<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission file number 1-10244
WEIRTON STEEL CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 06-1075442
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification #)
400 THREE SPRINGS DRIVE, WEIRTON, WEST VIRGINIA 26062-4989
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code:)
(304) 797-2000
Indicate by checkmark 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 of Common Stock ($.01 par value) of the Registrant
outstanding as of July 31, 1997 was 42,830,199.
================================================================================
<PAGE> 2
WEIRTON STEEL CORPORATION
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES......................................... $363,640 $335,580 $713,225 $676,480
OPERATING COSTS:
Cost of sales................................ 326,601 309,401 653,760 620,153
Selling, general and administrative
expense.................................... 8,909 10,102 17,974 19,616
Depreciation................................. 15,426 15,669 32,352 30,174
Restructuring charge......................... 17,000 16,959 17,000 16,959
-------- -------- -------- --------
Total operating costs...................... 367,936 352,131 721,086 686,902
-------- -------- -------- --------
LOSS FROM OPERATIONS.............................. (4,296) (16,551) (7,861) (10,422)
Interest expense............................. (11,988) (10,753) (23,938) (21,486)
Interest income.............................. 971 1,120 1,803 2,917
ESOP contribution............................ (652) (652) (1,305) (1,305)
-------- -------- -------- --------
LOSS BEFORE INCOME TAXES.......................... (15,965) (26,836) (31,301) (30,296)
Income tax benefit........................... (3,113) (5,233) (6,104) (5,908)
-------- -------- -------- --------
LOSS BEFORE EXTRAORDINARY ITEM.................... (12,852) (21,603) (25,197) (24,388)
Extraordinary loss on early extinguishment of
debt............................................ -- 5,431 -- 5,431
-------- -------- -------- --------
NET LOSS.......................................... $(12,852) $(27,034) $(25,197) $(29,819)
======== ======== ======== ========
PER SHARE DATA:
Weighted average number of common shares and
equivalents (in thousands)................. 42,616 42,347 42,614 42,347
Loss per share before extraordinary item.......... $ (0.30) $ (0.51) $ (0.59) $ (0.58)
Extraordinary loss on early extinguishment of
debt............................................ -- (0.13) -- (0.13)
-------- -------- -------- --------
NET LOSS PER COMMON SHARE......................... $ (0.30) $ (0.64) $ (0.59) $ (0.71)
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
WEIRTON STEEL CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31, 1996
(UNAUDITED) (AUDITED)
-------------- -----------------
<S> <C> <C>
Assets:
Cash and equivalents, includes restricted cash of
$2,028 and $2,010, respectively................... $ 81,971 $ 112,092
Receivables, less allowances of $8,551 and $7,684,
respectively...................................... 168,370 154,426
Inventories......................................... 240,986 259,139
Deferred income taxes............................... 51,872 51,872
Other current assets................................ 11,298 3,269
---------- -----------
Total current assets........................... 554,497 580,798
Property, plant and equipment, net.................. 606,932 610,494
Deferred income taxes............................... 98,075 91,971
Other assets and deferred charges................... 16,150 17,358
---------- -----------
Total assets................................... $1,275,654 $ 1,300,621
========== ===========
Current portion of long term debt obligations....... $ 42,163 $ --
Other current liabilities........................... 247,838 271,305
Long term debt obligations.......................... 388,827 430,820
Long term pension obligations....................... 86,990 74,750
Postretirement benefits other than pensions......... 334,854 329,154
Other long term liabilities......................... 31,223 26,941
---------- -----------
Total liabilities.............................. 1,131,895 1,132,970
---------- -----------
Redeemable stock......................................... 19,752 18,447
Stockholders' equity:
Common stock, $0.01 par value; 50,000,000
authorized; 42,824,920 and 42,592,850 shares
issued, respectively.............................. 428 426
Additional paid-in capital.......................... 455,941 455,311
Retained earnings (deficit)......................... (330,469) (305,272)
Other stockholders' equity.......................... (1,893) (1,261)
---------- -----------
Total stockholders' equity..................... 124,007 149,204
---------- -----------
Total liabilities, redeemable stock and
stockholders' equity......................... $1,275,654 $ 1,300,621
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
WEIRTON STEEL CORPORATION
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------
1997 1996
-------- --------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES............................. $ 16,989 $ 9,545
CASH FLOWS USED BY INVESTING ACTIVITIES
Capital spending................................................. (47,110) (27,377)
-------- --------
