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 July 1, 2000
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 August 8, 2000, is as follows:
4,065,830 shares of voting common stock, par value $.01 per share.
<PAGE>
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 ............ 9-12
PART II. OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K ................. 13
SIGNATURES ...................................... 14
<PAGE>
<TABLE>
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
July 1, Sept. 25,
2000 1999
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 141 $ 184
Accounts receivable, less allowance for doubtful
accounts and claims of $520 at July 1, 2000
and $430 at September 25, 1999 14,497 14,180
Inventories 20,914 22,751
Operating supplies and other current assets 5,649 5,294
Refundable income taxes 80 315
Deferred tax assets 768 683
Total current assets 42,049 43,407
PROPERTY, PLANT AND EQUIPMENT
Land and buildings 4,765 4,621
Machinery and equipment 45,451 45,324
Construction in progress 2,874 2,470
Less - accumulated depreciation (21,159) (18,307)
Net property, plant and equipment 31,931 34,108
DEFERRED TAX ASSETS 4,782 5,253
OTHER ASSETS 572 173
Total assets $ 79,334 $ 82,941
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Advances on line of credit $ 11,115 $ 14,510
Accounts payable 8,537 8,731
Capital expenditures payable 296 335
Accrued liabilities 3,298 3,988
Current portion of long-term debt 3,458 125
Total current liabilities 26,704 27,689
LONG-TERM DEBT 16,667 20,000
Total liabilities 43,371 47,689
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, 5,017,111 and 5,003,874
share issued, respectively 50 50
Additional paid-in capital 15,767 15,728
Less treasury stock - 942,581 and 932,581
shares at cost, respectively (4,292) (4,272)
Deferred compensation - (30)
Retained earnings 24,438 23,776
Total shareholders' equity 35,963 35,252
Total liabilities and shareholders' equity $ 79,334 $ 82,941
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<TABLE>
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Share and Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
July 1, June 26, July 1, June 26,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
NET SALES $ 30,629 $ 27,421 $ 89,106 $ 78,997
COST OF GOODS SOLD 27,383 23,710 81,183 71,250
Gross profit 3,246 3,711 7,923 7,747
SELLING AND ADMINISTRATIVE
EXPENSES 1,963 2,229 5,787 5,862
Operating income 1,283 1,482 2,136 1,885
INTEREST INCOME AND OTHER 831 1,147 880 1,197
INTEREST EXPENSE (632) (584) (1,949) (1,704)
Income before income taxes 1,482 2,045 1,067 1,378
PROVISION FOR INCOME
TAXES 562 776 405 524
Net income $ 920 $ 1,269 $ 662 $ 854
NET INCOME PER COMMON SHARE
- BASIC AND DILUTED $ .23 $ .31 $ .16 $ .21
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC 4,075,760 4,064,920 4,075,781 4,090,817
WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED 4,075,760 4,064,920 4,076,564 4,092,949
<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)
Nine Months Ended
July 1, June 26,
2000 1999
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 662 $ 854
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 2,926 2,688
Change in deferred taxes 471 572
Change in other (443) 100
Change in current assets and current
liabilities:
Accounts receivable (317) (1,541)
Inventories 1,837 212
Operating supplies and other
current assets (355) (317)
Refundable income taxes 235 -
Deferred tax assets (85) (148)
Accounts payable (194) 1,562
Accrued liabilities (690) (112)
Environmental liabilities - (982)
Net cash flows from operating activities 4,047 2,888
Cash Flows From Investing Activities:
Capital expenditures (675) (2,370)
Change in capital expenditures payable (39) (482)
Net cash flows from investing activities (714) (2,852)
Cash Flows From Financing Activities:
Net advances (repayments) on line of credit (3,395) 929
Purchases of treasury stock (20) (1,018)
Issuance of common stock 39 44
Net cash flows from financing activities (3,376) (45)
Net increase (decrease) in cash
and cash equivalents (43) (9)
Cash and Cash Equivalents at Beginning of Period 184 150
Cash and Cash Equivalents at End of Period $ 141 $ 141
Interest Paid, net of amount capitalized $ 2,288 $ 2,082
Income Taxes Paid $ - $ 100
<FN>
See notes to condensed consolidated financial statement
</TABLE>
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements represent Kentucky Electric Steel, Inc. and its wholly-
owned subsidiary, KESI Finance Company, (collectively the Company).
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 three-month and nine-month
periods ended July 1, 2000, are not necessarily indicative of the
results that may be expected for the year ending September 30, 2000.
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 25, 1999.
