FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended November 30, 1995
--------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
-------------- --------------
Commission file number: 0-15838
NEW JERSEY STEEL CORPORATION
- ----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 22-2137967
- -----------------------------------------------------------------
(State or other jurisdiction of (IRS Employer of
incorporation or organization) Identification No.)
North Crossman Road, Sayreville, NJ 08872
- -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908)721-6600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
- -----------------------------------------------------------------
(Title of class)
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-k or any
amendment to this Form 10-K. [ ]
Aggregate market value of voting stock held by non-affiliates:
$20,020,688 based on the last sales price of such common stock on
February 14, 1996 as reported on the NASDAQ National Market
System.
Number of share of Common Stock, par value $.01 per share,
outstanding at February 14, 1996: 5,920,500.
DOCUMENTS INCORPORATED BY REFERENCE: None.
- -----------------------------------------------------------------
Item 8. Financial Statements and Supplementary Data
See Index on Page F-1.
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Index to Consolidated Financial Statements and Schedule
Page
Number
------
Independent Auditors' Report F-2
Consolidated Financial Statements:
Consolidated Balance Sheets - November 30, 1995
and 1994 F-3
Consolidated Statements of Operations - Years ended
November 30, 1995, 1994 and 1993 F-4
Consolidated Statements of Stockholders' Equity -
Years ended November 30, 1995, 1994 and 1993 F-5
Consolidated Statements of Cash Flows - Years ended
November 30, 1995, 1994 and 1993 F-6
Notes to Consolidated Financial Statements F-7
Schedule - Years ended November 30, 1995, 1994 and 1993:
II - Valuation and Qualifying Accounts
Schedules other than that listed above are omitted as the
required information is either not applicable or is included in
the consolidated financial statements or notes thereto.
- ------------------------------------------------------------------------------
Independent Auditors' Report
The Board of Directors and Stockholders
New Jersey Steel Corporation:
We have audited the consolidated financial statements of New
Jersey Steel Corporation and subsidiary as listed in the
accompanying index. In connection with our audits of the
consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index.
These consolidated financial statements and financial statement
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of New Jersey Steel Corporation and subsidiary
as of November 30, 1995 and 1994, and the results of their
operations and their cash flows for each of the years in the
three-year period ended November 30, 1995 in conformity with
generally accepted accounting principles. Also in our opinion,
the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as
a whole, presents fairly, in all material respects, the
information set forth therein.
As discussed in notes 1 and 6 to the consolidated financial
statements, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes," in 1993.
KPMG Peat Marwick LLP
Short Hills, New Jersey
January 11, 1996, except as to the
last paragraph of note 8, which
is as of February 6, 1996
- -----------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
November 30, 1995 and 1994
(Dollars in Thousands, Except Per Share Data)
<TABLE>
Assets 1995 1994
- ------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 61 337
Receivables:
Trade, less allowance for doubtful
receivables of $2,147 and $1,846
in 1995 and 1994, respectively 22,164 19,874
Trade - affiliates 1,538 2,858
Other 293 364
------- -------
Net receivables 23,995 23,096
------- -------
Inventories 15,276 14,853
Prepaid expenses and other current assets 508 1,238
Deferred income taxes 837 382
------- -------
Total current assets 40,677 39,906
Property, plant and equipment, net 82,365 73,928
Other assets 5,691 3,931
Deferred income taxes 4,063 4,518
Real estate, net 13,447 13,953
------- -------
$146,243 136,236
======= =======
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Current installments of long-term debt 1,125 -
Accounts payable - trade 28,514 27,824
Due to parent 789 339
Accrued expenses 7,219 5,015
Customer deposit - 3,072
------- -------
Total current liabilities 37,647 36,250
------- -------
Note payable - bank 11,900 10,536
Long-term debt, less current installments 6,375 -
Stockholders' equity:
Preferred stock, $.01 par value.
Authorized 5,000,000 shares; none issued - -
Common stock, $.01 par value.
Authorized 15,000,000 shares; issued
and outstanding 5,920,500 shares in
1995 and 5,893,370 shares in 1994 59 59
Additional paid-in capital 134,070 133,904
Accumulated deficit (43,808) (44,513)
------- -------
Total stockholders' equity 90,321 89,450
Commitments and contingencies ------- -------
$146,243 136,236
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Consolidated Statements of Operations
Years ended November 30, 1995, 1994 and 1993
(In Thousands, Except Per Share Data)
<TABLE>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net sales $128,319 128,605 106,366
Net sales - affiliates 8,917 9,150 13,096
Cost of sales 129,253 128,733 112,333
------- ------- -------
Gross profit 7,983 9,022 7,129
Selling, general and administrative
expenses, including management
and technical consulting fees to
Von Roll Ltd. of $450 in 1995,
1994 and 1993 7,165 6,997 11,727
------- ------- -------
Operating income (loss) 818 2,025 (4,598)
------- ------- -------
Other (expense) income:
Interest (expense) income (633) 43 211
Rental 151 531 862
Gain on insurance settlement - - 627
Other expense (96) - (804)
------- ------- -------
(578) 574 896
------- ------- -------
Earnings (loss) before
provision for income taxes,
equity in operations of
investee and cumulative
effect of change in
accounting for income taxes 240 2,599 (3,702)
Provision for income taxes - - -
-------- ------- ------
Earnings (loss) before equity
in operations of investee
and cumulative effect of
change in accounting for
income taxes 240 2,599 (3,702)
Equity in operations of investee 465 - -
Earnings (loss) before
cumulative effect of
change in accounting for
income taxes 705 2,599 (3,702)
Cumulative effect of change in
accounting for income taxes - - 4,900
-------- -------- --------
Net earnings $ 705 2,599 1,198
======== ======== ========
Per common share amounts:
Earnings (loss) before
