<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 JANUARY 31, 1999
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 offices) (Zip Code)
(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 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
Number of shares outstanding of each of the registrant's classes of common
stock, as of March 12, 1999:
COMMON STOCK, NO PAR VALUE 1,000 SHARES
<PAGE>
FORM 10-Q
RENCO METALS, INC.
QUARTER ENDED JANUARY 31, 1999
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 - January 31, 1999 And October 31, 1998 3
Condensed Consolidated Statements Of Income - Three Months Ended January 31, 1999
And 1998 4
Condensed Consolidated Statements Of Cash Flows - Three Months Ended January 31, 1999
And 1998 5
Notes To Consolidated Financial Statements 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 7
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES 12
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
RENCO METALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JANUARY 31, October 31,
1999 1998
ASSETS (UNAUDITED) (Audited)
-------- ------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 14,049 $ 21,690
Accounts receivable, less allowance for doubtful accounts of
$551 in 1999 and $514 in 1998 23,191 25,749
Inventories, net (note 2) 38,383 34,500
Prepaid expenses and other current assets 3,215 3,024
--------- ---------
Total current assets 78,838 84,963
--------- ---------
Property, plant, and equipment, net 36,330 35,385
Other assets, net 5,524 5,626
--------- ---------
$ 120,692 $ 125,974
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDER'S DEFICIT
-------------------------------------
Current liabilities:
Current installments of long-term debt $ 23 $ 23
Accounts payable 6,430 7,279
Accrued expenses and other current liabilities 9,485 15,149
--------- ---------
Total current liabilities 15,938 22,451
--------- ---------
Long-term debt, excluding current installments 154,678 154,954
Other liabilities 12,219 14,180
--------- ---------
Total liabilities 182,835 191,585
--------- ---------
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 (62,644) (66,112)
--------- ---------
Total stockholder's deficit (62,143) (65,611)
--------- ---------
Commitments and contingencies
--------- ---------
$ 120,692 $ 125,974
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
RENCO METALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED JANUARY 31,
---------------------------
1999 1998
---------- ----------
<S> <C> <C>
Sales $ 41,620 $ 47,419
Costs and expenses:
Cost of sales 28,768 30,934
Depreciation, depletion, and amortization 2,336 2,276
Selling, general, and administrative expenses 4,679 5,166
---------- ----------
Total costs and expenses 35,783 38,376
---------- ----------
Income from operations 5,837 9,043
Other income (expense):
Interest income 239 316
Interest expense (4,671) (4,720)
---------- ----------
Total other income (expense) (4,432) (4,404)
---------- ----------
Income before income taxes 1,405 4,639
Income tax (benefit) expense (note 3) (2,063) 1,362
---------- ----------
Net income $ 3,468 $ 3,277
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
RENCO METALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED JANUARY 31,
---------------------------
1999 1998
---------- ---------
<S> <C> <C>
Net cash used in operating activities $ (4,035) $ (1,172)
---------- ---------
Cash flows from investing activities -
Capital expenditures, net (3,280) (1,483)
---------- ---------
Net cash used in investing activities (3,280) (1,483)
---------- ---------
Cash flows from financing activities:
Net borrowings (repayments) under revolving credit agreements (270) 905
Repayment of long-term debt (6) (5)
Payment of financing fees (50) -
Dividends - (2,000)
---------- ---------
Net cash used in financing activities (326) (1,100)
---------- ---------
Decrease in cash and cash equivalents (7,641) (3,755)
Cash and cash equivalents, beginning of period 21,690 26,607
---------- ---------
Cash and cash equivalents, end of period $ 14,049 $ 22,852
---------- ---------
---------- ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest $ 8,737 $ 8,830
Cash paid during the period for income taxes $ 65 $ 12
</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% 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. These interim condensed 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, 1998.
