<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 JULY 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 333-4513
RENCO METALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3724916
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
238 NORTH 2200 WEST
SALT LAKE CITY, UTAH 84116
(Address of principal executive (Zip Code)
offices)
(801) 532-2043
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 proceeding 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
Number of shares outstanding of each of the registrant's classes of common
stock, as of September 10, 1998:
COMMON STOCK, NO PAR VALUE 1,000 SHARES
<PAGE>
FORM 10-Q
RENCO METALS, INC.
QUARTER ENDED JULY 31, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
TABLE OF CONTENTS 2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS - JULY 31, 1998 AND OCTOBER 31, 1997 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - NINE MONTHS AND THREE MONTHS
ENDED JULY 31, 1998 AND 1997 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - NINE MONTHS ENDED JULY 31,
1998 AND 1997 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 8
PART II - OTHER INFORMATION
ITEM 5 OTHER INFORMATION 11
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES 12
</TABLE>
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<PAGE>
RENCO METALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JULY 31, October 31,
1998 1997
ASSETS (UNAUDITED) (Audited)
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 20,874 $ 26,607
Accounts receivable, less allowance for doubtful accounts of
$626 in 1998 and $514 in 1997 24,964 27,480
Inventories, net (note 2) 34,876 24,744
Prepaid expenses and other current assets 2,326 3,209
------------ ------------
Total current assets 83,040 82,040
------------ ------------
Property, plant, and equipment, net 35,149 37,715
Other assets, net 5,906 6,632
------------ ------------
$ 124,095 $ 126,387
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
Accounts payable $ 7,356 $ 8,262
Accrued expenses 13,639 19,451
Other current liabilities 548 248
------------ ------------
Total current liabilities 21,543 27,961
------------ ------------
Long-term debt 155,126 155,165
Other liabilities 11,785 12,127
------------ ------------
Total liabilities 188,454 195,253
------------ ------------
Stockholder's deficit:
Common stock, no par value. Authorized, issued, and
Outstanding 1,000 shares 1 1
Additional paid-in capital 500 500
Accumulated deficit (64,860) (69,367)
------------ ------------
Total stockholder's deficit (64,359) (68,866)
------------ ------------
Commitments and contingencies ------------ ------------
$ 124,095 $ 126,387
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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<PAGE>
RENCO METALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS
ENDED JULY 31, ENDED JULY 31,
----------------------- ----------------------
1998 1997 1998 1997
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Sales $142,886 $140,960 $47,922 $46,359
Costs and expenses:
Cost of sales 91,915 91,145 31,375 31,405
Depreciation, depletion, and amortization 6,463 5,759 2,057 1,836
Selling, general, and administrative expenses 17,366 16,077 5,324 4,910
-------- -------- ------- -------
Total costs and expenses 115,744 112,981 38,756 38,151
-------- -------- ------- -------
Income from operations 27,142 27,979 9,166 8,208
Other income (expense):
Interest income 909 845 324 327
Interest expense (14,186) (13,993) (4,736) (4,700)
-------- -------- ------- -------
Total other income (expense) (13,277) (13,148) (4,412) (4,373)
Income before income taxes 13,865 14,831 4,754 3,835
Provision for income taxes 4,158 5,457 1,438 1,292
-------- -------- ------- -------
Net income $ 9,707 $ 9,374 $ 3,316 $ 2,543
-------- -------- ------- -------
-------- -------- ------- -------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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<PAGE>
RENCO METALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED JULY 31,
----------------------
1998 1997
------- -------
<S> <C> <C>
Net cash provided by operating activities $ 3,494 $ 8,813
------- -------
Cash flows from investing activities -
Capital expenditures, net (3,933) (4,610)
------- -------
Net cash used in investing activities (3,933) (4,610)
------- -------
Cash flows from financing activities:
Net borrowings under revolving credit agreements 1,478 1,190
Repayment of long-term debt (1,512) (13)
Early redemption premium paid (60) -
Dividends (5,200) (6,600)
------- -------
Net cash used in financing activities (5,294) (5,423)
------- -------
Decrease in cash and cash equivalents (5,733) (1,220)
Cash and cash equivalents, beginning of period 26,607 20,779
------- -------
Cash and cash equivalents, end of period $20,874 $19,559
------- -------
------- -------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest $17,810 $17,609
Cash paid during the period for income taxes $4,271 $3,530
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-5-
<PAGE>
RENCO METALS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared from the accounting records of Renco Metals, Inc. (Renco Metals)
and its subsidiaries (the Company), Magnesium Corporation of America
(Magcorp), and Sabel Industries, Inc. (Sabel), without audit (except where
presented data is specifically identified as audited) pursuant to the rules
and regulations of the Securities and Exchange Commission. Renco Metals is
a 100 percent owned subsidiary of The Renco Group, Inc. (Group). The
financial statements reflect 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 presented. The
results of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the full year.
