<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 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 JUNE 30, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
For the transition period from ___________________to____________________
Commission file number 1-12870
COLD METAL PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 16-1144965
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8526 SOUTH AVENUE, YOUNGSTOWN, OHIO 44514
(Address of principal executive offices) (Zip Code)
(330) 758-1194
(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 of Common Stock outstanding as of August 1, 1999: 6,367,500
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COLD METAL PRODUCTS, INC.
SEC FORM 10-Q
Quarter Ended June 30, 1999
INDEX
Page No.
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations.............................. 3
Condensed Consolidated Balance Sheets........................................ 4
Condensed Consolidated Statements of Cash Flows.............................. 5
Notes to Condensed Consolidated Financial Statements......................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................................ 8
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings................................................. 11
Item 2. Changes in Securities............................................. 11
Item 3. Defaults Upon Senior Securities................................... 11
Item 4. Submission of Matters to a Vote of Securities Holders............. 11
Item 5. Other Information................................................. 11
Item 6. Exhibits and Reports on Form 8-K.................................. 11
Signatures........................................................ 11
2
<PAGE> 3
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COLD METAL PRODUCTS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended June 30,
--------------------------
1999 1998
---------- ----------
<S> <C> <C>
Net sales $ 51,135 $ 66,856
Cost of sales 45,034 61,420
---------- ----------
Gross profit 6,101 5,436
Selling, general, and administrative expenses 3,608 3,797
Interest expense 802 1,130
---------- ----------
Income before income taxes 1,691 509
Income taxes 630 147
---------- ----------
Net income $ 1,061 $ 362
========== ==========
Basic and diluted net income per share $ 0.16 $ 0.05
========== ==========
Weighted average shares outstanding 6,451,703 7,074,250
========== ==========
</TABLE>
See notes to consolidated financial statements.
3
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COLD METAL PRODUCTS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, March 31,
--------- ---------
1999 1999
---- ----
<S> <C> <C>
Assets:
Cash $ 633 $ 399
Receivables 26,706 38,772
Inventories 32,050 31,481
Prepaid and other current assets 2,226 2,729
--------- ---------
Total current assets 61,615 73,381
Property, plant and equipment - at cost 75,527 74,728
Less accumulated depreciation (35,555) (34,444)
--------- ---------
Property, plant and equipment - net 39,972 40,284
Other assets 10,180 9,563
--------- ---------
Total assets $ 111,767 $ 123,228
========= =========
Liabilities and shareholders' equity:
Short-term borrowings $ 9,554 $ 17,976
Accounts payable 19,995 17,221
Other current liabilities 8,363 12,611
--------- ---------
Total current liabilities 37,912 47,808
Long-term debt 33,959 37,356
Postretirement and other benefits 16,497 16,048
Shareholders' equity:
Common stock, $.01 par value; 15,000,000 shares
authorized, 7,532,250 shares issued 75 75
Additional paid-in capital 25,370 25,360
Retained earnings 6,702 5,640
Accumulated other comprehensive income (3,103) (3,732)
Less treasury stock, 1,164,750, and 999,750 shares, at cost (5,645) (5,327)
--------- ---------
Total shareholders' equity 23,399 22,016
--------- ---------
Total liabilities and shareholders' equity $ 111,767 $ 123,228
========= =========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
COLD METAL PRODUCTS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,061 $ 362
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 894 1,168
Deferred directors' fees 10 10
Changes in operating assets and liabilities:
Accounts receivable (1,949) 4,162
Inventory (283) (1,126)
Accounts payable 2,539 (664)
Accrued expense and other (3,946) (156)
-------- --------
Net cash (used in) provided by operating activities (1,674) 3,756
Cash flows from investing activities:
Additions to property, plant and equipment (418) (1,707)
Sale of assets 14,642 --
-------- --------
Net cash provided by (used in) investing activities 14,224 (1,707)
Cash flows from financing activities:
Payments of term loans (364) (333)
Proceeds from other debt 39,182 47,606
Payments of other debt (50,823) (49,467)
Acquisition of treasury stock (317) --
-------- --------
Net cash used in financing activities (12,322) (2,194)
Net increase (decrease) in cash 228 (145)
Effect of translation adjustment 6 (13)
Cash at beginning of period 399 1,140
-------- --------
Cash at end of period $ 633 $ 982
======== ========
See notes to consolidated financial statements.
