<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 MARCH 31, 2000.
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)
<TABLE>
<S> <C>
DELAWARE 06-1075442
(State or other jurisdiction of (IRS employer
incorporation or organization) identification
#)
</TABLE>
400 THREE SPRINGS DRIVE, WEIRTON, WEST VIRGINIA 26062-4989
(Address of principal executive offices) (Zip Code)
(304)-797-2000
Registrant's telephone number, including area code:
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 April 28, 2000 was 40,678,164.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WEIRTON STEEL CORPORATION
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
2000 1999
-------- --------
<S> <C> <C>
NET SALES................................................... $317,718 $265,138
OPERATING COSTS:
Cost of sales.......................................... 280,618 261,516
Selling, general and administrative expense............ 8,694 10,249
Depreciation........................................... 16,544 15,176
Profit sharing provision............................... 355 --
-------- --------
Total operating costs............................. 306,211 286,941
-------- --------
INCOME (LOSS) FROM OPERATIONS............................... 11,507 (21,803)
Loss from unconsolidated subsidiaries.................. (3,672) (13)
Interest expense....................................... (8,672) (11,024)
Other income, net...................................... 1,738 618
ESOP contribution...................................... -- (653)
-------- --------
INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST..... 901 (32,875)
Income tax provision (benefit)......................... 189 (4,916)
-------- --------
INCOME (LOSS) BEFORE MINORITY INTEREST...................... 712 (27,959)
Minority interest in loss of consolidated subsidiary... -- 103
-------- --------
NET INCOME (LOSS)........................................... $ 712 $(27,856)
======== ========
PER SHARE DATA:
Weighted average number of common shares (in thousands):
Basic.................................................. 41,614 41,578
Diluted................................................ 44,620 41,578
NET INCOME (LOSS) PER SHARE:
Basic.................................................. $ 0.02 $ (0.67)
Diluted................................................ $ 0.02 $ (0.67)
</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>
MARCH 31, DECEMBER 31,
2000 1999
(UNAUDITED) (AUDITED)
----------- ------------
<S> <C> <C>
ASSETS:
Current assets:
Cash and equivalents, including restricted cash of $7,917
and $810, respectively................................. $ 123,709 $ 209,270
Receivables, less allowances of $9,758 and $9,302,
respectively........................................... 175,821 104,647
Inventories............................................... 165,692 186,710
Deferred income taxes..................................... 42,517 42,517
Other current assets...................................... 2,897 3,167
---------- ----------
Total current assets................................... 510,636 546,311
Property, plant and equipment, net.......................... 501,306 514,464
Investment in unconsolidated subsidiaries................... 3,005 6,833
Deferred income taxes....................................... 108,921 109,110
Other assets and deferred charges........................... 10,858 10,804
---------- ----------
Total Assets........................................... $1,134,726 $1,187,522
========== ==========
LIABILITIES:
Current liabilities:
Payables.................................................. $ 130,553 $ 142,930
Employment costs.......................................... 58,395 81,688
Taxes other than income taxes............................. 13,324 13,805
Other current liabilities................................. 10,868 17,511
---------- ----------
Total current liabilities.............................. 213,140 255,934
Long term debt obligations.................................. 299,108 304,768
Long term pension obligations............................... 88,841 91,295
Postretirement benefits other than pensions................. 328,021 327,665
Other long term liabilities................................. 31,022 30,886
---------- ----------
Total Liabilities...................................... 960,132 1,010,548
Redeemable Stock, net....................................... 22,861 22,973
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value; 50,000,000 shares authorized;
43,694,702 and 43,499,363 shares issued, respectively..... 437 435
Additional paid-in capital.................................. 457,852 458,249
Retained earnings (deficit)................................. (297,482) (298,194)
Other stockholders' equity.................................. (9,074) (6,489)
---------- ----------
Total Stockholders' Equity............................. 151,733 154,001
---------- ----------
Total Liabilities, Redeemable Stock and Stockholders'
Equity................................................ $1,134,726 $1,187,522
========== ==========
</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>
THREE MONTHS ENDED
MARCH 31,
--------------------
2000 1999
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $ 712 $(27,856)
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation........................................... 16,544 15,176
Amortization of deferred financing costs............... 477 403
ESOP contribution...................................... -- 653
Deferred income taxes.................................. 188 (2,916)
Cash provided (used) by working capital items:
Receivables.......................................... (71,174) (10,486)
Inventories.......................................... 21,018 78,375
Other current assets................................. 271 665
Payables............................................. (12,377) (34,335)
Other current liabilities............................ (30,417) (6,256)
Long term pension obligation........................... (2,454) 2,888
Other.................................................. 5,258 (953)
-------- --------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES............ (71,954) 15,358
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan to unconsolidated subsidiary......................... (1,331) --
Capital spending.......................................... (3,386) (2,972)
-------- --------
NET CASH USED BY INVESTING ACTIVITIES....................... (4,717) (2,972)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt obligations............................. (5,757) --
Purchase of treasury stock................................ (3,133) --
-------- --------
NET CASH USED BY FINANCING ACTIVITIES....................... (8,890) --
-------- --------
NET CHANGE IN CASH AND EQUIVALENTS.......................... (85,561) 12,386
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD................. 209,270 68,389
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD....................... $123,709 $ 80,775
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid, net of capitalized interest................ $ 7,845 $ 7,720
Income taxes paid (refunded), net......................... 7,500 (2,000)
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
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, other
than the December 31, 1999 Consolidated Condensed Balance Sheet, are unaudited.