cumulative effect of change
in accounting for income
taxes $ .12 .44 (.63)
Cumulative effect of change
in accounting for income
taxes - - .83
-------- -------- --------
Net earnings per common
share $ .12 .44 .20
======== ======== ========
Weighted average number of common
shares outstanding 5,903 5,883 5,874
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
Years ended November 30, 1995, 1994 and 1993
(Dollars in Thousands, Except Per Share Data)
<TABLE>
Capital stock
-------------------------------
Preferred Common
Stock Stock
-------------------------------
$.01 $.01 Total
par par Additional Accum- stock-
value value paid-in ulated holders'
shares Amount shares Amount capital deficit equity
------ ------ ------- ------ --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at
November 30,
1992 - $ - 5,873,870 $ 59 133,676 (48,310) 85,425
Net earnings - - - - - 1,198 1,198
------ ------ --------- ----- --------- ------- -------
Balances at
November 30,
1993 - - 5,873,870 59 133,676 (47,112) 86,623
Common stock
options
exercised - - 19,500 - 228 - 228
Net earnings - - - - - 2,599 2,599
------ ------ --------- ----- --------- ------- --------
Balances at
November 30,
1994 - - 5,893,370 59 133,904 (44,513) 89,450
Common stock
options
exercised - - 27,130 - 166 - 166
Net earnings - - - - - 705 705
------ ------ ---------- ----- --------- ------- --------
Balances at
November 30,
1995 - $ - 5,920,500 $ 59 134,070 (43,808) 90,321
====== ===== ========== ===== ========= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended November 30, 1995, 1994 and 1993
(Dollars in Thousands)
<TABLE>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 705 2,599 1,198
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation 6,703 5,556 4,843
Provision for losses on trade
receivables 330 742 5,774
Deferred income taxes - - (4,900)
Income from equity investment (465) - -
Changes in assets and liabilities:
Increase in net receivables (1,229) (4,613) (2,783)
(Increase) decrease in inventories (423) 7,216 (5,896)
Decrease (increase) in prepaid
expenses and other current assets 730 (699) (234)
(Increase) decrease in other assets (1,295) (440) 55
Increase in accounts payable - trade 690 6,349 6,782
(Decrease) increase in due to parent,
accrued expenses and customer deposit (418) 3,218 (189)
-------- ------- -------
Net cash provided by
operating activities 5,328 19,928 4,650
-------- ------- -------
Cash flows from investing activities -
capital expenditures (14,634) (32,891) (17,759)
-------- ------- -------
Cash flows from financing activities:
Net borrowings on note payable - bank 1,364 10,536 -
Proceeds from long-term debt 7,500 - -
Proceeds from exercise of stock options 166 228 -
-------- ------- -------
Net cash provided by
financing activities 9,030 10,764 -
-------- ------- -------
Net decrease in cash and cash
equivalents (276) (2,199) (13,109)
Cash and cash equivalents at beginning of year 337 2,536 15,645
-------- ------- -------
Cash and cash equivalents at end of year $ 61 337 2,536
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
November 30, 1995, 1994 and 1993
(Dollars in Thousands, Except Per Share Data)
(1) Ownership and Summary of Significant Accounting Policies
Ownership and Nature of Operations
New Jersey Steel Corporation and subsidiary (the Company) is
majority owned by Von Roll Ltd., a company based in Switzerland.
The Company has one subsidiary, New Jersey Steel Investment Co.,
and operates in one industry segment, the manufacture and sale of
steel products. The Company is a steel mini-mill which is
designed to convert scrap metal into steel, operating at a high
capacity utilization and employing modern technology to produce
steel reinforcing bars (rebar) which are sold primarily to rebar
fabricators, mine roof bolt manufacturers and steel service
centers. The Company's steel reinforcing bars are used primarily
in the construction industry. Foreign export sales were not
significant during 1995 and 1994. For the year ended November
30, 1993, foreign export sales accounted for 6% of the Company's
total net sales.
Business and Other Risk
The Company grants trade credit to customers, substantially all
of which are located in the Northeastern United States. During the
year ended November 30, 1995, the Company generated sales to
three customers representing 17%, 13% and 12% of net sales. During the
year ended November 30, 1994, the Company generated sales to
three customers representing 21%, 11% and 10% of net sales. During the
year ended November 30, 1993, the Company generated sales to
three customers representing 16%, 15% and 13% of net sales. At
November 30, 1995 and 1994, the Company's ten largest customer trade
receivable accounts aggregated approximately 92% and 77%, respectively,
of trade receivables.
The principal raw material used in the Company's mini-mill is
scrap steel. The Company purchases scrap through outside
brokers, principally one broker, through which the Company purchased
approximately 98%, 87%, and 78% of its total scrap purchases in
1995, 1994 and 1993, respectively. The purchase prices for scrap
are dependent upon market conditions as is the ultimate sales
price of the Company's finished rebar. The Company's operating
results will be affected by the changing conditions affecting the
current prices of scrap and rebar. Due to the impact of the
winter weather in the Northeast on the construction market, the
Company typically experiences a seasonal period of lower sales in
winter months when inventory levels are built.
The Company's manufacturing processes consume large amounts of
electricity provided by Jersey Central Power & Light Company
under a contract which allows the Company to purchase its electricity
at a reduced cost in return for the utility's right to periodically
interrupt service. The number and duration of the service
interruptions are contractually limited. The Company believes
that the savings in the cost of electricity more than offsets any
production which might be lost as a result of such interruptions.
The Company's mill is classified, in the same manner as similar
steel mills in the industry, as generating hazardous waste due to
the production of dust. The Company collects the dust resulting
from its melting operation through an emissions control system.
For additional information with respect to environmental matters
see note 10.
Revenue Recognition
The Company recognizes revenue upon product shipment.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary. All significant
intercompany balances and transactions have been eliminated in
consolidation.
