<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 June 30, 2000
[ ] 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.
15,930,186 and 9,237,158 shares of Class A and Class B common stock,
respectively, outstanding as of August 10, 2000.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENEVA STEEL COMPANY
DEBTOR-IN-POSSESSION
CONDENSED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, September 30,
2000 1999
--------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ -- $ --
Accounts receivable, net 8,142 15,196
Inventories 58,297 55,460
Deferred income taxes 7,820 14,609
Prepaid expenses and other 7,087 4,584
--------- ---------
Total current assets 81,346 89,849
--------- ---------
Property, plant and equipment:
Land 1,792 1,990
Buildings 16,094 16,119
Machinery and equipment 639,024 645,943
Mineral property and development costs 1,000 1,000
--------- ---------
657,910 665,052
Less accumulated depreciation (308,570) (292,035)
--------- ---------
Net property, plant and equipment 349,340 373,017
--------- ---------
Other assets 11,532 11,850
--------- ---------
$ 442,218 $ 474,716
========= =========
</TABLE>
The accompanying notes to condensed financial statements
are an integral part of these condensed balance sheets.
Page 2 of 25
<PAGE> 3
GENEVA STEEL COMPANY
DEBTOR-IN-POSSESSION
CONDENSED BALANCE SHEETS (Continued)
(Dollars in thousands)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
June 30, September 30,
2000 1999
--------- -------------
<S> <C> <C>
Liabilities not subject to compromise:
Revolving credit facility $ 27,553 $ 55,466
Accounts payable 18,387 16,334
Accrued liabilities 16,819 18,209
Accrued payroll and related taxes 7,813 7,444
Accrued pension and profit sharing costs 2,342 963
--------- ---------
Total current liabilities 72,914 98,416
--------- ---------
Liabilities subject to compromise:
Senior notes 325,000 325,000
Accounts payable 56,119 56,633
Accrued dividends payable 28,492 28,492
Accrued interest payable 15,409 15,409
Accrued liabilities 3,125 3,404
--------- ---------
428,145 428,938
--------- ---------
Long-term employee defined benefits 10,731 10,731
--------- ---------
Deferred income tax liabilities 7,820 14,609
--------- ---------
Redeemable preferred stock 56,566 56,001
--------- ---------
Stockholders' deficit:
Preferred stock -- --
Common stock:
Class A 101,141 92,022
Class B 4,877 9,741
Warrants to purchase Class A
common stock -- 4,255
Accumulated deficit (239,976) (239,997)
--------- ---------
Total stockholders' deficit (133,958) (133,979)
--------- ---------
$ 442,218 $ 474,716
========= =========
</TABLE>
The accompanying notes to condensed financial statements
are an integral part of these condensed balance sheets.
Page 3 of 25
<PAGE> 4
GENEVA STEEL COMPANY
DEBTOR-IN-POSSESSION
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED June 30, 2000 AND 1999
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
Net sales $ 153,939 $ 87,000
Cost of sales 147,782 108,535
--------- ---------
Gross margin 6,157 (21,535)
Selling, general and administrative
expenses 3,568 3,785
--------- ---------
Income (loss) from operations 2,589 (25,320)
--------- ---------
Other income (expense):
Interest and other income 66 574
Interest expense (total contractual
interest of $9,586 and $10,242 in 2000
and 1999, respectively) (1,319) (1,975)
--------- ---------
(1,253) (1,401)
--------- ---------
Income (loss) before reorganization item
and provision (benefit) for income taxes 1,336 (26,721)
Reorganization item 844 2,770
--------- ---------
Income (loss) before provision (benefit) for
income taxes 492 (29,491)
Provision (benefit) for income taxes -- --
--------- ---------
Net income (loss) 492 (29,491)
Less redeemable preferred stock accretion
for original issue discount 190 186
--------- ---------
Net income (loss) applicable to common
shares $ 302 $ (29,677)
========= =========
Basic and diluted net income (loss) per
common share $ 0.02 $ (1.76)
========= =========
Basic and diluted weighted average common
shares outstanding 16,854 16,854
========= =========
</TABLE>
The accompanying notes to condensed financial statements are an integral part of
these condensed statements.
Page 4 of 25
<PAGE> 5
GENEVA STEEL COMPANY
DEBTOR-IN-POSSESSION
CONDENSED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED JUNE 30, 2000 AND 1999
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
Net sales $ 429,833 $ 225,044
Cost of sales 418,807 307,677
--------- ---------
Gross margin 11,026 (82,633)
Selling, general and administrative
expenses 10,735 18,455
--------- ---------
Income (loss) from operations 291 (101,088)
--------- ---------
Other income (expense):
Interest and other income 167 765
Interest expense (total contractual
interest of $29,111 and $31,327 in
2000 and 1999, respectively) (4,310) (17,510)
Gain on asset sales 8,349 166
--------- ---------
4,206 (16,579)
--------- ---------
Income (loss) before reorganization
item and provision (benefit) for
income taxes 4,497 (117,667)
Reorganization item 3,910 3,920
--------- ---------
Income (loss) before provision (benefit)
for income taxes 587 (121,587)
Provision (benefit) for income taxes -- --
--------- ---------
Net income (loss) 587 (121,587)
Less redeemable preferred stock dividends
and accretion for original issue discount 566 4,643
--------- ---------
Net income (loss) applicable to common shares $ 21 $(126,230)
========= =========
Basic and diluted net income (loss) per
common share $ 0.001 $ (7.55)
========= =========
Basic and diluted weighted average common
shares outstanding 16,854 16,727
========= =========
</TABLE>
The accompanying notes to condensed financial statements are an integral
part of these condensed statements.