Weirton Steel Corporation and/or Weirton Steel Corporation together with its
consolidated subsidiaries are hereafter referred to as the "Company." Entities
of which the Company owns a controlling interest are consolidated; entities of
which the Company owns a less than controlling interest are not consolidated and
are reflected in the consolidated condensed financial statements using the
equity method of accounting. All material intercompany accounts and transactions
with consolidated subsidiaries have been eliminated in consolidation. On
December 29, 1999, the Company sold a portion of its interest in MetalSite L.P.
and MetalSite General Partner LLC (collectively "MetalSite"). The results and
balances of MetalSite were consolidated as of and for the three months ended
March 31, 1999. As a result of the sale, the Company no longer retained a
controlling interest in MetalSite. Therefore, MetalSite's results and balances
as of and for the period ended March 31, 2000 were reported under the equity
method.
Certain information and footnote disclosures normally prepared in
accordance with accounting principles generally accepted in the United States
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 1999 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.
NOTE 2
INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
<S> <C> <C>
Raw materials........................................ $ 31,279 $ 61,254
Work-in-process...................................... 55,409 41,044
Finished goods....................................... 79,004 84,412
-------- --------
$165,692 $186,710
======== ========
</TABLE>
5
<PAGE> 6
NOTE 3
EARNINGS PER SHARE
The following represents a reconciliation between basic earnings per share
and diluted earnings per share for the quarter ended March 31, 2000:
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED MARCH 31, 2000
------------------------------------
PER SHARE
INCOME SHARES AMOUNT
------- ----------- ----------
<S> <C> <C> <C>
Basic earnings per share:
Net income...................................... $712 41,614,257 $0.02
Effect of dilutive securities
Series A Preferred.............................. -- 1,648,493 --
Stock options................................... -- 1,357,546 --
---- ---------- -----
Diluted earnings per share:
Net income...................................... $712 44,620,296 $0.02
==== ========== =====
</TABLE>
For the quarter ended March 31, 1999, basic and diluted earnings per share
were the same; however, securities totaling 1,678,744 were excluded from the
diluted earnings per share calculation due to their antidilutive effect.
NOTE 4
PURCHASES OF COMMON STOCK FOR TREASURY
During April 1998, the Company announced that it had been authorized by the
board of directors to repurchase up to 10%, or approximately 4.2 million shares,
of its outstanding common stock (the "1998 Stock Repurchase Program"). During
the first quarter of 2000, the Company paid $3.1 million to repurchase
approximately 0.4 million shares of its outstanding common stock at prices
ranging from $6.00 to $9.00 per share.
NOTE 5
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 discharges, air emissions and waste disposal. As a
consequence, the Company has incurred, and will continue to incur, substantial
capital expenditures and operating and maintenance expenses in order to comply
with regulatory requirements.
As of March 31, 2000, the Company had an accrued liability of $9.0 million
for known and identifiable environmental related costs to comply with negotiated
and mandated settlements of various actions brought by the United States
Environmental Protection Agency (the "EPA") and the West Virginia Department of
Environmental Protection. The EPA is also requiring the Company to conduct
investigative activities to determine the nature and extent of hazardous
substances which may be located on the Company's properties and to evaluate and
propose corrective measures needed to abate any unacceptable risks. Because the
Company does not currently know the nature or the extent of hazardous substances
which may be located on its properties, it is not possible at the present time
to estimate the ultimate cost to comply with the EPA's requirements or conduct
remedial activity that may be required.