Inventories
Inventories are stated at the lower of cost or market value.
Cost is determined using the first-in, first-out method.
Property, Plant and Equipment
Property, plant and equipment is stated at cost.
Depreciation of plant and equipment is calculated using the
straight-line method over the estimated useful lives of the
assets ranging from five to 18 years. Repairs and maintenance are
expensed as incurred.
Real Estate, Net
Real estate, which has been held for investment, consists of
land, bulkhead and buildings, and is stated at net depreciated
cost (accumulated depreciation amounted to $2,607 and $2,101 as
of November 30, 1995 and 1994, respectively), unless, in the opinion
of management, there has been a permanent impairment in value.
Depreciation is calculated using the straight-line method over
the estimated useful lives of the bulkhead and buildings ranging from
18-25 years. Rental income from the property has continued to
decline and the Company is currently seeking tenants and
exploring the possible sale of the property.
Equity Investment
The Company accounts for its ownership interest in an investee
using the equity method.
Supplemental Cash Flow Information
Cash paid for income taxes during the year ended November 30,
1993 amounted to approximately $169 (none in 1995 and 1994). Total
interest paid totaled approximately $2,035 and $1,602 for the
years ended November 30, 1995 and 1994, respectively (none in
1993). Total interest capitalized totaled approximately $1,402
and $1,602 for the years ended November 30, 1995 and 1994,
respectively.
Per Common Share Amounts
Net earnings per common share is computed by dividing net
earnings by the weighted average number of common shares outstanding
during the year. The effect on earnings per common share resulting from
the assumed exercise of outstanding stock options is immaterial
in 1995,1994 and 1993.
Income Taxes
Effective December 1, 1992, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes" (SFAS 109), which utilizes the asset and liability method
of accounting for income taxes. Under the asset and liability
method, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment
date.
The Company has reported the cumulative effect of that change in
the method of accounting for income taxes in the 1993
consolidated statement of operations.
Recently Issued Accounting Standards
The Company has not adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-lived
Assets and for Long-lived Assets to Be Disposed Of" (SFAS 121).
SFAS 121 was issued in March 1995 and is effective for fiscal
years beginning after December 15, 1995. The Company believes
that the adoption of this accounting standard will not have a
material effect on the Company's consolidated financial position
or results of operations based on current results of operations,
and management's opinion that the current fair value of its real
estate investment exceeds the net carrying value of such real
estate. The Company has not adopted Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-based
Compensation" (SFAS 123). SFAS 123 was issued in October 1995
and is effective for financial statements for fiscal years beginning
after December 15, 1995. When adopted, certain disclosures are
required for fiscal years that begin after December 15, 1994.
SFAS 123 allows for alternative methods of accounting for
stock-based compensation arrangements with employees. The
Company currently is undecided as to what method of adoption it will
utilize.
Use of Estimates
In conformity with generally accepted accounting principles,
management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities
and the disclosure of contingent assets and liabilities to
prepare these consolidated financial statements. Actual results could
differ from those estimates.
Reclassifications
Certain amounts in the 1994 consolidated financial statements
have been reclassified to conform to the 1995 consolidated financial
statements presentation.
(2) Transactions with Von Roll Ltd.
In accordance with a technical services and management consulting
agreement with Von Roll Ltd., during each of the years 1995, 1994
and 1993, the Company charged $450 to selling, general and
administrative expenses for management and technical consulting
services provided by Von Roll Ltd. The agreement is on a
year-to-year basis. The fee payable under the agreement is
renegotiated annually. The Company has agreed to pay Von Roll Ltd. a fee of
$450 under this agreement for the year ending November 30, 1996.
(3) Inventories
Inventories at November 30, 1995 and 1994 consist of the
following:
1995 1994
---- ----
Finished goods $5,709 4,707
Work in process 341 305
Raw materials, spare
parts and supplies 9,226 9,841
------ ------
$15,276 14,853
====== ======
(4)Property, Plant and Equipment
Property, plant and equipment at November 30, 1995 and 1994
consist of the following:
1995 1994
---- ----
Land and land improvements 1,944 1,944
Steel mill and related facilities 62,717 62,646
Machinery and equipment 89,698 82,228
Construction in progress 18,706 11,613
------- -------
173,065 158,431
Less accumulated depreciation 90,700 84,503
------- -------
$ 82,365 73,928
======= =======
During 1993, the Company revised the estimated remaining
useful lives of certain machinery and equipment from ten
to 15 years to more closely reflect expected remaining
lives. The effect of this change in accounting estimate
resulted in an increase in the Company's net earnings in 1993 of
$1,486, or $.25 per common share.
(5) Investments and Transactions with Related Parties
The Company has an investment in Excel Mining Systems,
Inc. (Excel), a mine roof bolt manufacturer and a customer of
the Company. The investment, which cost $750, is
represented by 750 shares of non-voting 9% cumulative preferred stock
and 25% of Excel's outstanding common stock. The preferred
stock is redeemable on December 31, 1998 or earlier, if a
certain earned surplus level is reached (as defined). The
preferred stock has a redemption price of $1,000 per share plus
accrued but unpaid dividends, plus a final dividend (as defined)
which, in substance, represents a 50% share of Excel's earned
surplus at the redemption date. Upon redemption of the preferred
stock, the Company's common stock investment in Excel will be
entitled to participate in the earnings of Excel. Through November
30, 1994, the effect of the investment on the Company's consolidated
financial position and results of operations was immaterial. However,
as described in the following paragraph, during fiscal 1995 Excel
acquired another mine roof bolt business and expanded its operations
significantly.
During 1995, the Company agreed to guarantee up to $7,000 of Excel's
revolving credit facility in connection with Excel's acquisition of
a mine roof bolt business. The guarantee expired on November 30, 1995.
