<PAGE> 1
- -----------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1998.
-----------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 333-18019
---------
WCI STEEL, INC.
(Exact name of registrant as specified in its charter)
Ohio 34-1585405
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1040 Pine Ave., S.E., Warren, Ohio 44483-6528
(Address of principal executive offices) (Zip Code)
(330) 841-8314
(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 (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.
[X] Yes [ ] No
As of February 23, 1998, the registrant had 100 shares of its common
stock, no par value, $.01 stated value, outstanding.
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<PAGE> 2
WCI STEEL, INC. AND SUBSIDIARIES
INDEX
--------------------------------
Page No.
--------
PART I FINANCIAL INFORMATION
- -------------------------------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
January 31, 1998 and October 31, 1997. 3
Condensed Consolidated Statements of Operations for the
three months ended January 31, 1998 and 1997. 4
Condensed Consolidated Statements of Cash Flows for the
three months ended January 31, 1998 and 1997. 5
Notes to Condensed Consolidated Financial Statements. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit Index 15
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
WCI STEEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
January 31, October 31,
1998 1997
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents.........................$ 11,666 $ 18,989
Accounts receivable, less allowances.............. 70,337 65,202
Inventories....................................... 103,747 106,293
Recoverable income taxes.......................... 791 4,273
Deferred income taxes............................. 8,470 8,188
Prepaid expenses.................................. 2,066 1,640
-------- --------
Total current assets......................... 197,077 204,585
Property, plant and equipment, net.................. 223,057 224,620
Intangible pension asset............................ 19,984 20,982
Other assets, net................................... 18,156 20,564
-------- --------
Total assets............................$ 458,274 $ 470,751
======== ========
LIABILITIES and SHAREHOLDER'S EQUITY (DEFICIT)
Current liabilities
Current portion of long-term debt.................$ 382 $ 1,319
Accounts payable.................................. 61,726 64,123
Accrued liabilities............................... 44,228 51,504
Income taxes...................................... 1,876 1,737
-------- --------
Total current liabilities.................... 108,212 118,683
Long-term debt, excluding current portion........... 301,590 301,618
Deferred income taxes............................... 7,982 7,497
Postretirement health care benefits................. 87,269 85,755
Pension benefits.................................... 30,152 31,489
Other liabilities................................... 15,034 16,575
-------- --------
Total liabilities....................... 550,239 561,617
-------- --------
Shareholder's equity (deficit)
Preferred stock, par value $1,000 per share, 5,000
shares authorized, none issued. ................ - -
Common stock, no par value, stated value $.01 per
share, 40 million shares authorized, 100 shares
issued and outstanding.......................... - -
Accumulated deficit............................... (91,965) (90,866)
-------- --------
Total shareholder's equity (deficit).... (91,965) (90,866)
Commitments and contingencies....................... - -
<PAGE> 4
Total liabilities and -------- --------
shareholder's equity (deficit)..........$ 458,274 $ 470,751
======== ========
<FN>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
WCI STEEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
(Unaudited)
Three months
ended January 31,
1998 1997
<S> <C> <C>
Net sales......................... $ 166,592 $ 160,907
Operating costs and expenses
Cost of products sold............ 141,848 131,609
Depreciation and amortization.... 6,413 5,544
Selling, general and
administrative expenses......... 4,052 14,016
------- -------
152,313 151,169
------- -------
Operating income.................. 14,279 9,738
------- -------
Other income (expense)
Interest expense................. (8,014) (7,525)
Interest and other income, net... 299 651
------- -------
(7,715) (6,874)
------- -------
Income before income taxes and
extraordinary loss............... 6,564 2,864
Income tax expense................ 2,363 1,151
------- -------
Income before extraordinary
loss............................. 4,201 1,713
Extraordinary loss on early
retirement of debt, net
of income taxes.................. - 19,606
------- -------
Net income(loss).................. $ 4,201 $ (17,893)
======= =======
<FN>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
</FN>
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
WCI STEEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited) Three months
ended January 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities
Net income(loss)..................................$ 4,201 $(17,893)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization................ 5,680 4,811
