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 March 28, 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 No. 0-22416
KENTUCKY ELECTRIC STEEL, INC.
(Exact name of Registrant as specified in its charter)
Delaware 61-1244541
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
Number)
P. O. Box 3500, Ashland, Kentucky 41105-3500
(Address of principal executive office, Zip Code)
(606) 929-1222
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
The number of shares outstanding of each of the issuer's classes of
common stock, as of May 11, 1998, is as follows:
4,626,561 shares of voting common stock, par value $.01 per
share.
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets.................. 3
Condensed Consolidated Statements of Operations ....... 4
Condensed Consolidated Statements of Cash Flows ....... 5
Notes to Condensed Consolidated Financial Statements .. 6-8
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations ........... 9-11
PART II. OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K ................ 12
SIGNATURES ................................... 13
<PAGE>
<TABLE
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
Mar. 28, Sept. 27,
1998 1997
[S] [C] [C]
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 128 $ 127
Accounts receivable, less allowance for doubtful
accounts and claims of $565 at March 28, 1998
and $470 at September 27, 1997 14,999 11,577
Insurance claim receivable 900 900
Inventories 19,036 16,538
Operating supplies and other current assets 5,492 4,802
Refundable income taxes - 900
Deferred tax assets 552 457
Total current assets 41,107 35,301
PROPERTY, PLANT AND EQUIPMENT
Land and buildings 4,498 4,448
Machinery and equipment 41,047 40,301
Construction in progress 3,069 2,012
Less - accumulated depreciation (12,978) (11,229)
Net property, plant and equipment 35,636 35,532
DEFERRED TAX ASSETS 6,472 7,159
OTHER ASSETS 984 778
Total assets $ 84,199 $ 78,770
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Advances on line of credit $ 15,393 $ 10,635
Accounts payable 7,762 7,977
Capital expenditures payable 911 547
Accrued liabilities 3,445 3,700
Environmental liabilities 982 982
Current portion of long-term debt 125 125
Total current liabilities 28,618 23,966
LONG-TERM DEBT 20,000 20,000
OTHER LIABILITIES 701 593
Total liabilities 49,319 44,559
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, 1,000,000
shares authorized, no shares issued - -
Common stock, $.01 par value, 15,000,000
shares authorized, 4,981,105 and 4,977,988
share issued, respectively 50 50
Additional paid-in capital 15,686 15,665
Less treasury stock - 354,544 and 350,976
shares at cost, respectively (2,663) (2,638)
Deferred compensation (101) (170)
Retained earnings 21,908 21,304
Total shareholders' equity 34,880 34,211
Total liabilities and shareholders' equity $ 84,199 $ 78,770
[FN]
See notes to condensed consolidated financial statement
<TABLE>
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
Mar. 28, Mar. 29, Mar. 28, Mar. 29,
1998 1997 1998 1997
<S> <C> <C>
NET SALES $ 29,610 $ 23,159 $ 55,630 $ 46,541
COST OF GOODS SOLD 26,187 23,615 49,867 47,011
Gross profit (loss) 3,423 (456) 5,763 (470)
SELLING AND ADMINISTRATIVE EXPENSES 1,901 1,658 3,589 3,383
Operating income (loss) 1,522 (2,114) 2,174 (3,853)
INTEREST INCOME AND OTHER 14 6 24 11
INTEREST EXPENSE (627) (554) (1,222) (1,048)
Income (loss) before
income taxes 909 (2,662) 976 (4,890)
PROVISION (CREDIT) FOR INCOME TAXES 346 (1,003) 372 (1,847)
Net income (loss) $ 563 $ (1,659) $ 604 $ (3,043)
NET INCOME (LOSS) PER COMMON
SHARE - BASIC AND DILUTED $ .12 $ (.36) $ .13 $ (.66)
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC 4,626,033 4,626,639 4,626,208 4,643,258
WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED 4,630,520 4,626,639 4,631,502 4,643,258
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<TABLE>
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Six Months Ended
Mar. 28, Mar. 29,
1998 1997
<S> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $ 604 $ (3,043)
Adjustments to reconcile net income (loss) to
net cash flows from operating activities:
Depreciation and amortization 1,832 1,821
Change in deferred taxes 687 (1,417)
Change in other (113) (88)
Change in current assets and current
liabilities:
Accounts receivable (3,422) 927
Inventories (2,498) 2,210
Operating supplies and other
current assets (690) (977)
Refundable income taxes 900 (411)
Deferred tax assets (95) 371
Accounts payable (215) 2,069
Accrued liabilities (255) (347)
Net cash flows from operating activities (3,265) 1,115
Cash Flows From Investing Activities:
Capital expenditures (1,852) (1,728)
Change in capital expenditures payable 364 (1,498)
Net cash flows from investing activities (1,488) (3,226)
Cash Flows From Financing Activities:
Net advances on line of credit 4,758 2,574
Purchases of treasury stock (25) (463)
Issuance of common stock 21 -
Net cash flows from financing activities 4,754 2,111
Net increase in cash and
cash equivalents 1 -
Cash and Cash Equivalents at Beginning of Period 127 124
Cash and Cash Equivalents at End of Period $ 128 $ 124
Interest Paid, net of amount capitalized $ 1,194 $ 1,050
Income Taxes Paid $ - $ -
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<TEXT
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY
(1) Basis of Presentation
The accompanying unaudited condensed consolidated
financial statements represent Kentucky Electric Steel, Inc.