In exchange for such guarantee, the Company received an additional common
equity interest in Excel to bring its aggregate common ownership interest
to 31%. Receivables due from Excel are included in trade - affiliates in
the accompanying consolidated balance sheets and amount to $1,538 and
$2,257 at November 30, 1995 and 1994, respectively. Receivables from
Excel carry trade terms consistent with its other customers.
Excel's fiscal year ends on December 31, with its accounts
being audited annually. Summary unaudited financial
information for Excel as of and for the year ended November
30, 1995 follows:
Current assets $ 12,396
Current liabilities 11,292
------
Working capital 1,104
Property, plant and equipment, net 19,025
Other assets 1,153
Long-term debt (19,472)
Mandatory redeemable preferred stock (750)
------
Stockholders' equity $ 1,060
======
Sales $ 71,494
======
Net earnings $ 930
======
The Company acquired a one-third interest in the common
stock of AJ Ross Logistics, Inc. and subsidiaries (AJ Ross) in fiscal 1988.
AJ Ross was a significant customer through fiscal 1993. AJ Ross
undertook a significant restructuring during 1992 and the Company's
investment was written off. The restructuring included asset sales,
management changes, revised credit arrangements, and a focus solely on being
a rebar fabricator. Despite the aforementioned restructuring of AJ Ross,
changing market conditions and related increases in the price of rebar in
1993 had an adverse effect on AJ Ross' operations, and AJ Ross filed a
petition for relief under Chapter 11 of the Bankruptcy Code in November 1993
and subsequently ceased doing business. As a result, in November 1993,
the Company charged approximately $5,159 to selling, general and
administrative expenses to write off trade receivables due from AJ Ross.
Under the terms of a 1990 agreement, the Company purchased from AJ Ross land
and buildings located in Keasby, New Jersey which is included in the
accompanying consolidated balance sheets as real estate, net. The
agreement also provided that the Company lease the property back to AJ Ross
under a two-year operating lease which expired in November 1992 at
which point AJ Ross leased the property on a month-to-month basis. During
fiscal 1994, AJ Ross stopped leasing the property; however, an affiliate
of an AJ Ross stockholder leased a portion of the property on a month-to-
month basis. Rental income from AJ Ross and an affiliate of AJ Ross for
the years ended November 30, 1994 and 1993 was approximately $480 and $862,
respectively.
(6) Income Taxes
The components of the deferred income tax assets and liabilities arising
under Statement 109 at November 30, 1995 and 1994 are as follows:
1995 1994
------ -----
Deferred tax assets:
Federal and state net operating
loss carryforwards $11,670 8,593
Other tax credit carryforwards 4,585 4,585
Equity investment 799 764
Deferred compensation 1,186 947
Other deductible temporary differences 1,839 1,187
Valuation allowances (7,468) (7,582)
----- -----
$12,611 8,494
====== =====
Deferred tax liabilities:
Fixed asset basis differences 6,718 2,789
Other taxable temporary differences 993 805
----- -----
$ 7,711 3,594
===== =====
For tax purposes, the Company has available at November 30, 1995 net
operating loss (NOL) carryforwards available to offset future taxable
income for regular Federal income tax purposes, which expire as follows:
1997 $ 627
1998 11,524
1999 4,601
2006 2,392
2008 7,734
2009 6,407
-------
$ 33,285
=======
The Company also has investment tax credit carryforwards totaling
approximately $903, which expire as follows; $47 in 1996; $52 in 1997;
$347 in 1998; $217 in 1999; and $240 thereafter. Additionally, in
conjunction with the Alternative Minimum Tax (AMT) rules, the Company has
available AMT credit carryforwards of approximately $1,051, which may be
used indefinitely to reduce regular Federal income taxes. The Company
has also received approval for $3,986 of recycling credits which are
available to offset certain state income taxes ($2,631, net of Federal
benefit). These credits are subject to certain limitations, with
an unlimited carryforward. A valuation allowance has been recorded at
November 30, 1995 and 1994 for that portion of deferred tax assets which
is not presently considered more likely than not to be realized. The
amount of the deferred tax asset considered realizable, however, could be
reduced in the near term if estimates of future taxable income during
the net operating loss carryforward periods previously described are
reduced. During fiscal 1995 and 1994, the valuation allowance decreased
by approximately $114 and $1,446, respectively. During fiscal 1993,
the valuation allowance increased by approximately $1,943.
Management believes that it is more likely than not that certain of its
NOL carryforwards will be utilized prior to their expiration. This
belief is based upon the factors discussed below:
(i) In 1994, the Company continued and completed a
major portion of its melt shop modernization
program which included a new, more efficient
system for making steel. While to date the Company
has not achieved anticipated efficiencies and results
with the new system, management is in the process
of working with the new system in order to maximize
efficiencies and cost savings.
(ii) As a result of new business opportunities, during
fiscal 1996 the Company expects to increase its
sale of billets which will enable the mill to
operate at higher rates and reduced costs.
(iii) The Company operates in a highly cyclical industry and
consequently has a history of generating
and subsequently utilizing significant amounts of NOL
carryforwards.
The provision for income taxes for the years ended November 30,
1995, 1994 and 1993 differs from the expected (benefit) provision
for Federal income taxes as follows:
1995 1994 1993
---- ---- ----
Computed expected (benefit) provi-
sion for Federal income taxes $ 82 884 (1,259)
Change in the beginning of the year
balance of the valuation al-
lowance for deferred tax assets
allocated to the provision for
income taxes (114) (1,446) -
Expense with no tax benefit 15 222 -
State income taxes before change
in valuation allowance (net of
Federal income tax benefit) 17 117 -
Loss for which no benefit was
recorded - - 1,259
Other - 223 -
----- ----- ------
$ - - -
===== ===== ======
The Company adopted SFAS 109 effective December 1, 1992. The cumulative
effect of this change in accounting for income taxes is a $4,900 benefit,
which is determined as of December 1, 1992 and is reported separately in
the consolidated statement of operations for the year ended November 30,
1993.
