<PAGE> 1
==============================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 26, 2000 or
( ) Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
---------------------------
Commission file number 1-14378
ACME METALS INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 36-3802419
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13500 South Perry Avenue, Riverdale, Illinois 60827-1182
(Address of principal executive offices) (Zip Code)
(708) 849-2500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes |X| No ____
Number of shares of Common Stock outstanding as of May 1, 2000: 11,647,471.
==============================================================================
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ACME METALS INCORPORATED
(DEBTOR-IN-POSSESSION)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
For The Three Months Ended
---------------------------
March 26, March 28,
2000 1999
----------- -----------
<S> <C> <C>
NET SALES................................................................ $ 126,363 $ 103,038
COSTS AND EXPENSES:
Cost of products sold .......................................... 104,945 94,388
Depreciation expense ........................................... 9,449 9,602
----------- -----------
Gross margin............................................................. 11,969 (952)
Selling and administrative expense.............................. 9,199 9,636
----------- -----------
Operating income (loss).................................................. 2,770 (10,588)
NON-OPERATING INCOME (EXPENSE):
Interest expense, excluding non-default contractual interest
of $5,906 in 2000 and $5,494 in 1999............................ (5,977) (6,306)
Interest income................................................. 20 96
Reorganization charges under Chapter 11 Bankruptcy.............. (1,568) (2,231)
Gain from sale of asset......................................... 1,241
----------- -----------
Loss before income taxes................................................. (4,755) (17,788)
Income tax provision..................................................... 58 21
----------- -----------
Net loss................................................................. $ (4,813) $ (17,809)
=========== ===========
LOSS PER SHARE:
BASIC:
Net loss........................................................ $ (0.41) $ (1.53)
----------- -----------
Weighted average outstanding shares............................. 11,647,471 11,668,180
=========== ===========
DILUTED:
Net loss........................................................ $ (0.41) $ (1.53)
----------- -----------
Weighted average outstanding shares............................. 11,647,471 11,668,180
=========== ===========
</TABLE>
The accompanying notes are an integral part of this financial statement.
2
<PAGE> 3
ACME METALS INCORPORATED
(DEBTOR-IN-POSSESSION)
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
(Unaudited)
March 26, December 26,
2000 1999
----- ----
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents........................................................... $ 359 $
Accounts receivable trade, less allowances of $1,214, and $1,178, respectively...... 71,623 67,715
Inventories......................................................................... 79,398 82,280
Other current assets................................................................ 5,766 5,896
--------- ---------
Total current assets............................................................. 157,146 155,891
--------- ---------
INVESTMENTS AND OTHER ASSETS:
Investments in associated companies................................................. 19,597 20,937
Other assets........................................................................ 14,678 14,861
--------- ---------
Total investments and other assets............................................... 34,275 35,798
--------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment....................................................... 891,521 888,596
Accumulated depreciation............................................................ (382,334) (372,297)
--------- ---------
Total property, plant and equipment.............................................. 509,187 516,299
--------- ---------
$ 700,608 $ 707,988
========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable.................................................................... $ 30,921 $ 32,808
Accrued expenses.................................................................... 41,077 46,345
DIP Financing Agreement............................................................. 6,500 2,050
--------- ---------
Total current liabilities........................................................ 78,498 81,203
--------- ---------
LONG-TERM LIABILITIES:
Long-term debt...................................................................... 233,370 233,370
Postretirement benefits other than pensions......................................... 101,960 101,017
Retirement benefit plans............................................................ 6,326 7,131
--------- ---------
Total long-term liabilities...................................................... 341,656 341,518
--------- ---------
LIABILITIES SUBJECT TO COMPROMISE...................................................... 300,072 300,072
--------- ---------
Commitments and contingencies
SHAREHOLDERS' DEFICIT:
Preferred stock, $1 par value, 2,000,000 shares authorized, no shares issued
Common stock, $1 par value, 20,000,000 shares authorized, 11,664,571 and
11,674,471 shares issued and outstanding, respectively............................. 11,647 11,647
Additional paid-in capital.......................................................... 165,285 165,285
Retained deficit.................................................................... (174,240) (169,427)
Accumulated other comprehensive loss................................................ (22,310) (22,310)
--------- ---------
Total shareholders' deficit...................................................... (19,618) (14,805)
--------- ---------
$ 700,608 $ 707,988
========= =========
</TABLE>
The accompanying notes are an integral part of this financial statement.
3
<PAGE> 4
ACME METALS INCORPORATED
(DEBTOR-IN-POSSESSION)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
For the Three Months Ended
----------------------------
March 26, March 28,
2000 1999
---------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.............................................................. $ (4,813) $(17,809)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
FROM OPERATING ACTIVITIES:
Gain on sale of properties......................................... (1,241)
Depreciation....................................................... 9,761 10,098
CHANGE IN OPERATING ASSETS AND LIABILITIES:
Accounts receivable.............................................. (3,908) (5,599)
Inventories...................................................... 2,882 (4,764)
Accounts payable................................................. (1,887) (787)
Other current accounts........................................... (5,138) 3,005
Liabilities subject to compromise................................ 1,825
Other, net......................................................... 1,670 1,089
-------- --------
Net cash used for operating activities................................ (1,433) (14,183)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of assets...................................... 1,928
Capital expenditures.................................................. (2,658) (1,643)
-------- --------
Net cash provided by (used for) investing activities.................. (2,658) 285
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment DIP Financing Agreement....................................... (17,790)
Borrowings under DIP Financing Agreement.............................. 22,240
-------- --------
Net cash provided by financing activities............................. 4,450
-------- --------
Net (decrease) increase in cash and cash equivalents.................. 359 (13,898)
Cash and cash equivalents at beginning of period...................... 18,869
-------- --------
Cash and cash equivalents at end of period............................ $ 359 $ 4,971
======== ========
</TABLE>
The accompanying notes are an integral part of this financial statement.