</TABLE>
5
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COLD METAL PRODUCTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. OPINION OF MANAGEMENT
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments, consisting of normal recurring accruals,
necessary to present fairly the financial position of Cold Metal Products, Inc.
and subsidiary (the Company) as of June 30, 1999 and March 31, 1999, the results
of operations for the three month periods ended June 30, 1999 and 1998, and
changes in cash flows for the three months ended June 30, 1999 and 1998. The
results of operations for the periods ended June 30, 1999 and 1998 are not
necessarily indicative of the results to be expected for the full year.
The condensed consolidated financial statements do not include footnotes and
certain financial information normally presented annually under generally
accepted accounting principles and therefore, should be read in conjunction with
the audited consolidated financial statements contained in the Company's annual
report on Form 10-K for the year ended March 31, 1999.
NOTE 2. RESULTS OF FOREIGN OPERATIONS
The Company operates in one business segment, intermediate steel processing. The
Company derived revenues from customers in the United States of approximately
$36.1 million during the fiscal quarter ended June 30, 1999 and $36.3 million
during the fiscal quarter ended June 30, 1998. The Company had long-lived assets
in the United States of $53.2 million at June 30, 1999 and March 31, 1999. The
remainder of the Company's revenues and long-lived assets are related to
customers and operations in Canada.
NOTE 3. PER SHARE CALCULATIONS
Primary earnings per common share have been computed based upon the average
weighted outstanding shares of 6,451,703 for the three months ended June 30,
1999 and 7,074,250 for the three month period ended June 30, 1998. Basic and
dilutive earnings per share amounts are the same as the effect of dilutive
outstanding stock options is immaterial.
NOTE 4. INVENTORIES
Inventories are classified as follows:
<TABLE>
<CAPTION>
June 30, March 31,
1999 1999
(In thousands)
<S> <C> <C>
Raw Materials $13,691 $12,554
Work-in-process 11,719 11,263
Finished goods 6,640 7,664
------- -------
Total inventories $32,050 $31,481
======= =======
</TABLE>
6
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NOTE 5. DIRECTORS' INCENTIVE PLAN
In accordance with the Non-Employee Directors' Incentive Plan, one director has
elected to receive shares of stock on a deferred basis in lieu of cash payments
of his 1999 annual retainer fee. As of June 30, 1999, a total of 20,000 of the
60,000 shares reserved under the Plan for such deferral elections, was committed
to be issued at the end of the deferment period, which is a specified period
after the Director's resignation or certain other events, such as a sale or
merger of the Company
NOTE 6. COMPREHENSIVE INCOME
Comprehensive income is comprised of net income and foreign currency translation
adjustment for the period. Translation adjustments were $629,000 and $(1.6)
million for the three months ended June 30, 1999 and June 30, 1998,
respectively. Total comprehensive income (loss) for the three months ended June
30, 1999 and June 30, 1998 was $1.7 million and $(1.2) million, respectively.
NOTE 7. RESTRUCTURING COSTS
In the fourth quarter of fiscal 1999, the Company initiated a restructuring plan
to align its operations with current market conditions, improve the productivity
of its operations and create a more efficient organizational structure. In
conjunction with the plan, the Company recorded a pretax charge of $2.5 million
comprised of severance and other employment-related costs resulting from a
reduction in workforce. Payments under this plan totaled $1.3 million in the
fiscal quarter ended June 30, 1999 and $.6 million in the fiscal quarter ended
March 31, 1999. The remaining liability of $.6 million is expected to be
substantially paid by the end of fiscal year 2000.
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ITEM 2.
COLD METAL PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of financial
condition and results of operations during the periods included in the
accompanying consolidated financial statements and should be read in conjunction
with the annual financial statements.