Page 5 of 25
<PAGE> 6
GENEVA STEEL COMPANY
DEBTOR-IN-POSSESSION
CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 2000 AND 1999
(Dollars in thousands)
(Unaudited)
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 587 $(121,587)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation 31,932 33,602
Amortization 592 1,995
Gain on asset sales (8,349) (166)
(Increase) decrease in current
assets--
Accounts receivable, net 7,054 48,050
Inventories (2,837) 53,193
Prepaid expenses and other (2,503) (8,343)
Increase (decrease) in current
liabilities--
Accounts payable 3,072 3,920
Accrued liabilities (1,669) (5,015)
Accrued payroll and related taxes 369 (2,422)
Accrued interest payable -- 10,329
Accrued pension and profit
sharing costs 1,379 (310)
--------- ---------
Net cash provided by operating
activities 29,627 13,246
--------- ---------
Cash flows from investing activities:
Purchases of property, plant and equipment (8,504) (7,698)
Proceeds from sale of property, plant and
equipment 8,598 184
--------- ---------
Net cash provided by (used for)
investing activities $ 94 $ (7,514)
========= =========
</TABLE>
The accompanying notes to condensed financial statements are an integral
part of these condensed statements.
Page 6 of 25
<PAGE> 7
GENEVA STEEL COMPANY
DEBTOR-IN-POSSESSION
CONDENSED STATEMENTS OF CASH FLOWS (Continued)
NINE MONTHS ENDED JUNE 30, 2000 AND 1999
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
-------- --------
<S> <C> <C>
Cash flows from financing activities:
Borrowings from credit facilities $ 9,173 $ 17,522
Payments on credit facilities (37,086) (20,762)
Payment of deferred loan costs (275) (1,580)
Change in bank overdraft (1,533) (912)
-------- --------
Net cash used for financing activities (29,721) (5,732)
-------- --------
Net change in cash -- --
Cash at beginning of period -- --
-------- --------
Cash at end of period $ -- $ --
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 4,310 $ 5,717
</TABLE>
Supplemental schedule of noncash financing activities:
For the nine months ended June 30, 2000 and 1999, the Company increased
the redeemable preferred stock by $566 and $657, 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 June
30, 2000, the Company had accrued dividends payable of $28,492 (total
contractual dividends of $47,249).
The accompanying notes to condensed financial statements are an integral
part of these condensed statements.
Page 7 of 25
<PAGE> 8
GENEVA STEEL COMPANY
DEBTOR-IN-POSSESSION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(1) VOLUNTARY FILING FOR RELIEF UNDER CHAPTER 11 OF THE UNITED STATES BANKRUPTCY
CODE
On February 1, 1999, the Company filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code in the United States
Bankruptcy Court for the District of Utah, Central Division. The filing was made
necessary by a lack of sufficient liquidity. The Company's operating results
since fiscal year 1998 have been severely affected by, among other things, the
dramatic surge in steel imports beginning in 1998. As a consequence of
record-high levels of low-priced steel imports and the resultant deteriorating
market conditions, the Company's overall price realization and shipments
declined precipitously. Decreased liquidity made it impossible for the Company
to service its debt and fund ongoing operations. Therefore, the Company sought
protection under Chapter 11 of the Bankruptcy Code. Prior to the bankruptcy
filing, the Company did not make the $9 million interest payment due January 15,
1999 under the terms of the Company's 9 1/2% senior notes due 2004. The
Bankruptcy Code generally prohibits the Company from making payments on
unsecured, pre-petition debt, including the 9 1/2% senior notes due 2004 and the
11 1/8% senior notes due 2001 (collectively, the "Senior Notes"), except
pursuant to a confirmed plan of reorganization. The Company is in possession of
its properties and assets and continues to manage its business as
debtor-in-possession subject to the supervision of the Bankruptcy Court. The
Company has a $125 million debtor-in-possession credit facility in place.
As of February 1, 1999, the Company discontinued accruing interest on
its Senior Notes and dividends on its redeemable preferred stock. Contractual
interest on the Senior Notes for the three months ended June 30, 2000 was $8.3
million, which is not included in the accompanying financial statements.
Contractual dividends on the redeemable preferred stock for the three months
were $3.6 million, which is also not included in the financial statements. As of
June 30, 2000, contractual accrued dividends on the redeemable preferred stock
were approximately $47.2 million, which is $18.8 million in excess of dividends
accrued in the accompanying balance sheet.
Pursuant to the provisions of the Bankruptcy Code, all actions to
collect upon any of the Company's liabilities as of the petition date or to
enforce pre-petition contractual obligations were automatically stayed. Absent
approval from the Bankruptcy Court, the Company is prohibited from paying
pre-petition obligations. The Bankruptcy Court has approved payment of certain
pre-petition obligations such as employee wages and benefits and customer claims
and rebates. Additionally, the Bankruptcy Court has approved the retention of
various legal, financial and other professionals. As a debtor-in-possession, the
Company has the right, subject to Bankruptcy Court approval and certain other
conditions, to assume or reject any pre-petition executory contracts and
unexpired leases. Parties affected by such rejections may file pre-petition
claims with the Bankruptcy Court in accordance with bankruptcy procedures.
Page 8 of 25
<PAGE> 9
On July 20, 2000, the Company filed a proposed plan of reorganization
(the "Plan") and Disclosure Statement with the United States Bankruptcy Court
for the District of Utah. The Plan is proposed jointly by the Company and the
Official Committee of Bondholders in the Company's Chapter 11 Case. If approved
as currently proposed, the Plan will significantly reduce the Company's debt
burden and provide additional liquidity in the form of a $25 million capital
infusion through the issuance of preferred stock convertible into common stock,
a $110 million term loan that is eighty-five-percent guaranteed by the United
States government, and a $125 million revolving line of credit. The Company's
prebankruptcy unsecured creditors will receive, in lieu of cash payments,
substantially all of the common stock of the Company and the right to purchase
the convertible preferred stock. The holders of the Company's prebankruptcy
common and redeemable preferred stock will not receive a distribution under the
Plan and all interests represented by prebankruptcy common and redeemable
preferred stock will be extinguished. In the event that creditors do not
purchase all of the preferred stock, the Company has entered into a standby
purchase agreement that ensures the full $25 million in new capital will be
raised. The objective of the Plan is to restructure the Company's balance sheet
to (i) significantly strengthen the Company's financial flexibility throughout
the business cycle; (ii) fund required capital expenditures and working capital
needs; and (iii) fulfill those obligations necessary to facilitate emergence
from Chapter 11.