(2) Accounting Policies
Fiscal Year End
The Company's fiscal year ends on the last Saturday of
September. The fiscal year normally consists of fifty-two weeks;
however, the fiscal year ended September 30, 2000 has fifty-three
weeks. The nine months ended July 1, 2000 consists of forty weeks as
compared to thirty-nine weeks for the nine months ended June 26,
1999.
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.
Derivative Financial Instruments
In June 1998, the Financial Accounting Standards Board issued
Statement No. 133 (SFAS No. 133) "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 establishes
accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities.
It requires that an entity recognize all derivatives as either assets
or liabilities in the statement of financial position and measure
those instruments at fair value. The impact of adoption is not
expected to be material. The Company is required to adopt SFAS No.
133 effective as of the beginning of the first quarter of fiscal
2001.
(3) Inventories
Inventories at July 1, 2000 and September 25, 1999 consist of
the following ($000's):
July 1, Sept. 25,
2000 1999
Raw materials $ 3,136 $ 2,824
Semi-finished and finished goods 17,778 19,927
Total inventories $ 20,914 $ 22,751
(4) Earnings Per Share
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
July 1, 2000 June 26, 1999
Per Per
Share Share
Income Shares Amount Income Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Amounts for Basic
Earnings Per Share $ 920 4,075,760 $.23 $1,269 4,064,920 $ .31
Effect of Dilutive
Securities Options - - - - - -
Amounts for Diluted
Earnings Per Share $ 920 4,075,760 $.23 $1,269 4,064,920 $ .31
For the Nine For the Nine
Months Ended Months Ended
July 1, 2000 June 26, 1999
Per Per
Share Share
Income Shares Amount Income Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Amounts for Basic
Earnings Per Share $ 662 4,075,781 $.16 $ 854 4,090,817 $ .21
Effect of Dilutive
Securities Options - 783 - - 2,132 -
Amounts for Diluted
Earnings Per Share $ 662 4,076,564 $.16 $ 854 4,092,949 $ .21
</TABLE>
The following options were not included in the computation of
diluted earnings per share because to do so would have been
antidilutive for the applicable period:
<TABLE>
For the Three For the Three For the Nine For the Nine
Months Ended Months Ended Months Ended Months Ended
Options July 1, 2000 June 26, 1999 July 1, 2000 June 26, 1999
<S> <C> <C> <C> <C>
Transition stock 51,825 57,524 51,825 57,524
Employee stock 561,052 469,860 469,860 378,668
</TABLE>
(5) 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. 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 and such
amounts can be estimated. The Company has no recorded reserves for
environmental matters as of July 1, 2000. However, new information
or developments with respect to known matters or unknown conditions
could result in the recording of accruals in the periods in which
they become known. The Company believes that any liability that may
ultimately be determined with respect to commercial, product
liability, environmental or other matters will not have a material
effect on its financial condition or results of operation.
(6) Claim Settlement
The fiscal 1999 and 2000 third quarter and nine month periods
include other income of $1.1 million and $.8 million, respectively,
for a claim settlement pertaining primarily to the Company's purchase
of electrodes during the years 1992 to 1997.
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.
The Company's fiscal year ends on the last Saturday of
September. The fiscal year normally consists of fifty-two weeks;
however, the fiscal year ended September 30, 2000 has fifty-three
weeks. The nine months ended July 1, 2000 consists of forty weeks as
compared to thirty-nine weeks for the nine months ended June 26,
1999.
Net Sales. Net sales increased $3.2 million (11.7%) in the
third quarter of fiscal 2000 to $30.6 million, as compared to $27.4
million for the third quarter of fiscal 1999. The increase in sales
for the third quarter is due to an increase in tons shipped offset by
a decrease in average selling price. Third quarter fiscal 2000
finished goods tons shipped increased 9.0% over the comparable period
in fiscal 1999 to 69,800 tons. The average selling price for finished
goods shipped was down 1.8% in the third quarter of fiscal 2000 as
compared to the third quarter of fiscal 1999. The decrease in
finished goods selling price for the third quarter of fiscal 2000 is
primarily attributable to a change in product mix as the Company
increased its participation in the lower priced spring and commodity
SBQ markets. In addition, fiscal 2000 third quarter shipments
included 5,800 tons of billets (semi-finished product) as compared to
400 tons in fiscal 1999.
Net sales for the nine months ended July 1, 2000 increased $10.1
million (12.8%) to $89.1 million, as compared to $79.0 million for
the nine months ended June 26, 1999. The increase in net sales for
the first nine months of fiscal 2000 is attributed to an increase in
shipments offset by a decrease in average selling price. Finished
goods shipments for the first nine months of fiscal 2000 increased
15.4% over the comparable period in fiscal 1999 to 209,300 tons. The
average selling price per finished goods shipped was down 3.7% in the
first nine months of fiscal 2000. The decrease in finished goods
average selling price for the nine months of fiscal 2000 is primarily
attributable to a change in product mix as the Company increased its
participation in the lower priced spring and commodity SBQ markets.