4
<PAGE> 5
ACME METALS INCORPORATED
(DEBTOR-IN-POSSESSION)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
BANKRUPTCY PROCEEDINGS:
On September 28, 1998, Acme Metals Incorporated ("Acme Metals") and its
principal direct and indirect subsidiary companies (Acme Steel Company ("Acme
Steel"), Acme Packaging Corporation ("Acme Packaging"), Alpha Tube Corporation
("Alpha Tube"), Alabama Metallurgical Corporation ("Alabama Metallurgical"), and
Acme Steel Company International, Inc., ("Acme Steel International")) filed
separate voluntary petitions for protection and reorganization under Chapter 11
of Title 11 ("Chapter 11") of the United States Code (the "Bankruptcy Code") in
the United States Bankruptcy Court for the District of Delaware ("Bankruptcy
Court") as previously described in Item 1. under the heading "Chapter 11
Bankruptcy Filings" on page 3 of the Company's Annual Report on Form 10-K for
the year ended December 26, 1999 ("1999 Form 10-K"). These bankruptcy
proceedings are collectively referred to as "Chapter 11 Bankruptcy" herein.
As a result of the Chapter 11 Bankruptcy proceedings, all of the Company's
obligations were stayed. Without Bankruptcy Court approval, the Company cannot
pay pre-petition obligations. Reference is made to "DIP Financing" on page 49 of
the 1999 Form 10-K for a description of the Loan and Security Agreement with
BankAmerica Business Credit, Inc. ("DIP Financing Agreement") entered into on
December 18, 1998. At March 26, 2000, $6.5 million of the DIP Financing
Agreement was outstanding with an additional $57.7 million available. No
significant developments with respect to the bankruptcy proceedings have
occurred since the filing of the 1999 Form 10-K.
Although the Chapter 11 Bankruptcy raises substantial doubt about the Company's
ability to continue as a going-concern, the accompanying consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles applicable to a company on a going-concern basis which contemplates
the continuity of operations, realization of assets and the liquidation of
liabilities in the ordinary course of business. As a result of the Chapter 11
Bankruptcy, realization of assets and liquidation of liabilities are subject to
significant uncertainties. Specifically, the financial statements do not present
the amount which will be paid to settle liabilities and contingencies which may
be allowed in a Chapter 11 Bankruptcy reorganization. Also the consolidated
financial statements do not reflect (a) adjustments to assets and liabilities
which may occur in accordance with generally accepted accounting principles
Statement of Position 90-7 Financial Reporting by Entities in Reorganization
under the Bankruptcy Code ("SOP 90-7") following the confirmation of a plan of
reorganization or (b) the realizable value of assets which would be required to
be recorded if the Company presents a plan which contemplates the disposal of
all or portions of its assets and operations. The filing of a plan of
reorganization could materially affect the carrying value of the assets and
liabilities currently disclosed in the consolidated financial statements.
5
<PAGE> 6
ACME METALS INCORPORATED
(DEBTOR-IN-POSSESSION)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The consolidated financial statements include adjustments and reclassifications
to reflect liabilities as "Liabilities Subject to Compromise" under the Chapter
11 Bankruptcy. Certain pre-petition liabilities have been approved for payment
by the Bankruptcy Court, such as employee wages and benefits, and specified
pre-petition obligations to vendors, customers and taxing authorities, and are
included in the appropriate liability caption on the balance sheet.
BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements for Acme Metals
include its wholly owned operating subsidiaries, Acme Steel, Acme Packaging, and
Alpha Tube, hereinafter collectively referred to as "the Company," for the
periods ended March 26, 2000 and March 28, 1999. The statements should be read
in conjunction with the audited financial statements included in the Company's
1999 Form 10-K. In the opinion of management, all adjustments, consisting only
of normal recurring adjustments, necessary for a fair statement of such
financial statements have been included. The financial statements have been
subjected to a limited review by PricewaterhouseCoopers LLP, the Company's
independent accountants, whose report appears on page 18 of this filing. Such
report is not a "report" or "part of the Registration Statement" within the
meaning of Sections 7 and 11 of the Securities Act of 1933 and the liability
provisions of Section 11 of such Act do not apply.
Certain prior year amounts have been reclassified to conform to the current
year's presentation.
The Company's fiscal year ends on December 31, 2000 and will contain 53 weeks.
First quarter results for 2000 and 1999 each cover 13-week periods.
INVENTORIES:
Inventories as calculated on the last-in, first-out method:
March 26, December 26,
2000 1999
------------- --------------
(unaudited)
(in thousands)
Raw materials $ 19,787 $ 23,887
Semi-finished and finished products 52,472 51,967
Supplies 7,139 6,426
------------- --------------
$ 79,398 $ 82,280
============= ==============
6
<PAGE> 7
ACME METALS INCORPORATED
(DEBTOR-IN-POSSESSION)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
INCOME TAXES:
As discussed on page 56 of the Company's 1999 Form 10-K, the Company has net
operating losses expiring in 2012 to 2019 and has recorded a valuation allowance
against its entire net deferred tax asset. The Company continued to fully
reserve any net deferred tax assets generated in the first quarter of 2000.
