<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
------------------------------
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 0-16254
-------------
Steel of West Virginia, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 55-0684304
- ---------------------------------- --------------------
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification No.
17th Street and 2nd Avenue, Huntington, West Virginia 25703
-----------------------------------------------------------
(Address of principal executive offices, Zip Code)
(304) 696-8200
-----------------------------------------------------------
(Registrant's telephone number, including area code)
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
---- -----
The number of shares outstanding of each of the issuer's classes of common
stock, as of September 30, 1998, is as follows:
6,010,795 shares of common stock, par value $.01 per share.
<PAGE>
STEEL OF WEST VIRGINIA, INC.
AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
Number
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of 3
September 30, 1998 and December 31, 1997
Condensed Consolidated Statements of Income for 4
the Three-Month and Nine-Month Periods Ended
September 30, 1998 and 1997
Condensed Consolidated Statements of Cash Flows 5
for the Three-Month and Nine-Month Periods Ended
September 30, 1998 and 1997
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of 9
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. CONDENSED CONSOLIDATED BALANCE SHEETS
STEEL OF WEST VIRGINIA, INC. AND SUBSIDIARIES
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
September 30 December 31
1998 1997
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash ................................................. $ 0 $ 0
Receivables, net of allowances of $683 and
$609 15,812 11,181
Inventories .......................................... 31,031 20,918
Deferred income taxes ................................ 1,555 1,555
Other current assets ................................. 447 660
--------- ---------
TOTAL CURRENT ASSETS 48,845 34,314
Property, plant, and equipment .......................... 65,095 61,002
Goodwill ................................................ 17,258 17,770
Other assets ............................................ 415 629
--------- ---------
TOTAL ASSETS $ 131,613 $ 113,715
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Overdraft ............................................ $ 1,048 $ 968
Accounts payable ..................................... 9,671 10,880
Accrued payroll and benefits payable ................. 4,433 3,509
Income taxes payable ................................. 323 71
Other current liabilities ............................ 2,321 1,385
Current maturities of long-term debt ................. 3,691 1,891
--------- ---------
TOTAL CURRENT LIABILITIES 21,487 18,704
Long-term debt .......................................... 47,730 34,339
Deferred income taxes ................................... 4,794 6,194
Other long-term liabilities ............................. 145 176
--------- ---------
TOTAL LIABILITIES 74,156 59,413
STOCKHOLDERS' EQUITY
Common stock, $.01 par value: 17,000,000
voting shares authorized, 7,116,095 and
7,100,602 issued, including treasury stock ... 71 71
Paid-in capital ...................................... 26,785 26,663
Treasury stock - 1,105,300 shares at cost ......... (11,483) (11,483)
Retained earnings ................................ 42,084 39,051
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 57,457 54,302
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 131,613 $ 113,715
--------- ---------
--------- ---------
</TABLE>
NOTE: The balance sheet at December 31, 1997, has been derived from the audited
financial statements at that date.
See notes to condensed consolidated financial statements.
3
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
STEEL OF WEST VIRGINIA, INC. AND SUBSIDIARIES
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales ......................... $ 32,701 $ 29,550 $ 99,371 $ 81,900
Cost of sales ..................... 29,023 26,191 88,247 70,233
----------- ----------- ----------- -----------
GROSS PROFIT ................ 3,678 3,359 11,124 11,667
Selling and administrative expenses 1,638 1,337 4,569 4,391
Interest expense .................. 979 187 2,296 682
Loss (Gain) on disposal of assets . 0 (288) (275) (741)
Other income ...................... (500) (98) (786) (441)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES .. 1,561 2,221 5,320 7,776
Income Taxes ...................... 710 924 2,287 3,277
----------- ----------- ----------- -----------
NET INCOME .................. $ 851 $ 1,297 $ 3,033 $ 4,499
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
BASIC AND DILUTED EARNINGS PER
COMMON SHARE .................... $ .14 $ .22 $ .50 $ .75
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average common shares
outstanding:
Basic ......................... 6,012,388 5,994,705 6,011,429 5,993,560
Diluted ....................... 6,012,388 6,004,562 6,015,421 6,004,239
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
STEEL OF WEST VIRGINIA, INC. AND SUBSIDIARIES
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH (USED IN) PROVIDED FROM
OPERATIONS
Net income .................... $ 851 $ 1,297 $ 3,033 $ 4,499
Adjustments for items not
affecting funds from
operations:
Depreciation and
amortization ............ 2,111 1,330 6,008 3,980
Loss (Gain) on disposal of
assets .................. 0 (288) (275) (741)
Other ..................... 14 (779) 644 (990)
Working capital changes
related to operations ....... (5,000) 1,350 (14,666) (2,739)
-------- -------- -------- --------
CASH (USED IN) PROVIDED FROM
OPERATIONS .................... (2,024) 2,910 (5,256) 4,009
INVESTMENT ACTIVITIES
Additions to property, plant,
and equipment ............... (412) (7,934) (10,015) (16,923)
FINANCING ACTIVITIES
Revolving credit and term loans 3,173 2,520 8,561 5,746
Proceeds from debt issue ...... 0 4,500 8,000 10,500
Long-term debt repayments ..... (924) (223) (1,370) (2,193)
-------- -------- -------- --------
2,249 6,797 15,191 14,053
INCREASE (DECREASE) IN CASH .. $ (187) $ 1,773 $ (80) $ 1,139
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
STEEL OF WEST VIRGINIA, INC. AND SUBSIDIARIES
September 30, 1998
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements include
the accounts of Steel of West Virginia, Inc. (the Company) and its wholly-owned
subsidiaries SWVA, Inc. and Marshall Steel, Inc. Such condensed financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three-month and
nine-month periods ended September 30, 1998 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1998. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1997.