NOTE 6
COMMITMENTS AND CONTINGENCIES
The Company participates in a joint venture GalvPro L.P. ("GalvPro") with
affiliates of Corus Group for the purpose of constructing and operating a
300,000-ton per year hot-dipped galvanizing line. Construction of GalvPro's
facility was being financed primarily through a ten-year loan of up to $49.0
million secured by
6
<PAGE> 7
GalvPro's assets. In connection with the initial funding of the loan, the
Company, jointly and severally with affiliates of Corus Group, agreed to prepay
a total of up to $6.0 million of the loan if GalvPro's facility failed to attain
certain defined efficiency standards within an allowed period of time after
operations commenced. The Company and Corus Group affiliates have each secured
their respective obligation to the other by pledging their interest in GalvPro.
GalvPro successfully commenced operations in October 1999, and the Company's
management believes that the likelihood that GalvPro will fail to meet the
minimum operating performance level is remote. Notwithstanding management's
belief, GalvPro, together with the project lender is loss payee under a policy
of efficacy insurance carried by the project's general contractor providing up
to $4.0 million if GalvPro fails to attain the defined production standards in a
timely manner.
The Company has a partner loan facility with MetalSite whereby the Company
funds a significant portion of MetalSite's operations. As of March 31, 2000,
$4.5 million was outstanding under the partner loan facility. The Company
expects to continue to fund a portion of MetalSite's operations throughout 2000.
The Company's ownership percentage in MetalSite may be decreased by
interests granted in accordance with MetalSite's Management Ownership Plan and
by options which may be exercised by Internet Capital Group, Inc. ("ICG").
Contingent on the occurrence of certain events as defined in the December 29,
1999 Security Purchase Agreement, ICG would have the option to purchase, and the
Company would be required to sell a 10% equity interest (determined on a
pre-offering basis) in MetalSite at an average market price based upon the
trading prices of MetalSite's equity securities during a ten-day period prior to
notice of exercise of such option.
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 in conjunction with and are qualified in
their entirety by the unaudited consolidated condensed financial statements of
the Company and notes thereto. The unaudited consolidated condensed financial
statements of Weirton Steel Corporation include the accounts of its wholly and
majority owned subsidiaries. Weirton Steel Corporation and/or Weirton Steel
Corporation together with its subsidiaries are hereafter referred to as the
"Company."
OVERVIEW
The Company is a major integrated producer of flat rolled carbon steels
with major product lines consisting of sheet and tin mill product. Sheet product
includes hot and cold rolled and both hot-dipped and electrolytic galvanized
steels. Tin mill product includes tin-plate, chrome coated and black plate.
Domestic steel producers face significant competition from foreign
producers. Beginning in the second half of 1998 and continuing through the first
quarter of 2000, imported steel, some of which was dumped in violation of United
States trade laws, adversely affected product prices in the United States and
tonnages sold by domestic producers. The relative strength of foreign economies,
including foreign markets for steel, and fluctuation in the value of the United
States dollar against foreign currencies substantially affect the intensity of
foreign competition. In 1999 foreign producers exported 35.6 million tons of
steel to the United States. This was the second highest import level in history
surpassed only by the 41.4 million tons imported in 1998. During the first
quarter of 2000, an estimated 9.5 million tons of foreign steel were imported
into the United States compared to 7.8 million tons for the same period in 1999.
The Company and other domestic producers have sought and continue to seek
legal and legislative remedies to stop the flow of illegally dumped steel
imported into the United States.
On October 28, 1999, the Company filed a trade case against Japan for
allegedly setting illegal prices on its tin mill products sold in American
markets. On April 6, 2000, the Commerce Department set preliminary antidumping
duties of 95% on Japanese imports of tin mill products. The Commerce Department
is expected to render a final determination in mid June 2000, and the ITC is
expected to make its final determination in early August 2000. If the ITC rules
in the affirmative, the duties will be applied to Japanese tin mill products for
a five-year period.
7
<PAGE> 8
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
In the first quarter of 2000, the Company recognized net income of $0.7
million or $0.02 per diluted share compared to a net loss of $27.9 million or
$0.67 per diluted share for the same period in 1999. Net sales in the first
quarter of 2000 were $317.7 million, an increase of $52.6 million or 20% from
the first quarter of 1999. Total shipments in the first quarter of 2000 were 740
thousand tons compared to the first quarter of 1999 shipments of 580 thousand
tons. The increase in shipments of 160 thousand tons reflects an improvement in
the domestic steel market. The import surge that began in the latter half of
1998 contributed substantially to the low shipment volume in the first quarter
of 1999. The filing and success of trade cases against foreign producers have
helped improve the overall market condition for the Company's sheet products.