Amortization of deferred maintenance costs... 733 733
Amortization of financing costs.............. 337 404
Postretirement health care benefits.......... 1,514 761
Pension benefits............................. 1,361 1,500
Deferred income taxes........................ 203 (572)
Provision for losses on accounts receivable.. (100) -
Extraordinary loss on early retirement of
debt....................................... - 32,786
Other........................................ (35) 359
Cash provided (used) by changes in certain assets
and liabilities
Accounts receivable........................ (5,035) 5,125
Inventories................................ 2,546 (9,211)
Accounts payable........................... (2,397) (7,785)
Accrued liabilities........................ (8,976) 3,332
Income taxes payable and recoverable, net.. 3,621 (15,881)
Other assets and liabilities, net.......... (629) (3,743)
------- -------
Net cash provided (used) by operating
activities.............................. 3,024 (5,274)
------- -------
Cash flows from investing activities
Additions to property, plant and equipment........ (4,192) (12,548)
Gross proceeds from the sale of assets............ 110 -
Short-term investments, net....................... - 49,146
------- -------
Net cash (used) provided by investing
activities.............................. (4,082) 36,598
------- -------
Cash flows from financing activities
Net proceeds from issuance of Senior Secured
Notes........................................... - 290,387
Repurchase of Senior Notes........................ - (233,085)
Repurchase of common stock........................ - (56,926)
Dividends paid.................................... (5,300) (108,000)
Principal payments on other long-term debt........ (965) (915)
------- -------
Net cash used by financing activities..... (6,265) (108,539)
------- -------
Net decrease in cash and cash equivalents.............. (7,323) (77,215)
Cash and cash equivalents at beginning of period....... 18,989 90,395
------- -------
<PAGE> 6
Cash and cash equivalents at end of period.............$ 11,666 $ 13,180
======= =======
Supplemental disclosure of cash flow information
Cash paid for interest............................$ 15,194 $ 5,436
Cash paid for income taxes........................ 40 4,425
<FN>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
</FN>
</TABLE>
WCI STEEL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three months ended January 31, 1998 and 1997
( Unaudited )
NOTE 1 : BASIS OF PRESENTATION
WCI Steel, Inc. (Company or WCI) is a wholly-owned subsidiary of Renco Steel
Holdings, Inc. (Renco Steel) and an indirect wholly-owned subsidiary of The
Renco Group, Inc. (Renco). The financial information included herein is
unaudited; however, such information reflects all adjustments (consisting
solely of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of results for the interim
periods. The results of operations for the three months ended January 31,
1998 are not necessarily indicative of the results to be expected for the
full year.
These interim consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in the
Company's Form 10-K for the fiscal year ended October 31, 1997.
NOTE 2 : INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined by
the last-in, first-out (LIFO) method. The composition of inventories at
January 31, 1998 and October 31, 1997 was as follows:
<TABLE>
<CAPTION>
January 31, October 31,
1998 1997
(Unaudited)
----------- -----------
(Dollars in thousands)
<S> <C> <C>
Raw materials.........................$ 33,889 $ 33,725
Finished and semi-finished product.... 79,152 82,216
Supplies.............................. 540 561
-------- --------
113,581 116,502
Less LIFO reserve..................... 9,834 10,209
-------- --------
$ 103,747 $ 106,293
======== ========
</TABLE>
<PAGE> 7
NOTE 3 : LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
January 31, October 31,
1998 1997
(Unaudited)
---------- ----------
(Dollars in thousands)
<S> <C> <C>
Senior Secured Notes with interest at 10%
payable semi-annually, due 2004...............$ 300,000 $ 300,000
Revolving Credit Facility with interest
at prime plus .5% (9.0% at
January 31, 1998) payable monthly............. - -
Other.......................................... 1,972 2,937
------- -------
301,972 302,937
Less current portion of long-term debt......... 382 1,319
------- -------
$ 301,590 $ 301,618
======= =======
</TABLE>
The $300 million 10% Senior Secured Notes due 2004 (Senior Secured Notes) are
secured by a second priority lien on substantially all of the existing
property, plant and equipment of the Company which will become a first
priority lien if all of the Company's 10.5% Senior Notes due 2002 (Senior
Notes) are extinguished ($.3 million currently outstanding). A Voluntary
Employee Beneficiaries Association trust fund, established to hold Company
contributions to fund postretirement health care and life insurance
obligations for the benefit of hourly employees, also holds a second priority
lien on the security for the Senior Secured Notes, which lien will remain a
second priority lien even if the lien in favor of the Senior Secured Notes
becomes a first priority lien.