(7) Stockholders' Equity
Under the terms of the New Jersey Steel Corporation Incentive Stock Option
Plan, certain key employees may be granted options to purchase up to 503,000
shares of common stock. Options are issued at prices equal to the fair
market value of the Company's common stock at the date of grant. Options
become exercisable ratably over a five-year period. Options which expire or
are canceled become available for future grants.
Information on common stock options is as follows:
Incentive
stock options
------------------------
Price
Shares Per Share
------------------------
Outstanding at November 30, 1992 129,130 $3.00- 14.00
Granted - -
Exercised - -
------- -------------
Outstanding at November 30, 1993 129,130 3.00- 14.00
Granted - -
Exercised (19,500) 11.50- 11.75
------- -------------
Outstanding at November 30, 1994 109,630 3.00- 14.00
Granted - -
Exercised (27,130) 6.10
-------- -------------
Outstanding and exercisable
at November 30, 1995 82,500 3.00- 14.00
======== =============
(8) Bank Borrowings
The Company has a credit agreement with a bank (the Credit Agreement) which
provides for a line of credit and a term loan.
The line of credit, as currently amended, provides for $17,500 of available
credit of which $11,900 is outstanding at November 30, 1995 (subject to
limits on collateral availability), bearing interest at the bank's prime rate
(8.75% at November 30, 1995). Advances under the amended line of credit are
secured by the Company's eligible accounts receivable and inventory (as
defined). The amended line of credit matures on April 30, 1997.
In August 1995, concurrent with the most recent amendment of its line of
credit, the Company obtained a five-year term loan in the amount of $7,500
with a maturity date of December 31, 2000. Principal payments under the
term loan are due in quarterly installments of $375 beginning March 31, 1996.
Interest is payable monthly at an annual rate of 8.65%. Borrowings under
the term loan are secured by the Company's eligible accounts receivable and
inventory, as defined.
The aggregate maturities of the Company's outstanding borrowings under the
Credit Agreement for each of the five years subsequent to November 30, 1995
are as follows: 1996: $1,125; 1997: $13,400; and 1998-2000:$1,500 per year.
The bank requires the Company to meet certain financial covenants such as
minimum working capital, current ratio, maximum total liabilities to tangible
net worth, certain profitability (as defined) and net worth requirements.
At November 30, 1995 the Company was not in compliance with its maximum total
liabilities to tangible net worth provision. On February 6, 1996 the
Company obtained from the bank a waver of noncompliance at November 30, 1995.
(9) Benefit Plans
The Company has a 401(k) plan which allows employees, upon meeting
eligibility requirements, to make contributions to the plan, and under
various conditions allows the Company to contribute to the plan at
percentages specified in the plan agreement. Company contributions to the
plan amounted to $178, $175 and $139 in 1995, 1994 and 1993, respectively.
The Company has a voluntary, nonqualified plan of deferred compensation
covering a select group of key employees. Under the terms of the plan,
key employees are eligible to defer specific percentages of their
compensation until their retirement or other termination of employment.
The Company supplements these amounts at percentages specified under the
plan. Company contributions to the plan amounted to $528, $261 and $189 in
1995, 1994 and 1993, respectively.
On December 12, 1995, the Company's board of directors approved the
termination of this plan effective as of the close of business on December
31, 1995, and determined that thereafter no further contributions will be
made. The assets of the plan were distributed to the participants in
January 1996.
During the years ended November 30, 1995, 1994 and 1993, the Company charged
$97, $189 and $146, respectively, to operations for amounts paid under a
profit-sharing plan for hourly and salaried employees authorized by the
board of directors.
(10) Commitments and Contingencies
The Company and Von Roll Ltd. are defendants in an action entitled Gary Lutin
v. New Jersey Steel Corporation, Von Roll Ltd. a/k/a Von Roll A.G., and
unknown parties, which is currently pending in the United States District
court for the Southern District of New York. The action was originally
brought against several individuals and Excel Mining Systems, Inc., and
involved allegations that the defendants had conspired to destroy the mine
roof bolt business of Advanced Mining Systems, Inc. The original complaint
sought damages in excess of $12,000. In 1992, an amended complaint added
the Company and Von Roll Ltd. as additional parties. The amended
complaint alleges causes of action for tortious conspiracy, tortious
interference with contract and prospective business relations and fraud
and unfair competition.
The action was subsequently removed to Federal court and transferred to the
Southern District of New York. A motion to dismiss the Company and Von Roll
has been pending, undecided for several years. In 1994, in connection with
the settlement of an unrelated action, the original defendants were dropped
as defendants in this action. In June 1995, the plaintiff moved to serve
an amended complaint which restated the claims from the original action as
claims under the Federal RICO statute and related state laws and to add
various officers and directors of the Company as defendants. This motion is
currently pending. Additionally, the plaintiff filed a new action in the
United States District Court for the Southern District of New York against
the Company, Von Roll Ltd. and various directors and officers of the Company.
This action is based on the same facts and seeks unspecified damages which
the plaintiff claims to be in excess of $50,000. The Company has made a
motion for an order dismissing the complaint and for summary judgment in
the new action. Although pre-trial discovery has not commenced, based on
the facts known, the Company's legal counsel and management believe the
plaintiff's claims in the actions are without merit.
In September 1994, the New Jersey Department of Environmental Protection
(NJDEP) issued a "Permit to Construct, Install or Alter Control Apparatus
or Equipment" and "Temporary Certificate to Operate Control Apparatus
or Equipment" and "Prevention of Significant Deterioration Permit" (the
NJDEP Permit). The NJDEP Permit authorizes the Company to complete the
currently ongoing melt shop modernization program, contains a temporary
operating permit and directs that the testing required for issuance of a
five-year certificate to operate be performed by March 8, 1996. A Continuous
Emissions Monitoring System (CEMS) has been installed and is in operation at
the mill as part of the modernization program. The permitted emissions level
contained in the NJDEP Permit were based, among other things, on the
manufacturer's claims regarding performance of the new steel making system
installed as part of the modernization program. As a result, the Company
believed that, following the modernization program, the Company's emissions
would comply with the emissions standards contained in the NJDEP Permit.