The improvement was manifest in the 160 thousand ton increase in volume and 20%
increase in revenue in the first quarter of 2000 compared to the first quarter
of 1999.
Sheet product net sales for the first quarter of 2000 were $211.0 million,
an increase of $67.3 million from the first quarter of 1999. Shipments of sheet
product in the first quarter of 2000 were 556 thousand tons compared to 376
thousand tons in the first quarter of 1999. Trade cases against foreign
producers have helped to improve the market conditions for the Company's sheet
products. The improved conditions helped generate the increase in shipment
volume and the resulting revenue increase during the first quarter of 2000
compared to the first quarter of 1999.
Tin mill product net sales for the first quarter of 2000 were $106.7
million, a decrease of $14.5 million from the first quarter of 1999. Shipments
of tin mill product in the first quarter of 2000 were 184 thousand tons compared
to 204 thousand tons for the same period in 1999. Unlike the condition of sheet
product markets, the market conditions for the Company's tin mill products have
not been positively impacted by trade case activity. A somewhat softer market
for the Company's tin mill products resulted in the 20 thousand ton decrease in
volume and the decrease in revenue.
Selling, general and administrative expense decreased $1.6 million in the
first quarter of 2000 compared to the first quarter of 1999. The decrease
resulted from lower average head counts and benefit costs for salaried
employees.
Cost of sales for the first quarter of 2000 were $280.6 million, or $379
per ton, compared to $261.5 million, or $451 per ton, for the first quarter of
1999. The decrease in cost of sales was primarily attributable to better
operating performance, lower employee benefit costs and a change in product mix.
Depreciation expense increased $1.4 million to $16.5 million in the first
quarter of 2000 when compared to the first quarter of 1999. The increase is
primarily attributable to restarting the No. 4 Blast Furnace in December 1999
and higher overall production levels throughout the Company's operation.
The Company's loss from unconsolidated subsidiaries increased $3.7 million
from the first quarter of 1999 to the first quarter of 2000. The additional loss
resulted primarily from the losses of GalvPro during its initial month of
operation and losses from MetalSite, the results of which were recorded using
the equity method of accounting the first quarter of 2000 versus consolidated
results in the first quarter of 1999.
Interest expense decreased $2.4 million in the first quarter of 2000 when
compared to the same period in 1999. The Company redeemed $84.0 million in
Senior Notes in October 1999, resulting in lower average outstanding debt during
the first quarter of 2000.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, the Company had cash and equivalents of $123.7
million compared to $209.3 million as of December 31, 1999. The Company's
liquidity requirements arise primarily from working capital
8
<PAGE> 9
requirements, debt service and capital investments. The Company's statements of
cash flows for the quarters ended March 31 are summarized below:
<TABLE>
<CAPTION>
2000 1999
--------- --------
DOLLARS IN THOUSANDS
<S> <C> <C>
Net cash provided (used) by operating activities........ $(71,954) $15,358
Net cash used by investing activities................... (4,717) (2,972)
Net cash used by financing activities................... (8,890) --
-------- -------
Increase (decrease) in cash............................. $(85,561) $12,386
======== =======
</TABLE>
Net cash flows from operating activities were $(72.0) million and $15.4
million for the quarters ended March 31, 2000 and March 31, 1999, respectively.
The Company's cash flows from operations were $87.3 million less than in the
first quarter of 1999 primarily due to higher receivable balances (partially as
a result of a reduction in funded participation interests in the Company's
Receivables Participation Agreement) and the payment of profit sharing and
alternative minimum tax during the first quarter of 2000.
Net cash used by investing activities for the quarter ended March 31, 2000
consisted of $3.4 million in capital spending and $1.3 million in loans to an
unconsolidated subsidiary. Net cash used by investing activities for the quarter
ended March 31, 1999 consisted of $3.0 million in capital spending. The
Company's planned capital expenditures for 2000 are approximately $31.0 million.
During the first quarter of 2000, pursuant to the 1998 Stock Repurchase
Program, the Company repurchased approximately 0.4 million shares of its
outstanding common stock at a cost of $3.1 million. Also during the first
quarter of 2000, the Company retired approximately $5.8 million in long-term
debt prior to maturity through open market purchases. The Company had no cash
flows from financing activities for the quarter ended March 31, 1999.