The Company, through Citicorp USA, filed an application on January 31,
2000, for a U.S. government loan guarantee under the Emergency Steel Loan
Guarantee Program. The application sought an eighty-five- percent guarantee for
the $110 million term loan incorporated into the Plan. The Emergency Steel Loan
Guarantee Board extended an offer of guarantee to Citicorp, USA for the
company's term loan on June 30, 2000.
The Bankruptcy Court will conduct a hearing on the adequacy of the
Disclosure Statement on August 24, 2000. Should the Disclosure Statement be
approved, a hearing on confirmation of the Plan has been scheduled for October
13, 2000.
There can be no assurance at this time that the Plan proposed by the
Company and the Bondholders' Committee will be confirmed by the Bankruptcy Court
either on the schedule set forth above or at all, or that, if confirmed and
consummated, the Plan will achieve the objectives described above. Similarly,
there can be no assurance that the financings contemplated by the Plan actually
can be obtained on terms favorable to the Company, or at all.
Although the Chapter 11 bankruptcy filing raises substantial doubt about
the Company's ability to continue as a going concern, the accompanying financial
statements have been prepared on a going concern basis. This basis contemplates
the continuity of operations, realization of assets, and discharge of
liabilities in the ordinary course of business. The accompanying financial
statements also present the assets of the Company at historical cost and the
current intention that they will be realized as a going concern and in the
normal course of business. The Plan, if implemented, will materially change
certain amounts currently disclosed in the financial statements.
At this time, because of material uncertainties, pre-petition claims are
generally carried at face value in the accompanying financial statements.
Page 9 of 25
<PAGE> 10
The accompanying financial statements do not present the amount which will
ultimately be paid to settle liabilities and contingencies which may be allowed
in the Chapter 11 bankruptcy case. Under the Plan, the rights of pre-petition
creditors will be substantially altered. This will result in such claims being
paid in the Chapter 11 bankruptcy proceedings at substantially less than 100
percent of face value.
(2) INTERIM CONDENSED FINANCIAL STATEMENTS
The accompanying condensed financial statements of the 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 accounting principles generally accepted
in the U.S. 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.
(3) INVENTORIES
Inventories were comprised of the following components (in thousands):
<TABLE>
<CAPTION>
June 30, September 30,
2000 1999
------- -------------
<S> <C> <C>
Raw materials $19,139 $17,081
Semi-finished and finished goods 36,656 33,762
Operating materials 2,502 4,617
------- -------
$58,297 $55,460
======= =======
</TABLE>
(4) BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE
Basic net income (loss) per common share is calculated based upon the
weighted average number of common shares outstanding during the periods. Diluted
net income (loss) per common share is calculated based upon the weighted average
number of common shares outstanding plus the assumed exercise of all dilutive
securities using the treasury stock method. For the three and nine months ended
June 30, 2000, unexercised stock options and warrants are not included in the
calculation of diluted net loss per common share because their exercise price is
above the average stock price for the periods. For the three and nine months
ended June 30, 1999, 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. The warrants expired in March 2000. Class B
common stock is included in the weighted average number of common shares
outstanding at one share for every ten shares outstanding
Page 10 of 25
<PAGE> 11
because the Class B common stock is convertible to Class A common stock at this
same rate.
The net income (loss) for the three months ended June 30, 2000 and 1999
and the nine months ended June 30, 2000 and 1999 was adjusted for the accretion
required over time to amortize the original issue discount on the redeemable
preferred stock incurred at the time of issuance. The net loss for the nine
months ended June 30, 1999, also was adjusted for redeemable preferred stock
dividends through January 31, 1999.
(5) TERMINATION OF MANNESMANN SALES REPRESENTATION AGREEMENT
In March 2000, the Company entered into an agreement with Mannesmann
Pipe and Steel ("Mannesmann") to terminate its existing sales representation
agreement. Prior to termination, Mannesmann sold the Company's products to end
customers at the same sales price Mannesmann paid the Company plus a variable
commission. Mannesmann paid the Company in approximately three days. In
addition, the Mannesmann agreement required Mannesmann to purchase and pay for
the Company's finished goods inventory as soon as it was assigned to or was
otherwise identified with a particular order. As of June 30, 2000, the Company
had received $13.4 million from Mannesmann for the purchase of finished goods
inventory assigned to discrete orders. The arrangement with Mannesmann was
terminated beginning July 1, 2000, with a 90 day phase out of its liquidity
arrangement with Mannesmann. The Company estimates that termination of the
liquidity arrangement will reduce the liquidity otherwise available to the
Company by approximately $15 million. With the cooperation of Mannesmann, the
Company has employed certain Mannesmann employees currently involved in
marketing the Company's products. While the Company believes that the Mannesmann
arrangement can be terminated without material disruption to its marketing
efforts, there can be no assurance that the termination will not have a material
adverse effect on the Company's marketing efforts, liquidity position or
financial condition.