The Company's $100 million revolving credit facility (Revolving Credit
Facility) and Senior Secured Notes contain certain financial
and other covenants, including maintenance of specified levels of net worth,
as defined, working capital, and debt service and limitations on capital
expenditures. Additional covenants limit the incurrence of additional
indebtedness, payments affecting subsidiaries, transactions with affiliates,
sale/leaseback transactions, impairment of security interest, consolidations,
mergers and transfers of the Company's assets. The Company is permitted to
declare and pay dividends, and make other transactions with affiliates
provided no event of default exists or will exist, and the accumulated amount
of such transactions is no greater than fifty percent (50%) of the
consolidated net income, as defined, (less 100% of any consolidated net loss)
earned for periods subsequent to October 31, 1996 when taken as a single
accounting period. Under these agreements, $1.1 million was available for
dividends and other transactions with affiliates at January 31, 1998.
On November 27, 1996, the Company completed the sale of the Senior Secured
Notes. The proceeds from the Senior Secured Notes, with existing cash
balances of the Company, were used to complete an equity tender offer in
which substantially all the common stock of the Company not held by Renco
<PAGE> 8
was acquired, a tender offer in which the Company acquired $206.1 million
principal amount of the then outstanding Senior Notes at a premium, pay a
$108 million dividend to Renco, make contractual compensation payments to
certain executives of the Company and pay related transaction costs. The
debt transactions, equity tender offer, dividend payment and compensation
payments are collectively referred to as the "Transactions".
Renco Steel is a holding company formed by Renco in January 1998 which owns
all the outstanding shares of capital stock of the Company. In February 1998
Renco Steel issued $120 million principal amount 10.875% senior secured notes
due 2005. These notes are secured by a pledge of all the outstanding capital
stock of the Company. Renco Steel intends to meet its debt service
obligations from its cash balances (approximately $15.6 million immediately
following the offering) and earnings thereon and through distributions from
the Company, including payments pursuant to a tax sharing agreement and
dividends as permitted under the Company's outstanding indebtedness as
described above.
NOTE 4 : ENVIRONMENTAL MATTERS and OTHER CONTINGENCIES
In common with much of the steel industry, the Company's facilities are
located on sites that have been used for heavy industrial purposes for
decades. The Company is and will continue to be subject to numerous federal,
state and local environmental laws and regulations governing, among other
things, air emissions, waste water discharge and solid and hazardous waste
disposal. The Company believes that it has made, and intends to continue to
make, the necessary expenditures for environmental remediation and compliance
with environmental laws and regulations. Environmental laws and regulations
have changed rapidly in recent years, and the Company may be subject to more
stringent environmental laws and regulations in the future. During 1997, the
EPA proposed new standards regulating particulate matter and ozone emissions.
Data relating to these standards is to be collected and analyzed with
implementation as early as 2004. These standards have been the subject of
significant discussion throughout federal and state governments, and changes
to the standards or the implementation date may be made prior to final
approval. Like much of the steel, utilities and other industries, the
Company's current operations are not expected to comply with these standards
as currently proposed. The Company cannot currently assess the impact of
these proposed standards on its results of operations or financial condition.
Compliance with more stringent environmental laws and regulations could have
a material adverse effect on the Company's financial condition and results of
operations.