Renco Metals' senior notes are unconditionally and fully guaranteed,
jointly and severally, by both of its subsidiaries, Magcorp and Sabel (the
Guarantors), each of which is wholly-owned. Separate financial statements
of the Guarantors are not presented because, in management's opinion, such
financial statements would not be material to investors because Renco
Metals is a holding company with no independent operations and its only
assets are cash and its investment in Magcorp and Sabel. Summarized
financial information on the combined Guarantors is presented below:
SUMMARIZED COMBINED GUARANTOR FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Nine months Three months
Ended July 31, Ended July 31,
(Unaudited) (Unaudited)
----------------------- -----------------------
1998 1997 1998 1997
-------- -------- -------- --------
(dollars in thousands) (dollars in thousands)
<S> <C> <C> <C> <C>
Statement of operations data:
Net sales $142,886 $140,960 $ 47,922 $ 46,359
Cost of sales $ 91,915 $ 91,145 $ 31,375 $ 31,405
Net income $ 9,731 $ 9,354 $ 3,352 $ 2,530
</TABLE>
<TABLE>
<CAPTION>
JULY 31 October 31,
1998 1997
(UNAUDITED) (Audited)
----------- -----------
(dollars in thousands)
<S> <C> <C>
Balance sheet data:
Current assets $ 81,614 $ 78,793
Noncurrent assets $ 41,055 $ 44,347
Current liabilities $ 19,227 $ 21,336
Noncurrent liabilities $ 16,911 $ 15,792
</TABLE>
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<PAGE>
(2) INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
JULY 31, October 31,
1998 1997
(UNAUDITED) (Audited)
----------- ------------
(dollars in thousands)
<S> <C> <C>
Finished goods $ 24,632 $ 16,264
Brine in ponds 1,168 1,400
Spare parts and supplies 8,599 7,683
Raw materials and work-in-process 840 760
----------- ------------
35,239 26,107
Less LIFO reserve 363 1,363
----------- ------------
$ 34,876 $ 24,744
----------- ------------
----------- ------------
</TABLE>
(3) ENVIRONMENTAL MATTERS AND OTHER CONTINGENCIES
The Company is and will continue to be subject to numerous federal and
state 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 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. The Company cannot
currently assess the impact of more stringent standards on its results of
operations or financial condition.
Magcorp's most significant long-term environmental issue is compliance with
the Clean Air Act. Title III of the Clean Air Act will establish, on a
published schedule, new emission standards for previously unregulated air
toxins. These national emission standards for hazardous air pollutants
("NESHAPS") will be technology based and will be designed to achieve the
maximum control as determined by a comparison of installations at similar
facilities in specific industry categories. Representatives from the
Environmental Protection Agency have visited Magcorp's facility in
preparation for the process of establishing NESHAPS for control of chlorine
and hydrogen chloride emissions.
It is expected that Magcorp will be required to make substantial reductions
in chlorine and hydrogen chloride emissions to meet NESHAPS for primary
magnesium refineries that will be promulgated in November 2000, with a
typical three to five year timetable for compliance to follow. In response
to the anticipated regulations imposed under amendments to the Clean Air
Act, Magcorp has embarked on a program to acquire new electrolytic cell
technology that will reduce chlorine emissions at the source. The new cells
are also expected to significantly reduce costs since they have much higher
throughput and are more energy efficient. Assuming the successful
completion of prototype work early in fiscal year 1999, the conversion of
the remaining cells is expected to be completed over a period of
approximately two years. With respect to hydrogen chloride, Magcorp has
installed and is successfully operating scrubbers that are considered to
use maximum available control technology to reduce pertinent sources of
emissions. Magcorp plans to spend a minimum of $40 million of its capital
budget for fiscal years 1999, 2000, and 2001, directly or indirectly to
meet environmental regulatory requirements, primarily for NESHAPS, and for
anticipated other future requirements. Prototype cell project development
expenditures to date total $3.5 million. There can be no assurance that
Magcorp's cell conversion program will be successful, and to the extent it
is not successful, it could have a material adverse effect on the Company's
financial condition and results of operations.