The preparation of the condensed consolidated financial statements in conformity
with generally accepted accounting principles requires that management make
certain estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.
Basic earnings per share excludes any dilutive effects of stock options and is
computed by dividing net income by the weighted average shares of common stock
outstanding for the period. Diluted earnings per share is computed by dividing
net income by the weighted average shares of common stock outstanding for the
period plus the shares that would be outstanding assuming the exercise of
dilutive stock options.
NOTE B--INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
September 30 December 31
1998 1997
------- -------
<S> <C> <C>
Raw materials ........ $ 2,235 $ 2,354
Work-in-process ...... 12,838 8,240
Finished goods ....... 15,543 10,731
Manufacturing supplies 4,935 4,068
------- -------
35,551 25,393
Less LIFO reserve .... 4,520 4,475
------- -------
$31,031 $20,918
------- -------
------- -------
</TABLE>
At the end of each year, management determines inventory levels based on a
physical inventory. The amount of inventories at September 30, 1998, has been
determined based upon inventory levels indicated by perpetual inventory
accounting records. In addition, an actual valuation of inventory under the LIFO
method can be made only at the end of each year based on the inventory levels
and costs at that time.
6
<PAGE>
Accordingly, interim LIFO calculations must necessarily be based on management's
estimates of expected year-end inventory levels and costs. Since these are
subject to many forces beyond management's control, interim results are subject
to the final year-end LIFO inventory valuation.
NOTE C--CREDIT ARRANGEMENTS
A summary of indebtedness under the Company's credit arrangements is as follows
(in thousands):
<TABLE>
<CAPTION>
September 30 December 31
1998 1997
-------- --------
<S> <C> <C>
Capital Expenditure Line Term Loan #1 ... $ 2,775 $ 3,420
Capital Expenditure Line Term Loan #2 ... 27,300 20,000
Revolver ................................ 21,102 12,541
Other notes payable ..................... 244 269
-------- --------
TOTAL ............ 51,421 36,230
Less current maturities of long-term debt (3,691) (1,891)
-------- --------
$ 47,730 $ 34,339
-------- --------
-------- --------
</TABLE>
The Company maintains a senior financing agreement that, as last amended,
provides for a $26,000,000 revolving line of credit and capital expenditure line
term loans. The interest rates on the Company's existing revolving credit lines
and term loans vary based on the Chemical Bank prime rate or LIBOR plus 1 3/4%;
and the annual revolving credit line commitment fee is 1/8% of the unused
balance. As of September 30, 1998, the revolving credit line loan balance, due
January 1, 2002, was $21,102,000, and the unused borrowing availability
approximated $3,729,000.
Under the terms of its senior financing agreement, the Company is permitted to
convert its Capital Expenditure Line Term Loan #1 indebtedness to a fixed
interest rate. Effective with the April 1998 amendment, the Company's borrowing
availability under the Capital Expenditure Line Term Loan #2 was increased to
$28,000,000 to finance current machinery and equipment expenditures, as governed
by a percentage of such expenditures. The Company is permitted, at its election
through January 1, 1999, to convert such indebtedness to a fixed interest rate.