RESULTS OF OPERATIONS
The following table presents the Company's results of operations as a
percentage of net sales:
<TABLE>
<CAPTION>
Quarter Ended June 30,
---------------------
1999 1998
---- -----
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of sales 88.1 91.9
---- ----
Gross profit 11.9 8.1
Selling, general, and administrative expenses 7.0 5.7
Interest expense 1.6 1.7
--- ---
Income before income taxes 3.3 0.7
Income taxes 1.2 0.2
--- ---
Net income 2.1% 0.5%
==== ====
</TABLE>
Net sales for the three-months ended June 30, 1999 was $51.1 million
(constituting net sales of the Company's continuing operations after its sale of
two steel service centers in Ontario, Canada at the end of the fourth quarter of
fiscal 1999) which was $15.7 million or 23.5% less than the Company's net sales
for the corresponding period ended June 30, 1998. Lower revenues primarily
reflected the elimination of revenue attributable to the service centers sold by
the Company, which was $15.6 million in the quarter ended June 30, 1998.
Similarly, the volume of tons shipped by the Company was 30.1% lower in the
period ended June 30, 1999 than in the quarter ended June 30, 1998, accounting
for $20.4 million of sales decrease. Somewhat offsetting this decrease in net
sales was an aggregate increase in revenue per ton of $4.7 million as the sale
of the Ontario service centers resulted in a shift in sales mix to specialty
strip product which produced higher revenue per ton.
Gross profit for the three months ended June 30, 1999 was $6.1 million
or 11.9% of net sales, compared to $5.4 million or 8.1% of net sales for the
three months ended June 30, 1998. Excluding the margins generated by the Ontario
service centers in the prior year quarter, margins were up $847,000 in the
quarter ended June 30, 1999. The improvement in gross profit is attributable to
cost savings resulting from the Company's restructuring initiatives and
increased volume at Ottawa, Ohio and the Company's continuing Canadian
operations.
Selling and administrative costs of $3.6 million in the quarter ended
June 30, 1999 represented 7.0% of sales as compared to $3.8 million in the
quarter ended June 30, 1998, which represented 5.7% of sales. Although the
percentage of sales represented by selling and administrative costs increased,
the aggregate amount of these costs represents a reduction as compared with the
quarter ended June 30, 1998.
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<PAGE> 9
These lower costs resulted from the sale of the Ontario service centers and the
effect of cost-reduction efforts implemented at the end of the prior fiscal
year. These effects were somewhat offset by higher foreign currency transaction
costs and higher compensation accruals related to the profitability performance
in the quarter ended June 30, 1999.
Interest expense was $802,000 or 1.6% of net sales for the three months
ended June 30, 1999 compared to $1.1 million or 1.7% in the first quarter of
fiscal year 1998. Lower expense primarily reflected the decrease in debt from
the collection of proceeds of the service center sale.
Income before taxes was $1.7 million or 3.3% of net sales for the three
months ended June 30, 1999. The income before taxes for the three months ended
June 30, 1998 was $509,000, or .7% of net sales.
Income taxes for the three month period ended June 30, 1999 were
$630,000 or 1.2% of net sales compared to $147,000, or .2% of net sales for the
same period ended June 30, 1998. The effective tax rate was 37.3% in the first
quarter of fiscal year 1999 compared with a 28.9% rate for the prior year
period. The lower effective tax rate in the prior year period reflected a minor
adjustment of valuation allowance.
Net income for the three months ended June 30, 1999 was $1.1 million,
or $.16 per share based on 6,451,703 shares as compared to $362,000, or $.05 per
share based on 7,074,250 shares for the three months ended June 30, 1998, which
included $467,000 ($.07 per share) of net losses attrtibutable to the disposed
Ontario service centers.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used by operating activities was $1.7 million for the three
months ended June 30, 1999. While net income and the effect of depreciation
provided funds, cash used by operating activities resulted from payments related
to the reduction in force accomplished by the Company in the last quarter of the
previous fiscal year, post-closing adjustments regarding the sale of the Ontario
Service Centers, and other payments related to normal year-end accruals.
Cash provided by investing activities was $14.2 million for the three
months ended June 30, 1999, reflecting the collection of funds from the sale of
the Ontario service centers, offset by capital expenditures.
Cash flows from financing activities consumed $12.3 million for the
three months ended June 30, 1999. In March of 1999, the Company sold its Ontario
service centers for a total of $15.6 million, of which $14.6 was collected in
April 1999 and used to reduce total bank debt.