Representatives of the Utah State Division of Environmental Quality
Division of Solid and Hazardous Waste visited Magcorp in 1994 regarding the
issue of whether piles of material generated in the
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<PAGE>
electrolytic process, which cover an extensive land area at Magcorp's
Rowley facility, can be classified as a hazardous or solid waste, and if so
classified, what measures might be required to investigate and address
these piles. No similar material has been classified by the State as
hazardous or solid waste. The State accepted Magcorp's written storage
plan that represents the piles are not hazardous and no remediation or
action by the Company is necessary. If the nature of these wastes changes,
they could become subject to State regulation, and corrective action could
be required. The costs of such compliance, if any, could be material;
however, such costs cannot be assessed at this time.
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.
RESULTS OF OPERATIONS - NINE MONTHS ENDED JULY 31, 1998 COMPARED TO NINE MONTHS
ENDED JULY 31, 1997
SALES for the nine-month period ended July 31, 1998 increased 1.4 percent over
the prior period. The increase was attributable to an 11.2 percent increase in
Sabel's revenues, offset by a 1.7 percent decrease in Magcorp's revenues.
Magnesium shipments decreased 0.9 percent and Magcorp's average selling price
for magnesium decreased 3.1 percent compared to the corresponding period in
1997. Foreign import competition is putting pressure on magnesium volumes and
pricing, particularly in the steel desulfurization segment of the magnesium
business. Magnesium pricing and volume are dependent on overall market supply
and demand, and there is no certainty that current trends will not continue.
Sabel's sales increase was primarily due to the opening of a new steel service
center in Newnan, Georgia in November 1997.
COST OF SALES for the nine-month period ended July 31, 1998 increased 0.8
percent on a consolidated basis. Sabel's cost of sales increased 11.7 percent
and Magcorp's decreased 2.8 percent, which values are generally consistent with
changes in sales volumes discussed above. Magcorp's decrease was also
attributable to reduced maintenance costs for the period.
DEPRECIATION, DEPLETION, AND AMORTIZATION for the nine-month period ended July
31, 1998 increased due to increased depreciation of plant and equipment as the
result of recent capital equipment additions.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES for the nine-month period ended
July 31, 1998 increased due in large part to increased costs associated with the
new steel service center at Sabel and increased computer software consulting
costs at Magcorp, offset by decreased development costs when compared to the
corresponding period in 1997.
INTEREST INCOME for the nine-month period ended July 31, 1998 increased $64,000
due to cash and cash equivalent balances on hand that increased to a month-end
average of $26.5 million in the current period from a month-end average of
$23.5 million in the corresponding prior period.
INTEREST EXPENSE for the nine-month period ended July 31, 1998 was higher than
that of the corresponding prior period due primarily to higher revolving credit
borrowings at Sabel in 1998.
INCOME TAXES are estimated at statutory rates, including estimates of available
credits, for both periods presented.
RESULTS OF OPERATIONS - THREE MONTHS ENDED JULY 31, 1998 COMPARED TO THREE
MONTHS ENDED JULY 31, 1997
SALES for the three-month period ended July 31, 1998 increased 3.4 percent over
the prior period. The increase was attributable to an 11.5 percent increase in
Sabel's revenues, offset by a 0.8 percent decrease in Magcorp's revenues.
Magnesium shipments decreased 1.2 percent and Magcorp's average selling price
for magnesium decreased 0.4 percent. Foreign import competition is putting
pressure on magnesium volumes and pricing, particularly in the steel
desulfurization segment of the magnesium business. Magnesium pricing and volume
are
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<PAGE>
dependent on overall market supply and demand, and there is no certainty that
current trends will not continue. Sabel's sales increase was primarily due to
the opening of a new steel service center in Newnan, Georgia in November 1997.
COST OF SALES for the three-month period ended July 31, 1998 decreased 0.1
percent on a consolidated basis. Magcorp's cost of sales decreased 3.8 percent,
offset by an increase of 11.2 percent at Sabel. Cost of sales trends are
consistent with changes in sales volumes discussed above. Magcorp's decrease
was also attributable to reduced maintenance costs for the period.