and its wholly-owned subsidiary, KESI Finance Company, (the
Company). KESI Finance Company was formed in October 1996 to
finance the Ladle Metallurgy Project. All significant
intercompany accounts and transactions have been eliminated.
These statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of
normal recurring adjustments) considered necessary for a fair
presentation have been included. Operating results for the
six-month period ended March 28, 1998, are not necessarily
indicative of the results that may be expected for the year
ending September 26, 1998. For further information, refer to
the financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended
September 27, 1997.
(2) Accounting Policies
Fiscal Year End
The Company's fiscal year ends on the last Saturday of
September.
Property, Plant, Equipment and Depreciation
Property, plant and equipment is recorded at cost, less
accumulated depreciation. For financial reporting purposes,
depreciation is provided on the straight-line method over the
estimated useful lives of the assets, generally 3 to 12 years
for machinery and equipment and 15 to 30 years for buildings
and improvements. Depreciation for income tax purposes is
computed using accelerated methods. Expenditures for
maintenance and repairs are charged to expense as incurred.
Expenditures for equipment renewals which extend the useful
life of any asset are capitalized.
The Company capitalizes interest costs as part of the
historical cost of constructing major capital assets. Interest
cost of $3,000 and $11,000 were capitalized for the quarter and
the six months ended March 29, 1997.
No interest was capitalized for the quarter and six months
ended March 28, 1998.
(3) Inventories
Inventories at March 28, 1998 and September 27, 1997
consist of the following ($000's):
Mar. 28, Sept. 27,
1998 1997
Raw materials $ 2,522 $ 3,280
Semi-finished and finished goods 16,514 13,258
Total inventories $ 19,036 $ 16,538
(4) Earnings Per Share
Statement of Financial Accounting Standards No. 128 (SFAS
No. 128) related to earnings per share requires dual
presentation of basic and diluted E.P.S. on the face of the
income statement for all entities with complex capital
structures. The Company adopted SFAS No. 128 during the first
quarter of fiscal 1998. The following is the reconciliation of
the numerators and denominators of the basic and diluted
earnings per share computations.
<TABLE>
For the Three For the Three
Months Ended Months Ended
March 28, 1998 March 29, 1997
Per Per
Income Share Income Share
(Loss) Shares Amount (Loss) Shares Amount
<S> <C> <C>
Amounts for Basic
Earnings Per Share $563 4,626,033 $.12 $(1,659) 4,626,639 $(.36)
Effect of Dilutive
Securities Options - 4,487 - - - -
Amounts for Diluted
Earnings Per Share $563 4,630,520 $.12 $(1,659) 4,626,639 $(.36)
For the Six For the Six
Months Ended Months Ended
March 28, 1998 March 29, 1997
Per Per
Income Share Income Share
(Loss) Shares Amount (Loss) Shares Amount
Amounts for Basic
Earnings Per Share $604 4,626,208 $.13 $(3,043) 4,643,258 $(.66)
Effect of Dilutive
Securities Options - 5,294 - - - -
Amounts for Diluted
Earnings Per Share $604 4,631,502 $.13 $(3,043) 4,643,258 $(.66)
</TABLE>
The Company had transition stock options of 141,081 and
163,329 as of March 28, 1998 and March 29, 1997, respectively.
The options have exercise prices ranging from $8.76 to $20.86
per share which exceeded the average market price as of March
28, 1998 and as of March 29, 1997, and therefore were not
included in the computation of diluted earnings per share.
These options expire beginning July 14, 1998 through February
18, 2003.