The Capital Expenditure Line Term Loan #1 portion of the loan agreement is
required to be repaid in quarterly installments of $215,000, with a final
principal payment of $195,000 on October 1, 2001. The Capital Expenditure Line
Term Loan #2 is required to be repaid in 40 equal quarterly installments of
principal over ten years that commenced July 1, 1998.
The Company's senior lending agreement may be terminated by the Company or, on
or after January 1, 2002 and upon 90 days written notice, by the lender. The
agreement contains various restrictive covenants, including specified levels of
working capital and net worth (as defined in the agreement). In addition,
capital expenditures and dividends are limited to the annual amounts set forth
in the agreement. At September 30, 1998, the Company's retained earnings
available for dividends is $2,629,500. As a result of the lending agreement,
substantially all of the Company's property, plant, and equipment, inventory and
accounts receivable are subject to a third party's security interests.
7
<PAGE>
NOTE D--COMMITMENTS AND CONTINGENCIES
The Company is principally self-insured for employees' medical care costs and
workers' compensation claims up to certain specified dollar limits. Under the
medical care program, the Company is insured by a private carrier for individual
claims in excess of specified dollar limits. The Company also has excess
coverage provided by the West Virginia Workers' Compensation Fund (a state
agency) for certain work related injuries. In connection with the self-insured
workers' compensation program, the Company has obtained an irrevocable standby
letter of credit in the amount of $1,000,000 (through July 1999). A liability
has been established for those illnesses and injuries occurring on or before
September 30, 1998, for which an amount of expected loss could be reasonably
estimated.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Recent Events
On November 10, 1998, the Company entered into an agreement to be
acquired by Roanoke Electric Steel Corporation ("RESCO") The transaction
contemplates that RESCO will pay $10.75 per share for each outstanding share
of common stock of the Company and assume all of the Company's indebtedness.
The transaction has been unanimously approved by the Boards of
Directors of both companies. The transaction will be concluded through a
tender offer, followed by a merger. The offer is subject to customary
conditions, including the tender of a majority of the shares of the Company's
common stock and termination of the Hart-Scott-Rodino waiting period.
Through the merger, the Company will become a wholly-owned
subsidiary of RESCO, and each share of the Company's common stock not
purchased in the offer will be converted to the right to receive the cash
price paid per share in the offer. The obligations of RESCO to consummate the
offer and the merger are not subject to any financing condition. First Union
Bank, N.A. is expected to arrange a bank syndicate for financing the
transaction.
As part of the transaction, the Company has agreed to grant an
option to RESCO to purchase up to 1,196,148 newly issued shares of the
Company's common stock, exercisable upon the occurrence of certain events,
and to pay a $5,000,000 "break-up" fee under certain circumstances. Finally,
as a part of the transaction, the Company has amended its Shareholder Rights
Plan to provide that RESCO will not become an "Acquiring Person"to trigger
the dilution provisions of that Plan by proceeding with this transaction.
This offer will be made only pursuant to definitive offering
documents, which will be filed with the Securities and Exchange Commission
and mailed to the Company's stockholders promptly.
The foregoing was reported by the Company in a Current Report on
Form 8-K filed with the Securities and Exchange Commission on November 13,
1998.
Net Sales
Net sales increased 10.7% in the third quarter of 1998 to $32,701,000 up
$3,151,000 from the third quarter of 1997, primarily due to an increase in
tonnage of products shipped. Finished tonnage sales increased to 55,448 tons
in the third quarter of 1998 from 48,950 tons for the third quarter of 1997.
Billet sales decreased to 627 tons for the third quarter of 1998 from 1,447
tons in the third quarter of 1997. The average selling price per ton for
finished products decreased to $587 in the third quarter of 1998 compared to
$597 per ton in the third quarter of 1997. The average selling price per ton
for billets increased to $260 in the third quarter of 1998 compared to $226
in the third quarter of 1997.
Net sales for the nine months ended September 30, 1998 increased 21.3% to
$99,371,000 from $81,900,000 for the comparable period in 1997, primarily due
to an increase in tonnage of products shipped. Finished tonnage sales
increased to 165,131 tons for the nine months ended September 30, 1998 from
131,478 tons for the comparable period in 1997. Billet sales decreased to
1,908 tons for the same period in 1998, from 4,827 tons for the comparable
period in 1997.
Recently the prices of products manufactured by the U.S. steel industry have
been adversely impacted by imports of foreign steel at greatly reduced
selling prices. Although the selling prices of certain of the Company's
products in its non-core markets have been similarly affected, to date this
trend has not had a material adverse impact on the Company. However, there
can be no assurance that this trend will not have a material adverse impact
on the Company in the future.