DEPRECIATION, DEPLETION, AND AMORTIZATION for the three-month period ended July
31, 1998 increased due to increased depreciation of plant and equipment as the
result of recent capital equipment additions.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES for the three-month period ended
July 31, 1998 increased due in large part to increased costs associated with the
new steel service center at Sabel, together with increased computer software
consulting costs and magnesium process enhancement piloting costs at Magcorp.
INTEREST EXPENSE for the three-month period ended July 31, 1998 was higher than
that of the corresponding prior period due to higher revolving credit borrowings
at Sabel in 1998.
INCOME TAXES are estimated at statutory rates, including estimates of available
credits, for both periods presented.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity needs arise from working capital requirements, capital
investments, and interest payment obligations. The Company's primary available
source of liquidity is from cash provided by operating activities. The Company
also has available $40.0 million in revolving credit facilities that provide for
advances by the lender based on specified percentages of eligible accounts
receivable and inventories to a maximum of $33.0 million for Magcorp and
$7.0 million for Sabel, net of outstanding letters of credit. As of July
31, 1998, the unused amounts available to Magcorp and Sabel were approximately
$27.1 million and $2.3 million, respectively. During the nine-month period
ended July 31, 1998, Sabel had net borrowings of $1.5 million under its
revolving credit facility to fund working capital requirements. Magcorp has not
borrowed cash under its revolving credit facility since November 1994.
Cash provided by operating activities was $3.5 million for nine-month period
ended July 31, 1998 compared to $8.8 million for the corresponding 1997 period.
The decrease in operating cash flow in the 1998 period compared to the 1997
period resulted in large part from increases in inventories, and to a lesser
extent from decreases in accounts payable and accrued expenses, and was offset
by decreases in accounts receivable. Magcorp is increasing inventory levels in
1998 and early 1999 to accommodate decreases in production that are planned to
take place during the period of conversion to new electrolytic cell technology
discussed below. The increase in inventories is also attributable to increased
volumes on hand of recycled magnesium to be processed by third parties or
already processed by third parties.
Capital expenditures were $3.9 million during the nine-month period ended July
31, 1998. Capital expenditures are budgeted at approximately $2 million for the
remaining three months of fiscal year 1998, $24 million for fiscal year 1999,
and $24 million for fiscal year 2000. An estimated $40 million of estimated
capital expenditures for fiscal years 1999 and 2000 are related to new
electrolytic cell technology that is expected to improve manufacturing
efficiencies and ensure compliance with future environmental standards.
Assuming the successful completion of prototype work early in fiscal year 1999,
the conversion of the remaining cells is expected to be completed over a period
of approximately two years. As a result, the associated cost reductions and
related manufacturing efficiencies are not expected to be realized in the
Company's operating results until fiscal year 2001.
On July 15, 1998, as provided by the terms of the indenture governing the
Company's 12% Senior Notes due 2000, the Company redeemed all of the remaining
$1.5 million of the Notes at 104 percent of the principal amount together with
accrued and unpaid interest to that date.
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<PAGE>
During the nine-month period ended July 31, 1998, dividends totaling
$5.2 million were paid on all outstanding shares of common stock to the
Company's sole stockholder, Group. The declaration and payment of dividends by
the Company are restricted by the Company's long-term debt agreements, which
generally allow dividends on a cumulative basis up to 50 percent of consolidated
net income earned since the issuance of the 11.5% Senior Notes. Based on
profitability and after taking into account the Company's prospects and
liquidity needs, the Company plans to pay quarterly dividends to the extent
allowed by the Company's long-term debt agreements. Management anticipates that
existing cash balances and cash generated from operations and available
revolving credit facilities will be sufficient to finance the Company's
liquidity needs for the foreseeable future.
The Company's long-term debt agreements contain numerous covenants and
prohibitions that limit the financial activities of the Company, including
requirements that the Company satisfy certain financial ratios and limitations
on 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.
YEAR 2000 BUSINESS MATTERS
Many information technology (IT) and process control systems used in the current
business environment were designed to use only two digits in the date field and
thus may not function properly in the Year 2000 and after. This could result in
system failures or in miscalculations causing disruption of operations,
including, but not limited to, an inability to process transactions, to send and
receive electronic data, or to engage in routine business activities and
operations. Management has initiated projects to prepare the Company's IT and
process control systems to be Year 2000 compliant. The projects consist of four
phases: evaluation, renovation, testing, and implementation. The Company
expects to both replace some systems and upgrade others. Project funds to cover
remaining remediation costs as incurred are expected to come from operations.