In addition, fiscal 2000 shipments included 6,000 tons of billets as
compared to 400 tons of billets in fiscal 1999.
Cost of Goods Sold. Cost of goods sold increased $3.7 million
(15.5%) in the third quarter of fiscal 2000 to $27.4 million, as
compared to $23.7 million for the third quarter of fiscal 1999. As
a percentage of net sales, cost of goods sold increased from 86.5%
for the third quarter of fiscal 1999 to 89.4% for the third quarter
of fiscal 2000. The increase in cost of goods sold for the third
quarter of fiscal 2000 from the comparable period in fiscal 1999 is
primarily due to the increase in shipments (as discussed above) and
a small increase in per ton manufacturing costs. The increase in per
ton manufacturing costs reflects higher scrap metal prices partially
offset by lower conversion costs due to improvements in productivity.
The increase in cost of goods sold as a percentage of net sales for
the third quarter of fiscal 2000 as compared to the third quarter of
fiscal 1999 is primarily attributed to higher scrap prices and to a
lesser extent the 1.8% decrease in average selling price.
Cost of good sold for the nine months ended July 1, 2000
increased $9.9 million (13.9%) to $81.2 million as compared to $71.3
million for the nine months ended June 26, 1999. As a percentage of
net sales, cost of goods sold increased from 90.2% for the nine
months ended June 26, 1999 to 91.1% for the nine months ended July 1,
2000. The increase in cost of goods sold for the first nine months
of fiscal 2000 from the comparable period in fiscal 1999 is primarily
due to the increase in shipments (as discussed above) offset by a
decrease in the per ton cost of tons shipped. The decrease in the
per ton manufacturing costs of tons shipped resulted from lower
conversion costs due to increased productivity offset by higher scrap
costs. The increase in cost of goods sold as a percentage of net
sales for the first nine months of fiscal 2000, as compared to the
first nine months of fiscal 1999, reflects lower selling prices (as
discussed above) partially offset by lower per ton manufacturing
costs.
Gross Profit. As a result of the above, gross profit for the
third quarter of fiscal 2000 decreased by $.5 million (12.5%) to $3.2
million from $3.7 million for the third fiscal quarter of 1999. As a
percentage of net sales, gross profit decreased from 13.5% for the
third quarter of fiscal 1999 to 10.6% for the third quarter of fiscal
2000.
As a result of the above, gross profit for the nine months ended
July 1, 2000 increased by $.2 million (2.3%) to $7.9 million as
compared to $7.7 million for the nine months ended June 26, 1999. As
a percentage of net sales, gross profit decreased from 9.8% for the
first nine months of fiscal 1999 to 8.9% for the first nine months of
fiscal 2000.
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
decreased by approximately $.3 million and $.1 million for the three
months and nine months ended July 1, 2000, as compared to the same
periods in fiscal 1999. As a percentage of net sales, such expenses
decreased from 8.1% for the third quarter of fiscal 1999 to 6.4% for
the third quarter of fiscal 2000, and from 7.4% for the nine months
ended June 26, 1999 to 6.5% for the nine months ended July 1, 2000.
The decrease in selling and administrative expenses is due primarily
to a decrease in legal and professional fees and self-insured health
benefit costs. The decrease in legal and professional fees is
primarily due to unusually high legal and consulting fees incurred
during the third fiscal quarter of 1999 related to the Company's
electric service contract and a pending trade case with the
Department of Commerce.
Operating Income. For the reasons described above, operating
income decreased $.2 million from $1.5 million in the third quarter
of fiscal 1999 to $1.3 million in the third quarter of fiscal 2000.
As a percentage of net sales, operating income decreased from 5.4% in
the third quarter of 1999 to 4.2% in the third quarter of 2000.
Operating income increased $.2 million from $1.9 million for the
first nine months of fiscal 1999 to $2.1 million for the nine months
ended July 1, 2000. As a percentage of net sales, operating income
remained at 2.4% for both the nine months ended June 26, 1999 and the
nine months ended July 1, 2000.
