<PAGE> 1
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 June 30, 1997
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 1-12852
ROUGE STEEL COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 38-2386833
(State of Incorporation) (I.R.S. Employer Identification No.)
3001 MILLER ROAD, DEARBORN, MI 48121-1699
(Address of principal executive offices)
(313) 317-8900
(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 ___
The number of shares of common stock issued and outstanding as of July 18, 1997
was 21,934,328. This amount includes 14,241,928 shares of Class A Common Stock
and 7,692,400 shares of Class B Common Stock.
<PAGE> 2
ROUGE STEEL COMPANY
QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED JUNE 30, 1997
INDEX
<TABLE>
<CAPTION>
PAGE
PART I - FINANCIAL INFORMATION
<S> <C>
Item 1. Consolidated Financial Statements
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . 6
Consolidated Statements of Changes in Stockholders' Equity . . . . . . . . . . . . . . 7
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . 8
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . 16
Item 5. Other Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
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<PAGE> 3
July 18, 1997
To the Board of Directors and
Stockholders of Rouge Steel Company
We have reviewed the accompanying consolidated financial information of Rouge
Steel Company and consolidated subsidiaries appearing on pages 4 through 10 of
this report as of June 30, 1997, and for the three-month and six-month periods
ended June 30, 1997 and 1996. This financial information is the responsibility
of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial information, as of June 30, 1997, and for
the three-month and six-month periods ended June 30, 1997 and 1996, for it to
be in conformity with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing standards,
the consolidated balance sheet as of December 31, 1996, and the related
consolidated statements of operations, of changes in stockholders' equity, and
of cash flows for the year then ended (not presented herein), and in our report
dated January 29, 1997, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth
in the accompanying consolidated balance sheet information as of December 31,
1996, is fairly stated in all material respects in relation to the consolidated
balance sheet from which it has been derived.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
-3-
<PAGE> 4
FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
ROUGE STEEL COMPANY
CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
<TABLE>
<CAPTION>
June 30 December 31
1997 1996
---- ----
Assets Unaudited
<S> <C> <C>
Current Assets
- --------------
Cash and Cash Equivalents $ 35,876 $ 24,914
Marketable Securities 4,346 2,039
Accounts Receivable
Trade and Other (Net of Allowances
of $6,097 and $7,294) 131,232 102,593
Affiliates 11,902 9,995
Inventories 226,554 267,877
Other Current Assets 557 7,483
---------- --------
Total Current Assets 410,467 414,901
---------- --------
Property, Plant, and Equipment
- ------------------------------
Buildings and Improvements 17,352 16,942
Machinery and Equipment 215,267 186,851
Construction in Progress 33,134 32,545
---------- --------
Subtotal 265,753 236,338
Less: Accumulated Depreciation (33,739) (27,176)
---------- --------
Net Property, Plant, and Equipment 232,014 209,162
---------- --------
Investment in Unconsolidated Subsidiaries 36,150 15,590
- ----------------------------------------- ---------- --------
Deferred Charges and Other 38,378 42,300
- -------------------------- ---------- --------
Total Assets $ 717,009 $681,953
========== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-4-
<PAGE> 5
ROUGE STEEL COMPANY
CONSOLIDATED BALANCE SHEETS
(amounts in thousands except share amounts)
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
June 30 December 31
1997 1996
-------- -----------
Unaudited
<S> <C> <C>