For IT systems, the evaluation phase is complete. IT projects since 1994 have
been planned with Year 2000 compliance in mind, and no other IT projects have
been deferred to accommodate Year 2000 costs. Replacement of mainframe-based IT
systems began in 1994 and as a result, the renovation phase is approximately 90%
complete. The Company anticipates completion of renovation, testing and
implementation of its IT systems by July 1999. Since Year 2000-related
replacements began in 1994, the Company has expensed approximately $1 million in
IT maintenance or modification costs and capitalized approximately $600,000.
Remaining IT modification costs and capital costs are each estimated to be less
than $200,000, which is about one-half of the IT budget.
The Company's IT and non-IT systems are not materially interdependent. Process
control and other non-IT systems are being evaluated individually and may
require replacement software, reprogramming or other corrective actions.
Completion status of non-IT systems is estimated to be as follows: evaluation;
90%, renovation; 50%, testing; 40%, and implementation; 30%. Because the
evaluation phase of process control systems is not complete, management is
unable at this time to estimate the timetable for completion of remaining
phases. However, total costs are preliminarily estimated not to exceed
$100,000.
The Company is communicating with third parties material to the Company's
operations, including electric and natural gas utility companies, to determine
the extent of the Company's vulnerability to the failure of third parties to
remediate their own Year 2000 issues. The Year 2000 issue is a potentially
significant issue for most companies, with implications that cannot be
anticipated or predicted with any degree of certainty. There can be no
assurance that the systems of third parties material to the Company's operations
will be Year 2000 compliant, or that their failure to be compliant will not have
an adverse effect on the Company's operations.
The Company intends to make the necessary modifications necessary to mitigate
the risk of disruption to its operations. The remaining costs of this project
and its timely completion are dependent upon numerous assumptions about future
events, including availability of certain resources, third party remediation
plans, and other factors, many of which are beyond the Company's control.
Contingency plans are being developed as part of the project, but a timetable
for completion has not been established.
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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;
industry capacity; demand; industry trends; competition; currency fluctuations;
the loss of any significant customers; availability of qualified personnel;
successful completion of planned installation of new technology, and major
equipment failures.
PART II- OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
For information as to the environmental matters, see Part I, Note 3 to Item 1,
Financial Statements.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
A list of 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 reports on Form 8-K were filed during the quarter for which this report
is filed.
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<PAGE>
S I G N A T U R E S
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.
RENCO METALS, INC.
(Registrant)
September 10, 1998 /s/ Ira Leon Rennert
- -------------------------- ---------------------------
Date Ira Leon Rennert
Chairman of the Board and
Principal Executive Officer
September 10, 1998 /s/ Roger L. Fay
- -------------------------- ---------------------------
Date Roger L. Fay
Vice President - Finance
Principal Financial and
Accounting Officer
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<PAGE>
RENCO METALS, INC.
EXHIBIT INDEX
<TABLE>
<S> <C>
Exhibit No. Identification of Exhibits
10.1.1 Amendments to Employment Agreements between Magnesium
Corporation of America and:
(a) Michael H. Legge
(b) Ron L. Thayer
(c) Howard I. Kaplan
(d) Lee R. Brown
(e) Todd R. Ogaard
27 Financial Data Schedule
</TABLE>
<PAGE>
EXHIBIT 10.1.1(A)
Magnesium Corporation of America
238 North 2200 West Street
Salt Lake City, UT 84116
July 22, 1998
Mr. Michael H. Legge
C/O Magnesium Corporation of America
238 North 2200 West Street
Salt Lake City, UT 84116
Dear Mike:
Reference is made to your Employment Agreement with this Corporation dated
January 1, 1993 (the "Agreement").
This will confirm our agreement with you as follows:
The base salary provided in Section 2(a) of the agreement is increased from
$120,000 to $220,000, effective this date.
The parties reaffirm the Agreement as amended hereby.
Please confirm your agreement to the foregoing by signing and returning the
enclosed copy.