LONG-TERM DEBT:
The Company's long-term debt, including current maturities, not recorded as
"Liabilities Subject to Compromise:"
<TABLE>
<CAPTION>
March 26, December 26,
2000 1999
---------- -------------
(unaudited)
(in thousands)
<S> <C> <C>
Senior Secured Credit Agreement $174,250 $174,250
12.5 percent Senior Secured Notes 17,623 17,623
13.5 percent Senior Secured Discount Notes 669 669
DIP Financing Agreement 6,500 2,050
Environmental Improvement Bonds 7.95 percent 11,345 11,345
Environmental Improvement Bonds 7.90 percent 8,585 8,585
Walbridge Facility 14,700 14,700
Other long-term debt 6,198 6,198
-------- --------
$239,870 $235,420
======== ========
</TABLE>
On September 28, 1998, all of the long-term debt became in default due to the
Chapter 11 Bankruptcy. Without a Bankruptcy Court order, the Company cannot pay
or restructure pre-petition debt until the conclusion of the Chapter 11
Bankruptcy.
In accordance with SOP 90-7, the Company has not accrued interest on its
unsecured debt of $204 million after the petition date, as it is unlikely such
interest would be paid in the plan of reorganization. The amount of such
unaccrued contractual interest at the non-default rates as of March 26, 2000
aggregated $33 million and $27 million at December 26, 1999. Additionally,
scheduled principal payments on secured debt which have not been made for the
post-petition period, totaled $3.2 million. The Company is prohibited from
making contractual payments on its outstanding long-term debt obligations absent
a Bankruptcy Court order or until the conclusion of Chapter 11 Bankruptcy and
implementation of a plan or reorganization allowing for such payments. The
Company has obtained Bankruptcy Court orders allowing adequate protection
payments on secured debt. During the first quarter of 2000, the Company paid
$5.5 million in adequate protection payments as ordered by the Bankruptcy Court
($19.4 million in 1999).
7
<PAGE> 8
ACME METALS INCORPORATED
(DEBTOR-IN-POSSESSION)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Secured debt has not been classified as subject to compromise in the
consolidated balance sheet; however, in the event the collateral underlying the
secured debt is determined to be insufficient, secured debt could be settled at
less than its current carrying value and not be eligible for interest during
bankruptcy. The Company has obtained an appraisal of the assets securing (the
"collateral") the Environmental Improvement Bonds which indicates the value of
this collateral is not sufficient to fully secure these bonds. Discussions have
been initiated with the agent representing the holders of these bonds, however,
no agreement has been reached regarding the value of this collateral. Because
the collateral may not be adequate to fully secure these Environmental
Improvement Bonds, the Company ceased accruing interest as of December 26, 1999.
Interest, had it been accrued, would have equaled $0.4 million in the first
quarter of 2000.
LIABILITIES SUBJECT TO COMPROMISE:
Items classified as "Liabilities Subject to Compromise:"
<TABLE>
<CAPTION>
March 26, December 26,
2000 1999
---- ----
(unaudited)
(in thousands)
<S> <C> <C>
Accounts payable.............................................. $ 60,525 $ 60,525
Accrued interest.............................................. 6,094 6,094
Bond payable and other related liability...................... 2,567 2,567
Other accrued liabilities..................................... 492 492
Note payable.................................................. 5,500 5,500
10.875 percent Senior Unsecured Notes, net
of discount................................................. 198,682 198,682
Other long-term liabilities................................... 26,212 26,212
------------- -------------
Total......................................................... $ 300,072 $ 300,072
============= =============
</TABLE>
CASH FLOWS:
Cash payments for adequate protection payments were $5.5 million during the
first three months of 2000 compared to $5.2 million in the first three months of
1999.
8
<PAGE> 9
ACME METALS INCORPORATED
(DEBTOR-IN-POSSESSION)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
COMMITMENTS AND CONTINGENCIES:
The Company is subject to various commitments and contingencies as previously
described in the Company's 1999 Form 10-K. On February 16, 2000, the Company
assumed a material executory contract with NACME Steel Processing LLC ("NACME"),
which Acme Steel is a 40 percent member. The contract requires Acme Steel to
provide NACME with certain minimum flat-rolled steel tonnages, which NACME is
required to process. The processing operations performed by NACME includes
pickling, slitting, and packaging.
As reported in the 1999 Form 10-K on page 62, Raytheon Engineers & Constructors,
Inc. ("Raytheon") filed various legal actions in the Bankruptcy Court seeking to
prevent Acme Steel from drawing on an irrevocable letter of credit. On April 11,
2000, the Bankruptcy Court held any claims Raytheon may have against Acme Steel
for draws against the letter of credit are considered pre-petition; and Raytheon
cannot enjoin Acme Steel from future draws on the letter of credit without
alleging and proving fraud, which Raytheon failed to do. The Bankruptcy Court's
decision did not address whether the claim is secured or unsecured. The Company
has filed an Adversary Complaint challenging both Raytheon's assertion of the
claim having a secured status and the validity of Raytheon's underlying
mechanics lien.
On April 13, 2000, Raytheon filed a notice of appeal to the U.S. District Court
of Delaware appealing the April 11, 2000 Bankruptcy Court decision. Although the
Company plans to vigorously oppose Raytheon in this appeal process, there can be
no assurances that the Company will prevail.
9
<PAGE> 10
ACME METALS INCORPORATED
(DEBTOR-IN-POSSESSION)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
BUSINESS SEGMENTS:
The Company presents its operations in two segments, Steel Making and Steel
Fabricating, as previously disclosed in the Company's 1999 Form 10-K.
