<PAGE> 1
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 December 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ______________
Commission File #1-10459
GENEVA STEEL COMPANY
(Exact name of registrant as specified in its charter)
UTAH 93-0942346
(State of Incorporation) (I.R.S. Employer Identification No.)
10 South Geneva Road
Vineyard, Utah
(Address of principal executive offices)
84058
(Zip Code)
Registrant's telephone number, including area code: (801) 227-9000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each class of the issuer's common
stock, as of the latest practicable date.
14,155,518 and 19,151,348 shares of Class A and Class B common stock,
respectively, outstanding as of January 31, 1998.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENEVA STEEL COMPANY
CONDENSED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
December 31, September 30,
1997 1997
--------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ -- $ --
Accounts receivable, net 73,012 60,163
Inventories 109,784 100,081
Deferred income taxes 5,340 3,059
Prepaid expenses and other 3,301 5,291
Related party receivable 123 753
--------- ---------
Total current assets 191,560 169,347
--------- ---------
Property, plant and equipment:
Land 1,990 1,990
Buildings 16,109 16,109
Machinery and equipment 650,639 645,807
Mineral property and development costs 8,425 8,425
--------- ---------
677,163 672,331
Less accumulated depreciation (225,808) (214,016)
--------- ---------
Net property, plant and equipment 451,355 458,315
--------- ---------
Other assets 17,930 18,408
--------- ---------
$ 660,845 $ 646,070
========= =========
</TABLE>
The accompanying notes to condensed financial statements
are an integral part of these condensed balance sheets.
Page 2 of 17
<PAGE> 3
GENEVA STEEL COMPANY
CONDENSED BALANCE SHEETS (Continued)
(Dollars in thousands)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, September 30,
1997 1997
--------- ---------
<S> <C> <C>
Current liabilities:
Accounts payable $ 57,564 $ 46,348
Accrued liabilities 23,688 23,671
Accrued payroll and related taxes 10,047 11,715
Accrued dividends payable 16,906 14,290
Accrued interest payable 13,037 4,559
Accrued pension and profit
sharing costs 1,436 1,701
--------- ---------
Total current liabilities 122,678 102,284
--------- ---------
Long-term debt 398,894 399,906
--------- ---------
Deferred income tax liabilities 5,505 5,108
--------- ---------
Redeemable preferred stock 56,355 56,169
--------- ---------
Stockholders' equity:
Preferred stock -- --
Common stock:
Class A 87,979 87,979
Class B 10,110 10,110
Warrants to purchase Class A
common stock 5,360 5,360
Accumulated deficit (18,001) (11,399)
Class A common stock held in
treasury, at cost (8,035) (9,447)
--------- ---------
Total stockholders' equity 77,413 82,603
--------- ---------
$ 660,845 $ 646,070
========= =========
</TABLE>
The accompanying notes to condensed financial statements
are an integral part of these condensed balance sheets.
Page 3 of 17
<PAGE> 4
GENEVA STEEL COMPANY
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Net sales $ 181,513 $ 169,741
Cost of sales 169,720 156,811
--------- ---------
Gross margin 11,793 12,930
Selling, general and administrative
expenses 5,892 5,636
--------- ---------
Income from operations 5,901 7,294
--------- ---------
Other income (expense):
Interest and other income 84 175
Interest expense (10,271) (9,702)
--------- ---------
(10,187) (9,527)
--------- ---------
Loss before benefit for income taxes (4,286) (2,233)
Benefit for income taxes (1,571) (823)
--------- ---------
Net loss (2,715) (1,410)
Less redeemable preferred stock dividends and
accretion for original issue discount 2,801 2,461
--------- ---------
Net loss applicable to common shares $ (5,516) $ (3,871)
========= =========
Basic and diluted net loss per common share $ (.35) $ (.25)
========= =========
Weighted average common shares outstanding 15,943 15,479
========= =========
</TABLE>
The accompanying notes to condensed financial statements
are an integral part of these condensed statements.