Cost of Sales
Cost of sales increased to 88.8% of net sales or $29,023,000 for the third
quarter of 1998 from 88.6% of net sales or $26,191,000 for the third quarter
of 1997. The percent increase in cost of goods sold was principally due to
higher mill roll and depreciation expense in relation to the recent
modernization and expansion project, as well as the effect of electricity
shortages and power interruptions.
Cost of sales for the nine months ended September 30, 1998 increased to 88.8%
of net sales or $88,247,000 from 85.8% of net sales or $70,233,000 for the
comparable period in 1997. This increase in cost of goods sold was
principally due to the effect of a shut down of approximately two weeks of
the #2 Mill in the first quarter for installation and start-up of new
equipment, electricity shortages and power interruptions in the second and
third quarter, and higher alloy and mill roll expense.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses for the third quarter of 1998
were $1,638,000 as compared to $1,337,000 for the third quarter of 1997. This
increase was due primarily to higher legal and professional fees as well as
expenses incurred in moving the Company's administrative offices into a
refurbished office building. As a percentage of net sales, selling and
administrative expense was 5.0% in the third quarter of 1998 and 4.5% for the
comparable period in 1997.
Selling, general, and administrative expenses for the nine month period ended
September 30, 1998 were $4,569,000, compared to $4,391,000 for the comparable
period in 1997. This increase was due primarily to expenses incurred in
moving the Company's administrative offices into a refurbished office
building. As a percentage of net sales, selling and administrative expense
was 4.6% in the nine month period ended September 30, 1998, compared to 5.4%
for the comparable period in 1997.
9
<PAGE>
Interest Expense, Gain on Disposal of Assets and Other Operating Income
Interest expense for the third quarter of 1998 was $979,000, compared to
$187,000 for the third quarter of 1997 due to increased borrowings associated
with the Company's recently completed Phase II expansion and modernization
program. As a percentage of net sales, interest expense was 3.0% in the three
month period ended September 30, 1998 compared to 0.6% for the comparable
period in 1997. The Company did not have any asset disposals during 1998 as
compared to recognizing a $288,000 gain in the third quarter of 1997. Other
operating income for the third quarter of 1998 was $500,000 compared to
$98,000 for the third quarter of 1997 due to an increase in mill roll income
recognized during the quarter.
Interest expense for the nine months ended September 30, 1998 was $2,296,000,
compared to $682,000 for the comparable period in 1997. Interest expense
increased primarily due to increased borrowings associated with the Company's
recently completed Phase II expansion and modernization program. As a
percentage of net sales, interest expense was 2.3% in the nine month period
ended September 30, 1998, compared to 0.8% for the comparable period in 1997.
The Company recognized a gain on disposal of assets of $275,000 for the nine
months ended September 30, 1998 compared to a gain on asset disposal of
$741,000 for the nine months ended September 30, 1997. Other operating income
for the nine months ended September 30, 1998 was $786,000 of income compared
to $441,000 of income for the comparable period in 1997.
Net Income
Net income for the third quarter of 1998 decreased by $446,000 to $851,000
from $1,297,000 for the third quarter of 1997. As a percentage of net sales,
net income was 2.6% for the third quarter of 1998, compared to 4.4% for the
third quarter of 1997. Net income for the nine months ended September 30,
1998 was $3,033,000, compared to $4,499,000 for the comparable period in
1997. As a percentage of net sales, net income was 3.1% in the nine month
period ended September 30, 1998, compared to 5.5% for the comparable period
in 1997.
Liquidity and Sources of Capital
The Company's primary ongoing cash needs are for working capital, debt
service and capital expenditures. The Company's principal sources of
liquidity are internally generated funds, a capital expenditure term loan
line, and the Company's revolving credit facility, which the Company
anticipates will be sufficient for its ongoing cash needs. Working capital at
the end of the third quarter of 1998 was $27,358,000, compared to $15,610,000
at the end of the prior fiscal year. This increase in working capital was
funded by proceeds from the Company's credit arrangements with its senior
lender. The Company's expenditures for required capital replacements are
currently anticipated to average approximately $1,000,000 to $2,000,000
annually over the next several years.
The Company completed Phase II of its expansion and modernization program for
the Huntington, West Virginia plant, in February 1998. The project, costing
approximately $36,000,000 (not including capitalized interest), was funded
with a combination of internally generated cash and bank debt.