On June 29, 1995, the Department of Justice, on behalf of the Environmental
Protection Agency (EPA), instituted a civil action against the Company under
the Clean Water Act in the United States District Court for the Northern
District of Ohio. The action alleges numerous violations of the Company's
National Pollution Discharge Elimination System (NPDES) permit alleged to
have occurred during the years 1989 through 1996, inclusive. On March 29,
1996, the Department of Justice on behalf of the EPA, instituted another
civil action against the Company in the same court under the Clean Air Act
alleging violations by the Company of the work practice, inspection and
notice requirements for demolition and renovation of the National Emission
Standard for Hazardous Air Pollutants for Asbestos and also violations of the
particulate standard and the opacity limits applicable to the Company's
facilities in Warren, Ohio. Each action seeks a civil penalty not to exceed
the statutory maximum of $25,000 per day per violation and also seeks an
injunction against continuing violations. The Company believes that
<PAGE> 9
imposition of the statutory maximum penalty for the alleged violations is
unlikely based upon past judicial penalties imposed under the Clean Water Act
and the Clean Air Act, and that it has defenses to liability. In November
1996, the EPA requested information pursuant to the Clean Water Act from the
Company relating to the Warren facility, including information as to the
effect of a prohibition against federal procurement of the Company's products
on the Company's business. The Company responded to the EPA's request on
December 2, 1996. The Company has not been notified that the EPA will seek a
federal procurement prohibition based on alleged permit violations. However,
there can be no assurance that a federal procurement prohibition will not be
imposed. The Company is negotiating with the EPA toward settlement of these
matters. If the Company is unable to reach a negotiated settlement, and if a
substantial penalty similar to the statutory maximum penalty or federal
procurement prohibition were imposed, it could have a material adverse effect
on the operating results or financial condition of the Company, the extent of
which the Company is unable to estimate at this time. Discovery has been
completed in both of these actions and a trial date has been scheduled for
April 1998 for the Clean Water Act civil action and May 1998 for the Clean
Air Act civil action.
On December 17, 1997, the Company received a compliance order from the EPA
alleging certain violations of the Company's NPDES permit, including
exceedances of permit limits for pH and oil and grease and failure to
identify and sample for residual chlorine. The Company currently is
investigating the alleged exceedances. The Company is unable at this time to
estimate the cost which may be incurred related to the compliance order, if
any.
The Company has obtained a Resource Conservation and Recovery Act (RCRA)
storage permit for waste pickle liquor at its' Warren facility acid
regeneration plant. As a provision of the permit, the Company will be
required to undertake a corrective action program with respect to historical
material handling practices at the Warren facility. In April 1997 the
Company received notice from the EPA that it had approved a workplan for the
first investigation step of the corrective action program, the RCRA Facility
Investigation (RFI) which is expected to be completed in 1999. The workplan
identifies thirteen historical solid waste management units which are the
subject of the RFI. The final scope of the corrective action required to
remediate or reclaim any contamination that may be present at or emanating
from the Warren facility is dependent upon the findings of the RFI and the
development and approval of a corrective action program. Accordingly, the
Company is unable at this time to estimate the final cost of the corrective
action program or the period over which such costs may be incurred and there
can be no assurance that it would not have a material adverse effect on the
operating results or financial condition of the Company.
On January 23, 1996, two retired employees instituted an action against the
Company and the United Steelworkers of America (USWA) in the United States
District Court for the Northern District of Ohio alleging in substance that
certain distributions made by the Company to employees and benefit plans
violated certain agreements, the Employee Retirement Income Security Act, the
National Labor Relations Act and common law. On July 31, 1997, the court
granted the Company's motion to dismiss this action and entered judgement in
favor of the Company and the USWA. The plaintiffs have filed an appeal
regarding the court's decision to dismiss.
On April 5, 1996, an employee instituted an action for damages against the
Company in the Court of Common Pleas, Trumbull County, Ohio alleging that,
<PAGE> 10
under Ohio common law, her privacy rights were violated and that she has been
subjected to sexual harassment. On April 28, 1997, the plaintiff filed for
summary judgement which the court denied. The Company denies plaintiff's
allegations of liability. The court has scheduled a trial date for August
1998.