The Company's two bank lending arrangements provide an aggregate
borrowing availability up to a maximum of approximately $71.1 million, of which
$43.5 million was outstanding as of June 30, 1999. One of the borrowing
facilities is a term loan in the approximate amount of $18.9 million secured by
the fixed assets of the Company's facility in Ottawa, Ohio. At June 30, 1999,
the Company was in violation with respect to a cash flow covenant which the
lender has waived through the period ending December 31, 1999. Subsequent to
December 1999, the Company expects to be in compliance.
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<PAGE> 10
Management expects that cash generated from operating activities and
its borrowing capacity will be sufficient to meet planned capital expenditure
needs, cash requirements of the restructuring plan and other cash requirements
for the next twelve months.
IMPACT OF YEAR 2000
In the year 2000, certain computer programs may recognize a date using
"00" as the year 1900 rather than the year 2000. The Company must determine
whether its systems are capable of recognizing and handling date information
accurately and without interruption before, during and after January 1, 2000.
Most of the Company's critical information technology systems have been
modified, tested, and/or certified from vendors as being Year 2000 compliant.
Other non-information technology systems have been inventoried, tested or
certified in accordance with a compliance plan.
The Company has initiated a formal inquiry process with its suppliers
and vendors with which the Company has significant relationships to evaluate the
extent to which the Company is vulnerable to third party failure to remedy Year
2000 problems. The Company continues to evaluate replies as it receives them and
is working with the third parties to correct those problems or monitoring their
efforts to achieve compliance. The Company has received replies from most of its
significant suppliers and vendors.
The Company estimates that the total cost of achieving Year 2000
compliance for its internal systems and equipment is less than $150,000, of
which only a nominal amount remains to be spent. Most of the cost to date has
been funded by allocation of existing resources rather than incurring
incremental costs. The Company expects to continue to fund any remaining costs
by allocation of existing resources.
Based on assessment of its major information technology and
non-information technology systems, the Company believes that all necessary
modifications and testing will be completed in a timely manner to insure that
the Company is Year 2000 compliant. While the Company is verifying the readiness
of its major suppliers and vendors, there is no assurance that all third parties
on which the Company relies will be Year 2000 compliant in a timely manner. The
worst case scenario for the Company would involve general failure of
infrastructure systems such as electrical power. While the Company will continue
to develop contingency plans intended to allow the Company to move production
among its various facilities, substitute alternate suppliers, or reduce or
suspend operations in the case of a major infrastructure failure, the resulting
disruption could have a material adverse effect on the Company's business or
consolidated financial statements.
The foregoing information is provided in accordance with guidance furnished
by the Securities and Exchange Commission in Securities Act Release No. 75558,
Exchange Act Release No. 40277, dated July 29, 1998.
FORWARD-LOOKING INFORMATION
This document contains various forward-looking statements and
information that are based on management's beliefs as well as assumptions made
by and information currently available to management. When used in this
document, the words "expect", "believe", anticipate," "plan" and similar
expressions
10
<PAGE> 11
are intended to identify forward-looking statements, which are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Because such statements include risks and uncertainties,
actual results may differ materially from those expressed or implied by such
forward looking statements. Factors that could cause actual results to differ
materially from those expressed or implied by such forward-looking statements
include, but are not limited to, general business and economic conditions,
competitive factors such as availability and pricing of steel, changes in
customer demand, work stoppages by customers, potential equipment malfunctions,
Year 2000 problems, or other risks and uncertainties discussed in the Company's
10K report.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal proceedings to be reported.
ITEM 2. CHANGE IN SECURITIES There have been no changes in securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
There have been no defaults upon senior securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no submissions of matters to a vote of the shareholders in the
quarter ended June 30, 1999
ITEM 5. OTHER INFORMATION There is no other information to report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
(10)(y) Letter Agreement between John E. Sloe and Cold Metal Products,
Inc. (27) Financial Data Schedule
(b) Reports on Form 8-K: None
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.
Cold Metal Products, Inc.