Current Liabilities
- -------------------
Accounts Payable
Trade $166,339 $ 154,338
Affiliates 12,215 8,188
Accrued Vacation Pay 12,166 11,243
Taxes Other than Income 2,039 4,580
Other Accrued Liabilities 20,575 19,921
-------- ---------
Total Current Liabilities 213,334 198,270
-------- ---------
Other Liabilities 53,159 49,342
- ----------------- -------- ---------
Excess of Net Assets Acquired Over Cost 14,178 17,076
- --------------------------------------- -------- ---------
Commitments and Contingencies (Note 4)
Stockholders' Equity
- --------------------
Common Stock
Class A, 80,000,000 shares authorized with 14,369,116 and
14,341,136 issued and outstanding as of June 30, 1997 and
December 31, 1996, respectively 143 143
Class B, 7,562,400 shares authorized, issued, and
outstanding 76 76
Capital in Excess of Par Value 127,578 127,096
Retained Earnings 310,940 292,349
Additional Minimum Pension Liability (2,399) (2,399)
-------- ---------
Total Stockholders' Equity 436,338 417,265
-------- ---------
Total Liabilities and Stockholders' Equity $717,009 $ 681,953
======== =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE> 6
ROUGE STEEL COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except share and per share amounts)
Unaudited
<TABLE>
<CAPTION>
For the Quarter Ended For the Six Months Ended
June 30 June 30
------- -------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales
- -----
Unaffiliated Customers $ 303,334 $ 300,777 $ 594,797 $ 575,239
Affiliates 51,871 48,190 94,580 93,913
---------- ---------- ---------- ----------
Total Sales 355,205 348,967 689,377 669,152
---------- ---------- ---------- ----------
Costs and Expenses
- ------------------
Costs of Goods Sold 332,810 324,883 646,413 630,909
Depreciation and Amortization 3,671 3,327 7,218 6,068
Selling and Administrative Expenses 6,197 6,559 11,782 12,433
Amortization of Excess of Net Assets Acquired
Over Cost (1,449) (1,449) (2,898) (2,898)
---------- ---------- ---------- ----------
Total Costs and Expenses 341,229 333,320 662,515 646,512
---------- ---------- ---------- ----------
Operating Income 13,976 15,647 26,862 22,640
Interest Income 569 1,443 939 2,897
Interest Expense (96) (83) (175) (165)
Other - Net 335 75 705 473
---------- ---------- ---------- ----------
Income Before Income Taxes, Minority Interest
and Equity in Loss of Unconsolidated Subsidiaries 14,784 17,082 28,331 25,845
Income Tax Provision (3,638) (5,075) (7,718) (7,609)
---------- ---------- ---------- ----------
Income Before Minority Interest and Equity in Loss
of Unconsolidated Subsidiaries 11,146 12,007 20,613 18,236
Minority Interest in Net (Income)/ Loss of Consolidated
Subsidiary - (202) - 237
Equity in Loss of Unconsolidated Subsidiaries (524) - (707) -
---------- ---------- ---------- ----------
Net Income $ 10,622 $ 11,805 $ 19,906 $ 18,473
========== ========== ========== ==========
Per Share Amounts
- -----------------
Net Income $ 0.48 $ 0.54 $ 0.91 $ 0.85
========== ========== ========== ==========
Cash Dividends Declared $ 0.03 $ 0.03 $ 0.06 $ 0.06
========== ========== ========== ==========
Weighted Average Shares Outstanding 21,921,783 21,833,677 21,917,956 21,821,933
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE> 7
ROUGE STEEL COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(amounts in thousands)
Unaudited
<TABLE>
<CAPTION>
For the Quarter Ended For the Six Months Ended
June 30, 1997 June 30, 1997
------------- -------------
<S> <C> <C>
Common Stock
Beginning and Ending Balance $ 219 $ 219
---------- ----------
Capital in Excess of Par Value
Beginning Balance 127,380 127,096
Common Stock Issued for Benefit Plans 198 482
---------- ----------
Ending Balance 127,578 127,578
---------- ----------
Retained Earnings
Beginning Balance 300,977 292,349
Net Income 10,622 19,906
Cash Dividends Declared (659) (1,315)
---------- ----------
Ending Balance 310,940 310,940
---------- ----------
Additional Minimum Pension Liability