Page 11 of 25
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Overview
On February 1, 1999, the Company filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code in the United States
Bankruptcy Court for the District of Utah, Central Division. The filing was made
necessary by a lack of sufficient liquidity. The Company's operating results
since fiscal year 1998 have been severely affected by, among other things, the
dramatic surge in steel imports beginning in 1998. As a consequence of
record-high levels of low-priced steel imports and the resultant deteriorating
market conditions, the Company's overall price realization and shipments
declined precipitously. Decreased liquidity made it impossible for the Company
to service its debt and fund ongoing operations. Therefore, the Company sought
protection under Chapter 11 of the Bankruptcy Code. Prior to the bankruptcy
filing, the Company did not make the $9 million interest payment due January 15,
1999 under the terms of the Company's 9 1/2% senior notes due 2004. The
Bankruptcy Code generally prohibits the Company from making payments on
unsecured, pre-petition debt, including the 9 1/2% senior notes due 2004 and the
11 1/8% senior notes due 2001 (collectively, the "Senior Notes"), except
pursuant to a confirmed plan of reorganization. The Company is in possession of
its properties and assets and continues to manage its business as
debtor-in-possession subject to the supervision of the Bankruptcy Court. The
Company has a $125 million debtor-in-possession credit facility in place. (See
"Liquidity and Capital Resources.")
As of February 1, 1999, the Company discontinued accruing interest on
the Senior Notes and dividends on its redeemable preferred stock. Contractual
interest on the Senior Notes for the three months ended June 30, 2000 was $8.3
million, which is not included in the Company's financial statements.
Contractual dividends on the redeemable preferred stock for the three months
were $3.6 million, which is also not included in the Company's financial
statements. As of June 30, 2000, contractual accrued dividends on the redeemable
preferred stock were approximately $47.2 million, which is $18.8 million in
excess of dividends accrued in the Company's balance sheet.
Pursuant to the provisions of the Bankruptcy Code, all actions to
collect upon any of the Company's liabilities as of the petition date or to
enforce pre-petition contractual obligations were automatically stayed. Absent
approval from the Bankruptcy Court, the Company is prohibited from paying
pre-petition obligations. The Bankruptcy Court has approved payment of certain
pre-petition obligations such as employee wages and benefits and customer claims
and rebates. Additionally, the Bankruptcy Court has approved the retention of
various legal, financial and other professionals. As a debtor-in-possession, the
Company has the right, subject to Bankruptcy Court approval and certain other
conditions, to assume or reject any pre-petition executory contracts and
unexpired leases. Parties affected by such rejections may file pre-petition
claims with the Bankruptcy Court in accordance with bankruptcy procedures.
On July 20, 2000, the Company filed a proposed plan of reorganization
(the "Plan") and Disclosure Statement with the United States Bankruptcy Court
for
Page 12 of 25
<PAGE> 13
the District of Utah. The Plan is proposed jointly by the Company and the
Official Committee of Bondholders in the Company's Chapter 11 Case. If approved
as currently proposed, the Plan will significantly reduce the Company's debt
burden and provide additional liquidity in the form of a $25 million capital
infusion through the issuance of preferred stock convertible into common stock,
a $110 million term loan that is eighty-five-percent guaranteed by the United
States government, and a $125 million revolving line of credit. The Company's
prebankruptcy unsecured creditors will receive, in lieu of cash payments,
substantially all of the common stock of the Company and the right to purchase
the preferred stock. The holders of the Company's prebankruptcy common and
redeemable preferred stock will not receive a distribution under the Plan and
all interests represented by prebankruptcy common and redeemable preferred
stock will be extinguished. In the event that creditors do not purchase all of
the preferred stock, the Company has entered into a standby purchase agreement
that ensures the full $25 million in new capital will be raised. The objective
of the Plan is to restructure the Company's balance sheet to (i) significantly
strengthen the Company's financial flexibility throughout the business cycle;
(ii) fund required capital expenditures and working capital needs; and (iii)
fulfill those obligations necessary to facilitate emergence from Chapter 11.
The Company, through Citicorp USA, filed an application on January 31,
2000, for a U.S. government loan guarantee under the Emergency Steel Loan
Guarantee Program. The application sought an eighty-five- percent guarantee for
the $110 million term loan incorporated into the Plan. The Emergency Steel Loan
Guarantee Board extended an offer of guarantee to Citicorp, USA for the
Company's term loan on June 30, 2000.
The Bankruptcy Court will conduct a hearing on the adequacy of the
Disclosure Statement on August 24, 2000. Should the Disclosure Statement be
approved, a hearing on confirmation of the Plan has been scheduled for October
13, 2000.
There can be no assurance at this time that the Plan proposed by the
Company and the Bondholders' Committee will be confirmed by the Bankruptcy Court
either on the schedule set forth above or at all, or that, if confirmed and
consummated, the Plan will achieve the objectives described above. Similarly,
there can be no assurance that the financings contemplated by the Plan actually
can be obtained on terms favorable to the Company, or at all.
Although the Chapter 11 bankruptcy filing raises substantial doubt about
the Company's ability to continue as a going concern, the Company's financial
statements have been prepared on a going concern basis. This basis contemplates
the continuity of operations, realization of assets, and discharge of
liabilities in the ordinary course of business. The financial statements also
present the assets of the Company at historical cost and the current intention
that they will be realized as a going concern and in the normal course of
business. The Plan, if implemented, will materially change certain amounts
currently disclosed in the Company's financial statements.
At this time, because of material uncertainties, pre-petition claims are
generally carried at face value in the financial statements. The Company's
financial statements do not present the amount which will ultimately be paid to
settle liabilities and contingencies which may be allowed in the
Page 13 of 25
<PAGE> 14
Chapter 11 bankruptcy case. Under the Plan, the rights of pre-petition creditors
will be substantially altered. This will result in such claims being paid in
the Chapter 11 bankruptcy proceedings at substantially less than 100 percent of
face value.