Page 4 of 17
<PAGE> 5
GENEVA STEEL COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
(Dollars in thousands)
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (2,715) $ (1,410)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation 11,797 9,964
Amortization 478 478
Deferred income taxes (1,884) (811)
(Increase) decrease in current
assets--
Accounts receivable, net (12,849) 4,844
Inventories (9,703) (5,675)
Prepaid expenses and other 2,620 4,841
Increase (decrease) in current
liabilities--
Accounts payable 11,216 (6,403)
Accrued liabilities (152) (2,113)
Accrued payroll and related taxes (1,341) (417)
Production prepayments -- 5,237
Accrued interest payable 8,478 8,202
Accrued pension and profit
sharing costs (265) (897)
-------- --------
Net cash provided by operating
activities 5,680 15,840
-------- --------
Cash flows from investing activities:
Purchases of property, plant and equipment $ (4,841) $(13,099)
-------- --------
</TABLE>
The accompanying notes to condensed financial statements
are an integral part of these condensed statements.
Page 5 of 17
<PAGE> 6
GENEVA STEEL COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (Continued)
THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
------- --------
<S> <C> <C>
Cash flows from financing activities:
Proceeds from issuance of long-term debt $ 4,263 $ 18,218
Payments on long-term debt (5,274) (23,431)
Change in bank overdraft 168 1,879
Other 4 (4)
------- --------
Net cash used for financing activities (839) (3,338)
------- --------
Net decrease in cash and cash
equivalents -- (597)
Cash and cash equivalents at beginning
of period -- 597
------ ---------
Cash and cash equivalents at end
of period $ -- $ --
====== =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $1,315 $ 1,022
</TABLE>
Supplemental schedule of noncash financing activities:
For the three months ended December 31, 1997 and 1996, the Company increased
the redeemable preferred stock by $185 and $182, respectively, for the
accretion required over time to amortize the original issue discount on the
redeemable preferred stock incurred at the time of issuance. At December 31,
1997, the Company had accrued dividends payable of $16,906.
The accompanying notes to condensed financial statements
are an integral part of these condensed statements.
Page 6 of 17
<PAGE> 7
GENEVA STEEL COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
(1) INTERIM CONDENSED FINANCIAL STATEMENTS
The accompanying condensed financial statements of Geneva Steel Company
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. The accompanying unaudited condensed financial statements reflect
all adjustments (consisting only of normal recurring adjustments) which, in the
opinion of management, are necessary to present fairly the financial position
and results of operations of the Company.
It is suggested that these condensed financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's latest Annual Report on Form 10-K.
(2) INVENTORIES
Inventories were comprised of the following components (dollars in
thousands):
<TABLE>
<CAPTION>
December 31, September 30,
1997 1997
-------- --------
<S> <C> <C>
Raw materials $ 27,292 $ 26,783
Semi-finished and finished goods 75,252 65,406
Operating materials 7,240 7,892
-------- --------
$109,784 $100,081
======== ========
</TABLE>
(3) BASIC AND DILUTED NET LOSS PER COMMON SHARE
In February 1997, Statement of Financial Accounting Standards ("SFAS") No.
128 "Earnings Per Share" was issued. This statement specifies requirements for
computation, presentation and disclosure of earnings per share ("EPS"). SFAS No.
128 simplifies the standards for computing EPS and replaces the presentations of
Primary EPS and Fully Diluted EPS with Basic EPS and Diluted EPS. The Company
adopted SFAS No. 128 during the quarter ended December 31, 1997. As required,
the Company restated the prior period EPS data, resulting in no adjustment.
Page 7 of 17
<PAGE> 8
Basic and diluted net loss per common share is calculated based upon the
weighted average number of common shares outstanding during the periods. Stock
options and warrants prior to conversion are not included in the calculation of
diluted net loss per common share because their inclusion would be antidilutive.
Class B common stock is included in the weighted average number of common shares
outstanding at one share for every ten shares outstanding as the Class B common
stock is convertible to Class A common stock at this same rate.
The net loss for the three-month periods ended December 31, 1997 and 1996
was adjusted for redeemable preferred stock dividends and the accretion required
over time to amortize the original issue discount on the redeemable preferred
stock incurred at the time of issuance.