Renco Metals' 11.5% Senior Notes due 2003 (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>
Three months
Ended January 31,
(Unaudited)
-------------------------
1999 1998
--------- ---------
(dollars in thousands)
<S> <C> <C>
Statement of operations data:
Net sales $41,620 $47,419
Cost of sales $28,768 $30,934
Income before extraordinary item $ 3,450 $ 3,276
Net income $ 3,450 $ 3,276
</TABLE>
<TABLE>
<CAPTION>
JANUARY 31, October 31,
1999 1998
(UNAUDITED) (Audited)
----------- -----------
(dollars in thousands)
<S> <C> <C>
Balance sheet data:
Current assets $77,350 $83,687
Noncurrent assets $41,854 $41,011
Current liabilities $13,605 $16,300
Noncurrent liabilities $16,897 $19,134
</TABLE>
6
<PAGE>
(2) INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
JANUARY 31, October 31,
1999 1998
(UNAUDITED) (Audited)
----------- -----------
(dollars in thousands)
<S> <C> <C>
Finished goods $28,893 $24,451
Brine in ponds 1,141 1,100
Spare parts and supplies 8,207 8,740
Raw materials and work-in-process 676 743
----------- -----------
38,917 35,034
Less LIFO reserve 534 534
----------- -----------
$38,383 $34,500
----------- -----------
----------- -----------
</TABLE>
(3) INCOME TAXES
On January 15, 1999, Group filed an election with the consent of its
shareholders with the Internal Revenue Service to change its taxable
status from that of a subchapter C corporation to that of a subchapter S
corporation, effective November 1, 1998. At the same time, Group elected
for the Company to be treated as a qualified subchapter S subsidiary
(QSSS). Most states in which the Company operates will follow similar tax
treatment. QSSS status requires the ultimate shareholders to include
their pro rata share of the Company's income or loss in their individual
tax returns. The Company will continue to provide for state and local
income taxes for the taxing jurisdictions which do not recognize QSSS
status, however, management believes this is not material to the Company.
As a result of this change in tax status, the Company recognized an
income tax benefit of $2,063,000 during the three months ended January
31, 1999, which includes the elimination of net deferred tax liabilities
recorded as of October 31, 1998.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS - THREE MONTHS ENDED JANUARY 31, 1999 COMPARED TO THREE
MONTHS ENDED JANUARY 31, 1998
SALES for the three-month period ended January 31, 1999 decreased 12.2% over
the prior period. The decrease was attributable to a 14.5% decrease in
Magcorp's revenues and a 4.8% decrease in Sabel's revenues. Magnesium
shipments decreased 12.5% and Magcorp's average selling price for magnesium
decreased 1.4%. Foreign import competition primarily from Chinese and Russian
producers continues to put pressure on magnesium volumes and pricing,
particularly in the steel desulfurization segment of the magnesium business.
According to International Magnesium Association statistics, calendar 1998
shipments by such non-western producers represented a 24% increase over 1997
levels, demonstrating the increased foreign imports in the markets. Magnesium
pricing and volume are dependent on the overall market supply and demand, and
there is no certainty that current trends will not continue. Sabel's sales
decrease was due to overall price and volume decreases affecting the U.S.
steel industry.
COST OF SALES for the three-month period ended January 31, 1999 decreased
7.0% on a consolidated basis. Magcorp's cost of sales decreased 7.5% due in
large part to the decreases in sales volume noted above, offset by increases
in certain energy costs when compared to the corresponding period in 1998.
Magcorp's cost of sales is highly sensitive to acquired energy costs and
levels of production. The 5.4% cost of sales decrease at Sabel is
attributable to the volume decreases mentioned above.
7
<PAGE>
DEPRECIATION, DEPLETION, AND AMORTIZATION for the three-month period ended
January 31, 1999 increased 3% 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 January 31, 1999 decreased primarily due to decreased development
costs, legal costs, and profit-based accruals when compared to the
corresponding period in 1998.