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 Nine Months Ended
June 30, June 30,
------------------ ------------------
2000 1999 2000 1999
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 96.0 124.8 97.4 136.7
----- ----- ----- -----
Gross margin 4.0 (24.8) 2.6 (36.7)
Selling, general and
administrative expenses 2.3 4.3 2.5 8.2
----- ----- ----- -----
Income (loss) from operations 1.7 (29.1) 0.1 (44.9)
----- ----- ----- -----
Other income (expense):
Interest and other income -- 0.7 -- 0.3
Interest expense (0.8) (2.3) (1.0) (7.8)
Gain on asset sales -- -- 1.9 0.1
----- ----- ----- -----
(0.8) (1.6) 0.9 (7.4)
----- ----- ----- -----
Income (loss) before reorganization
item and provision (benefit) for
income taxes 0.9 (30.7) 1.0 (52.3)
Reorganization item 0.6 3.2 0.9 (1.7)
----- ----- ----- -----
Income (loss) before provision
(benefit) for income taxes 0.3 (33.9) 0.1 (54.0)
Provision (benefit) for income taxes -- -- -- --
----- ----- ----- -----
Net income (loss) 0.3% (33.9)% 0.1% (54.0)%
===== ===== ===== =====
</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 Nine Months Ended
June 30, June 30,
------------------- -------------------
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Plate 28.0% 53.2% 29.0% 59.5%
Sheet 51.0 28.9 52.8 19.2
Pipe 9.7 10.8 10.7 10.0
Slab 9.6 4.3 6.6 8.2
Non-Steel 1.7 2.8 0.9 3.1
------ ------ ------ ------
100.0% 100.0% 100.0% 100.0%
====== ====== ====== ======
</TABLE>
Page 14 of 25
<PAGE> 15
THREE MONTHS ENDED JUNE 30, 2000 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1999
Net sales increased 76.9% primarily due to increased shipments of
approximately 195,800 tons and higher average selling prices for the three
months ended June 30, 2000 as compared to the same period in the previous
fiscal year. The weighted average sales price (net of transportation costs) per
ton of sheet, plate, pipe and slab products increased by 20.0%, 8.6%, 19.0% and
31.0%, respectively, in the three months ended June 30, 2000 compared to the
same period of the previous fiscal year. Shipped tonnage of sheet, pipe and
slab products increased approximately 167,200 tons or 160.9%,9,400 tons or
33.0% and 42,300 tons or 196.8%, respectively, while shipped tonnage of plate
products decreased approximately 23,100 tons or 14.1% between the two periods.
The changes in price, volume and product mix were primarily the result of
significantly improved market conditions. As a result of various trade cases,
as well as improved steel markets in several foreign economies, market
conditions for the Company's products significantly improved in the three
months ended June 30, 2000 as compared to the same period in the previous
fiscal year, although well below levels existing prior to the influx of
imports. Average price realization increased despite a product mix shift to
lower-priced sheet.
The Company expects in the near term that both volume and pricing will
decline. Steel imports into the U.S. and domestic steel inventory levels have
recently increased and are adversely affecting the Company's order entry and
pricing. Additionally, new plate production capacity is being added in the
domestic market. As a result of the increased supply of imports and other market
conditions, the Company expects that its overall price realization and shipments
will decrease significantly in the fourth quarter of fiscal 2000 and negatively
impact the financial performance of the Company during the quarter and
potentially beyond that period.
Domestic competition remains intense and imported steel continues to
adversely affect the market. 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 higher than that of most 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.
Foreign competition is a significant factor in the steel industry and
has adversely affected product prices in the United States and tonnage sold by
domestic producers. The intensity of foreign competition is significantly
affected by fluctuations in the value of the United States dollar against
several other currencies, the level of demand for steel in the United States
economy relative to steel demand in foreign economies and world economic
conditions generally. In addition, many foreign steel producers are controlled
or subsidized by foreign governments whose decisions concerning production and
exports may be influenced in part by political and social policy considerations
as well as by prevailing market conditions and profit opportunities. The Company
continues to monitor imports of all its products and may file additional trade
cases or take other trade action in the future. Existing trade laws and
regulations may, however, be inadequate to prevent the adverse impact of dumped
and/or subsidized steel imports. Moreover, the preparation and prosecution of
trade cases requires several months during which the Company
Page 15 of 25
<PAGE> 16
and other domestic producers must continue to suffer the adverse impact of
unfairly traded imports. There is no guarantee that domestic markets will not in
the future be flooded illegally with foreign imports of products in competition
with the Company's products. While the Company intends to oppose all such
imports vigorously, there is no guarantee that it will be successful.
Consequently, such imports could pose continuing problems for the domestic steel
industry and the Company.
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,
decreased to 96.0% for the three months ended June 30, 2000, as compared to
124.8% for the same period in the previous fiscal year. The overall average cost
of sales per ton shipped decreased approximately $54 per ton between the two
periods, primarily as a result of production efficiencies associated with
returning to a two-blast furnace operating level and a shift in product mix to
lower-cost coiled products, offset in part by higher natural gas costs.
Operating costs per ton decreased as production volume increased in part because
fixed costs were allocated over more tons.
Depreciation costs included in cost of sales decreased approximately
$0.7 million for the three months ended June 30, 2000, compared with the same
period in the previous fiscal year. This decrease was due to a slightly lower
asset base.
Selling, general and administrative expenses for the three months ended
June 30, 2000 decreased approximately $0.2 million as compared to the same
period in the previous fiscal year. These lower expenses were due primarily to
cost savings related to staff and support personnel reductions.
Interest expense decreased approximately $0.7 million during the three
months ended June 30, 2000 as compared to the same period in the previous fiscal
year as a result of lower average borrowings outstanding under the Company's
revolving credit facility.