The Company also had options of 305,476 and 327,976 as of
March 28, 1998 and March 29, 1997, respectively. These options
have exercise prices ranging from $7.63 to $12.31 per share
which exceeded the average market price as of March 28, 1998
and March 29, 1997 and therefore were not included in the
computation of diluted earnings per share. These options
expire beginning October 6, 2003 through May 8, 2006. The
Company also had 89,192 options at an exercise price of $5.62,
which were less than the average market price as of March 29,
1997, however, these options are anti-dilutive and were not
included in the computation of earnings per share.
(5) Insurance Claim Receivable and Environmental Liabilities
The Company's melt shop operations were shut down for
twelve days during the third quarter of fiscal 1997 in order to
decontaminate its baghouse facilities after detection of a
radioactive substance in the baghouse dust, a by-product of the
melting process. The financial statements include a receivable
of $.9 million which represents the estimated balance due from
the insurance carrier on the total projected reimbursement of
$6.7 million, which reimburses the costs incurred in the
radiation contamination clean-up, the disposal cost, and
business interruption. To date, the Company has received $5.8
million from the insurance carrier for payment of costs
incurred.
The $1.0 million in environmental liabilities recorded as
a current liability on the balance sheet represents final
payment due an environmental services company for treatment and
disposal of the contaminated baghouse dust. Payment for the
disposal will occur within the next twelve months. Although it
is possible that the ultimate disposal costs may change from
current estimates, the effect of the change, if any, is not
expected to be material to the financial statements due to the
Company having applicable insurance coverage.
(6) Commitments and Contingencies
The Company has various commitments for the purchase of
materials, supplies and energy arising in the ordinary course
of business.
The Company is subject to various claims, lawsuits and
administrative proceedings arising in the ordinary course of
business with respect to commercial, product liability and
other matters, which seek remedies or damages. The Company
believes that any liability that may ultimately be determined
will not have a material effect on its financial position or
results of operations.
The Company generates both hazardous wastes and non-
hazardous wastes which are subject to various governmental
regulations. Estimated costs to be incurred in connection with
environmental matters are accrued when the prospect of
incurring costs for testing or remedial action is deemed
probable. The Company is not aware of any material asserted or
unasserted environmental claims against the Company and no
accruals for such matters have been recorded in the
accompanying balance sheets except as disclosed in Note 5.
However, discovery of unknown conditions could result in the
recording of accruals in the periods in which they become
known.
<PAGE
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General. The Company manufactures special bar quality
alloy and carbon steel bar flats to precise customer
specifications for sale in a variety of niche markets. Its
primary markets are manufacturers of leaf-spring suspensions
and flat bed truck trailers, cold drawn bar converters, and
steel service centers.
Net Sales. Net sales increased $6.5 million ( 27.9%) in
the second quarter of fiscal 1998 to $29.6 million, as compared
to $23.1 million for the second quarter of fiscal 1997. Net
sales for the six months ended March 28, 1998 increased $9.1
million (19.5%) to $55.6 million, as compared to $46.5 million
for the six months ended March 29, 1997. The increase in sales
is attributed to an increase in shipments and an increase in
average selling price. Tons shipped increased 18.6% in the
second quarter of fiscal 1998 as compared to the second quarter
of fiscal 1997. Tons shipped for the six months ended March 28,
1998 increased 12.3% as compared to the six months ended March
29, 1997.The increase in shipments resulted from the continued
strong demand for the Company's products and the increase in
available inventory due to improvements in productivity. The
increase in average selling price is attributed to the price
increases implemented on many products primarily in the third
quarter of fiscal 1997 and first and second quarters of fiscal
1998.
Cost of Goods Sold. Cost of goods sold increased $2.6
million (10.9%) in the second quarter of fiscal 1998 to $26.2
million, as compared to $23.6 million for the second quarter of
fiscal 1997. As a percentage of net sales, cost of goods sold
decreased from 102.0% for the second quarter of fiscal 1997 to
88.4% for the second quarter of fiscal 1998. Cost of goods
sold for the six months ended March 28, 1998 increased $2.9
million (6.1%) to $49.9 million as compared to $47.0 million
for the six months ended March 29, 1997. As a percentage of net
sales, cost of goods sold decreased from 101.0% for the six
months ended March 29, 1997 to 89.6% for the six months ended
March 28, 1998. The increase in cost of goods sold reflects the
increase in shipments offset by a decrease in the per ton cost
of tons shipped. The decrease in the per ton cost of tons
shipped resulted from the lower conversion costs due to
continued improvements in productivity from our capital
projects, during the second quarter and first six months of
fiscal 1998 as compared to the second quarter and first six
months of fiscal 1997, offset somewhat by an increase in scrap
costs.