NET CASH USED BY INVESTING ACTIVITIES................................. (47,110) (27,377)
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES...................... -- --
-------- --------
NET CHANGE IN CASH AND EQUIVALENTS.................................... (30,121) (17,832)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD........................... 112,092 131,811
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD................................. $ 81,971 $113,979
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid, net of capitalized interest....................... $ 24,215 $ 21,484
Income taxes paid................................................ -- --
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
WEIRTON STEEL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, OR IN MILLIONS OF DOLLARS WHERE INDICATED)
NOTE 1
BASIS OF PRESENTATION
The Consolidated Condensed Financial Statements presented herein are
unaudited. Weirton Steel Corporation and/or Weirton Steel Corporation together
with its wholly-owned subsidiary, Weirton Receivables, Inc. are hereafter
referred to as the "Company." Certain information and footnote disclosures
normally prepared in accordance with generally accepted accounting principles
have been either condensed or omitted pursuant to the rules and regulations of
the Securities and Exchange Commission. Although the Company believes that all
adjustments necessary for a fair presentation have been made, interim periods
are not necessarily indicative of the financial results of operations for a full
year. As such, these financial statements should be read in conjunction with the
audited financial statements and notes thereto included or incorporated by
reference in the Company's 1996 Annual Report on Form 10-K.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Certain prior period amounts have been reclassified, where necessary, to
conform to the presentation in the current period.
NOTE 2
INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
-------- ---------
<S> <C> <C>
Raw materials.......................... $ 73,386 $ 87,733
Work-in-process........................ 74,680 76,526
Finished goods......................... 92,920 94,880
-------- ---------
$240,986 $ 259,139
======== =========
</TABLE>
NOTE 3
EARNINGS PER SHARE
The weighted average number of common and common equivalent shares used in
the calculation of net loss per common share were 42,615,633 and 42,347,048 for
the three months ended June 30, 1997 and 1996, respectively and 42,614,064 and
42,346,818 for the six months ended June 30, 1997 and 1996, respectively. The
Series A Preferred shares were excluded from the calculations for the quarters
and six month periods ended June 30, 1997 and 1996, due to their antidilutive
effect.
NOTE 4
RESTRUCTURING CHARGES
During the second quarter of 1997, the Company finalized its labor
agreements with members of the Independent Steelworkers' Union. The new labor
agreements, among other things, provided for a retirement window for the union's
retirement eligible employees. As a result of the retirement window the Company
recorded a restructuring charge of $17.0 million associated with the retirement
of approximately 230 of the
5
<PAGE> 6
Company's represented employees. The restructuring charge consisted of the
recognition of special retirement benefits and a lumpsum payment for those
retiring under the window. The cash portion of the restructuring charge is
expected to be approximately $2.5 million in the remainder of 1997 and $1.5
million in 1998.
In the second quarter of 1996, the Company reduced its supervisory and
managerial workforce by approximately 200 employees. In connection with this
reduction, the Company recognized a restructuring charge of $17.0 million. The
charge related to this employee reduction consisted primarily of severence
benefits, special retirement benefits and other termination related benefits.
NOTE 5
BENEFIT PLANS REMEASUREMENT
As a result of the new labor agreements with the Company's union employees,
the Company remeasured its pension and postretirement healthcare benefit
liabilities during the second quarter of 1997. The primary change affecting the
pension liability related to the decrease of the assumed compensation increase
from 4% annually to 2% through the life of the agreement and 4% thereafter and
the retirement window for the union employees. The remeasurement of the pension
liability reduced the 1997 annual pension expense by $4.2 million. Plan assets
as of June 30, 1997, were $526.3 million. The postretirement healthcare
liability and expense was remeasured during the second quarter of 1997, as a
result of negotiated plan changes including the elimination in 1998 of the
healthcare deductible, as well as other changes to the retiree healthcare plan.
The remeasurement of the postretirement healthcare liability resulted in an
increase of approximately $0.8 million in the 1997 annual postretirement
healthcare expense. The discount rate used to measure both the pension and
postretirement liabilities was 7.75%.
NOTE 6
ENVIRONMENTAL COMPLIANCE
The Company, as well as its domestic competitors, is subject to stringent
federal, state and local environmental laws and regulations concerning, among
other things, waste water discharge, air emissions and waste disposal.