Beginning and Ending Balance (2,399) (2,399)
---------- ----------
Total Stockholders' Equity $ 436,338 $ 436,338
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE> 8
ROUGE STEEL COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
Unaudited
<TABLE>
<CAPTION>
For the Six Months Ended
June 30
-------
1997 1996
---- ----
<S> <C> <C>
Cash Flows From Operating Activities
- ------------------------------------
Net Income $ 19,906 $ 18,473
Adjustments to Reconcile Net Income to Net Cash
Provided By Operating Activities:
Deferred Taxes 6,469 4,076
Depreciation and Amortization 7,218 6,068
Amortization of Capitalized Debt Costs 18 18
Equity in Loss of Unconsolidated Subsidiaries 707 -
Amortization of Excess of Net Assets Acquired Over Cost (2,898) (2,898)
Minority Interest in Consolidated Subsidiary - (237)
Common Stock Issued for Benefit Plans 482 1,483
Changes in Assets and Liabilities:
Accounts Receivable (30,546) (20,313)
Inventories 41,909 22,062
Prepaid Expenses 5,047 3,308
Accounts Payable and Accrued Liabilities 16,842 24,762
Other - Net (1) (87)
--------- ---------
Net Cash Provided by Operating Activities 65,153 56,715
--------- ---------
Cash Flows From Investing Activities
- ------------------------------------
Capital Expenditures (27,468) (50,562)
Purchase of Marketable Securities (3,311) (22,979)
Sale of Marketable Securities 1,004 42,941
Investments in Unconsolidated Subsidiaries (22,732) (13)
Other - Net (369) (318)
--------- ---------
Net Cash Used for Investing Activities (52,876) (30,931)
--------- ---------
Cash Flows From Financing Activities
- ------------------------------------
Cash Dividend Payments (1,315) (1,309)
--------- ---------
Net Increase in Cash and Cash Equivalents 10,962 24,475
Cash and Cash Equivalents - Beginning of Period 24,914 57,036
--------- ---------
Cash and Cash Equivalents - End of Period $ 35,876 $ 81,511
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
- 8 -
<PAGE> 9
ROUGE STEEL COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The interim consolidated financial statements are unaudited; however, in the
opinion of the Company, the statements include all adjustments, consisting of
only normal recurring adjustments, necessary for a fair statement of the
results for the interim periods presented. The foregoing interim results are
not necessarily indicative of the results of operations expected for the full
fiscal year ending December 31, 1997.
These consolidated financial statements should be read together with the
Company's audited financial statements presented in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996 filed with the Securities and
Exchange Commission on February 11, 1997.
Certain reclassifications have been made to conform with current period
presentation.
NOTE 2 - INVENTORIES
The major classes of inventories are as follows (dollars in thousands):
<TABLE>
<CAPTION>
June 30 December 31
1997 1996
---- ----
Unaudited
<S> <C> <C>
Production
Raw Materials $ 40,972 $ 85,306
Semifinished and Finished Steel Products 179,434 174,746
--------- --------
Total Production at FIFO 220,406 260,052
LIFO Reserve (15,502) (14,390)
--------- --------
Total Production at LIFO 204,904 245,662
Nonproduction and Sundry 21,650 22,215
--------- --------
Total Inventories $ 226,554 $267,877
========= ========
</TABLE>
NOTE 3 - INVESTMENTS IN UNCONSOLIDATED SUBSIDIARY
On April 15, 1997, Rouge Steel invested $6.5 million to acquire an 11% interest
in TWB Company, L.L.C., an existing joint venture formed by Worthington Steel
of Michigan, Inc. and Thyssen, Inc. to produce laser welded blanks.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
Waste Oxide Reclamation Facility. On May 14, 1997, the Company entered into an
agreement to lease a $35,000,000 waste oxide reclamation facilty, to be
constructed at the Rouge Steel site. Payments on the seven-year lease will
commence upon completion of construction, estimated to be July 1, 1998.