INTEREST INCOME for the three-month period ended January 31, 1999 decreased
$77,000 due to cash and cash equivalent balances on hand that decreased to a
month-end average of $21.0 million in the current period from a month-end
average of $26.8 million in the corresponding prior period.
INTEREST EXPENSE for the three-month period ended January 31, 1999 was lower
than that of the corresponding prior period due to lower long-term debt
levels than in the corresponding prior period.
INCOME TAXES for the three-month period ended January 31, 1999 reflects the
Company's change in taxable status effective November 1, 1998 described in
Note 3 to the condensed consolidated financial statements in Item 1 above.
Accordingly, the Company recognized an income tax benefit of $2.1 million
that represents the elimination of net deferred tax liabilities recorded as
of October 31, 1998.
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 January 31, 1999, the unused amounts available to Magcorp and Sabel
were approximately $28.3 million and $2.7 million, respectively. During the
three-month period ended January 31, 1999, Sabel repaid a net amount of
$271,000 under its revolving credit facility. Magcorp has not borrowed cash
under its revolving credit facility since 1994.
Cash used in operating activities was $4.0 million for the three-month period
ended January 31, 1999 compared to $1.2 million for the corresponding prior
period. The increase in cash used in operations in 1999 compared to 1998
resulted primarily from increases in inventories and decreases in accrued
expenses, offset partially by decreases in accounts receivable. Magcorp is
increasing inventory levels in 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 die cast magnesium
to be processed by third parties or already processed by third parties. Cash
flow has also been adversely affected by reduced operating income
attributable to lower sales volume and pricing from increased import
competition in both the magnesium and steel operations. Pricing and volume
are dependent on the overall market supply and demand, and there is no
assurance that current trends will not continue.
Capital expenditures were $3.3 million for the three-month period ended
January 31, 1999. Capital expenditures are budgeted at approximately $20
million for 1999, $35 million for 2000 and $17 million for 2001. Of these
projected capital expenditure amounts, an estimated total of $40 to $45
million is related to new electrolytic cell technology that is expected to
improve manufacturing efficiencies and ensure compliance with future
environmental standards. Prototype work continues on the electrolytic cell
conversion program. Assuming the successful completion of prototype work by
mid-1999, the conversion of the remaining cells is expected to take place
over a period of two to three 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 2001.
8
<PAGE>
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% of consolidated net income earned since the
issuance of the 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 availability under its 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. Projected 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 95% 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 $1.1 million in IT maintenance or modification costs and
capitalized approximately $700,000. Remaining IT modification costs, all
expected to be expensed, are estimated to be less than $50,000.
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-100%; renovation-95%; testing-95%; and implementation-90%. The
Company anticipates completion of renovation, testing and implementation of
its process control systems by July 1999. Total remaining costs for all
non-IT phases combined are estimated not to exceed $25,000.
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. 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 Company will use
information learned from this process in developing its contingency plans to
mitigate the effect of suppliers that will not be Year 2000 ready on a timely
basis. The Company is presently dependent on a single source for certain of
its energy and raw materials needs. If certain vendors are unable to supply
the energy or raw materials on a timely basis in 2000, it could result in the
Company being unable to operate or require the Company to operate at a
reduced level. In addition, the lack of accurate and timely Year 2000
information from suppliers of automation and process control systems and
components, or suppliers' inability to provide Year 2000 ready replacement
components, could result in the Company being unable to operate, or require
the Company to operate at a reduced level, in 2000. There can be no assurance
that third parties material to the Company's operations will be Year 2000
compliant, or that their failure to be compliant will not have a material
adverse effect on the Company's operations.
9
<PAGE>
The Company intends to make the 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.
ENVIRONMENTAL MATTERS
Title III of the Clean Air Act will establish, on a published schedule, new
national emission standards for hazardous air pollutants (NESHAPS). NESHAPS
are to be based on maximum achievable control technology 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 chlorine and hydrogen chloride emissions, which have been
previously unregulated. It is expected that Magcorp will be required to make
substantial reductions in chlorine emissions to meet NESHAPS for primary
magnesium refineries that will be promulgated by November 2000, with an
expected three to five year timetable for compliance following promulgation
of the new standards.