In March 1996, the West Virginia Department of Environmental Protection
("DEP") and the United States Environmental Protection Agency ("EPA") advised
the Company that they had identified a number of enforcement issues pertaining
to waste water discharge, air emissions and waste handling operations of the
Company. In September 1996, the Company and DEP and EPA reached a settlement
regarding these water, air and waste-related issues. Under the settlement, the
Company was required to pay a total penalty of $3.2 million. Such payment was
made in January 1997. Additionally, the Company will be required to conduct
certain remedial activity at one of its waste disposal sites, which is expected
to cost approximately $1.6 million. The amount related to the remedial activity
has been accrued in the Company's balance sheet as of June 30, 1997.
The settlement also requires the Company to undertake certain capital
projects to assure compliance with water, air and waste-related regulations.
Such capital costs will include upgrades and modifications to waste water
treatment systems, air emissions control equipment and waste handling
facilities. Under the settlement, the Company committed to environmental related
capital projects currently estimated at approximately $16.7 million. Through
June 30, 1997, the Company has expended approximately $4.8 million related to
these capital commitments.
The required capital projects, as well as other terms of the proposed
settlement, will require changes in operating procedures at the Company's
facilities. While the Company expects to attempt to mitigate any increased
operating costs attributable to such changes, it nevertheless expects operating
costs to increase as a result. At the present time it is not possible to
estimate the increase in operating costs, but the Company does not believe that
any such increase will be material to its results of operations.
In connection with the negotiations EPA issued a corrective action order,
effective October 18, 1996, requiring the Company to conduct investigative
activities to determine the nature and extent of hazardous
6
<PAGE> 7
materials which may be located on the Company's property and to evaluate and
propose corrective measures needed to abate any unacceptable risks. The Company
has recorded approximately $2.9 million related to its current estimate of costs
associated with the investigative activities. It is reasonably possible that a
change in estimate will occur. Because the Company does not currently know the
nature or the extent of hazardous material located on the property, it is not
presently possible to estimate the ultimate cost to comply with this order or
conduct remedial activity that may be required.
The Company believes that National Steel Corporation ("NSC") is obligated
to reimburse the Company for a portion of any costs that may be incurred by the
Company to comply with the corrective action order and to undertake any required
remedial action. Pursuant to the agreement whereby the Company purchased the
Division in 1984, NSC retained liability for cleanup costs related to solid or
hazardous waste facilities, areas or equipment as long as such were not used by
the Company in its operations subsequent to the acquisition.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This discussion and analysis of the Company's financial condition and
results of operations should be read together with the unaudited consolidated
condensed financial statements and notes thereto. The unaudited consolidated
condensed financial statements of Weirton Steel Corporation include the accounts
of its wholly-owned subsidiary Weirton Receivables, Inc. ("WRI"). Weirton Steel
Corporation and/or Weirton Steel Corporation together with its subsidiary are
hereafter referred to as the "Company."
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996
In the second quarter of 1997, the Company recognized a net loss of $12.9
million or $0.30 per common share, compared to a net loss of $27.0 million or
$0.64 per common share for the same period in 1996. During the second quarters
of 1997 and 1996 the Company recognized restructuring charges of $17.0 million.
In the second quarter of 1996, the Company recognized a $5.4 million
extraordinary loss associated with the early retirement of a portion its senior
note obligations. Excluding the impact of these items, the Company would have
recognized net income of $0.8 million or $0.02 per share in the second quarter
of 1997, compared to a net loss of $8.0 or $0.19 per share in the second quarter
of 1996.
Net sales in the second quarter of 1997 were $363.6 million, an increase of
$28.1 million or 8.4% from the second quarter of 1996. Total shipments in the
second quarter of 1997 were 725 thousand tons compared to second quarter of 1996
shipments of 706 thousand tons.
Sheet product sales for the second quarter of 1997 increased $25.5 million
to $225.5 million. Shipments of sheet product in the second quarter of 1997 were
504 thousand tons compared to 487 thousand tons in the second quarter of 1996.
The increase in sheet product sales is attributable to an increase in average
selling prices, higher shipping volume and improved product mix.
The second quarter of 1997 revenues from tin mill products were $138.2
million on shipments of 220 thousand tons compared to $135.6 million on 219
thousand tons for the same period in 1996.