(4) RELATED PARTY TRANSACTION
On October 17 and December 17, 1997, the Company's Chief Executive Officer
paid $240,000 and $400,000, respectively, on his note with the Company. At
December 31, 1997, the amount remaining on the note was approximately $123,000.
Page 8 of 17
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
The following table sets forth the percentage relationship of certain cost
and expense items to net sales for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------------
1997 1996
----- -----
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of sales 93.5 92.4
----- -----
Gross margin 6.5 7.6
Selling, general and administrative expenses 3.2 3.3
----- -----
Income from operations 3.3 4.3
----- -----
Other income (expense):
Interest and other income 0.1 0.1
Interest expense (5.7) (5.7)
----- -----
(5.6) (5.6)
----- -----
Loss before benefit for income taxes (2.3) (1.3)
Benefit for income taxes (0.8) (0.5)
----- -----
Net loss (1.5)% (0.8)%
===== =====
</TABLE>
The following table sets forth the sales product mix as a percentage of net
sales for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------------
1997 1996
----- -----
<S> <C> <C>
Plate 53.2% 39.6
Sheet 20.6 38.6
Pipe 12.9 8.5
Slab 11.1 10.6
Non-Steel 2.2 2.7
----- -----
100.0% 100.0%
===== =====
</TABLE>
Page 9 of 17
<PAGE> 10
THREE MONTHS ENDED DECEMBER 31, 1997 COMPARED WITH THREE MONTHS ENDED
DECEMBER 31, 1996
Net sales increased 6.9% due to a shift in product mix to higher-priced
plate and pipe products from lower-priced sheet products and an increase in
shipments of approximately 24,000 tons, offset in part by decreased overall
average selling prices for the three months ended December 31, 1997 as compared
to the same period in the previous fiscal year. The weighted average sales price
(net of transportation costs) per ton of plate, sheet and slab products
decreased by 2.8%, 1.6% and 0.5%, respectively, while the weighted average sales
price of pipe increased by 6.1% in the three months ended December 31, 1997
compared to the same period in the previous fiscal year. The overall decrease in
prices was due to pricing pressure resulting from certain unfairly traded
imports, an increase in domestic hot-rolled capacity as well as other market
factors. Shipped tonnage of plate, pipe and slab products increased
approximately 86,100 tons or 48.0%, 18,500 tons or 52.6% and 10,600 tons or
14.0%, respectively, while shipped tonnage of sheet products decreased
approximately 91,200 tons or 42.7%, between the two periods. During the quarter
ended December 31, 1997, a shortage of railcars increased costs and caused
shipments to be slightly lower than expected. The Company's primary rail carrier
is building additional railcars and taking other steps to improve its service to
the Company. Based in part upon an anticipated increase in railcar availability,
the Company expects shipments to increase in the second quarter of fiscal year
1998. Consistent with the Company's strategic objectives, plate shipments have
increased, in part through utilization of outside processors to level and cut
plate from coils. The Company has experienced increased demand for pipe and
continues to produce pipe at an increased level. The Company continues to sell
slabs to maximize production from the continuous caster while efforts to
increase rolling mill throughput continue.
The Company is currently in the process of installing the rolling mill
finishing stand upgrades, which are expected to increase rolling mill throughput
and product quality. Upgrades on four of the six finishing stands have been
completed. Even with completion of the fourth finishing stand during January
1998, the Company achieved record monthly production for hot-rolled tons. The
Company expects to complete work on the final two finishing stands during the
second quarter of fiscal year 1998. Nevertheless, the Company may experience
operational disruptions during the final stages of completing and fully
implementing the project.
Demand for the Company's plate products remains very strong, and overall
demand for pipe is stable. Given the Company's selective approach to coiled
sheet sales, price realization for coiled sheet has remained relatively stable.
Based on current orders, the Company anticipates that overall price realization
will increase in the second quarter of fiscal year 1998. Future demand for the
Company's products could be adversely affected by, among other things,
Page 10 of 17
<PAGE> 11
increased imports, additions to domestic production capacity or a slowing in the
U.S. economy. The Company's recent successful completion of the cut-to- length
plate cases and the implementation of suspension agreements against such plate
imports from China, Russia, Ukraine and South Africa have reduced imports from
these countries. Imports from other countries, however, continue to adversely
affect operating results. The Company continues to monitor cut-to- length plate
imports from other countries as well as imports of other of its products and may
file additional trade cases in the future.