During the three months ended June 30, 2000 and 1999, the Company
recorded approximately $0.8 million and $2.8 million, respectively, in
professional fees and expenses related to its Chapter 11 reorganization efforts.
These include the professional fees and expenses of the two official committees
established in the bankruptcy proceeding. These expenses have been included in
the reorganization item in the condensed statements of operations.
NINE MONTHS ENDED JUNE 30, 2000 COMPARED WITH NINE MONTHS ENDED JUNE 30, 1999
Net sales increased 91.0% primarily due to increased shipments of
approximately 681,200 tons and higher average selling prices for the nine
months ended June 30, 2000 as compared to the same period in the previous
fiscal year. The weighted average sales price (net of transportation costs) per
ton of sheet, pipe and slab products increased by 14.9%, 12.7% and 22.6%,
respectively, while the weighted average sales price per ton of plate decreased
by 0.9% in the nine months ended June 30, 2000 compared to the same period of
the previous fiscal year. Shipped tonnage of sheet, pipe and slab products
increased approximately 630,700 tons or 358.4%, 52,500 tons or 81.4% and 25,000
tons or 24.7%
Page 16 of 25
<PAGE> 17
respectively, while shipped tonnage of plate products decreased approximately
27,000 tons or 6.1% between the two periods. The changes in price, volume and
product mix were primarily the result of improved market conditions due in part
to the outcome of the trade cases that were filed in late 1998 and early 1999.
The Company's cost of sales, as a percentage of net sales, decreased to
97.4% for the nine months ended June 30, 2000, as compared to 136.7% for the
same period in the previous fiscal year. The overall average cost of sales per
ton shipped decreased approximately $107 per ton between the two periods,
primarily as a result of production efficiencies associated with returning to a
two-blast furnace operating level and a shift in product mix to lower cost
coiled products, offset in part by higher natural gas costs. Operating costs per
ton decreased as production volume increased in part because fixed costs were
allocated over more tons.
Depreciation costs included in cost of sales decreased approximately
$1.6 million for the nine months ended June 30, 2000, compared with the same
period in the previous fiscal year. This decrease was due to a slightly lower
asset base.
Selling, general and administrative expenses for the nine months ended
June 30, 2000 decreased approximately $7.7 million as compared to the same
period in the previous fiscal year. These lower expenses were due primarily to a
higher than usual reserve for the allowance for doubtful accounts of
approximately $4.0 million expensed during the nine months ended June 30, 1999.
In addition, cost savings related to staff and support personnel reductions
reduced expenses during the current period.
Interest expense decreased approximately $13.2 million during the nine
months ended June 30, 2000 as compared to the same period in the previous fiscal
year. As of February 1, 1999, the Company discontinued accruing interest on the
Senior Notes. Interest expense on the Senior Notes of approximately $11.0
million was included in the nine months ended June 30, 1999, which reflects
accrued interest prior to February 1, 1999. In addition, lower average
borrowings outstanding under the Company's revolving credit facility in the nine
months ended June 30, 2000 reduced interest expense by approximately $2.2
million as compared to the same period in the previous fiscal year.
During the nine months ended June 30, 2000 and 1999, the Company
recorded approximately $3.9 million and $3.9 million, respectively, in
professional fees and expenses related to its Chapter 11 reorganization efforts.
These include the professional fees and expenses of the two official committees
established in the bankruptcy proceeding. These expenses have been included in
the reorganization item in the condensed statements of operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements arise from operating expenses,
capital expenditures and working capital requirements, including interest
payments. In the past, the Company's principal sources of capital included from
the sale of equity; the incurrence of long-term indebtedness, including
borrowings under the Company's credit facilities; equipment lease financings;
asset sales and
Page 17 of 25
<PAGE> 18
cash provided by operations. As of August 11, 2000, the Company's eligible
inventories, accounts receivable and equipment supported access to $10.9 million
in borrowings under the Company's credit facility. As of August 11, 2000, the
Company had $59.3 million available under the credit facility, with $44.7
million in borrowings and $3.7 million in letters of credit outstanding.
Besides the above-described financing activities, the Company's major
source of liquidity has been cash provided by operating activities. Net cash
provided by operating activities was $29.6 million for the nine months ended
June 30, 2000, as compared with net cash provided by operating activities of
$13.2 million for the nine months ended June 30, 1999. The sources of cash for
operating activities during the nine months ended June 30, 2000 included net
income of $0.6 million, depreciation and amortization of $32.5 million, a
decrease in accounts receivable of $7.1 million, an increase in accounts payable
of $3.1 million, an increase in accrued pension and profit sharing costs of $1.4
million and an increase in accrued payroll and related taxes of $0.4 million.
These sources of cash were substantially offset by a gain on asset sales of $8.3
million, an increase in inventories of $2.8 million, an increase in prepaid
expenses of $2.5 million, and a decrease in accrued liabilities of $1.7 million.
In March 2000, the Company entered into an agreement with Mannesmann
Pipe and Steel ("Mannesmann") to terminate its existing sales representation
agreement. Prior to termination, Mannesmann sold the Company's products to end
customers at the same sales price Mannesmann paid the Company plus a variable
commission. Mannesmann paid the Company in approximately three days. In
addition, the Mannesmann agreement required Mannesmann to purchase and pay for
the Company's finished goods inventory as soon as it was assigned to or was
otherwise identified with a particular order. As of June 30, 2000, the Company
had received $13.4 million from Mannesmann for the purchase of finished goods
inventory assigned to discrete orders. When the funds were received for
inventory prior to shipment, the Company deferred the revenue recognition until
the inventory was shipped. Therefore, until shipment occurred the Company
recorded the receipt of funds and a corresponding liability representing the
deferred revenue and/or inventory reduction for the cost of the inventory in its
financial statements. The Company is responsible for customer credit and product
quality for all steel sold through Mannesmann. The arrangement with Mannesmann
was terminated beginning July 1, 2000, with a 90 day phase out of its liquidity
arrangement with Mannesmann. The Company estimates that termination of the
liquidity arrangement will reduce the liquidity otherwise available to the
Company by approximately $15 million. With the cooperation of Mannesmann, the
Company has employed certain Mannesmann employees currently involved in
marketing the Company's products. While the Company believes that the Mannesmann
arrangement will be terminated without material disruption to its marketing
efforts, there can be no assurance that the termination will not have a material
adverse effect on the Company's marketing efforts, liquidity position or
financial condition.