Costs of sales for the second quarter of 1997 were $326.6 million compared
to $309.4 million for the second quarter of 1996. This increase is attributable
to higher overall levels of shipments and shipments of higher value added
products, particularly within sheet products. These increased costs were offset
by lower operating costs resulting from the ramp up of the No. 1 Blast Furnace
after its major rebuild. Operating costs should continue to decline as a result
of the improvements made to the No. 1 Blast Furnace.
Selling, general and administrative expenses for the second quarter of 1997
were $8.9 million compared to $10.1 million in the same period in 1996. This
decrease in selling, general and administrative expense was due primarily to the
1996 salaried workforce reduction.
During the second quarter of 1997, the Company finalized its labor
agreements with members of the Independent Steelworkers' Union. The new labor
agreements, among other things, provided for a retirement
7
<PAGE> 8
window for the union's retirement eligible employees. As a result of the
retirement window the Company recorded a restructuring charge of $17.0 million
associated with the retirement of approximately 230 of the Company's represented
employees. The restructuring charge consisted of the recognition of special
retirement benefits and a lumpsum payment for those retiring under the window.
During the second quarter of 1996, the Company recognized a $17.0 million
restructuring charge associated with the reduction of approximately 200
supervisory and managerial employees. The charge related to this employee
reduction consisted primarily of severance benefits, special retirement benefits
and other termination related benefits.
Interest expense for the second quarter of 1997, was $12.0 million, an
increase of $1.2 million compared to the same period in 1996. The increase in
interest expense is due to the higher levels of outstanding debt obligations and
higher average interest rates on this debt during the second quarter of 1997
compared to 1996.
During the quarter ended June 30, 1997, the Company recognized an income
tax benefit of $3.1 million compared to an income tax benefit of $5.2 million in
the corresponding period in 1996. The decrease in 1997 results from the
generation of a lower level of net operating loss carryforwards than in 1996 and
the recognition of a portion of the net operating losses as a deferred tax
asset.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
In the first half of 1997, the Company recognized a net loss of $25.2
million or $0.59 per common share, compared to a net loss of $29.8 million or
$0.71 per common share for the same period in 1996. The results in the first
half of 1997 included a $17.0 million restructuring charge, while the results
for the same period in 1996 included a $17.0 million restructuring charge and an
extraordinary loss of $5.4 million. Excluding the effects of the restructuring
charges and the extraordinary loss, the net loss for the first half of 1997
would have been $11.5 million or $0.27 per share compared to a net loss of $10.7
million or $0.25 per share for the first half of 1996.
Net sales in the first half of 1997 were $713. 2 million, an increase of
$36.7 million or 5.4% from the first half of 1996. Total shipments in the first
half of 1997 were 1,423 thousand tons compared to first half of 1996 shipments
of 1,418 thousand tons.
Sheet product sales for the first half of 1997 increased $42.1 million to
$442.1 million. Shipments of sheet product in the first half of 1997 were 989
thousand tons compared to 977 thousand tons in the first half of 1996. The
increase in sheet product sales is attributable to an increase in selling
prices, higher levels of shipments and improved product mix.
The first half of 1997 revenues from tin mill products were $270.8 million
on shipments of 434 thousand tons compared to $276.5 million on 441 thousand
tons for the same period in 1996. The decrease results primarily from lower tin
mill product shipments.
Costs of sales for the first half of 1997 were $653.8 million compared to
$620.2 million for the first half of 1996. This increase resulted primarily from
higher shipment levels and disruptions in operations during the first quarter of
1997 due to unplanned outages and the startup of the No. 1 Blast Furnace. These
higher costs were partially offset during the second quarter of 1997 by improved
operations at the No. 1 Blast Furnace during the ramp-up phase.
Selling, general and administrative expenses for the first half of 1997
were $18.0 million compared to $19.6 million in the same period in 1996. This
decrease in selling, general and administrative expense was due primarily to the
1996 salaried workforce reduction.
During the first half of 1997, the Company finalized its labor agreements
with members of the Independent Steelworkers' Union. The new labor agreements,
among other things, provided for a retirement window for the union's retirement
eligible employees. As a result of the retirement window the Company recorded a
restructuring charge of $17.0 million associated with the retirement of
approximately 230 of the Company's represented employees. The restructuring
charge consisted of the recognition of special retirement benefits and a lumpsum
payment for those retiring under the window. During the first half of 1996, the
Company recognized a $17.0 million restructuring charge associated with the
reduction of approximately 200
8
<PAGE> 9
supervisory and managerial employees. The charge related to this employee
reduction consisted primarily of severance benefits, special retirement benefits
and other termination related benefits.