Spartan Steel Commitment. The Company and Worthington Industries, Inc. are
constructing a cold rolled hot dipped galvanizing line near Monroe, Michigan
called Spartan Steel Coating,L.L.C., ("Spartan Steel"). The project is
expected to cost approximately $95,000,000. Rouge Steel will be responsible
for 48 percent of the total, or approximately $45,600,000. Through June 30,
1997, the Company had invested $14,184,000 in Spartan Steel. Construction of
the facility is expected to be completed by mid-1998.
- 9 -
<PAGE> 10
Note 4 - COMMITMENTS AND CONTINGENCIES (CONT)
Shiloh of Michigan, L.L.C. Loan Guaranty. During February 1997, Shiloh of
Michigan, L.L.C. (the "Shiloh Venture") amended its credit agreement and
related guaranty. The amendment increased the amount available for borrowings
from $23,000,000 to $28,000,000, of which Rouge Steel guarantees 20 percent.
As of June 30, 1997, the Shiloh Venture had borrowings of $27,100,000
outstanding under its line of credit.
Other than the matters discussed above, there have been no significant changes
to the prior year-end consolidated financial statements.
- 10 -
<PAGE> 11
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
COMPARISON OF THE THREE - MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
Total Sales. Total sales for Rouge Steel Company ("Rouge Steel" or the
"Company") increased 1.8% in the second quarter of 1997 to $355.2 million from
$349.0 million in the second quarter of 1996, an increase of $6.2 million. The
increase in total sales was caused principally by an increase in steel product
shipments. Shipments increased 4.8% in the second quarter of 1997 to 803,000
net tons from 766,000 net tons in the second quarter of 1996, an increase of
37,000 net tons. Rouge Steel's shipments were higher in the second quarter of
1997 because of significant demand for the Company's products. The increase in
total sales resulting from higher shipments was partially offset by lower steel
product selling prices in the second quarter of 1997 and a deterioration in
market mix compared to the second quarter of 1996.
Costs and Expenses. Total costs and expenses increased 2.4% in the
second quarter of 1997 to $341.2 million from $333.3 million in the second
quarter of 1996, an increase of $7.9 million. Costs of goods sold increased
2.4% in the second quarter of 1997 to $332.8 million from $324.9 million in the
second quarter of 1996, an increase of $7.9 million. The increase in costs of
goods sold was primarily due to higher shipments and reduced production in the
cold mills resulting from the start-up problems associated with a facility
modernization activity. These increases were offset partially by lower raw
material and fuel prices. Costs of goods sold in the second quarter of 1997
was 93.7% of total sales, up from 93.1% of total sales in the second quarter of
1996, due to steel product selling price reductions, market mix deterioration
and the increase in costs of goods sold discussed above.
- 11 -
<PAGE> 12
Operating Income. Primarily as a result of lower steel product selling
prices and market mix deterioration, operating income decreased 10.7% in the
second quarter of 1997 to $14.0 million from $15.6 million in the second
quarter of 1996, a decrease of $1.6 million. Operating income represented 3.9%
of total sales in the second quarter of 1997 compared to 4.5% of total sales in
the second quarter of 1996.
Interest Income. Interest income decreased 60.6% in the second quarter
of 1997 from $1.4 million to $569,000 in the second quarter of 1996, a decrease
of $900,000. The decrease in interest income was the result of a lower cash
and marketable securities balance in the second quarter of 1997. The average
cash and marketable securities balance in the second quarter of 1997 was $35.8
million compared to $91.8 million in the second quarter of 1996.
Income Tax Provision. The lower income tax provision in the second
quarter of 1997 was a function of lower taxable income.
Net Income. Net income decreased 10.0% in the second quarter of 1997
to $10.6 million from $11.8 million in the second quarter of 1996, a decrease
of $1.2 million. The decrease in net income is attributable to lower steel
product selling prices, market mix deterioration, less interest income and
reduced production in the cold mills.