However, as a result of the failure to date of the system to perform to
expectations, management believes that the mill is emitting at least two
criteria air pollutants at levels in excess of those contained in the
NJDEP Permit. The Company believes that it will be required to apply to
the NJDEP for a modification to its permit to increase the permitted levels
of such criteria air pollutants. Until such time as a new permit is issued,
the Company may be in technical violation of its permitted emissions levels
and, as a consequence, subject to fines and penalties the amounts of which
are subject to the discretion of the NJDEP. The Company believes that the
ultimate outcome of this matter will not have a material adverse effect on
the Company's financial position or results of operations.
By letter dated December 21, 1995, the Company was notified that the Trial
Lawyers for Public Justice, P.C., on behalf of the Natural Resources Defense
Council and the Public Interest Research Group of New Jersey, intends to
bring an action against the Company alleging that the air emissions from
one of the stacks of the Company's electric arc furnace violated
and continue to violate certain sections of the Clean Air Act. This claim,
if made, would relate to the excess emissions described in the preceding
paragraph.
On June 7, 1994, the United States Environmental Protection Agency (USEPA)
issued a Notice of Violation (NOV) to the Company stating that the Company
had violated the New Jersey State Implementation Plan (NJSIP) because a
"major modification" was commenced without a Prevention of Significant
Deterioration Permit from the NJDEP. As described above, that permit was
issued by the NJDEP in September 1994. Since the Company acted in accordance
with an understanding with the NJDEP, it believes that no violation of the
NJSIP occurred. There have been no further proceedings under the NOV,
however, there can be no assurances that USEPA will not assess penalties
resulting from the NOV. The Company believes that the ultimate outcome
of this matter will not have a material effect on the Company's financial
position or results of operations.
In March 1994, Novo-Plez SA and NASCO Brokers, Inc. (the Claimants), steel
brokers, filed a Petition and Request for Arbitration in the International
Court of Arbitration of the International Chamber of Commerce (the Swiss
Arbitration). The Claimants seek approximately $721 in damages for steel
purchased from the Company which is asserted to be of inferior quality plus
interest at 9.5% and have reserved the right to assert a claim for an
additional $8,700 in incidental and consequential damages. The Company
filed an answer to the petition on May 2, 1994, in which it stated that the
steel billets fully conformed to the specifications provided for in the
contracts. All arbitration hearings have been completed and the parties
are awaiting the decision of the arbitrator. While arbitration always
involves risk at the hands of the decision maker, based on the advice of
legal counsel, management believes that the Company presented a meritorious
defense to the claims at the hearing, and that the Company will prevail in
the defense of these claims.
Egyptian Metals Company (EMC), the customer of the Claimants in the Swiss
Arbitration, and its broker have attempted to pursue a related claim before
the "Tribunal de Commerce" in Paris, France (the Paris Action), alleging
that the Company was liable to it for the sale of the defective billets. EMC
claimed damages of approximately $2,121 and an additional claim for payment
of one hundred thousand French francs under the French Code of Civil
Procedure. The Company has not entered an appearance in the Paris Action as,
based on the advice of legal counsel, management believes that the French
court is without jurisdiction over the Company, and that the litigation
will ultimately be dismissed or, if judgment is in fact entered, the Company
will have meritorious defenses against the enforceability of the judgment.
In February 1995, EMC filed a complaint against the Company, Novo-Plez SA
and NASCO Brokers, Inc. in the United States District Court for the
District of New Jersey based on the same transactions as the Paris Action
and the Swiss Arbitration seeking damages against the three defendants
individually in the amount of $5,050. Novo-Plez SA and NASCO Brokers, Inc.
subsequently were dismissed as defendants by stipulation. Management
believes, based on the advice of legal counsel, that the Company will
ultimately prevail in its defense of these claims.
As further described in note 5, in November 1993, AJ Ross filed a petition
for relief under Chapter 11 of the U.S. Bankruptcy Code. As AJ Ross was
a significant customer, the Company received in excess of $5,600 in
payments on trade receivables from AJ Ross in the year immediately preceding
the filing date. The AJ Ross case was converted to Chapter 7 and the
trustee in bankruptcy is seeking $87 from the Company on the grounds that
such portion of the $5,600 in payments constituted a voidable preference
under the U.S. Bankruptcy Code. The Company is contesting the trustee's
claims and the matter is under negotiation.
By letter dated July 7, 1994, the staff of the Securities and Exchange
Commission (SEC) informed the Company that it is conducting a private
inquiry into whether there have been violations of the Federal securities
laws. The staff requested that the Company provide it with all documents
concerning its investments in AJ Ross and the modernization program. The
staff letter states that its request for documents should not be construed
as an indication by the SEC or its staff that any violations of law have
occurred, nor should it be considered a reflection upon any person, entity
or security. The Company is cooperating with the staff and in August 1994,
provided the requested documents. There have been no further developments
in this matter since August 1994.
In October 1994, the Company entered into an Agreement and Plan of Merger
(the Merger Agreement) with International Metals Acquisition Corporation
(IMAC). On February 1, 1995, the Merger Agreement and related Stock
Purchase Agreement were terminated. On March 15, 1995. IMAC, the Company
and Von Roll Ltd. entered into a Termination Settlement Agreement which
involved no payment by any of the parties and the parties exchanged full
releases.