Unaudited operating segment information based on operating income:
<TABLE>
<CAPTION>
March 26, March 28,
2000 1999
---- ----
(in thousands)
<S> <C> <C>
STEEL MAKING:
Sales to unaffiliated customers.......................... $ 69,552 $ 49,285
Intersegment sales....................................... 21,886 19,311
--------- --------
Net sales............................................ $ 91,438 $ 68,596
========= ========
Depreciation............................................. $ 8,308 $ 8,562
Loss from operations..................................... (707) (15,729)
Total assets............................................. 531,214 564,358
Capital expenditures..................................... 1,813 291
Operating data (in tons)
Steel production (hot band).......................... 248,861 244,266
Steel shipments (flat rolled)........................ 232,698 221,255
STEEL FABRICATING:
Sales to unaffiliated customers.......................... $ 56,811 $ 53,753
Intersegment sales....................................... 131 160
--------- --------
Net sales............................................ $ 56,942 $ 53,913
========= ========
Depreciation............................................. $ 1,461 $ 1,222
Income from operations................................... 3,477 5,141
Total assets............................................. 128,836 116,244
Capital expenditures..................................... 845 1,292
</TABLE>
10
<PAGE> 11
ACME METALS INCORPORATED
(DEBTOR-IN-POSSESSION)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Reconciliation of the unaudited segment information to the Company's unaudited
consolidated financial statements:
<TABLE>
<CAPTION>
March 26, March 28,
2000 1999
---- ----
(in thousands)
<S> <C> <C>
Net Sales:
Steel Making............................................. $ 91,438 $ 68,596
Steel Fabricating........................................ 56,942 53,913
Intersegment sales....................................... (22,017) (19,471)
--------- ---------
$ 126,363 $ 103,038
========= =========
Income (loss) before income taxes and extraordinary loss:
Operating income (loss):
Steel Making......................................... $ (707) $ (15,729)
Steel Fabricating.................................... 3,477 5,141
--------- ---------
2,770 (10,588)
Less:
Interest expense..................................... (5,977) (6,306)
Reorganization charges under
Chapter 11 Bankruptcy............................. (1,568) (2,231)
Add:
Interest income...................................... 20 96
Gain from sale of properties......................... 1,241
--------- ---------
Loss before income taxes........................ $ (4,755) $ (17,788)
========= =========
Total assets:
Steel Making............................................. $ 531,214 $ 564,358
Steel Fabricating........................................ 128,838 116,244
Corporate................................................ 40,556 46,230
--------- ---------
$ 700,608 $ 726,832
========= =========
</TABLE>
11
<PAGE> 12
ACME METALS INCORPORATED
(DEBTOR-IN-POSSESSION)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(dollars in thousands)
GUARANTOR'S FINANCIAL STATEMENTS
In December 1997, Acme Metals, as issuer, and Acme Steel, a wholly owned
subsidiary of the Company, as guarantor, entered into an offering pursuant to
which $200 million of 10.875 percent Senior Unsecured Notes due 2007 were
offered pursuant to Rule 144A under the Securities Act of 1933, as amended
(the "Act"). In June 1998, Acme Metals registered the Senior Unsecured Notes
under the Act.
Following is consolidating condensed financial information pertaining to
the Company and its subsidiary guarantor and its subsidiary nonguarantors.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 26, 2000
------------------------------------------------------------------
SUBSIDIARY
SUBSIDIARY NON TOTAL
PARENT GUARANTOR GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net Sales $ $ 91,438 $ 56,942 $ (22,017) $ 126,363
Costs and expenses 87,895 48,516 (22,017) 114,394
--------- ---------- -------- ---------- ---------
Gross margin 3,543 8,426 11,969
Selling and administrative expense 4,250 4,949 9,199
--------- ---------- -------- ---------- ---------
Operating income (loss) (707) 3,477 2,770
Reorganization charges under
Chapter 11 Bankruptcy (565) (767) (236) (1,568)
Net interest income (expense) and other (5,346) (787) 176 (5,957)
--------- ---------- -------- ---------- ---------
Income (loss) before income taxes (5,911) (2,261) 3,417 (4,755)
Income tax provision (benefit) (1,199) 1,257 58
--------- ---------- -------- ---------- ---------
Net income (loss) before equity
adjustment (4,712) (2,261) 2,160 (4,813)
Equity income (loss) in subsidiaries (101) 101
--------- ---------- -------- ---------- ---------
Net income (loss) $ (4,813) $ (2,261) $ 2,160 $ 101 $ (4,813)
========= ========== ======== ========== =========
</TABLE>
12
<PAGE> 13
ACME METALS INCORPORATED
(DEBTOR-IN-POSSESSION)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(dollars in thousands)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 28, 1999
----------------------------------------------------------------------------
SUBSIDIARY
SUBSIDIARY NON TOTAL
PARENT GUARANTOR GUARANTORS ELIMINATIONS CONSOLIDATED
----------- ------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Net Sales $ $ 68,596 $ 53,913 $ (19,471) $ 103,038
Costs and expenses 79,717 43,744 (19,471) 103,990
----------- ------------ ------------- ------------- ---------------
Gross margin (11,121) 10,169 (952)
Selling and administrative expense 4,608 5,028 9,636
----------- ------------ ------------- ------------- ---------------
Operating income (loss) (15,729) 5,141 (10,588)
Reorganization charges under
Chapter 11 Bankruptcy (598) (779) (854) (2,231)
Net interest income (expense) and other (5,976) (305) 1,312 (4,969)
----------- ------------ ------------- ------------- ---------------
Income (loss) before income taxes (6,574) (16,813) 5,599 (17,788)
Income tax provision (benefit) (536) 557 21
----------- ------------ ------------- ------------- ---------------
Net income (loss) before equity
adjustment (6,038) (16,813) 5,042 (17,809)
Equity income (loss) in subsidiaries (11,771) 11,771
----------- ------------ ------------- ------------- ---------------
Net income (loss) $ (17,809) $ (16,813) $ 5,042 $ 11,771 $ (17,809)
=========== ============ ============= ============= ===============
</TABLE>
13
<PAGE> 14
ACME METALS INCORPORATED
(DEBTOR-IN-POSSESSION)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(dollars in thousands)
<TABLE>
<CAPTION>
AS OF MARCH 26, 2000
----------------------------------------------------------------------
SUBSIDIARY
SUBSIDIARY NON TOTAL
ASSETS PARENT GUARANTOR GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 359 $ $ $ $ 359
Accounts receivable, net 378 41,775 29,470 71,623
Inventories 43,920 36,925 (1,447) 79,398
Other current assets 1,458 3,669 639 5,766
Due (to) from affiliates 493,083 (51,132) 29,577 (471,528)
