 period. Oilfield, specialty tubing, and flat rolled steel
and other tubular products revenues declined 47%, 10% and 26%, respectively.
Third quarter 1999 shipments increased 35% when compared to the same period
1998 to 177,300 tons and consisted of 94,700 tons of oilfield products,
32,100 tons of specialty tubing products and 50,500 tons of flat rolled steel
and other tubular products. Oilfield products, specialty tubing products, and
flat rolled steel and other tubular products shipments increased by 35%, 16%,
and 52%, respectively.
Consolidated revenues reported in the statements of earnings are as follows:
<TABLE>
<CAPTION>
($ in millions) ($ in millions)
For the Quarter Ended For the Nine Months Ended
September 30, September 30,
1999 % 1998 % 1999 % 1998 %
---- --- ---- --- ------ --- ------ ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Oilfield products revenues 51.3 52 46.8 53 118.5 49 225.7 61
Specialty tubing products revenues 32.0 32 30.2 34 88.4 37 97.8 27
Flat rolled steel and other tubular
products revenues 16.2 16 11.9 13 33.5 14 45.4 12
---- --- ---- --- ------ --- ------ ---
Consolidated net revenues 99.5 100 88.9 100 240.4 100 368.9 100
==== === ==== === ====== === ====== ===
</TABLE>
Shipments of products by segment are as follows:
9
<PAGE>
<TABLE>
<CAPTION>
(in tons) (in tons)
For the Quarter Ended For the Nine Months Ended
September 30, September 30,
1999 % 1998 % 1999 % 1998 %
------- --- ------- --- ------- --- ------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Oilfield products 94,700 53 70,100 54 223,900 54 321,500 60
Specialty tubing products 32,100 18 27,600 21 84,800 20 89,000 17
Flat rolled steel and other tubular products 50,500 29 33,200 25 107,600 26 124,000 23
------- --- ------- --- ------- --- ------- ---
Total tons shipped 177,300 100 130,900 100 416,300 100 534,500 100
======= === ======= === ======= === ======= ===
</TABLE>
Increased revenues for the third quarter of 1999 were due to higher shipment
volumes in all segments. Oilfield revenue advanced on additional shipment
volumes as the number of active rigs advanced 26% to 730 at the end of the
third quarter from the end of the second quarter of 1999. Shipments of
specialty tubing were up due to continued demand growth for new heavy wall
products. Flat rolled steel and other tubular revenues were improved due to
increased volumes resulting from reduced imports into the domestic market.
The gross earnings and operating earnings for the three months ended
September 30, 1999 were $6.9 million and $3.0 million, respectively, compared
to a gross loss and operating loss of $9.9 million and $15.0 million,
respectively, for the same 1998 period. Gross earnings and operating earnings
included $1.8 million from settlement of lawsuits against graphite electrode
manufacturers. Third quarter 1999 mill operating costs were significantly
lower than the third quarter of 1998 due to previous completion of capital
projects directed at lowering product costs and reengineered specialty tubing
scheduling and delivery systems. Increased production volumes favorably
impacted gross and operating margins as fixed and semi-fixed costs were
absorbed by more units of production. In addition, selling, general, and
administration expenses were 24% lower than in the third quarter of 1998.
Net earnings in third quarter of 1999 were $2.0 million, or $.09 per diluted
share, which included $1.8 million, or $.08 per diluted share, from
settlement of lawsuits against graphite electrode manufacturers.
FINANCIAL CONDITION AND LIQUIDITY
Lone Star has no direct business operations other than Steel or significant
sources of cash other than from investments or the sale of securities. Lone
Star is reimbursed by Steel for most of its operating costs as provided by
its cost-sharing agreement with Steel. Under Steel's new revolving credit
agreement, Lone Star's operating costs and Steel's portion of Lone Star's
consolidated taxes are the only funds that can be distributed to Lone Star.
At September 30, 1999, Lone Star had available cash and cash equivalents,
short-term investments, and marketable securities of $33.6 million, compared
to $33.0 million at December 31, 1998. Lone Star has no immediate cash
requirements as Steel reimburses Lone Star for those expenses incurred for
Steel's benefit under a cost-sharing plan. Lone Star has no debt.