On September 22, 1994, the Company received a summons and complaint in an
action purported to be a class action on behalf of minority stockholders
of the Company and sought unspecified damages and injunctive relief
in connection with the proposed merger between the Company and IMAC. With
the termination of the Merger Agreement between the Company and IMAC, the
plaintiff and the Company entered into a Stipulation and Order of Voluntary
Dismissal, filed on March 9, 1995, dismissing the action.
The Company is also involved in litigation relating to claims arising out of
its operations in the normal course of business. Such claims against the
Company are generally covered by insurance. In the opinion of management,
any uninsured or unindemnified liability resulting from existing litigation
would not have a material adverse effect on the Company's business or
consolidated financial position. The Company is not aware of any probable
liabilities or related recoveries which would have a material adverse effect
on the Company's consolidated financial position. There can be no assurance
that insurance, including product liability insurance, will be available in
the future at reasonable rates.
The Company is a party to several month-to-month operating leases, primarily
for equipment. Total rent expense in 1995, 1994 and 1993 was approximately
$841, $574 and $476, respectively.
(11) Other Income (Expense)
During fiscal 1995, other expense consists principally of costs related to
the IMAC Merger Agreement which were written off in 1995, offset by the
gain resulting from the sale of certain equipment. During fiscal 1993,
the Company settled a claim with its insurance company related to roof
damage in its melt shop resulting in a gain of $627. Other expense
during fiscal 1993 is primarily a result of expenses incurred in connection
with the Company's option to purchase property in Pennsylvania, which expired
in May 1993.
(12) Subsequent Event (Unaudited)
In December 1995 the board of directors approved the closure of the
Company's fabrication operations in Bowie, Maryland. Management believes the
effect of such potential sale will not have a material effect on the Company's
consolidated financial position or results of operations.
(13) Quarterly Financial Information (Unaudited)
The following tables set forth selected quarterly financial
information:
1995
-------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------------------------------------
Net sales $ 29,893 37,172 34,414 35,757
Gross profit 1,959 3,395 1,937 692
Net earnings (loss) 372 1,454 (49) (1,072)
-------------------------------------
Per share common amounts
- net (loss) earnings $ .06 .25 (.01) (.18)
=====================================
1994
-------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------------------------------------
Net sales $ 22,349 35,841 40,067 39,498
Gross profit 562 129 3,187 5,144
Net earnings (loss) (903) (1,355) 1,578 3,279
-------------------------------------
Per share common amounts
- net (loss) earnings $ (.15) (.23) .27 .55
=====================================
Schedule II
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Valuation and Qualifying Accounts
Years ended November 30, 1995, 1994 and 1993
(Dollars in Thousands, Except Per Share Data)
<TABLE>
Write
Charged offs,
Balance to costs net of Balance
at be- and ex- recov- at end
Description ginning penses eries of year
- ----------- ------- -------- ------ -------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended November 30, 1995 $ 1,846 330 (29) 2,147
Year ended November 30, 1994 1,828 742 (724) 1,846
Year ended November 30, 1993 1,836 5,774 (5,782) 1,828
======= ======== ====== =======
</TABLE>
- -----------------------------------------------------------------------------
<PAGE>
EXCEL MINING SYSTEMS, INC.
Condensed Financial Information as of December 30, 1995
and December 31, 1994 and for the Years Ended December
30, 1995, December 31, 1994 and December 25, 1993 and
Independent Auditor's Report
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and
Board of Directors of
Excel Mining Systems, Inc.:
We have audited, in accordance with generally accepted auditing standards,
the balance sheets of Excel Mining Systems, Inc. as of December 30, 1995 and
December 31, 1994, and the related statements of income, stockholders' equity
and cash flows for the years ended December 30, 1995, December 31, 1994 and
December 25, 1993 (not presented herein); and in our reports dated January 23,
1996 (except for Note 9, which is as of March 8, 1996) and January 20, 1995,
we expressed, except for the effects of deferring certain litigation costs as
discussed in our reports, unqualified opinions on those financial statements.
In our opinion, the information set forth in the accompanying condensed
financial statements is fairly stated, in all material respects, in relation
to the financial statements from which it has been derived.
Pittsburgh, Pennsylvania Grossman, Yanak & Ford
March 8, 1996
EXCEL MINING SYSTEMS, INC.
CONDENSED BALANCE SHEETS
DECEMBER 30, 1995 AND DECEMBER 31, 1994
(Dollars in Thousands)
<TABLE>
ASSETS 1995 1994
<S> <C> <C>
Current assets $ 12,847 $ 7,302
Property and equipment, net 17,637 2,602
Notes receivable 220 40
Other assets 2,756 315
Total 33,460 10,259
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities 12,223 7,386
Long-term debt 18,782 1,558
Deferred loan fees 387 -
Deferred income taxes 388 215
Total liabilities 31,780 9,159
Redeemable preferred stock 750 750
Common stockholders' equity 930 350
Commitments and contingencies - -
TOTAL $ 33,460 $ 10,259
</TABLE>
See independent auditors' report.
EXCEL MINING SYSTEMS, INC.
CONDENSED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 30, 1995, DECEMBER 31, 1994
AND DECEMBER 25, 1993
(Dollars in thousands, except per share data)
<TABLE>
1995 1994 1993
<S> <C> <C> <C>
Net sales $ 73,113 $ 26,227 $ 20,213
Cost of goods sold 64,584 23,520 19,263
Gross profit 8,529 2,707 950
Selling, general and
administrative expenses 4,864 1,312 683
Other expenses, net 2,640 352 223
Income before income taxes and
cumulative effect adjustment 1,025 1,043 44
Provision (benefit) for
income taxes 445 244 (9)
Income before cumulative
effect of change in
accounting principle 580 799 53
Cumulative effect of change in
accounting principle - - 6
Net income $ 580 $ 799 $ 59
Earnings per share:
Earning (loss) before
cumulative effect of change
in accounting principle (as
adjusted for $67,500 of
dividends on preferred
stock for each year) $ 1,280.12 $ 1,828.52 $ (35.31)
Cumulative effect of change
in accounting principle - - 15.00
Net earnings (loss) per
common share $ 1,280.12 $ 1,828.52 $ (20.31)
Weighted average number of
common shares outstanding 400 400 400
</TABLE>
See independent auditors' report.