--------- --------- --------- --------- ---------
Total current assets 495,278 38,232 96,611 (472,975) 157,146
--------- --------- --------- --------- ---------
INVESTMENTS AND OTHER ASSETS:
Investments in associated companies (46,900) 20,361 1,031 45,105 19,597
Other assets 11,070 3,219 389 14,678
--------- --------- --------- --------- ---------
Total investments and other assets (35,830) 23,580 1,420 45,105 34,275
--------- --------- --------- --------- ---------
PROPERTY, PLANT AND EQUIPMENT-Net: 14,213 459,905 35,069 509,187
--------- --------- --------- --------- ---------
$ 473,661 $ 521,717 $ 133,100 $(427,870) $ 700,608
========= ========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 20,143 $ 38,904 $ 12,951 $ $ 71,998
DIP Financing Agreement 6,500 6,500
--------- --------- --------- --------- ---------
Total current liabilities 26,643 38,904 12,951 78,498
--------- --------- --------- --------- ---------
LONG-TERM LIABILITIES:
Long-term debt 233,370 233,370
Postretirement benefits other than pensions 1,151 85,738 15,071 101,960
Retirement benefit plans 2,056 6,946 (2,676) 6,326
--------- --------- --------- --------- ---------
Total long-term liabilities 236,577 92,684 12,395 341,656
--------- --------- --------- --------- ---------
LIABILITIES SUBJECT TO COMPROMISE 230,059 496,782 48,001 (474,770) 300,072
--------- --------- --------- --------- ---------
SHAREHOLDERS' EQUITY (DEFICIT): (19,618) (106,653) 59,753 46,900 (19,618)
--------- --------- --------- --------- ---------
$ 473,661 $ 521,717 $ 133,100 $(427,870) $ 700,608
========= ========= ========= ========= =========
</TABLE>
14
<PAGE> 15
ACME METALS INCORPORATED
(DEBTOR-IN-POSSESSION)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(dollars in thousands)
<TABLE>
<CAPTION>
AS OF DECEMBER 26, 1999
------------------------------------------------------------------
SUBSIDIARY
SUBSIDIARY NON TOTAL
ASSETS PARENT GUARANTOR GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ $ $ $ $
Accounts receivable, net 1,689 36,868 30,241 (1,083) 67,715
Inventories 53,033 30,694 (1,447) 82,280
Other current assets 1,451 3,868 577 5,896
Due (to) from affiliates 491,623 (52,758) 32,611 (471,476)
--------- --------- --------- --------- ---------
Total current assets 494,763 41,011 94,123 (474,006) 155,891
--------- --------- --------- --------- ---------
INVESTMENTS AND OTHER ASSETS:
Investments in associated companies (46,799) 21,701 46,035 20,937
Other assets 11,544 2,928 389 14,861
--------- --------- --------- --------- ---------
Total investments and other assets (35,255) 24,629 389 46,035 35,798
--------- --------- --------- --------- ---------
PROPERTY, PLANT AND EQUIPMENT-Net: 14,387 466,352 35,560 516,299
--------- --------- --------- --------- ---------
$ 473,895 $ 531,992 $ 130,072 $(427,971) $ 707,988
========= ========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 19,969 $ 47,116 $ 12,068 $ $ 79,153
Current maturities of long-term debt 2,050 2,050
--------- --------- --------- --------- ---------
Total current liabilities 22,019 47,116 12,068 81,203
--------- --------- --------- --------- ---------
LONG-TERM LIABILITIES:
Long-term debt 233,370 233,370
Post-retirement benefits other than pensions 1,130 84,996 14,891 101,017
Retirement benefit plans 2,122 7,490 (2,481) 7,131
--------- --------- --------- --------- ---------
Total long-term liabilities 236,622 92,486 12,410 341,518
--------- --------- --------- --------- ---------
LIABILITIES SUBJECT TO COMPROMISE 230,059 496,782 48,001 (474,770) 300,072
--------- --------- --------- --------- ---------
SHAREHOLDERS' EQUITY (DEFICIT): (14,942) (104,392) 57,593 46,799 (14,942)
--------- --------- --------- --------- ---------
$ 473,758 $ 531,992 $ 130,072 $(427,971) $ 707,851
========= ========= ========= ========= =========
</TABLE>
15
<PAGE> 16
ACME METALS INCORPORATED
(DEBTOR-IN-POSSESSION)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(dollars in thousands)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 26, 2000
-------------------------------------------------------------------------
SUBSIDIARY
SUBSIDIARY NON TOTAL
PARENT GUARANTOR GUARANTORS ELIMINATIONS CONSOLIDATED
----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
NET CASH FLOWS (USED FOR) PROVIDED BY
OPERATING ACTIVITIES $ (4,091) $ 1,811 $ 847 $ $ (1,433)
----------- ------------ ------------ ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,811) (847) (2,658)
----------- ------------ ------------ ------------ -----------
Net cash used for investing activities (1,811) (847) (2,658)
----------- ------------ ------------ ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolver agreement 22,240 22,240
Payments under revolver agreement (17,790) (17,790)
----------- ------------ ------------ ------------ -----------
Net cash provided by financing activities 4,450 4,450
----------- ------------ ------------ ------------ -----------
Net increase in cash and cash equivalents 359 359
Cash and cash equivalents at
beginning of period
----------- ------------ ------------ ------------ -----------
Cash and cash equivalents at
end of period $ 359 $ $ $ $ 359
=========== ============ ============ ============ ===========
</TABLE>
16
<PAGE> 17
ACME METALS INCORPORATED
(DEBTOR-IN-POSSESSION)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(dollars in thousands)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 28, 1999
------------------------------------------------------------------
SUBSIDIARY
SUBSIDIARY NON TOTAL
PARENT GUARANTOR GUARANTORS ELIMINATIONS CONSOLIDATED
-------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET CASH FLOWS (USED FOR) PROVIDED BY
OPERATING ACTIVITIES $(13,636) $ 351 (898) $ $(14,183)
-------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of assets 1,928 1,928
Capital expenditures (351) (1,292) (1,643)
-------- -------- -------- -------- --------
Net cash provided by (used for) investing (351) 636 285
-------- -------- -------- -------- --------
Net decrease in cash and cash equivalents (13,636) (262) (13,898)
Cash and cash equivalents at
beginning of period 18,457 412 18,869
-------- -------- -------- -------- --------
Cash and cash equivalents at
end of period $ 4,821 $ $ 150 $ $ 4,971
======== ======== ======== ======== ========
</TABLE>
17
<PAGE> 18
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of
Acme Metals Incorporated
We have reviewed the accompanying consolidated balance sheet as of March 26,
2000, the consolidated statements of operations for the three-month periods
ended March 26, 2000 and March 28, 1999, and the consolidated statements of cash
flows for the three-month periods ended March 26, 2000 and March 28, 1999 (the
"consolidated financial information") of Acme Metals Incorporated and its
subsidiaries. This consolidated financial information is the responsibility of
the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated interim financial information for it to
be in conformity with generally accepted accounting principles.