Gross Profit (Loss). As a result of the above, the second
quarter of fiscal 1998 reflected a gross profit of $3.4 million
as compared to a loss of $.5 million for the second quarter of
fiscal 1997. As a percentage of net sales, gross profit
increased from (2.0%) for the second quarter of fiscal 1997 to
11.6% for the second quarter of fiscal 1998.
Similarly, the six months ended March 28, 1998 reflected
a gross profit of $5.8 million as compared to a loss of $.5
million for the six months ended March 29, 1997. As a
percentage of net sales, gross profit increased from (1.0%) for
the first six months of fiscal 1997 to 10.4% for the first six
months of fiscal 1998.
Selling and Administrative Expenses. Selling and
administrative expenses include salaries and benefits,
corporate overhead, insurance, sales commissions and other
expenses incurred in the executive, sales and
marketing, shipping, personnel, and other administrative
departments. Selling and administrative expenses increased by
approximately $243,000 and $206,000 for the three months and
six months ended March 28, 1998, as compared to the same
periods in fiscal 1997. The increase in selling and
administrative expenses primarily in the second quarter is due
to an increase in personnel costs including workmen's
compensation and health benefits, and an increase in legal
fees. As a percentage of net sales, such expenses decreased
from 7.2% for the second quarter of fiscal 1997 to 6.4% for the
second quarter of fiscal 1998. As a percentage of net sales,
such expenses decreased from 7.3% for the six months ended
March 29, 1997 to 6.5% for the six months ended March 28, 1998.
The decrease, as a percentage of sales, is primarily the
result of an increase in net sales (as discussed above) for the
quarter and six months ended March 28, 1998.
Operating Income (Loss). For the reasons described above,
the second quarter of fiscal 1998 reflected operating income of
$1.5 million as compared to an operating loss of $2.1 million
for the second quarter of fiscal 1997. As a percentage of net
sales, operating income (loss) increased from (9.1%) in the
second quarter of 1997 to 5.1% in the second quarter of 1998.
Similarly, the six months ended March 28, 1998 reflected
an operating income of $2.2 million as compared to an operating
loss of $3.9 million for the six months ended March 29, 1997.
As a percentage of net sales, operating income (loss) increased
from (8.3%) for the six months ended March 29, 1997 to 3.9% for
the six months ended March 28, 1998.
Interest Expense. Interest expense increased by $73,000
for the three months ended March 28, 1998 from $554,000 for the
second quarter of fiscal 1997 to $627,000 for the second
quarter of fiscal 1998. Interest expense increased by $174,000
for the six months ended March 28, 1998 from $1.0 million for
the six months ended March 29, 1997 to $1.2 million for the six
months ended March 28, 1998. The increase is the result of
additional borrowings on the Company's line of credit.
Net Income (Loss). As a result of the above, the second
quarter of fiscal 1998 reflected net income of $.6 million as
compared to a net loss of $1.7 million for the second quarter
of fiscal 1997.
Similarly, the six months ended March 28, 1998 reflected
net income of $.6 million as compared to a net loss of $3.0
million for the six months ended March 29, 1997.
Liquidity and Capital Resources
The cash flows used by operating activities were $3.3 million
for the first six months of fiscal 1998 as compared to cash
flows provided of $1.1 million for the first six months of
fiscal 1997. The first six months of fiscal 1998 operating cash
flows reflect the increases in accounts receivable and
inventories (due primarily to the increased level of sales and
production). The cash flows provided by operating activities
for the first six months of fiscal 1997 reflect a reduction in
accounts receivable and inventories and an increase in accounts
payable.
The cash flows used by investing activities were $1.5
million for the first six months of fiscal 1998 as compared to
$3.2 million for the first six months of fiscal 1997. The cash
flows used by investing activities for the first six months of
fiscal 1998 consist of $1.9 million in capital expenditures
offset somewhat by an increase in capital expenditures payable
of $.4 million. The cash flows used by investing activities
for the first six months of fiscal 1997 consist of capital
expenditures of $1.7 million and a reduction in capital
expenditures payable of $1.5 million.
The cash flows provided from financing activities were
$4.8 million for the first six months of fiscal 1998 as
compared to $ 2.1 million for the first six months of fiscal
1997. The cash flows provided from financing activities for the
first six months of fiscal 1998 reflect net advances of $4.8
million on the Company's line of credit which were used
primarily for the working capital needs discussed above. The
cash flows provided from financing activities for the first six
months of fiscal 1997 reflect net advances of $ 2.6 million on
the Company's line of credit and $.5 million used for the
purchase of treasury stock.
Working capital at March 28, 1998 was $ 12.5 million as
compared to $ 11.3 million at September 27, 1997, and the
current ratio was 1.4 to 1.0 as compared to 1.5 to 1.0.