From time to time, the Company evaluates discretionary capital expenditures
and acquisition opportunities. Any such expenditures would be subject to
availability of funds and approval by the Company's Board of Directors.
10
<PAGE>
Year 2000 Issues
The "Year 2000 problem", as it has come to be known, refers to the fact that
many computer programs use only the last two digits to refer to a year, and
therefore recognize a year that begins with "20" as instead beginning with
"19". For example, the year 2000 would be read as being the year 1900. If not
corrected, this problem could cause many computer applications to fail or
create erroneous results.
The Company has modified and tested all of the critical applications of its
information technology ("IT"), the result of which is that all such
applications are now Year 2000 compliant. The Company has retained the
services of an independent consultant who directed and, together with the
Company's internal IT personnel, implemented its compliance program. The
total amount of the payments made to date and to be made hereafter to such
independent consultant are not expected to be material. Based on the
Company's analysis to date, the Company believes that its material non-IT
systems are either Year 2000 compliant, or do not need to be made Year 2000
compliant in order to continue to function in substantially the same manner
in the year 2000. The Company intends to continue its analysis of whether its
non-IT systems require any Year 2000 remediation. The Company's Year 2000
compliance work has not caused, nor does the Company expect that it will
cause, a deferral on the part of the Company of any material IT or non-IT
projects.
In response to the Company's inquiries, the Company has received questionnaires
from approximately 65% of its significant vendors, and customers representing
approximately 35% of the Company's 1998 net sales thru the nine months ended
September 30, 1998, with regard to their Year 2000 compliance efforts. Virtually
all of these companies have indicated that they are endeavoring to become Year
2000 compliant prior to January 1, 2000. However, there can be no assurance that
any of the Company's vendors or customers, including those that responded to the
Company's questionnaire, will be Year 2000 compliant prior to such date. The
Company is unable to predict the ultimate affect that the Year 2000 problem may
have upon the Company, in that there is no way to predict the impact that the
problem will have nation-wide or world-wide and how the Company will in turn be
affected. In addition, the Company cannot predict the number and nature of its
vendors and customers who will fail to become Year 2000 compliant prior to
January 1, 2000. Significant Year 2000 difficulties on the part of vendors or
customers could have a material adverse impact upon the Company. The Company
intends to monitor the progress of its vendors and customers in becoming Year
2000 compliant. The Company has not to date formulated a contingency plan to
deal with the potential non-compliance of vendors and customers, but will be
considering whether such a plan would be feasible.
Forward Looking Statements
Any Forward Looking Statements contained herein are subject to the section on
Forward Looking Statements contained in the Company's Annual Report on Form 10-K
for the year ended December 31, 1997, including the following risk factors set
forth therein: the cyclical and capital intensive nature of the industry;
pressure resulting from foreign and domestic competition; reduction in demand
for the Company's products and industry pricing; volatility of electricity
prices and raw material costs, especially steel scrap, resulting in reduced
profit margins; excess industry capacity resulting in reduced profit margins;
and the cost of compliance with environmental regulations. In addition, the
Forward Looking Statements contained herein are also subject to the Company's
ability to effectively integrate new equipment.
11
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit
27 Financial Data Schedule
(b) Reports on Form 8-K
None
12
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
DATED: November 13, 1998 STEEL OF WEST VIRGINIA, INC.
-------------------------------------
(Registrant)
/s/ Timothy R. Duke
-------------------------------------
Timothy R. Duke, President and
Chief Executive Officer
/s/ Mark G. Meikle
-------------------------------------
Mark G. Meikle, Vice President,
Treasurer and Chief Financial
Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 15,812
<ALLOWANCES> 683
<INVENTORY> 31,031
<CURRENT-ASSETS> 48,845
<PP&E> 101,961
<DEPRECIATION> (36,866)
<TOTAL-ASSETS> 131,613
<CURRENT-LIABILITIES> 21,487
<BONDS> 51,421
0
0
<COMMON> 71
<OTHER-SE> 57,386
<TOTAL-LIABILITY-AND-EQUITY> 131,613
<SALES> 99,371
<TOTAL-REVENUES> 99,371
<CGS> 88,247
<TOTAL-COSTS> 88,247
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,296
<INCOME-PRETAX> 5,320
<INCOME-TAX> 2,287
<INCOME-CONTINUING> 3,033
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,033
<EPS-PRIMARY> .50
<EPS-DILUTED> .50
</TABLE>