We previously audited, in accordance with generally accepted auditing standards,
the consolidated balance sheet as of December 26, 1999, and the related
consolidated statements of operations, of shareholders' equity, and of cash
flows for the year then ended (not presented herein), and in our report dated
February 23, 2000, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet information as of December 26, 1999, is
fairly stated in all material respects in relation to the consolidated balance
sheet from which it has been derived.
On September 28, 1998, the Company filed voluntary petitions for protection and
reorganization under Chapter 11 of the Bankruptcy Code. The accompanying
consolidated financial statements have been prepared on the basis that the
Company will continue as a going-concern.
/s/ PricewaterhouseCoopers LLP
- -------------------------------
PricewaterhouseCoopers LLP
Chicago, Illinois
April 26, 2000
18
<PAGE> 19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
On September 28, 1998, the Company filed voluntary petitions for protection and
reorganization under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court.
The Company's operations are divided into two segments: the Steel Making Segment
and the Steel Fabricating Segment. The Steel Making Segment consists of Acme
Steel and includes all the facilities used to manufacture hot-rolled sheet and
strip steel. The Steel Fabricating Segment includes Acme Packaging and Alpha
Tube. Each Fabricating Segment company uses flat-rolled steel in its respective
operations; and, Acme Packaging also uses plastic in addition to steel in the
manufacturing of strapping products.
This discussion and analysis or results of operations should be read in
conjunction with the unaudited consolidated financial statements and
accompanying notes to the financial statements.
First Quarter 2000 as compared to First Quarter 1999
THE COMPANY. First quarter 2000 operating results for the Company improved
substantially over the first quarter 1999, due to both increased sales and lower
operating costs. Consolidated net sales of $126 million for the first quarter of
2000 were $23 million higher than the same period in the prior year. An increase
in shipments coupled with higher selling prices resulted in the increase in
sales.
The increase in sales led to greater income from operations over the first
quarter 1999. The Company's operating income of $3 million for the first three
months of 2000 represents a $13 million improvement over the $10 million loss
recorded for the same period in 1999. This substantial improvement relates to
the increased sales and cost improvements at the Steel Making Segment. However,
despite these improvements, the Steel Making Segment incurred an operating loss.
The Steel Fabricating Segment's income from operations offset this loss
generating operating income for the Company.
Selling and administrative expense for the current period remained flat with the
same period of the previous year. The Company generated $2 million in proceeds
in the first quarter 1999 from the sale of a building which resulted in a $1.2
million capital gain on the sale of an asset.
Interest expense of $6 million for the Company during the first three months of
2000 was $0.4 million better than the same period a year ago. However, in
January of 2000, the Company ceased recording interest expense on debt which it
believes the Bankruptcy Court will not approve adequate protection payments,
generating a $0.4 million improvement over the first quarter of 1999.
During the first quarter of 2000, the Company incurred reorganization charges of
$2 million, essentially flat with the same period in 1999. Reorganization
charges primarily consist of administrative, professional, and legal fees
associated with the Chapter 11 Bankruptcy.
19
<PAGE> 20
The components discussed above resulted in a net loss for the Company of $5
million, or $0.41 per share, for the first quarter of 2000. The same period in
1999 generated an $18 million loss, or $1.53 per share. Results for 2000 are
better than 1999 by $13 million, or 72 percent. Per share amounts are based on
weighted average number of common shares calculated on both the basic and fully
diluted method, which are equivalent in amount.
THE STEEL MAKING SEGMENT. In the first quarter of 2000, the Steel Making Segment
experienced an increase in both selling prices and volume together with a better
mix as compared with the first quarter of 1999. Net sales in the current period
were $91 million, a $23 million increase over the same period last year. The
sales improvement consists of $10 million in improved prices and $13 million in
increased volume and stronger mix. Compared to a year ago, sales to unaffiliated
customers increased $20 million, or 41 percent, while sales to affiliates
increased $3 million, or 13 percent. Sales, excluding intersegment sales,
improved $20 million over last year consisting of $7 million and $13 million
relating to price and volume/mix, respectively.