COMPARISON OF THE SIX - MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
Total Sales. Total sales increased 3.0% in the first half of 1997 to
$689.4 million from $669.2 million in the first half of 1996, an increase of
$20.2 million. The increase in total sales was caused principally by higher
steel product shipments. Steel product shipments increased 5.4% in the first
half of 1997 to 1,547,000 net tons from 1,468,000 net tons in the first half of
1996, an increase of 79,000 net tons. Rouge Steel's shipments were higher in
the first half of 1997 because of significant
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<PAGE> 13
demand for the Company's products. The increase in total sales resulting from
higher shipments was partially offset by lower steel product selling prices in
the first half of 1997.
Costs and Expenses. Total costs and expenses increased 2.5% in the
first half of 1997 to $662.5 million from $646.5 million in the first half of
1996, an increase of $16.0 million. Costs of goods sold increased 2.5% in the
first half of 1997 to $646.4 million from $630.9 million in the first half of
1996, an increase of $15.5 million. The increase in costs of goods sold was
primarily due to higher shipments offset partially by the reduction of "C"
blast furnace operating problems compared to the first half of 1996. Costs of
goods sold in the first half of 1997 was 93.8% of total sales, compared to
94.3% of total sales in the first half of 1996. Depreciation and amortization
increased 19.0% in the first half of 1997 to $7.2 million from $6.1 million in
the first half of 1996, an increase of $1.1 million. The increase in
depreciation and amortization is a function of the continuing high capital
expenditures.
Operating Income. Primarily as a result of better operating
productivity at the blast furnaces, operating income increased 18.6% in the
first half of 1997 to $26.9 million from $22.6 million in the first half of
1996, an increase of $4.3 million. Operating income represented 3.9% of total
sales in the first half of 1997 compared to 3.4% of total sales in the first
half of 1996.
Interest Income. Interest income decreased 67.6% in the first half of
1997 to $939,000 from $2.9 million in the first half of 1996, a decrease of
$2.0 million. The decrease in interest income was the result of a lower cash
balance in the first half of 1997. Average cash and marketable securities in
the first half of 1997 was $31.9 million compared to $93.8 million in the first
half of 1996.
Net Income. Net income increased 7.8% in the first half of 1997 to
$19.9 million from $18.5 million in the first half of 1996, an increase of $1.4
million. The increase in net income is primarily attributable to improved
operating productivity at the blast furnaces partially offset by lower interest
income.
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<PAGE> 14
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and marketable securities on June 30, 1997
totalled $40.2 million compared to $27.0 million on December 31, 1996, an
increase of $13.2 million. This increase was primarily due to cash provided by
operating activities partially offset by capital expenditures and investments
in unconsolidated subsidiaries.
Cash Flows From Operating Activities. Net cash provided by operating
activities increased 14.9% in the first half of 1997 to $65.2 million from
$56.7 million in the first half of 1996, an increase of $8.5 million. This
increase is principally due to a large reduction in raw material inventories,
principally pellets and scrap, and an increase in accounts payable.
Capital Expenditures. Cash used for capital expenditures, including
investments in unconsolidated subsidiaries, decreased in the first half of 1997
to $50.2 million from $50.6 million in the first half of 1996, a decrease of
$400,000. The expenditures made in the first half of 1997 were primarily for
(i) construction of a raw material handling system and (ii) investment in
Spartan Steel Coating, L.L.C. ("Spartan Steel"), Rouge Steel's 48% owned cold
rolled hot dip galvanizing joint venture with Worthington Industries, Inc.
During the remainder of 1997, it is anticipated that an additional $65 million
will be accrued for capital items, the most significant of which are the
reline of the Company's smaller "B" blast furnace, the continued construction
of a raw material handling system and additional investments in Spartan Steel.
The remaining capital expenditures are generally directed at improving plant
efficiency and product quality.
During the second quarter, Rouge Steel entered into an operating lease
agreement for the financing of the construction of a facility to reclaim waste
oxides. The value of the asset to be leased is approximately $35 million.
Payments on the lease will commence upon completion of construction, which is
estimated to be mid-1998.