Domestic competition remains intense and imported steel continues to
adversely affect the market. Moreover, additional production capacity is being
added in the domestic plate and sheet markets. The Company sells substantially
all of its products in the spot market at prevailing market prices. The Company
believes its percentage of such sales is significantly higher than that of most
of the other domestic integrated producers. Consequently, the Company may be
affected by price increases or decreases more quickly than many of its
competitors. The Company intends to react to price increases or decreases in the
market as required by competitive conditions.
Cost of sales includes raw materials, labor costs, energy costs,
depreciation and other operating and support costs associated with the
production process. The Company's cost of sales, as a percentage of net sales,
increased to 93.5% for the three months ended December 31, 1997 from 92.4% for
the same period in the previous fiscal year. The overall average cost of sales
per ton shipped increased approximately $10 per ton between the two periods,
primarily as a result of a shift in product mix to higher-cost plate and pipe
products from lower-cost sheet products, as well as an increase in operating
costs. Operating costs increased as a result of production disruptions relating
to the rolling mill finishing stand modernization project, increased
depreciation expense, increased costs for severance and health insurance
associated with the Company's recent layoffs described below, higher wages and
benefits and other increased costs. The increased costs were offset in part by
reduced freight rates.
Depreciation costs included in cost of sales increased approximately $1.8
million for the three months ended December 31, 1997 compared with the same
period in the previous fiscal year. This increase was due to increases in the
asset base as a result of completion of relines and repairs to blast furnaces
no. 1 and no. 2.
On January 15, 1998, the Company announced layoffs of 100 staff and support
personnel, approximately one-third of such employees. An additional 80 wage
employees have or will be laid off as a result of suspending operations of the
Company's heavy gauge shear line and foundry. The layoffs are one of several
steps being taken by the Company to improve short and long-term operating
results. In connection with the layoffs, the Company accrued a liability of
approximately $900,000 during the first quarter of fiscal 1998.
Page 11 of 17
<PAGE> 12
Selling, general and administrative expenses for the three months ended
December 31, 1997 increased approximately $0.3 million as compared to the same
period in the previous fiscal year. These higher expenses resulted primarily
from severance and health insurance liabilities associated with the Company's
recent layoffs.
Interest expense increased approximately $0.6 million during the three
months ended December 31, 1997 as compared to the same period in the previous
fiscal year as a result higher levels of borrowing.
For the three months ended December 31, 1997 and 1996, the Company
recognized a benefit for income taxes by carrying back the loss against income
from a prior period. As of December 31, 1997, the Company is able to recognize a
benefit for carryback of approximately $0.4 million of future losses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements arise from capital expenditures and
working capital requirements, including interest payments. The Company has met
these requirements principally from the sale of equity, the incurrence of
long-term indebtedness, including borrowings under the Company's credit
facilities, equipment lease financing and cash provided by operations. As of
December 31, 1997, the Company's eligible inventories and accounts receivable
supported access to $113.8 million under the revolving credit facility (the
"Revolving Credit Facility"). As of December 31, 1997, the Company had $74.2
million in borrowings and $9.9 million in letters of credit outstanding under
the Revolving Credit Facility, leaving $29.7 million in additional borrowing
availability.
The terms of the Revolving Credit Facility and of the Company's 111/8%
senior notes issued in March 1993 and 9 1/2% senior notes issued in February,
1994 (collectively the "Senior Notes") include cross default and other customary
provisions. Financial covenants contained in the Revolving Credit Facility
and/or the Senior Notes also include, among others, a limitation on dividends
and distributions on capital stock of the Company, a tangible net worth
requirement, a cash interest coverage requirement, a cumulative capital
expenditure limitation, limitations on the incurrence of additional indebtedness
unless certain financial tests are satisfied, a limitation on mergers,
consolidations and dispositions of assets and limitations on liens. In the event
of a change in control, the Company must offer to purchase all Senior Notes then
outstanding at a premium.