A liability has been established for an amount, which management believes is
adequate, based on information currently available, to cover the costs to
resolve the above described matters, including remediation, if any, except
for any costs of corrective action that may result from the RFI or cost
associated with the compliance order dated December 8, 1997 for which no
estimate can currently be made. The outcome of the above described matters
could have a material adverse effect on the future operating results of the
Company in a particular quarterly or annual period, however, management
believes that the effect of such matters will not have a material adverse
effect on the Company's consolidated financial position. In addition to the
above matters, the Company is contingently liable with respect to lawsuits
and other claims incidental to the ordinary course of its operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Three Months Ended January 31, 1998 Compared to
Three Months Ended January 31, 1997
Net sales for the three months ended January 31, 1998 were $166.6 million on
347,931 tons shipped, representing a 3.5% increase in net sales and a 7.4%
increase in tons shipped compared to the three months ended January 31, 1997.
Net sales per ton shipped decreased 3.6% to $479 compared to $497 for the
1997 quarter. This decrease is primarily the result of changes in product
mix with shipments of custom carbon, alloy and electrical steels accounting
for 62.2% of total shipments in 1998 compared to 65.9% in 1997 and a decline
in market selling prices in late 1997. In addition, shipments in the first
quarter of 1998 included 9,394 tons of lower value added semi-finished steel.
Throughout the first fiscal quarter of 1998, the Company experienced a high
order entry rate, and as a result, the Company's order backlog increased to
306,000 tons at January 31, 1998 from 232,000 tons at October 31, 1997.
Because of the recent strength in the order entry rate and backlog for the
industry, management believes that market prices should be more stable
through the first half of 1998.
Gross margin (net sales less cost of products sold) was $24.7 million for the
three months ended January 31, 1998 compared to $29.3 million for the three
months ended January 31, 1997. The decrease in gross margin reflects the
changes in product mix and decreases in selling prices discussed above offset
somewhat by increased volume.
Operating income was $14.3 million for the three months ended January 31,
1998 compared to $9.7 million for the three months ended January 31, 1997.
The operating results for 1997 include $8.6 million of compensation expenses
related to the Transactions. Excluding the expenses incurred as a result of
the Transactions, operating income was $18.3 million during the 1997 quarter
or $57 per ton shipped compared to $41 per ton shipped in the 1998 quarter.
The decrease in operating income in 1998 (excluding the previously mentioned
compensation charges in 1997) reflects the lower gross margin discussed above
and higher depreciation expense as a result of the hot strip mill upgrade
<PAGE> 11
substantially completed in late 1997 offset by a decrease in selling, general
and administrative expenses in 1998 as a result of lower variable
compensation and legal expenses.
Interest expense increased to $8.0 million in 1998 compared to $7.5 million
in 1997 as a result of the issuance of $300 million 10% Senior Secured Notes
and the retirement of $206.1 million principal amount of 10.5% Senior Notes
on November 27, 1996.
As a result of the items discussed above, income before extraordinary items
was $4.2 million in 1998 compared to $1.7 million in 1997. During the first
quarter of 1997, the Company recognized an extraordinary loss of $19.6
million, net of income taxes, on the early retirement of $206.1 million
principal amount of Senior Notes. As a result, the Company had a net loss of
$17.9 million for the quarter ended January 31, 1997.
Liquidity and Capital Resources
WCI's liquidity requirements result from capital investments, working capital
requirements, postretirement health care and pension funding, interest
expense and, to a lesser extent, principal payments on its indebtedness. WCI
has met these requirements in each fiscal year since 1992 from cash balances
and cash provided by operating activities. The Company's primary sources of
liquidity as of January 31, 1998 consisted of cash and cash equivalents of
$11.7 million and available borrowing under the Revolving Credit Facility.
The Revolving Credit Facility has a maximum borrowing limit of $100 million,
is secured by eligible inventories and receivables, as defined therein, and
expires on December 29, 1999. As of January 31, 1998, WCI had no borrowings
outstanding under the Revolving Credit Facility, with a borrowing limit of
$94.5 million net of $5.5 million in outstanding letters of credit.
Cash provided by operating activities was $3.0 million for the three months
ended January 31, 1998 compared to cash used by operating activities of $5.3
million for the 1997 period. The increase in operating cash flow in 1998
compared to 1997 resulted from an increase in income before extraordinary
loss
and changes in working capital elements during the 1998 quarter offset by an
increase in payments relating to interest as a result of the Transactions.