Since its bankruptcy filing, the Company has supplemented its liquidity
by the sale of certain non-core assets. During the first quarter of fiscal year
2000, the Company completed the sale of its quarry for $10.0 million ($1.5
million of which is contingent upon the future issuance, by the relevant
governmental entity, of a conditional use permit) and received $8.5 million in
Page 18 of 25
<PAGE> 19
October 1999. The Company believes it is now entitled to receive the additional
$1.5 million, although payment has not been made and may be subject to dispute.
There can be no assurance that the Company will receive the additional $1.5
million of the sale price. Pursuant to the sale, the Company entered into a
contract with the buyer of the quarry for the purchase of limestone to meet its
production requirements at a per ton price that is lower than the Company's
historical production cost.
Capital expenditures were $8.5 million and $7.7 million for the nine
months ended June 30, 2000 and 1999, respectively. Capital expenditures for
fiscal year 2000 are estimated at approximately $15 million, which includes
spending on a walking beam furnace, a blast furnace reline, maintenance items
and various projects designed to reduce costs and increase product quality and
throughput. The Company is continuing to closely monitor its capital spending
levels. The Company's recent cash constraints have dictated that significant
capital projects be postponed. In the future, the Company will be required to
spend significant additional amounts for capital maintenance and projects
including the recently deferred projects. Depending on market, operational,
liquidity and other factors, the Company may elect to adjust the design, timing
and budgeted expenditures of its capital plan.
FACTORS AFFECTING FUTURE RESULTS
The Company's future operations and liquidity will be impacted by, among
other factors, pricing, product mix, throughput levels and production
efficiencies. The Company has efforts underway to increase sales volumes, shift
its product mix and improve throughput rates and production efficiencies. There
can be no assurance that the Company's efforts will be successful or that
sufficient demand will exist to support the Company's efforts. Pricing and
shipment levels in future periods are key variables to the Company's future
operating results that remain subject to significant uncertainty. These
variables will be affected by several factors including the level of imports,
future capacity additions, product demand and other competitive and market
conditions. Furthermore, the Chapter 11 bankruptcy filing introduces numerous
uncertainties which may affect the Company's business, asset values, results of
operations and prospects. Because of the Company's bankruptcy filing and
liquidity position, the Company's financial flexibility is limited. Many of the
foregoing factors, of which the Company does not have complete control, may
materially affect the performance, financial condition and future results of the
Company. Furthermore, continued weak market conditions or a disruption in the
Company's operations would likely cause the Company to experience negative cash
flow in the fourth fiscal quarter and potentially beyond that period.
The short-term and long-term liquidity of the Company also is dependent
upon other factors, including continued access to the Company's credit facility;
vendor credit support; cash needs to fund working capital; the effect of the
termination of the Mannesmann agreement; availability of capital; foreign
currency fluctuations; capital expenditure requirements 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.
Page 19 of 25
<PAGE> 20
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.
This report contains a number of forward-looking statements, including,
without limitation, statements contained in this report relating to the
Company's ability to compete against imports and the effect of imports and
trade cases on the domestic market, the Company's ability to improve and
optimize operations, the Company's ability to compete with the additional
production capacity being added in the domestic market, the Company's ability
to successfully reorganize under Chapter 11 of the Bankruptcy Code (including
the confirmation and timing of the Plan), the outcome of the Company's proposed
Plan, resolution of pending claims and of other issues in the Company's Chapter
11 proceedings, access to sufficient exit financing for the Plan, the Company's
expectation that prices and shipments will improve, the production efficiencies
of a two-blast furnace operation, the Company's continued access to and
adequacy of its Credit Facility, the commercial and liquidity impact of
terminating the Mannesmann agreement, the level of future required capital
expenditures, the effect of inflation and any other statements contained herein
to the effect that the Company or its management "believes," "expects,"
"anticipates," "plans" or other 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 described herein
and in the Company's other filings with the Securities and Exchange Commission.
Page 20 of 25
<PAGE> 21
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's earnings are affected by changes in interest rates related
to the Company's credit facility. Variable interest rates may rise, which could
increase the amount of interest expense. At June 30, 2000, the Company had
variable rate debt outstanding from its credit facilities totaling $27.6
million. The impact of market risk is estimated using a hypothetical increase in
interest rates of one percentage point for the Company's variable rate credit
facility. Based on this hypothetical assumption, the Company would have incurred
approximately an additional $69,000 in interest expense for the three months
ended June 30, 2000.
Page 21 of 25
<PAGE> 22
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On February 1, 1999, the Company filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code in the United States
Bankruptcy Court for the District of Utah, Central Division. The filing was made
necessary by a lack of sufficient liquidity. The Company's operating results
since fiscal year 1998 have been severely affected by, among other things, the
dramatic surge in steel imports beginning in 1998. As a consequence of
record-high levels of low-priced steel imports and the resultant deteriorating
market conditions, the Company's overall price realization and shipments
declined precipitously. Decreased liquidity made it impossible for the Company
to service its debt and fund ongoing operations. Therefore, the Company sought
protection under Chapter 11 of the Bankruptcy Code. Prior to the bankruptcy
filing, the Company did not make the $9 million interest payment due January 15,
1999 under the terms of the Company's 9 1/2% senior notes due 2004. The
Bankruptcy Code generally prohibits the Company from making payments on
unsecured, pre-petition debt, including the 9 1/2% senior notes due 2004 and the
11 1/8% senior notes due 2001 (collectively, the "Senior Notes"), except
pursuant to a confirmed plan of reorganization. The Company is in possession of
its properties and assets and continues to manage its business as
debtor-in-possession subject to the supervision of the Bankruptcy Court. The
Company has a $125 million debtor-in-possession credit facility in place.