The Company's ability to pay cash dividends on its 14% cumulative
redeemable exchangeable preferred stock (the "Redeemable Preferred Stock") is
subject to the covenants and tests contained in the indentures governing the
Senior Notes and in the Company's Revolving Credit Facility. Restricted
Page 12 of 17
<PAGE> 13
payment limitations under the Company's Senior Notes precluded payment of the
quarterly preferred stock dividends beginning with the dividend due June 15,
1996. Unpaid dividends were approximately $16.9 million at December 31, 1997.
Unpaid dividends accumulate until paid and accrue additional dividends at a rate
of 14% per annum. As a result of the Company's inability to pay four full
quarterly dividends, the holders of the Redeemable Preferred Stock elected two
directors on May 30, 1997. The right of such holders to elect directors
continues until the Company has paid all dividends in arrears and has paid the
dividends due for two consecutive quarters thereafter. While not affecting net
income (loss), dividends and the accretion required over time to amortize the
original issue discount associated with the Redeemable Preferred Stock will
negatively impact quarterly earnings per share by approximately $.18 per share.
Besides these financing activities, the Company's major source of liquidity
has been cash provided by operating activities. Net cash provided by operating
activities was $5.7 million for the three months ended December 31, 1997, as
compared with net cash provided by operating activities of $15.8 million for the
three months ended December 31, 1996. The sources of cash provided by operating
activities during the three months ended December 31, 1997, included
depreciation and amortization of $12.3 million, an increase in accounts payable
of $11.2 million and an increase in accrued interest of $8.5 million. These
sources of cash flow were offset in part by an increase in inventories of $9.7
million, an increase in accounts receivable of $12.8 million, a decrease in the
net deferred tax liability of $1.9 million and a net loss of $2.7 million.
Capital expenditures were $4.8 million for the three months ended December
31, 1997. Capital expenditures for fiscal year 1998 are estimated at
approximately $39.0 million, which includes completion of the rolling mill
finishing stand modernization project, implementation of new business and
financial software and various other projects designed to reduce costs and
increase product quality and throughput. The Company anticipates that it may
incur significant start-up and transition costs as the remaining rolling mill
finishing stand equipment is installed and implemented. The Company has selected
and started the implementation of SAP software, an enterprise-wide business
system. The Company expects to benefit significantly from such implementation,
including addressing the year 2000 issue inherent in its legacy systems. The
implementation is currently estimated to cost $8.0 to $10.0 million with
implementation over a two-year period. Depending on market, operational,
liquidity and other factors, the Company may elect to adjust the design, timing
and budgeted expenditures of its capital plan. In addition, the Revolving Credit
Facility contains certain limitations on capital expenditures.
The Company has formed a limited liability company with certain unrelated
parties, which in turn has entered into a cooperative agreement with the United
States Department of Energy ("DOE") for the demonstration of a cokeless
ironmaking facility and associated power generation and air separation
facilities. As of December 31, 1997, the Company had spent (net of DOE
Page 13 of 17
<PAGE> 14
reimbursement) approximately $0.7 million in connection with the project, which
has been included in construction in progress in the accompanying consolidated
financial statements. Expenditures on the project are subject to government cost
sharing arrangements. Completion of the project remains subject to several
contingencies. Under certain circumstances, the Company will be required to
repay some or all of the government cost share funds and expense other funds
included in construction in progress in the event the project is terminated.
The Company is required to make substantial interest and dividend payments
on the Senior Notes, its Redeemable Preferred Stock and outstanding balances
under the Revolving Credit Facility. Currently, the Company's annual cash
interest expense is approximately $39.6 million and its annual preferred stock
dividends are approximately $10.6 million.
The Company's labor agreement with the United Steelworkers of America
expires as of March 31, 1998. The Company has begun negotiations with Union
representatives in anticipation of reaching a new agreement prior to March 31,
1998. The Company is currently unable to predict the effect such negotiations
will have on the Company's operations and financial condition.