The current period operating loss of $0.7 million for the Steel Making Segment
is a $15 million, or a 96 percent improvement over the first quarter of 1999
operating loss of $15.7 million. The improvement primarily relates to increased
sales and lower operating costs. The Continuous Steel Making Plant (the "CSP")
operated at an average of 98 percent capacity for the first quarter of 2000 (96
percent in the first quarter of 1999). By operating at near full capacity and by
experiencing related improvement in material yield, the CSP continued to improve
its cost structure over 1999. Despite the increase in production and cost
improvement, the Steel Making Segment continued to incur losses in the first
quarter of 2000. New entrants into the market now compete with the Segment's
traditional high margin products, which has driven overall prices down below
those previously enjoyed by the Steel Segment.
THE STEEL FABRICATING SEGMENT. In the first quarter of 2000, the Steel
Fabricating Segment experienced improvement in both price and volume/mix over
the same period in 1999. Net sales for the current period equaled $57 million, a
$3 million improvement over the first quarter of 1999. Although the segment
experienced some upturn in price, volume/mix improvements primarily accounted
for the increase in sales.
In the first quarter of 2000, the Steel Fabricating Segment incurred operating
income of $3 million, $2 million below the comparable period in 1999. Increased
raw material costs account for the decrease in income from operations.
20
<PAGE> 21
LIQUIDITY AND CAPITAL RESOURCES
The most significant factor affecting the Company's liquidity and capital
resources is operating under the protection of the Bankruptcy Code. Additional
information and discussions concerning the circumstances which led to the
Chapter 11 Bankruptcy are contained in Item 1. Business--Chapter 11 Bankruptcy
Filings on page 3 of the 1999 Form 10-K.
The Company's current liquidity requirements include working capital needs,
Chapter 11 Bankruptcy administrative expenses, payments to adequately protect
holders of certain secured claims, and capital investments. The Company holds
$0.4 million in cash and cash equivalents at March 26, 2000, while it held no
cash or cash equivalents at December 26, 1999. To fund liquidity requirements,
the Company entered into a DIP Financing Agreement with Bank of America as
discussed in Liquidity and Capital Resources on page 18 of the Company's 1999
Form 10-K. The DIP Financing Agreement provides for a maximum of $100 million of
revolving credit borrowings subject to borrowing base limitations. At March 26,
2000, $6.5 million of the DIP Financing Agreement was outstanding with an
additional $57.7 million available based on borrowing base limitations. The DIP
Financing Agreement expires September 27, 2000. Should the Company's plan of
reorganization not be implemented prior to the expiration date, the Company
plans to request an extension of the current facility.
Capital expenditures are expected to approximate $26 million during 2000. At
March 26, 2000, the Company has spent $3 million on capital projects. During the
first half of 2000, the Company expects to make $16 million in Bankruptcy Court
approved adequate protection payments. The Company anticipates the Bankruptcy
Court will approve additional adequate protection payments for the second half
of the year.
Although the Company believes the anticipated cash from future operations and
borrowings under the DIP Financing Agreement will provide sufficient liquidity
for the Company to fund on-going operations, to meet its adequate protection
payments, and to finance its Chapter 11 Bankruptcy administrative costs, there
can be no assurances these or other possible resources will be adequate or that
an extension of the DIP Financing Agreement would be obtained.
21
<PAGE> 22
OUTLOOK
The Company currently intends to present a plan of reorganization to the
Bankruptcy Court to reorganize the Company's businesses and to restructure the
Company's balance sheet at the earliest practicable date. Although management
expects to file a plan of reorganization, there can be no assurance at this time
that a plan of reorganization will be proposed by the Company, approved or
confirmed by the Bankruptcy Court, or that such plan will be consummated. The
Bankruptcy Court has granted the Company's request to extend its exclusive right
to file a plan of reorganization through May 30, 2000. While the Company
anticipates requesting further extensions of the exclusivity period, there can
be no assurance the Bankruptcy Court will grant such further extensions. If the
exclusivity period were to expire or be terminated, other interested parties,
such as creditors of the Company, would have the right to propose alternative
plans of reorganization. The Board of Directors strives to maximize the value of
the estate, including shareholder value, however, a plan of reorganization
could, among other things, result in material dilution or potentially the
elimination of the equity of existing shareholders of the Company as a result of
the issuance of equity to creditors or new investors.
On January 20, 2000, the Bankruptcy Court denied a motion of certain equity
holders of the Company to appoint an equity committee to represent the interest
of the Company's equity security holders (the "Stockholders") in the Company's
pending bankruptcy proceedings. In the course of the Court's consideration of
this motion, the Company's financial advisor presented evidence indicating it
now appears likely, under current circumstances, that at the time the final plan
of reorganization is filed, there will not be sufficient reorganization value in
the bankruptcy proceedings to provide a distribution to Stockholders. In denying
the motion, the Court did not comment on the financial advisor's conclusion,
ruling instead that the Company and its advisors were fulfilling their fiduciary
duty in seeking to represent all interest and, therefore, no need for a separate
equity committee to represent the Stockholders existed.
Steel Making Segment
The Steel Making Segment continues to incur operating losses and may not achieve
the sales, production, and performance levels necessary to achieve an operating
profit for the year 2000. For this Outlook section, the Company is contemplating
the continuation of business without restructuring its balance sheet due to its
possible emergence from Chapter 11 Bankruptcy during 2000. Additionally, the
Company believes a structural change in the market pricing of products has
occurred, compressing the premium received by Acme Steel for traditionally
high-margin products. Also, steel imports continue to adversely affect price. On
the other hand, the cost position of Acme Steel has substantially improved since
the CSP began operations. The Company continues to place maximum effort on
optimizing the operating performance of its facilities, reducing cash
manufacturing costs, and optimizing its mix of higher margin productions to
return the Steel Making Segment to profitability.