(Registrant)
/S/ RAYMOND P. TOROK
--------------------------------------------------
Raymond P. Torok
President, Chief Executive Officer
/S/ JOSEPH C. HORVATH
--------------------------------------------------
Joseph C. Horvath
Vice-President, Chief Financial Officer
(Principal Financial and Accounting Officer)
August 12, 1999
11
<PAGE> 1
Exhibit 10(g)
April 16, 1999
Mr. John E. Sloe
505 Duneden Drive
Aurora, Ohio 44202
Dear John:
This letter agreement sets forth the terms and conditions of your
separation from employment with Cold Metal Products, Inc. (the "Company"). We
agree as follows:
1. RESIGNATION DATE. Your resignation as an officer of the Company and
all of its related corporations will be effective on April 9, 1999. The fifteen
month period beginning on the resignation date and ending on July 31, 2000 is
referred to herein as the "post-resignation period". The period between April 9,
1999 and April 30, 1999 will be treated as paid vacation.
2. OBLIGATIONS OF THE COMPANY. In consideration of the agreements,
releases and representations made by you in this Agreement:
(a) You will receive severance payments in the aggregate amount of
$220,000 in approximately equal monthly installments over the post-resignation
period, less lawful withholdings, which includes compensation for vacation
accrued but unused as of the resignation date.
(b) During the post-resignation period, you will continue to
participate in those employee benefit plans and fringe benefit arrangements
identified in Schedule A, subject to the Company's right to modify, amend or
terminate any such plan or arrangement. COBRA continuation coverage under the
Company's group health plan identified in Schedule A will be available at the
end of post-resignation period in accordance with applicable law. You may
continue to participate in the Cold Metal Products, Inc. Thrift Plan during the
post-resignation period.
(c) You will receive all amounts credited to your account under the
Company's Special Incentive Compensation Plan, including investment earnings, as
if you had "Retired", within the meaning of such plan, on the resignation date.
Payment will be made to you within thirty (30) days after the date of this
Agreement.
(d) Within thirty (30) days after this Agreement becomes effective, the
Company will pay an allowance of $20,000 for financial services and legal fees
relating to this Agreement.
(e) Your resignation on the resignation date will be considered a
"Normal Termination" for purposes of the Company's 1994 Incentive Program, so
that your currently exercisable options to purchase 15,000 shares of Company
stock will not expire until five (5) years after the resignation date.
<PAGE> 2
Mr. John E. Sloe
April 16, 1999
Page 2
(f) You may purchase your Dell computer, "AS IS", for $500 cash at any
time within thirty (30) days after the date of this Agreement, payment to be
made by personal check.
(g) The Company will transfer title to your Company vehicle to you,
within thirty (30) days after the date of this Agreement.
(h) Within thirty (30) days after this Agreement becomes effective, the
Company will pay you severance in the amount of $500.00, less lawful
withholdings.
3. YOUR OBLIGATIONS: GENERAL RELEASE.
(a) In consideration of your receipt of the payments and benefits
described in paragraph 2 above:
(i) You release and agree not to sue the Company, Aarque
Securities Corporation or any of their affiliates, or any of the
officers, agents or employees thereof, with respect to any claim,
whether known or unknown, which you have, or may have, related to your
employment with the Company, or termination of such employment (the
"Claims"), including all Claims of unlawful discrimination on account
of sex, race, age, disability, veteran's status, national origin or
religion; all Claims based upon any federal, state or local equal
employment opportunity law, including the Civil Rights Act of 1964, as
amended, the Age Discrimination in Employment Act, as amended by the
Older Workers Benefit Protection Act, the Americans With Disabilities
Act of 1990, the Civil Rights Act of 1991, all Claims for violations of
the Employee Retirement Income Security Act of 1974; all Claims for
violation of any agreement or representation, express or implied, made
prior to or simultaneously with this Agreement; and all Claims based
upon wrongful termination of employment and similar or related Claims.
(ii) You will not at any time disclose any Confidential
Information in whole or in part to any person, firm or corporation for
any reason or purpose whatsoever, or use such information in any way or
in any capacity. The Term "Confidential Information" shall mean secret
or confidential information relating to the Company, its affiliates and
customers or their affiliates, which conveys a competitive advantage to
the Company or any such customer, client or affiliate, and which was
disclosed to or known by you as a consequence of or through your
employment with the Company (including information conceived,
originated, discovered or developed by you), which information is not
public knowledge or otherwise generally known in the relevant trade or
industry.