Interest expense for the first half of 1997, was $23.9 million, an increase
of $2.5 million compared to the same period in 1996. The increase in interest
expense is due to the higher levels of outstanding debt obligations and higher
average interest rates on this debt during the first half of 1997 compared to
1996.
During the first half of 1997, the Company recognized an income tax benefit
of $6.1 million compared to an income tax benefit of $5.9 million in the
corresponding period in 1996. The increase in 1997 results from the generation
of a higher level of net operating loss carryforwards than in 1996 and the
recognition of a portion of the net operating losses as a deferred tax asset.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Company had cash and equivalents of $82.0 million
compared to $112.1 million as of December 31, 1996. This decrease in cash and
equivalents is due primarily to the net loss for the first half of 1997, capital
spending made in connection with the rebuild of the No. 1 Blast Furnace and
pension plan funding.
As of June 30, 1997, and December 31, 1996, after reductions for amounts in
place under its letter of credit subfacility, WRI had a base amount of
participation interests available for cash sales under the Company's Receivables
Participation Agreement of approximately $65.8 and $68.0 million, respectively.
In the first half of 1997, the Company reclassified to current liabilities
$42.2 million of Senior Note obligations due March 1, 1998. Based upon available
cash on hand and the amount of cash expected to be generated from operating
activities, the Company expects to have sufficient cash to meet its near term
needs, including the retirement of the Senior Note obligations in the first
quarter of 1998 and the completion of the 1997 capital spending plan. To the
extent that cash on hand and cash from operating activities do not generate an
adequate amount of cash, the Company expects that cash requirements will be
supplemented through the Company's Receivables Participation Agreement.
The Company's net deferred tax assets increased $6.1 million to $149.9
million as of June 30, 1997, which consist primarily of the carrying value of
net operating loss carryforwards and other tax credits and net deductible
temporary differences available to reduce the Company's cash requirements for
the payment of future federal income tax.
INVESTMENT IN FACILITIES
Expenditures for property, plant and equipment for the first half of 1997
totaled $47.1 million. Included in capital spending is approximately $15.2
million of 1996 capital additions included in accounts payable as of December
31, 1996 and subsequently paid in the first quarter of 1997. The Company's
planned capital additions for 1997 are approximately $47.5 million and include
the remaining spending for a major rebuild of the No. 1 Blast Furnace, which was
completed in the first quarter of 1997, and approximately $11.0 million related
to environmental compliance.
ENVIRONMENTAL COMPLIANCE
The Company, as well as its domestic competitors, is subject to stringent
federal, state and local environmental laws and regulations concerning, among
other things, waste water discharge, air emissions and waste disposal.
In March 1996, the West Virginia Department of Environmental Protection
("DEP") and the United States Environmental Protection Agency ("EPA") advised
the Company that it had identified a number of enforcement issues pertaining to
waste water discharge, air emissions and waste handling operations of the
Company. In September 1996, the Company and DEP and EPA reached a settlement
regarding these water, air and waste-related issues. Under the settlement, the
Company was required to pay a total penalty of $3.2 million. Such payment was
made in January 1997. Additionally, the Company will be required to conduct
9
<PAGE> 10
certain remedial activity at one of its waste disposal sites, which is expected
to cost approximately $1.6 million. The amount related to the remedial activity
has been accrued in the Company's balance sheet as of June 30, 1997.
The settlement also requires the Company to undertake certain capital
projects to assure compliance with water, air and waste-related regulations.
Such capital costs will include upgrades and modifications to waste water
treatment systems, air emissions control equipment and waste handling
facilities. Under the settlement, the Company committed to environmental related
capital projects currently estimated at approximately $16.7 million. Through
June 30, 1997, the Company has expended approximately $4.8 million related to
these capital commitments.
The required capital projects, as well as other terms of the proposed
settlement, will require changes in operating procedures at the Company's
facilities. While the Company expects to attempt to mitigate any increased
operating costs attributable to such changes, it nevertheless expects operating
costs to increase as a result. At the present time it is not possible to
estimate the increase in operating costs, but the Company does not believe that
any such increase will be material to its results of operations.