Very truly yours,
MAGNESIUM CORPORATION
OF AMERICA
By /s/ Roger L. Fay
CONFIRMED AND AGREED TO:
/s/ Michael H. Legge
<PAGE>
EXHIBIT 10.1.1(B)
Magnesium Corporation of America
238 North 2200 West Street
Salt Lake City, UT 84116
July 22, 1998
Mr. Ron L. Thayer
C/O Magnesium Corporation of America
238 North 2200 West Street
Salt Lake City, UT 84116
Dear Ron:
Reference is made to your Employment Agreement with this Corporation dated
January 1, 1993 (the "Agreement").
This will confirm our agreement with you as follows:
The base salary provided in Section 2(a) of the agreement is increased from
$80,000 to $120,000, effective this date.
The parties reaffirm the Agreement as amended hereby.
Please confirm your agreement to the foregoing by signing and returning the
enclosed copy.
Very truly yours,
MAGNESIUM CORPORATION
OF AMERICA
By /s/ Michael H. Legge
CONFIRMED AND AGREED TO:
/s/ Ron L. Thayer
<PAGE>
EXHIBIT 10.1.1(C)
Magnesium Corporation of America
238 North 2200 West Street
Salt Lake City, UT 84116
July 22, 1998
Mr. Howard I. Kaplan
C/O Magnesium Corporation of America
238 North 2200 West Street
Salt Lake City, UT 84116
Dear Howard:
Reference is made to your Employment Agreement with this Corporation dated
September 1, 1989 (the "Agreement").
This will confirm our agreement with you as follows:
The base salary provided in Section 2(a) of the agreement is increased from
$94,723 to $120,000, effective this date.
The parties reaffirm the Agreement as amended hereby.
Please confirm your agreement to the foregoing by signing and returning the
enclosed copy.
Very truly yours,
MAGNESIUM CORPORATION
OF AMERICA
By /s/ Michael H. Legge
CONFIRMED AND AGREED TO:
/s/ Howard I. Kaplan
<PAGE>
EXHIBIT 10.1.1(D)
Magnesium Corporation of America
238 North 2200 West Street
Salt Lake City, UT 84116
July 22, 1998
Mr. Lee R. Brown
C/O Magnesium Corporation of America
238 North 2200 West Street
Salt Lake City, UT 84116
Dear Lee:
Reference is made to your Employment Agreement with this Corporation dated
September 1, 1989 (the "Agreement").
This will confirm our agreement with you as follows:
The base salary provided in Section 2(a) of the agreement is increased from
$76,000 to $96,000, effective this date.
The parties reaffirm the Agreement as amended hereby.
Please confirm your agreement to the foregoing by signing and returning the
enclosed copy.
Very truly yours,
MAGNESIUM CORPORATION
OF AMERICA
By /s/ Michael H. Legge
CONFIRMED AND AGREED TO:
/s/ Lee R. Brown
<PAGE>
EXHIBIT 10.1.1(E)
Magnesium Corporation of America
238 North 2200 West Street
Salt Lake City, UT 84116
July 22, 1998
Mr. Todd R. Ogaard
C/O Magnesium Corporation of America
238 North 2200 West Street
Salt Lake City, UT 84116
Dear Lee:
Reference is made to your Employment Agreement with this Corporation dated
December 1, 1994 (the "Agreement").
This will confirm our agreement with you as follows:
The base salary provided in Section 2(a) of the agreement is increased from
$82,000 to $96,000, effective this date.
The parties reaffirm the Agreement as amended hereby.
Please confirm your agreement to the foregoing by signing and returning the
enclosed copy.
Very truly yours,
MAGNESIUM CORPORATION
OF AMERICA
By /s/ Michael H. Legge
CONFIRMED AND AGREED TO:
/s/ Todd R. Ogaard
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<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> JUL-31-1998
<CASH> 20,874
<SECURITIES> 0
<RECEIVABLES> 25,590
<ALLOWANCES> 626
<INVENTORY> 34,876
<CURRENT-ASSETS> 83,040
<PP&E> 85,597
<DEPRECIATION> 50,448
<TOTAL-ASSETS> 124,095
<CURRENT-LIABILITIES> 21,543
<BONDS> 155,126
0
0
<COMMON> 1
<OTHER-SE> (64,360)
<TOTAL-LIABILITY-AND-EQUITY> 124,095
<SALES> 142,886
<TOTAL-REVENUES> 142,886
<CGS> 91,915
<TOTAL-COSTS> 115,744
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 113
<INTEREST-EXPENSE> 14,186
<INCOME-PRETAX> 13,865
<INCOME-TAX> 4,158
<INCOME-CONTINUING> 9,707
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,707
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