FACTORS AFFECTING FUTURE RESULTS
This report contains a number of forward-looking statements, including,
without limitation, statements contained in this report relating to the
Company's ability to obtain railcars, to increase shipments to the expected
levels, the Company's objective to increase higher-margin plate and pipe product
mix while reducing lower-margin slab sales, the successful implementation of the
rolling mill finishing stands upgrade which is expected to increase production
throughput and product quality, the Company's ability to compete with the
additional production capacity being added in the domestic plate and sheet
markets, the Company's ability to monitor and control the level of unfairly
traded imports and their effect on the domestic market, the successful
resolution of the labor negotiations, the expected adequacy of cash resources
including additional borrowing availability and any other statements contained
herein to the effect that the Company or its management "believes", "expects",
"anticipates", "plans" and similar expressions. There are a number of important
factors that could cause actual events or the Company's actual results to differ
materially from those indicated by such forward-looking statements. These
factors include, without limitation, those set forth below.
The Company's future operations will be impacted by, among other factors,
pricing, product mix, throughput levels, production efficiencies and railcar
availability. The Company has efforts underway to increase throughput and
production efficiencies and to continue shifting its product mix to higher-
margin products. There can be no assurance that the Company's efforts will be
successful or that sufficient demand will exist to support the Company's
Page 14 of 17
<PAGE> 15
additional throughput capacity. Pricing in future periods is a key variable to
the Company's future operating results that remains subject to significant
uncertainty. Future pricing will be affected by several factors including the
level of imports, future capacity additions, product demand and other market
factors such as the increased domestic plate production capacity currently
coming on line.
The short-term and long-term liquidity of the Company also is dependent
upon several other factors, including availability of capital, foreign currency
fluctuations, competitive and market forces, capital expenditures and general
economic conditions. Moreover, the United States steel market is subject to
cyclical fluctuations that may affect the amount of cash internally generated by
the Company and the ability of the Company to obtain external financing.
Although the Company believes that the anticipated cash from future operations
and borrowings under the Revolving Credit Facility will provide sufficient
liquidity for the Company to meet its debt service requirements and to fund
ongoing operations, including required capital expenditures, there can be no
assurance that these or other possible sources will be adequate. Moreover,
because of the Company's current leverage situation, its financial flexibility
is limited.
Inflation can be expected to have an effect on many of the Company's
operating costs and expenses. Due to worldwide competition in the steel
industry, the Company may not be able to pass through such increased costs to
its customers.
Page 15 of 17
<PAGE> 16
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit Filed
Number Exhibit Herewith
------ ------- --------
<S> <C> <C>
27 Financial Data Schedule X
</TABLE>
(b) Reports on Form 8-K.
On November 15, 1997, the Company filed a current report on Form 8-K to
report a dividend of one preferred share purchase right to the holders of the
Class A and Class B Common Stock.
Page 16 of 17
<PAGE> 17
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.
GENEVA STEEL COMPANY
By: /s/ Dennis L. Wanlass
-----------------------------------
Vice President, Treasurer and
Chief Financial Officer
Dated: February 13, 1998
Page 17 of 17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS
AS OF AND FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE
NOTES THERETO.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-1-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 73,012
<ALLOWANCES> 4,653
<INVENTORY> 109,784
<CURRENT-ASSETS> 191,560
<PP&E> 677,163
<DEPRECIATION> (225,808)
<TOTAL-ASSETS> 660,845
<CURRENT-LIABILITIES> 122,678
<BONDS> 398,894
56,355
0
<COMMON> 90,054
<OTHER-SE> (12,641)
<TOTAL-LIABILITY-AND-EQUITY> 660,845
<SALES> 181,513
<TOTAL-REVENUES> 181,513
<CGS> 169,720
<TOTAL-COSTS> 169,720
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<LOSS-PROVISION> 2,055
<INTEREST-EXPENSE> 10,187
<INCOME-PRETAX> (4,286)
<INCOME-TAX> (1,571)
<INCOME-CONTINUING> (2,715)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,715)
<EPS-PRIMARY> (.35)
<EPS-DILUTED> (.35)
</TABLE>