Steel requires capital primarily to fund general working capital needs and
capital expenditures. Principal sources of funds include cash generated by
operations, borrowings under Steel's revolving credit facility and from Lone
Star.
On March 16, 1999, Steel entered into a $90.0 million revolving line of
credit and a three year $10.0 million term loan. Under the revolving credit
facility, Steel can borrow an amount based on a percentage of eligible
accounts receivable and inventories, reduced by outstanding letters of
credit. At September 30, 1999, borrowings totaled $35.3 million including
$9.5 million on the term loan with a remaining availability of $60.3 million.
At Steel's option, the interest rate is the prime lending rate plus 1.0% or
the LIBOR plus 3.0%. Steel also pays a 0.375% per annum fee on the unused
portion of the credit facility. The term loan is repayable in quarterly
installments of $0.5 million, plus interest at the prime lending rate plus
1.5% or the LIBOR plus 3.5%. Steel's assets other than real estate secure
these loans.
Steel periodically purchases steel slabs under consignment arrangements for
use in its production process, which affords
10
<PAGE>
Steel somewhat longer payment periods for this raw material. Steel makes the
payment as the slabs are used plus interest on unpaid amounts. At the end of
the third quarter 1999, $16.1 million of consigned slabs was included in
accounts payable.
Steel's operations are subject to numerous environmental laws. The three
major areas of regulation are air quality, water quality, and solid and
hazardous waste management. Steel believes that its environmental
expenditures will continue to fall within its contemplated operating and
capital plans.
YEAR 2000. In order to prepare Lone Star and Steel for the Year 2000, a plan
has been implemented detailing a process to ensure that its various computer
systems are or become Year 2000 compliant. This plan encompasses three
primary areas: business systems (both hardware and software), communications
equipment, and manufacturing equipment. The various stages in this process
include assessment (identifying systems which need change), remediation
(making changes in the software or hardware), verification (testing the
changes), and implementation of the Year 2000 compliant systems. All stages
of the process were completed for the business systems hardware and software
and communication equipment of Lone Star and Steel and they are now Year 2000
compliant. All of the manufacturing equipment has been assessed with minimal
changes required and will be Year 2000 compliant by December 31, 1999.
This plan also entails assessing certain Year 2000 risks related to third
party relationships through communications with key suppliers and customers.
The processes described above have been performed on identified third party
issues that are correctable. For those key suppliers and customers identified
as a concern, such concerns are addressed in Lone Star and Steel's
contingency plan. The contingency plan also considers risks for the "most
reasonably likely worst case year 2000 scenarios" and how those identified
risks will be handled. The cumulative costs incurred through September 30,
1999 to achieve Year 2000 compliance are approximately $1.5 million, and are
estimated to total $1.6 million upon completion in 1999.
Steel believes that funds generated by operations and its borrowing capacity
under the revolving credit agreement will provide the liquidity necessary to
fund its cash requirements for the remainder of 1999.
The matters discussed or incorporated by reference in this report on Form
10-Q that are forward-looking statements involve risks and uncertainties
including, but not limited to, economic conditions, product demand, the
regulatory and trade environment, and other risks indicated in other filings
with the Securities and Exchange Commission.
PART II. - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
No. 27. Financial Data Schedule
(b) Reports on Form 8-K: none
SIGNATURES
11
<PAGE>
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.
LONE STAR TECHNOLOGIES, INC.
By: /s/ Charles J. Keszler
---------------------------
(Charles J. Keszler)
Vice President - Finance
Dated: October 27, 1999
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 17
<SECURITIES> 17
<RECEIVABLES> 58
<ALLOWANCES> 1
<INVENTORY> 83
<CURRENT-ASSETS> 161
<PP&E> 327
<DEPRECIATION> 176
<TOTAL-ASSETS> 343
<CURRENT-LIABILITIES> 70
<BONDS> 0
0
0
<COMMON> 23
<OTHER-SE> 157
<TOTAL-LIABILITY-AND-EQUITY> 343
<SALES> 240
<TOTAL-REVENUES> 240
<CGS> 236
<TOTAL-COSTS> 239
<OTHER-EXPENSES> 8
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3
<INCOME-PRETAX> (9)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9)
<EPS-BASIC> (0.42)
<EPS-DILUTED> (0.42)
</TABLE>