The Company's primary ongoing cash requirements are for
working capital needs. The two sources for the Company's
liquidity are internally generated funds and its bank credit
facility. The Company has $15.4 million in borrowings
outstanding on its line of credit as of March 28, 1998. The
Company believes that the unused portion of its $24.5 million
bank credit facility and internally generated funds will be
sufficient to fund its ongoing cash needs.
Year 2000 Compliance
The Company is in the process of modifying or replacing
its computer software and systems in order to resolve the Year
2000 problem. The Year 2000 problem is the result of programs
being designed to use two digits instead of four to define the
applicable year, therefore, it would recognize "00" as the year
1900 rather than the year 2000. The Company does not expect
that the cost of this process will be material to its financial
statements or results of its operations.
Outlook
Management continues to see strength in both demand and
pricing for the Company's products as exhibited by current
bookings. Further improvements in productivity combined with
strong demand and pricing in the Company's major markets should
continue to strengthen operating results.
Forward-Looking Statements
The matters discussed or incorporated by reference in this
Report on Form 10-Q that are forward-looking statements (as
defined in the Private Securities Litigation Reform Act of
1995) involve risks and uncertainities. These risks and
uncertainities include, but are not limited to, reliance on the
truck and utility vehicle industry; excess industry capacity;
product demand and industry pricing; volatility of raw material
costs, especially steel scrap; intense foreign and domestic
competition; management's estimate of niche market data; the
cyclical and capital intensive nature of the industry; and cost
of compliance with environmental regulations. These risks and
uncertainities could cause actual results of the Company to
differ materially from those projected or implied by such
forward-looking statements.
<PAGE>
PART II. - OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security-Holders
The annual meeting of shareholders was held on
February 4, 1998. In connection with the meeting,
proxies were solicited pursuant to the Securities
Exchange Act. The following are the voting results
on proposals considered and voted upon at the
meeting, all of which were described in the proxy
statement.
1. The nominees for director were elected. The
vote was as follows:
Term
For Withheld Expires
Carl E. Edwards, Jr. 4,387,841 20,700 2001
J. Marvin Quin, II 4,388,641 19,900 2001
2. The proposal to ratify the Board of Directors'
appointment of Arthur Andersen LLP as the
Company's independent public accountants for
the fiscal year ending September 26, 1998.
(For 4,401,041; Against 4,600; Abstain 2,900)
ITEM 6. Exhibits and Reports on Form 8-K
A) Exhibits
3.1 - Certificate of Incorporation of
Kentucky Electric Steel, Inc., filed
as Exhibit 3.1 to Registrant's
Registration Statement on Form S-1
(No. 33-67140), and incorporated by
reference herein.
3.2 - By-Laws of Kentucky Electric Steel,
Inc., filed as Exhibit 3.2 to
Registrant's Registration Statement
on Form S-1 (No. 33-67140), and
incorporated by reference herein.
27 - Financial Data Schedule
B) Reports on Form 8-K - None.
<PAGE
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.
DATED: May 11, 1998 KENTUCKY ELECTRIC STEEL, INC.
(Registrant)
William J. Jessie
William J. Jessie, Vice President,
Secretary, Treasurer, and
Principal Financial Officer
</DOCUMENT
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from Kentucky Electric Steel, Inc.'s condensed consolidated
financial statements as of and for the six month period ended
March 28, 1998 included in this Company's quarterly report on
Form 10-Q and is qualified in its entirety by reference to such
condensed consolidated financial statements.
</LEGEND>
<CIK> 0000910394
<NAME> KENTUCKY ELECTRIC STEEL, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-26-1998
<PERIOD-START> SEP-28-1997
<PERIOD-END> MAR-28-1998
<EXCHANGE-RATE> 1
<CASH> 128
<SECURITIES> 0
<RECEIVABLES> 15,564
<ALLOWANCES> 565
<INVENTORY> 19,036
<CURRENT-ASSETS> 41,107
<PP&E> 48,614
<DEPRECIATION> 12,978
<TOTAL-ASSETS> 84,199
<CURRENT-LIABILITIES> 28,618
<BONDS> 20,000
<COMMON> 50
0
0
<OTHER-SE> 34,830
<TOTAL-LIABILITY-AND-EQUITY> 84,199
<SALES> 55,630
<TOTAL-REVENUES> 55,630
<CGS> 49,867
<TOTAL-COSTS> 49,867
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 1,222
<INCOME-PRETAX> 976
<INCOME-TAX> 372
<INCOME-CONTINUING> 604
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 604
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