In connection with the negotiations EPA issued a corrective action order,
effective October 18, 1996, requiring the Company to conduct investigative
activities to determine the nature and extent of hazardous materials which may
be located on the Company's property and to evaluate and propose corrective
measures needed to abate any unacceptable risks. The Company has recorded
approximately $2.9 million related to its current estimate of costs associated
with the investigative activities. It is reasonably possible that a change in
estimate will occur. Because the Company does not currently know the nature or
the extent of hazardous material located on the property, it is not presently
possible to estimate the ultimate cost to comply with this order or conduct
remedial activity that may be required.
The Company believes that National Steel Corporation ("NSC") is obligated
to reimburse the Company for a portion of any costs that may be incurred by the
Company to comply with the corrective action order and to undertake any required
remedial action. Pursuant to the agreement whereby the Company purchased the
Division in 1984, NSC retained liability for cleanup costs related to solid or
hazardous waste facilities, areas or equipment as long as such were not used by
the Company in its operations subsequent to the acquisition.
NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement on Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share." SFAS No. 128 differs from current accounting guidance in that earnings
per share is classified as basic earnings per share and diluted earnings per
share, compared to primary earnings per share and fully diluted earnings per
share under current standards. Basic earnings per share differs from primary
earnings per share in that it includes only the weighted average common shares
outstanding and does not include any dilutive securities in the calculation.
Diluted earnings per share under the new standard differs in certain
calculations compared to fully diluted earnings per share under the existing
standards. Adoption of SFAS No. 128 is required for interim and annual periods
ending after December 15, 1997. Had the Company applied the provisions of SFAS
No. 128 in the second quarter of 1997 earnings per share calculations there
would have been no impact compared to that which is reported.
FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forwardlooking statements. In addition to historical information,
this report contains forward-looking statements that are subject to risks and
uncertainties that could cause future results to differ materially from expected
results. Such statements are based on management's beliefs and assumptions made
on information currently available to it. The Company is under no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 21, 1997, the Company's Annual Meeting of Stockholders was held and
the following proposals were voted upon:
(1) Affirmation of the four nominees to serve on the Board of Directors until
2000:
<TABLE>
<CAPTION>
VOTES
VOTES FOR WITHHELD
----------- -----------
<S> <C> <C>
Michael Bozic....................... 49,110,967 7,848,957
Richard R. Burt..................... 48,839,136 8,120,788
Richard K. Riederer................. 43,585,710 13,374,214
Thomas R. Sturges................... 47,815,227 9,144,697
</TABLE>
(2) Affirmation of Arthur Andersen LLP as the Company's Independent Accountants
for the fiscal year ending December 31, 1997:
For: 49,880,065 Against: 6,934,867 Abstain:
141,992
(3) Requiring an 80% super majority approval by the stockholders, denied the
proposal to amend Article FIFTH of the Company's Restated Certificate of
Incorporation to change the qualification requirements for service as a
director:
For: 44,019,527 Against: 12,560,462 Abstain:
352,533
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit 27.--Financial Data Schedule for three months ended June 30, 1997.
(B) REPORTS ON FORM 8-K
The Company filed a Current Report on Form 8-K on January 31, 1997.
11
<PAGE> 12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WEIRTON STEEL CORPORATION
Registrant
By: /s/ MARK E. KAPLAN
---------------------------
Mark E. Kaplan
Controller (Principal Accounting
Officer)
August 12, 1997
12
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000849979
<NAME> WEIRTON STEEL CORP
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 81,971
<SECURITIES> 0
<RECEIVABLES> 176,921
<ALLOWANCES> 8,551
<INVENTORY> 240,986
<CURRENT-ASSETS> 554,497
<PP&E> 1,024,932
<DEPRECIATION> (418,000)
<TOTAL-ASSETS> 1,275,654
<CURRENT-LIABILITIES> 290,001
<BONDS> 388,827
19,752
74
<COMMON> 433
<OTHER-SE> (1,972)
<TOTAL-LIABILITY-AND-EQUITY> 1,275,654
<SALES> 363,640
<TOTAL-REVENUES> 363,640
<CGS> 326,601
<TOTAL-COSTS> 367,936
<OTHER-EXPENSES> (319)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,988
<INCOME-PRETAX> (15,965)
<INCOME-TAX> (3,113)
<INCOME-CONTINUING> (12,852)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,852)
<EPS-PRIMARY> (0.30)
<EPS-DILUTED> (0.30)
</TABLE>
