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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JULY 22, 1997 (APRIL 30, 1997)
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CONSOLIDATED STAINLESS, INC.
DELAWARE 0-22690 59-1669166
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(State or other (Commission File No.) (IRS Employer
jurisdiction of ID No.)
incorporation)
1601 EAST AMELIA STREET, ORLANDO FL 32803
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(Address of principal executive offices)
(407) 896-4000
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Registrant's telephone number, including area code
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(Former name or former address, if changed since last report)
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ITEM 5 - OTHER EVENTS.
The Company has been notified by the Department of the Treasury - Internal
Revenue Service ("IRS") that it has concluded an examination of the Company's
tax returns for the tax periods ended December 31, 1992, November 30, 1993,
December 31, 1994 and December 31, 1995. The IRS is proposing changes to the
tax returns resulting in additional taxes amounting to $1,210,706 and penalties
totaling an additional $242,140. The issues raised by the IRS relate to a
Built-in Gains Tax for the disposition of inventory and the valuation of
inventory based upon the tax requirement that certain indirect costs be included
in the value of its inventory which are not required for financial statement
purposes.
The Company appealed the proposed findings to the Office of the Regional
Director of Appeals and has requested a hearing to present its positions on the
issues raised by the IRS. The Company has substantial arguments, both in the
facts and circumstances and in the law, to refute the arguments of the IRS. The
Company believes that the Built-in Gains Tax does not apply to the years
examined and that it has capitalized sufficient costs to comply with IRS
regulations. However, should the IRS prevail on the capitalization of costs
issue, it would immediately create an additional net operating loss increasing
the amount of available losses to carry forward and offset against future
taxable earnings of the Company.
Should the Appeals officer find in favor of the IRS, the Company has
additional administrative channels of appeal available to challenge the proposed
changes and intends to vigorously defend its position. The Company does not
intend at this time to set up a reserve for payment of the alleged deficiencies
and penalties.
ITEM 7 - FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION
Not applicable.
(c) EXHIBITS.
Not applicable.
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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 hereto duly authorized.
CONSOLIDATED STAINLESS, INC.
(Registrant)
Dated: July 22, 1997 By:___________________________
Burton Chasnov
Chief Financial Officer