In anticipation of the new standards, Magcorp has embarked on a program to
install new electrolytic cell technology that will reduce chlorine emissions
at the source. The new cells are also expected to significantly reduce costs
because they have much higher throughput and are more energy efficient.
Assuming the successful completion of prototype work by mid-1999, the
conversion of the remaining cells is expected to take place over a period of
two to three years. With respect to hydrogen chloride, Magcorp has recently
installed and is successfully operating scrubbers to reduce pertinent
emissions. Magcorp does not expect that it will be required to spend
significant additional amounts to meet the new standards for hydrogen
chloride. Magcorp plans to spend an estimated $40 to $45 million of its
capital expenditure budget for 1999, 2000 and 2001, directly or indirectly,
to meet environmental regulatory requirements, primarily for NESHAPS, and for
other anticipated future requirements. Prototype cell-related project
development expenses to date total $4.7 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 (UDEQ)
Division of Solid and Hazardous Waste visited Magcorp in 1994 regarding the
issue of whether piles of material generated in the 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, which does not consider the piles
hazardous and under which no remediation or action by the Company is
necessary. If the piles were at some point in the future to be classified as
hazardous waste, thereby becoming subject to State regulation, corrective
action could be required. The costs of such compliance, if any, could be
material; however, such costs cannot be assessed at this time.
Sampling conducted by MagCorp and by UDEQ in 1998 indicated a low but
measurable accumulation of chlorinated hydrocarbons in the form of
dioxin/furan compounds in soil and sediment samples from a contained and
permitted process wastewater collection and retention system used at the
Magcorp plant site for over 25 years. While MagCorp does not consider, and
believes that UDEQ does not consider, a health hazard to be associated with
these preliminary sampling results, Magcorp intends to conduct additional
sampling to verify that there are limited accumulations of these compounds in
the wastewater area. An air emissions test is being planned to verify the
suspected insignificance of any dioxins in air emissions from the facility.
Management does not expect magnesium refineries to become subject to new
regulations regarding these compounds in the near future. If these compounds
do become subject to government regulation, the costs of such compliance, if
any, could have a material adverse effect on the Company's financial
condition and results of operations; however, such costs cannot be assessed
at this time.
10
<PAGE>
FORWARD-LOOKING STATEMENTS
This report includes "forward-looking statements," 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; and successful completion of planned installation of new
technology and major equipment failures. 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 forward-looking statement is
based.
PART II- OTHER INFORMATION
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.
11
<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)
March 12, 1999 /s/ Ira Leon Rennert
- ------------------------------ ----------------------------
Date Ira Leon Rennert
Chairman of the Board and
Principal Executive Officer
March 12, 1999 /s/ Roger L. Fay
- ------------------------------ ----------------------------
Date Roger L. Fay
Vice President - Finance
Principal Financial and
Accounting Officer
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> JAN-31-1999
<CASH> 14,049
<SECURITIES> 0
<RECEIVABLES> 23,742
<ALLOWANCES> 551
<INVENTORY> 38,383
<CURRENT-ASSETS> 78,838
<PP&E> 90,655
<DEPRECIATION> 54,325
<TOTAL-ASSETS> 120,692
<CURRENT-LIABILITIES> 15,938
<BONDS> 154,678
0
0
<COMMON> 1
<OTHER-SE> (62,144)
<TOTAL-LIABILITY-AND-EQUITY> 120,692
<SALES> 41,620
<TOTAL-REVENUES> 41,620
<CGS> 28,768
<TOTAL-COSTS> 35,783
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 37
<INTEREST-EXPENSE> 4,671
<INCOME-PRETAX> 1,405
<INCOME-TAX> (2,063)
<INCOME-CONTINUING> 3,468
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,468
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