22
<PAGE> 23
Steel Fabricating Segment
Steel Fabricating Segment earnings for the remainder of 2000 are expected to
remain relatively steady. Acme Packaging will increase the utilization of the
plastic strapping lines in the second full year of operations. Alpha Tube will
continue its strong sales volume.
FORWARD LOOKING STATEMENT
Actual events might materially differ from those projected in the above
forward looking statements. If there are substantial unexpected production
interruptions or other operating difficulties, or if the CSP fails to maintain
production utilization and material yield goals, the competitive and financial
position of the Company could be materially adversely affected. In addition to
uncertainties with respect to the CSP, forward looking statements regarding all
of the Company's businesses, but particularly the Steel Making Segment, are
based on various economic assumptions. These assumptions include projections
regarding: selling prices for the Company's products, costs for labor, energy,
raw material, supplies, pensions and active and retiree medical care, volume or
units of product sales, competitive developments in the marketplace by domestic
and foreign competitors, including import levels, and the competitive impact of
the facilities which are expected to compete with the Company's products,
general economic developments in the United States or abroad affecting the
business of the Company's customers, including the strength of the U.S. dollar
against other currencies and similar events which may affect the costs, price or
volume of products sold by the Company.
There can be no assurances the results of these factors will conform with
the Company's assumptions and projections. If one or more of these factors fails
to meet the Company's projections, the adverse impact on the Company's business
and financial results could be significant. Similarly, in the event the
Company's assumptions and projections are too conservative, the Company's
performance may exceed these forecasts.
Furthermore, the Chapter 11 Bankruptcy filings introduce numerous
uncertainties which may affect the Company's businesses, results of operations
and prospects.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Exchange. The Company has exposure from changes in foreign exchange
rates for the purchase of raw materials from its Wabush joint venture. A 10
percent unfavorable movement in the Canadian Dollar would affect raw material
costs by approximately $3 million on an annual basis.
Interest Rates. The Company's net interest rate risk exposure consists of
floating rate debt instruments linked to LIBOR. The Company, while under Chapter
11 Bankruptcy, is prohibited from making interest payments but with the approval
of the Bankruptcy Court, has or expects to enter into adequate protection
agreements with secured lenders.
23
<PAGE> 24
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As reported in the 1999 Form 10-K on page 62, Raytheon Engineers & Constructors,
Inc. ("Raytheon") filed various legal actions in the Bankruptcy Court seeking to
prevent Acme Steel from drawing on an irrevocable letter of credit. On April 11,
2000, the Bankruptcy Court held any claims Raytheon may have against Acme Steel
for draws against the letter of credit are considered pre-petition; and Raytheon
cannot enjoin Acme Steel from future draws on the letter of credit without
alleging and proving fraud, which Raytheon failed to do. The Bankruptcy Court's
decision did not address whether the claim is secured or unsecured. The Company
has filed an Adversary Complaint challenging both Raytheon's assertion of the
claim having a secured status and the validity of Raytheon's underlying
mechanics lien.
On April 13, 2000, Raytheon filed a notice of appeal to the U.S. District Court
of Delaware appealing the April 11, 2000 Bankruptcy Court decision. Although the
Company plans to vigorously oppose Raytheon in this appeal process, there can be
no assurances that the Company will prevail.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Board of Directors concluded this year's Annual Meeting of Shareholders
(usually held in late April) should be postponed while the Company concentrates
its efforts toward the development and submission of a Plan of Reorganization
for the Company to exit the Chapter 11 Bankruptcy process at the earliest
practicable time.
ITEM 6. EXHIBITS AND REPORTS ON FORM 10-Q
Exhibit 27 - Financial data schedule
24
<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.
ACME METALS INCORPORATED
Date: April 26, 2000 By: /s/ Jerry F. Williams
-----------------------------------------
Jerry F. Williams
Vice President - Finance and
Administration and Chief Financial
Officer (Principal Financial Officer)
By: /s/ Derrick T. Bay
-----------------------------------------
Derrick T. Bay
Controller and Chief Accounting Officer
(Principal Accounting Officer)
25
<PAGE> 1
Exhibit 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Dear Sirs:
We are aware that our report dated April 26, 2000 on our review of interim
financial information of Acme Metals Incorporated (the "Company") as of and for
the period ended March 26, 2000 and included in the Company's quarterly report
on Form 10-Q for the quarter then ended is incorporated by reference in its
Registration Statements on Form S-8 (Nos. 33-17235, 33-19437 and 33-30841) and
in its Registration Statements on From S-8 (Nos. 33-38747 and 33-59627).
Very truly yours,
/s/ PricewaterhouseCoopers LLP
- ---------------------------------
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
April 26, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information (dollars in thousands,
except for per share data) extracted from the Company's Unaudited Consolidated
Balance Sheets at March 26, 2000 and Unaudited Consolidated Statements of
Operations for the Three Months Ended March 28, 1999 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> DEC-27-1999
<PERIOD-END> MAR-26-2000
<CASH> 359
<SECURITIES> 0
<RECEIVABLES> 72,837
<ALLOWANCES> (1,214)
<INVENTORY> 79,398
<CURRENT-ASSETS> 157,146
<PP&E> 891,521
<DEPRECIATION> (382,334)
<TOTAL-ASSETS> 700,608
<CURRENT-LIABILITIES> 78,498
<BONDS> 233,370
0
0
<COMMON> 11,647
<OTHER-SE> (31,265)
<TOTAL-LIABILITY-AND-EQUITY> 700,608
<SALES> 126,363
<TOTAL-REVENUES> 126,363
<CGS> 104,945
<TOTAL-COSTS> 123,593
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,977
<INCOME-PRETAX> (4,755)
<INCOME-TAX> 58
<INCOME-CONTINUING> (4,813)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,813)
<EPS-BASIC> (0.41)
<EPS-DILUTED> (0.41)
</TABLE>