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<PAGE>
3. Exhibits:
3(a) -- Restated Certificate of Incorporation, as
amended--Incorporated by reference to Exhibit 3(a) of the
Company's Registration Statement on Form S-1 (No.33-13298).
3(b) -- By-laws, as amended--Incorporated by reference to Exhibit 3(b)
to the Company's Annual Report on Form 10-K for the year ended
November 30, 1993 (File No. 0-15838).
4(a) -- Form of Certificate for shares of Common Stock of the
Company-- Incorporated by reference to Exhibit 4(a)
of the Company's Registration Statement on Form S-1 (No.
33-13298).
10(a) -- Electricity Supply Contract between Company and
Central Jersey Power & Light Company effective May
1985--Incorporated by reference to Exhibit 10(d) of
the Company's Registration Statement on Form S-1 (No.
33-13298).
10(b) -- Technical Services and Management Consulting Agreement
between the Company and Von Roll Ltd. dated as of April
1, 1987--Incorporated by reference to Exhibit 10(e) of
the Company's Registration Statement on Form S-1
(No. 33-13298).
10(c) -- Incentive Stock Option Plan of Company adopted October
2, 1987 with amendments--Incorporated by reference to
Exhibit 10(f) of the Company's Registration Statement
on Form S-1 (No. 33-13298).
10(d) -- Form of Stock Option Agreement--Incorporated by reference to
Exhibit 4(b) of the Company's Registration Statement on
Form S-8 (No. 33-17435).
10(e) -- Indemnity Agreement between the Company and Von Roll
Ltd. dated as of April 1, 1987--Incorporated by reference to
Exhibit 10(g) of the Company's Registration Statement on
Form S-1 (No. 33-13298).
10(f) -- New Jersey Steel Corporation Executive Thrift Savings
Plan--Incorporated by reference to Exhibit 10(I) of the
Company's Registration Statement on Form S-1 (No. 33-13298).
10(g) -- New Jersey Steel Corporation Thrift Savings Plan (as
amended 1994)--Incorporated by reference to Exhibit
10(g) of the Company's Annual Report on Form 10-K for
the year ended November 30, 1994 (File No. 0-15838).
10(h) -- New Jersey Steel Corporation Thrift Trust Savings
Agreement (as amended 1994)--Incorporated by reference
to Exhibit 10(h) of the Company's Annual Report on Form
10-K for the year ended November 30, 1994 (File No. 0-15838).
10(i) -- Registration Agreement between the Company and Von Roll
Ltd. dated as of April 1, 1987--Incorporated by reference to
Exhibit 10(h) of the Company's Registration Statement on
Form S-1 (No. 33-13298).
10(j) -- Employment Agreement dated September 23, 1993 between
the Company and Robert J. Pasquarelli--Incorporated by
reference to Exhibit 10(k) to the Company's Annual
Report on Form 10-K for the year ended November 30,
1993 (File No. 0-15838).
10(k) -- Revolving Loan and Security Agreement dated March 31,
1993, as amended by Amendment dated April 1994, as
amended by Second Amendment dated May 31, 1994, as
amended by Third Amendment dated December 31, 1994
--Incorporated by reference to Exhibit 10(j) to the
Company's Quarterly Report on Form 10-Q for the quarter
ended May 31, 1995 (File No. 0-15838).
10(l) -- Fourth Amendment, dated May 12, 1995, to the Revolving
Loan and Security Agreement dated March 31, 1993, as
amended by Amendment dated April 1994, as amended by
Second Amendment dated May 31, 1994, as amended by
Third Amendment dated December 31, 1994--Incorporated
by reference to Exhibit 10(k) to the Company's
Quarterly Report on Form 10-Q for the quarter ended May
31, 1995 (File No. 0-15838).
10(m) -- Fifth Amendment, dated August 29, 1995, to the
Revolving Loan and Security Agreement dated March 31,
1993, as amended by Amendment dated April 1994, as
amended by Second Amendment dated May 31, 1994, as
amended by Third Amendment dated December 31, 1994, as
amended by Fourth Amendment dated May 12, 1995--Incorporated
by reference to Exhibit 10(k) to the Company's Quarterly
Report on Form 10-Q for the quarter ended August 31, 1995
(File No. 0-15838).
23(a) -- Consent of KPMG Peat Marwick LLP - Previously filed.
23(b) -- Consent of Grossman, Yanak & Ford - Filed herewith.
27 -- Financial Data Schedule.
- -------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of Section 13 or 15(b) 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.
June 28, 1996 NEW JERSEY STEEL CORPORATION
By:/s/ Paul Roik
--------------------------------
Paul Roik, Vice President,
Finance and Treasurer (Principal
Financial and Accounting Officer)
- ------------------------------------------------------------------------------
<PAGE>
Exhibit 23(b)
Consent of Grossman, Yanak & Ford
The Board of Directors
New Jersey Steel Corporation
We consent to incorporation by reference in the Registration Statements
(No. 33-17435 and 33-52194) on Form S-8 of New Jersey Steel Corporation
of our report dated March 8, 1996, relating to the condensed balance
sheets of Excel Mining Systems, Inc. as of December 30, 1995 and December
31, 1994, and the related condensed statements of income for the years
ended December 30, 1995, December 31, 1994 and December 25, 1993, which
report appears in the Annual Report on Form 10-K/A of New Jersey Steel
Corporation for the year ended November 30, 1995.
Pittsburgh, Pennsylvania
June 27, 1996