- 14 -
<PAGE> 15
Credit Facility. Rouge Steel has a five-year, $100 million, unsecured
revolving loan commitment under a credit agreement (the "Credit Agreement")
which expires on November 29, 2001. The Company had no borrowings under the
facility as of June 30, 1997. The Company believes that net income and funds
available under the Credit Agreement will be adequate for its working capital
and capital expenditure requirements.
OUTLOOK
Rouge Steel expects a strong order book for the third and fourth
quarters of 1997. On September 2, 1997, the Company plans to begin a full
reline of its smaller blast furnace. The outage related to the reline will
last approximately 72 days and is expected to have a negative impact on
operating results in the third and fourth quarters.
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995. With the exception of historical information, the matters
discussed in this Quarterly Report on Form 10-Q include certain forward-looking
statements that involve risks and uncertainties. Stockholders of the Company
are cautioned not to place undue reliance on such forward-looking statements
contained herein.
- 15 -
<PAGE> 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, Rouge Steel is a defendant in routine lawsuits
incidental to its business. The Company believes that none of such current
proceedings, individually or in the aggregate, will have a materially adverse
effect on the Company.
Item 4. Submission of Matters to a Vote of Security Holders
Rouge Steel's Annual Meeting of Stockholders was held on May 8, 1997.
In connection with the meeting, proxies were solicited. Following are the
voting results on proposals considered and voted upon.
1) Both nominees for Class III Director were elected by a
plurality of the votes entitled to be cast by the stockholders
who were present or represented by proxy.
<TABLE>
<CAPTION>
For Withheld
<S> <C> <C>
Clayton P. Shannon 32,099,996 920
Carl L. Valdiserri 32,097,032 38,884
</TABLE>
2) Rouge Steel's Restated Certificate of Incorporation (the
"Certificate") was amended to (i) change the required number
of directors of the Company and (ii) delete certain super-
majority voting provisions.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
Amendment of the Company's Certificate 31,456,747 25,712 119,343
</TABLE>
3) The appointment of Price Waterhouse LLP as the Company's
independent public accountants for the calendar year ending
December 31, 1997 was ratified by a majority of the votes
entitled to be cast by the stockholders who were present or
represented by proxy.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
Ratification of the appointment of
Price Waterhouse LLP as Rouge Steel's
independent public accountants for the
calendar year ending December 31, 1997 32,095,833 15,770 24,313
</TABLE>
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<PAGE> 17
Item 5. Other Events
On May 8, 1997, Rouge Steel's board of directors declared a $0.03 per
share dividend on the Company's common stock. The dividend will be payable on
July 25, 1997 to stockholders of record on July 11, 1997. The total amount of
dividends to be paid is approximately $658,000.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are included in this report.
Exhibit Number Description of Exhibit
15 Price Waterhouse LLP Awareness Letter
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<PAGE> 18
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.
Date: July 24, 1997 ROUGE STEEL COMPANY
By: /s/ Carl L. Valdiserri
-----------------------
Name: Carl L. Valdiserri
Title: Chairman of the Board and
Chief Executive Officer
Date: July 24, 1997 By: /s/ Gary P. Latendresse
------------------------
Name: Gary P. Latendresse
Title: Vice President and Chief
Financial Officer
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<PAGE> 19
EXHIBIT INDEX
Exhibit Number Description of Exhibit
15 Price Waterhouse LLP Awareness Letter
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 15
July 24, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We are aware that Rouge Steel Company has incorporated by reference our report
dated July 18, 1997 (issued pursuant to the provisions of Statements on
Auditing Standards No. 71 and No. 42) in the Prospectus constituting part of
its Registration Statement on Form S-3 (Registration No. 333-16183) amended as
of February 11, 1997 and in its Registration Statements on Form S-8 (No.
33-88518 and No. 33-88520). We are also aware of our responsibilities under
the Securities Act of 1933.
Yours very truly,
/s/ Price Waterhouse LLP
Price Waterhouse LLP
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 AND THE RELATED CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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0
0
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