As of February 1, 1999, the Company discontinued accruing interest on
the Senior Notes and dividends on its redeemable preferred stock. Contractual
interest on the Senior Notes for the three months ended June 30, 2000 was $8.3
million, which is not included in the Company's financial statements.
Contractual dividends on the redeemable preferred stock for the three months
were $3.6 million, which is also not included in the Company's financial
statements. As of June 30, 2000, contractual accrued dividends on the redeemable
preferred stock were approximately $47.2 million, which is $18.8 million in
excess of dividends accrued in the Company's balance sheet.
Pursuant to the provisions of the Bankruptcy Code, all actions to
collect upon any of the Company's liabilities as of the petition date or to
enforce pre-petition contractual obligations were automatically stayed. Absent
approval from the Bankruptcy Court, the Company is prohibited from paying
pre-petition obligations. The Bankruptcy Court has approved payment of certain
pre-petition obligations such as employee wages and benefits and customer claims
and rebates. Additionally, the Bankruptcy Court has approved the retention of
various legal, financial and other professionals. As a debtor-in-possession, the
Company has the right, subject to Bankruptcy Court approval and certain other
conditions, to assume or reject any pre-petition executory contracts and
unexpired leases. Parties affected by such rejections may file pre-petition
claims with the Bankruptcy Court in accordance with bankruptcy procedures.
On July 20, 2000, the Company filed a proposed plan of reorganization
(the "Plan") and Disclosure Statement with the United States Bankruptcy Court
for the District of Utah. The Plan is proposed jointly by the Company and the
Official Committee of Bondholders in the Company's Chapter 11 Case. If approved
as currently proposed,the Plan
Page 22 of 25
<PAGE> 23
will significantly reduce the Company's debt burden and provide additional
liquidity in the form of a $25 million capital infusion through the issuance of
preferred stock convertible into common stock, a $110 million term loan that is
eighty-five-percent guaranteed by the United States government, and a $125
million revolving line of credit. The Company's prebankruptcy unsecured
creditors will receive, in lieu of cash payments, substantially all of the
common stock of the Company and the right to purchase the preferred stock. The
holders of the Company's prebankruptcy common and redeemable preferred stock
will not receive a distribution under the Plan and all interests represented by
prebankruptcy common and redeemable preferred stock will be extinguished. In
the event that creditors do not purchase all of the preferred stock, the
Company has entered into a standby purchase agreement that ensures the full $25
million in new capital will be raised. The objective of the Plan is to
restructure the Company's balance sheet to (i) significantly strengthen the
Company's financial flexibility throughout the business cycle; (ii) fund
required capital expenditures and working capital needs; and (iii) fulfill
those obligations necessary to facilitate emergence from Chapter 11.
The Company, through Citicorp USA, filed an application on January 31,
2000, for a U.S. government loan guarantee under the Emergency Steel Loan
Guarantee Program. The application sought an eighty-five- percent guarantee for
the $110 million term loan incorporated into the Plan. The Emergency Steel Loan
Guarantee Board extended an offer of guarantee to Citicorp, USA on the Company's
term loan on June 30, 2000.
The Bankruptcy Court will conduct a hearing on the adequacy of the
Disclosure Statement on August 24, 2000. Should the Disclosure Statement be
approved, a hearing on confirmation of the Plan has been scheduled for October
13, 2000.
There can be no assurance at this time that the Plan proposed by the
Company and the Bondholders' Committee will be confirmed by the Bankruptcy Court
either on the schedule set forth above or at all, or that, if confirmed and
consummated, the Plan will achieve the objectives described above. Similarly,
there can be no assurance that the financings contemplated by the Plan actually
can be obtained on terms favorable to the Company, or at all.
Although the Chapter 11 bankruptcy filing raises substantial doubt about
the Company's ability to continue as a going concern, the Company's financial
statements have been prepared on a going concern basis. This basis contemplates
the continuity of operations, realization of assets, and discharge of
liabilities in the ordinary course of business. The financial statements also
present the assets of the Company at historical cost and the current intention
that they will be realized as a going concern and in the normal course of
business. The Plan, if implemented, will materially change certain amounts
currently disclosed in the Company's financial statements.
At this time, because of material uncertainties, pre-petition claims are
generally carried at face value in the accompanying financial statements.
The Company's financial statements do not present the amount which will
ultimately be paid to settle liabilities and contingencies which may be allowed
in the Chapter 11 bankruptcy case. Under the Plan, the rights of pre-petition
creditors will be substantially altered. This will result in such claims being
Page 23 of 25
<PAGE> 24
paid in the Chapter 11 bankruptcy proceedings at substantially less than 100
percent of face value.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
As described above, the Company filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code on February 1, 1999. The
Bankruptcy Code generally prohibits the Company from making payments on
unsecured pre-petition debt, including the 9 1/2% Senior Notes due 2004 and the
11 1/8% Senior Notes due 2001, except as provided in a confirmed plan of
reorganization. Interest payment defaults under the Senior Notes are excluded as
a cross default under the terms of the Company's existing debtor-in-possession
credit facility.
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.
The Company did not file any reports on Form 8-K during the three months
ended June 30, 2000.
Page 24 of 25
<PAGE> 25
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: August 14, 2000
Page 25 of 25