Interest Income and Other. Interest and other income decreased
by $.3 million for the three months ended July 1, 2000 from $1.1
million for the third quarter of fiscal 1999 to $.8 million for the
third quarter of fiscal 2000. Interest and other income decreased by
$.3 million for the nine months ended July 1, 2000 from $1.2 million
for the nine months ended June 26, 1999 to $.9 million for the nine
months ended July 1, 2000. The third quarter and nine month periods
for fiscal 2000 and fiscal 1999 include other income of $.8 million
and $1.1 million, respectively, for a claim settlement pertaining
primarily to the Company's purchase of electrodes during the years
1992 to 1997.
Interest Expense. Interest expense increased by $48,000 for the
three months ended July 1, 2000 from $584,000 for the third quarter
of fiscal 1999 to $632,000 for the third quarter of fiscal 2000.
Interest expense increased by $245,000 for the nine months ended July
1, 2000 from $1.7 million for the nine months ended June 26, 1999 to
$1.9 million for the nine months ended July 1, 2000. The increase in
interest expense for the third quarter is primarily due to an
increase in the interest rate on the Company's line of credit. The
increase in interest expense for the first nine months of fiscal 2000
is due to an increase in the average amount outstanding as well as an
increase in the interest rate on the Company's line of credit.
Net Income. As a result of the above, net income decreased $.4
million from $1.3 million for the third quarter of fiscal 1999 to $.9
million for the third quarter of fiscal 2000.
As a result of the above, net income decreased $.2 million from
$.9 million for the first nine months of fiscal 1999 to $.7 million
for the first nine months of fiscal 2000.
Liquidity and Capital Resources
The cash flows provided by operating activities were $4.0
million for the first nine months of fiscal 2000 as compared to $2.9
million for the first nine months of fiscal 1999. The first nine
months of fiscal 2000 reflect the profitable operations of $.7
million, $2.9 million in depreciation and amortization, a decrease in
inventories of $1.8 million and a decrease in accrued liabilities of
$.7 million. The decrease in inventories reflects lower billet and
finished goods tons due to an increase in tons shipped and lower per
ton cost of finished goods. The decrease in accrued liabilities
reflects semi-annual interest payment made in the third quarter. The
first nine months of fiscal 1999 reflect the profitable operations of
$.9 million, $2.7 million in depreciation and amortization, an
increase of $1.5 million in accounts receivable, an increase of $1.6
million in accounts payable and a decrease of $1.0 million in
environmental liabilities.
The cash flows used by investing activities were $.7 million for
the first nine months of fiscal 2000 as compared to $2.9 million for
the first nine months of fiscal 1999. The cash flows used by
investing activities for the first nine months of fiscal 2000 consist
of $.7 million in capital expenditures. The cash flows used by
investing activities for the first nine months of fiscal 1999 consist
of capital expenditures of $2.4 million and a reduction in capital
expenditures payable of $.5 million.
The cash flows used in financing activities were $3.4 million
for the first nine months of fiscal 2000 as compared to cash flows
used of $45,000 for the first nine months of fiscal 1999. The cash
flows used in financing activities for the first nine months of
fiscal 2000 reflect repayments of $3.4 million on the Company's line
of credit. The cash flows used in financing activities for the first
nine months of fiscal 1999 reflect net advances of $1.0 million on
the Company's line of credit which were used primarily for capital
expenditures and $1.0 million used for purchase of treasury stock.
Working capital at July 1, 2000 was $15.3 million as compared to
$15.7 million at September 25, 1999, and the current ratio was 1.6 to
1.0 at the end of both periods.
The Company's primary ongoing cash requirements are for current
capital expenditures and ongoing working capital requirements. In
addition, principal payments on the unsecured senior notes commence
on November 1, 2000 and are due in annual installments of $3.3
million over six years. The two sources for the Company's liquidity
are internally generated funds and its bank credit facility. The
Company has a $24.5 million unsecured bank credit facility, which
expires January 31, 2002. Borrowings are limited to defined
percentages of eligible inventory and accounts receivable. As of
July 1, 2000, the Company had $11.1 million outstanding and $9.6
million available under its line of credit. The Company believes
that the bank credit facility and internally generated funds will be
sufficient to fund its ongoing cash needs.
Outlook
Management believes that, while the Company's backlog of orders
remains firm, there appears to be some market softening. Management
will closely monitor market conditions during the next quarter.
Quantitative and Qualitative Disclosure About Market Risk
Management does not believe that there is any material market
risk exposure with respect to derivative or other financial
instruments that would require disclosure under this item.
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 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 Statements 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
99 Ownership of Certain Beneficial Owners and
Management
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: August 8, 2000 KENTUCKY ELECTRIC STEEL, INC.
(Registrant)
William J. Jessie
William J. Jessie, Vice President,
Secretary, Treasurer, and
Principal Financial Officer
<PAGE>