Under the minimum funding requirements of ERISA, the Company is required to
contribute approximately $1.1 million during the remainder of 1998 and $8.1
million in 1999 to its defined benefit pension plan. The Company made no
contributions to this plan during 1998 to-date and made minimal contributions
during 1997.
Capital expenditures were $4.2 million and $12.5 million during the first
quarter of fiscal 1998 and 1997, respectively, and are estimated to be $25
million to $30 million for all of fiscal 1998. The higher level of capital
expenditures in 1997 reflects expenditures on the upgrade of the Company's
hot strip mill which was substantially completed in late 1997. Management
has funded capital expenditures in 1998 and 1997 through cash balances and
cash provided by operating activities. At January 31, 1998, the Company had
commitments for capital expenditures of approximately $7.4 million.
The Revolving Credit Facility and Senior Secured Notes contain numerous
covenants and prohibitions that limit the financial activities of the
Company, including requirements that the Company satisfy certain financial
<PAGE> 12
ratios and limitations on the incurrence of additional indebtedness. The
ability of the Company to meet its debt service requirements and to comply
with such covenants will be dependent upon future operating performance and
financial results of the Company, which will be subject to financial,
economic, political, competitive and other factors affecting the Company,
many of which are beyond its control.
During the first quarter of 1998 the Company declared and paid a dividend of
$5.3 million.
Renco Steel is a holding company formed by Renco in January 1998 which owns
all the outstanding shares of capital stock of the Company. In February
1998, Renco Steel issued $120 million principal amount 10.875% Senior Secured
Notes due 2005. These Notes are secured by a pledge of all the outstanding
capital stock of the Company. Renco Steel intends to meet its debt service
obligations from its cash balances (approximately $15.6 million immediately
following the offering) and earnings thereon and through distributions from
the Company, including payments pursuant to a tax sharing agreement and
dividends as permitted under the Company's outstanding indebtedness.
Forward-Looking Statements
This report includes "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 which involve known and
unknown risks, uncertainties and other important factors that could cause the
actual results, performance or achievements of the Company to differ
materially from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such risks, uncertainties and
other important factors include, among others: general economic and business
conditions; increasing industry capacity and levels of imports of steel or
steel products; industry trends, including product pricing; competition;
currency fluctuations; the loss of any significant customers; availability of
qualified personnel; major equipment failures; changes in, or the failure or
inability to comply with, government regulation, including, without
limitation, environmental regulations; and the outcome of pending
environmental and other legal matters. These forward-looking statements
speak only as of the date of this report. The Company expressly disclaims
any obligation or undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein to reflect any change in the
Company's expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based.
PART II - OTHER INFORMATION
WCI STEEL, INC.
ITEM 1. LEGAL PROCEEDINGS
For information as to the environmental matters and as to the
employee litigation described in the Company's Form 10-K for
the year ended October 31, 1997, see Part I, Note 4 to Item 1,
Financial Statements.
<PAGE> 13
ITEM 6. EXHIBITS and REPORTS ON FORM 8-K
(a) Exhibits:
A list of the exhibits required to be filed as part of this
Report on Form 10-Q is set forth in the "Exhibit Index" which
immediately precedes such exhibits, and is incorporated herein
by reference.
(b) Reports on Form 8-K:
No report on Form 8-K was filed during the quarter ended
January 31, 1998.
<PAGE> 14
WCI STEEL, INC.
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.
WCI STEEL, INC.
(registrant)
Date: February 24, 1998 /S/ BRET W. WISE
-----------------------------
Bret W. Wise
Vice President and
Chief Financial Officer
(principal financial officer)
/S/ JOHN P. JACUNSKI
-----------------------------
John P. Jacunski
Controller
<PAGE> 15
WCI STEEL, INC.
EXHIBIT INDEX
Exhibit Number Description
27. Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AT JANUARY 31, 1998 (UNAUDITED) AND THE
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTH PERIOD ENDED
JANUARY 31, 1998 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> JAN-31-1998
<CASH> 11,666
<SECURITIES> 0
<RECEIVABLES> 71,864
<ALLOWANCES> 1,527
<INVENTORY> 103,747
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0
0
<COMMON> 0
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<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