<PAGE> 3
Mr. John E. Sloe
April 16, 1999
Page 3
(b) It is agreed that the general release set forth in this paragraph
3: (i) does not release the Company of its obligations under this Agreement; and
(ii) shall not adversely affect such benefits, if any, to which you may be
entitled under the Pension Plan for Salaried Non-Bargaining Employees of Cold
Metal Products, Inc. (the "Pension Plan"), the Cold Metal Products, Inc. Thrift
Plan (the "Thrift Plan"), the Cold Metal Products, Inc. Special Incentive
Compensation Plan, and other fringe benefit plans maintained by the Company as
of the date hereof, as such plans may be amended from time to time, to the
extent that you qualify for benefits thereunder in accordance with the terms of
such plans.
4. ACKNOWLEDGMENTS. By signing this Agreement, you expressly
acknowledge and agree that:
(a) You have read and fully understand the terms of this Agreement.
(b) YOU UNDERSTAND THAT THIS AGREEMENT CONSTITUTES A FULL, FINAL AND
BINDING SETTLEMENT OF ALL MATTERS COVERED BY THIS AGREEMENT AND THAT THIS
AGREEMENT CONSTITUTES A RELEASE OF ALL CLAIMS, KNOWN AND UNKNOWN, WHICH RELATE
TO YOUR EMPLOYMENT OR SEPARATION FROM EMPLOYMENT INCLUDING, WITHOUT LIMITATION,
CLAIMS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT;
(c) You understand that this Agreement does not waive any rights or
claims arising after this Agreement goes into effect;
(d) The payments and benefits described above are significantly more
valuable than any payments or benefits you would be entitled to receive under
the Company's normal termination policies;
(e) You have had the opportunity to consult with an attorney, prior to
signing this Agreement;
(f) YOU HAVE HAD ADEQUATE OPPORTUNITY TO REQUEST AND HAVE RECEIVED ALL
INFORMATION YOU NEED TO UNDERSTAND THIS AGREEMENT AND HAVE BEEN OFFERED
SUFFICIENT TIME, THAT IS, AT LEAST TWENTY-ONE (21) DAYS TO CONSIDER WHETHER TO
SIGN THIS AGREEMENT;
(g) YOU HAVE KNOWINGLY AND VOLUNTARILY ENTERED THIS AGREEMENT WITHOUT
ANY DURESS, COERCION OR UNDUE INFLUENCE BY ANYONE.
5. MISCELLANEOUS.
(a) You and the Company agree that this Agreement contains the complete
agreement between you and the Company and that there are no other agreements or
representations relating in any way to the subject matter of this Agreement.
<PAGE> 4
Mr. John E. Sloe
April 16, 1999
Page 4
(b) This Agreement will become effective on the 7th day after you sign
it. During the seven (7) days after you sign this Agreement, you may revoke it
by giving written notice to the Company, in which event this Agreement will not
go into effect.
If you agree with the foregoing, please indicate by signing below.
COLD METAL PRODUCTS, INC.
BY:/S/ RAYMOND P. TOROK
---------------------------
Raymond P. Torok, President
ACCEPTED AND AGREED TO IN FULL:
/S/ JOHN E. SLOE
- ----------------
John E. Sloe
Date: May 25, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 633
<SECURITIES> 0
<RECEIVABLES> 26,706
<ALLOWANCES> 404
<INVENTORY> 32,050
<CURRENT-ASSETS> 61,615
<PP&E> 75,527
<DEPRECIATION> 35,555
<TOTAL-ASSETS> 111,767
<CURRENT-LIABILITIES> 37,912
<BONDS> 0
0
0
<COMMON> 75
<OTHER-SE> 23,323
<TOTAL-LIABILITY-AND-EQUITY> 111,767
<SALES> 51,135
<TOTAL-REVENUES> 51,135
<CGS> 45,034
<TOTAL-COSTS> 45,034
<OTHER-EXPENSES> 3,608
<LOSS-PROVISION> 67
<INTEREST-EXPENSE> 802
<INCOME-PRETAX> 1,691
<INCOME-TAX> 630
<INCOME-CONTINUING> 1,061
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,061
<EPS-BASIC> .16
<EPS-DILUTED> .16
</TABLE>