Through a wholly-owned subsidiary Weirton Receivables Inc. ("WRI"), the
Company has two receivables participation agreements with a group of three
banks, the WRI Receivables Participation Agreement and the Additional Receivable
Facility. As of December 31, 1999, $35.0 million of funded participation
interest had been sold to the banks and $12.7 million in letters of credit under
the subfacility were outstanding. Subsequent to December 31, 1999, the $35.0
million of funded participation interest was no longer outstanding. As of March
31, 2000, after reductions for amounts in place under its letter of credit
subfacility, the base amount of participation interest available for cash sale
under both receivable facilities was approximately $84.1 million. Letters of
credit outstanding under the Receivables Participation Agreement were $8.7
million at March 31, 2000.
The Company also has a working capital facility of up to $100.0 million
secured by a first priority lien on the Company's inventory (the "Inventory
Facility"). As of March 31, 2000, no amounts were outstanding under the
Inventory Facility, and $82.8 million was available for borrowing.
The Company's net deferred tax assets were $151.4 million as of March 31,
2000. These consisted 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. The Company may be required in future periods to make
additional cash payments for income taxes under federal alternative minimum tax
regulations.
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 short term needs, including the completion of the 2000 capital
spending plan.
To the extent that cash on hand and cash generated from operating
activities do not generate an adequate amount of cash, the Company expects that
cash requirements can be met by the Inventory Facility or the Receivables
Participation Agreements.
9
<PAGE> 10
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 discharges, air emissions and waste disposal. As a
consequence, the Company has incurred, and will continue to incur, substantial
capital expenditures and operating and maintenance expenses in order to comply
with regulatory requirements.
As of March 31, 2000, the Company had an accrued liability of $9.0 million
for known and identifiable environmental related costs to comply with negotiated
and mandated settlements of various actions brought by the United States
Environmental Protection Agency (the "EPA") and the West Virginia Department of
Environmental Protection. The EPA is also requiring the Company to conduct
investigative activities to determine the nature and extent of hazardous
substances which may be located on the Company's properties and to evaluate and
propose corrective measures needed to abate any unacceptable risks. Because the
Company does not currently know the nature or the extent of hazardous substances
which may be located on its properties, it is not possible at the present time
to estimate the ultimate cost to comply with the EPA's requirements or conduct
remedial activity that may be required.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("Statement 133"). The Statement establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at its
fair value. In June 1999, the FASB issued Statement No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133," which amends Statement 133 to be effective for all
fiscal quarters of all fiscal years beginning after June 15, 2000. Management
has not yet determined how Statement 133 will impact the Company's financial
statements.
FORWARD LOOKING STATEMENTS
This Item contains certain forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. Such statements
are based on assumptions and expectations which may not be realized and are
inherently subject to risk and uncertainties, many of which cannot be predicted
with accuracy. Future events and actual results, financial and otherwise, may
differ from the results discussed in the forward-looking statements. Although
the Company believes that its assumptions made in connection with the forward-
looking statements are reasonable, there are no assurances that such assumptions
or expectations will prove to have been correct due to the foregoing and other
factors. Such forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. 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.
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's 50% owned unconsolidated subsidiary, WeBCo, utilizes forward
contracts to mitigate its exposure to changes in foreign currency exchange
rates. At March 31, 2000, WeBCo had four outstanding forward contracts to sell
foreign currencies. A hypothetical 10% change in the applicable March 31, 2000
spot rates would result in a change in WeBCo's pretax income ranging from
approximately $(0.3) million to $(1.7) million.
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
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 -- Financial Data Schedule for the three months ended March
31, 2000 (filed herewith).
(b) Reports on Form 8-K
The Company filed Current Reports on Form 8-K on March 16, 2000 and
January 6, 2000.
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
Vice President -- Information
Technology
and Controller
(Principal Accounting Officer)
May 15, 2000
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 123,709
<SECURITIES> 0
<RECEIVABLES> 185,579
<ALLOWANCES> 9,758
<INVENTORY> 165,692
<CURRENT-ASSETS> 510,636
<PP&E> 993,860
<DEPRECIATION> 492,554
<TOTAL-ASSETS> 1,134,726
<CURRENT-LIABILITIES> 213,140
<BONDS> 299,108
22,861
250
<COMMON> 437
<OTHER-SE> 151,046
<TOTAL-LIABILITY-AND-EQUITY> 1,134,726
<SALES> 317,718
<TOTAL-REVENUES> 317,718
<CGS> 280,618
<TOTAL-COSTS> 306,211
<OTHER-EXPENSES> 1,934
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,672
<INCOME-PRETAX> 901
<INCOME-TAX> 189
<INCOME-CONTINUING> 712
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 712
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
</TABLE>
