-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NGB3t1FXNY/579WiMxfDIJ9DJ5VXoUGKsO4xe0kzws9nAqKWHPZ0fxgynRu+5iBg Uv2x0sIKxruQsqa6VlaQXg== 0000910394-99-000001.txt : 19990209 0000910394-99-000001.hdr.sgml : 19990209 ACCESSION NUMBER: 0000910394-99-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981226 FILED AS OF DATE: 19990208 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KENTUCKY ELECTRIC STEEL INC /DE/ CENTRAL INDEX KEY: 0000910394 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 611244541 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22416 FILM NUMBER: 99524156 BUSINESS ADDRESS: STREET 1: P O BOX 3500 CITY: ASHLAND STATE: KY ZIP: 41105-3500 BUSINESS PHONE: 6069291222 MAIL ADDRESS: STREET 1: P O BOX 3500 CITY: ASHLAND STATE: KY ZIP: 41105-3500 10-Q 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 December 26, 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 No. 0-22416 KENTUCKY ELECTRIC STEEL, INC. (Exact name of Registrant as specified in its charter) Delaware 61-1244541 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) P. O. Box 3500, Ashland, Kentucky 41105-3500 (Address of principal executive office, Zip Code) (606) 929-1222 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO The number of shares outstanding of each of the issuer's classes of common stock, as of February 8, 1999, is as follows: 4,057,731 shares of voting common stock, par value $.01 per share. KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY TABLE OF CONTENTS Page PART I. FINANCIAL INFORMATION Item 1 - Financial Statements Condensed Consolidated Balance Sheets ............. 3 Condensed Consolidated Statements of Operations ... 4 Condensed Consolidated Statements of Cash Flows ... 5 Notes to Condensed Consolidated Financial Statements ..................................... 6-8 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations ............. 9-12 Item 3 - Qualitative and Quantitative Disclosures about Market Risk ..................................... 12 PART II. OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K .................. 13 SIGNATURES ....................................... 14 KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) (Unaudited) Dec. 26, Sept. 26, ASSETS 1998 1998 CURRENT ASSETS Cash and cash equivalents $ 134 $ 150 Accounts receivable, less allowance for doubtful accounts and claims of $440 at December 26, 1998 and $460 at September 26, 1998 12,004 12,037 Inventories 20,281 20,363 Operating supplies and other current assets 5,391 5,206 Deferred tax assets 692 648 ------- ------- Total current assets 38,502 38,404 ------- ------- PROPERTY, PLANT AND EQUIPMENT Land and buildings 4,532 4,532 Machinery and equipment 42,006 42,004 Construction in progress 3,875 3,031 Less - accumulated depreciation (15,632) (14,772) ------- ------- Net property, plant and equipment 34,781 34,795 ------- ------- DEFERRED TAX ASSETS 6,100 5,990 ------- ------- OTHER ASSETS 1,119 1,062 ------- ------- Total assets $ 80,502 $ 80,251 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Advances on line of credit $ 13,227 $ 11,397 Accounts payable 7,594 7,056 Capital expenditures payable 671 857 Accrued liabilities 2,907 3,834 Environmental liabilities 982 982 Current portion of long-term debt 125 125 ------- ------- Total current liabilities 25,506 24,251 ------- ------- LONG-TERM DEBT 20,000 20,000 ------- ------- OTHER LIABILITIES 880 808 ------- ------- Total liabilities 46,386 45,059 ------- ------- SHAREHOLDERS' EQUITY Preferred stock, $.01 par value, 1,000,000 shares authorized, no shares issued - - Common stock, $.01 par value, 15,000,000 shares authorized, 4,990,312 and 4,985,937 share issued, respectively 50 50 Additional paid-in capital 15,686 15,671 Less treasury stock - 930,781 and 526,996 shares at cost, respectively (4,267) (3,254) Deferred compensation (63) (73) Retained earnings 22,710 22,798 ------- ------- Total shareholders' equity 34,116 35,192 ------- ------- Total liabilities and shareholders' equity $ 80,502 $ 80,251 See notes to condensed consolidated financial statement
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands, Except Per Share Data) (Unaudited) Three Months Ended Dec. 26, Dec. 27, 1998 1997 NET SALES $ 25,624 $ 26,020 COST OF GOODS SOLD 23,549 23,680 ------- ------- Gross profit 2,075 2,340 SELLING AND ADMINISTRATIVE EXPENSES 1,689 1,688 ------- ------- Operating income 386 652 INTEREST INCOME AND OTHER 25 10 INTEREST EXPENSE (553) (595) ------- ------- Income (loss) before income taxes (142) 67 PROVISION (CREDIT) FOR INCOME TAXES (54) 26 ------- ------- Net income (loss) $ (88) $ 41 NET INCOME (LOSS) PER COMMON SHARE - BASIC AND DILUTED $ (.02) $ .01 WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 4,147,178 4,626,383 WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED 4,147,178 4,643,073 See notes to condensed consolidated financial statements
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) Three Months Ended Dec. 26, Dec. 27, 1998 1997 Cash Flows From Operating Activities: Net income (loss) $ (88) $ 41 Adjustments to reconcile net income (loss) to net cash flows from operating activities: Depreciation and amortization 885 917 Change in deferred taxes (110) (13) Change in current assets and current liabilities: Accounts receivable 33 (1,601) Inventories 82 (2,948) Operating supplies and other current assets (185) (868) Deferred tax assets (44) 39 Accounts payable 538 2,137 Accrued liabilities (927) (1,277) ------- ------- Net cash flows from operating activities 184 (3,573) ------- ------- Cash Flows From Investing Activities: Capital expenditures (846) (786) Change in capital expenditures payable (186) 274 ------- ------- Net cash flows from investing activities (1,032) (512) ------- ------- Cash Flows From Financing Activities: Net advances on line of credit 1,830 4,095 Purchases of treasury stock (1,013) (25) Issuance of common stock 15 14 ------- ------- Net cash flows from financing activities 832 4,084 ------- ------- Net increase (decrease) in cash and cash equivalents (16) (1) Cash and Cash Equivalents at Beginning of Period 150 127 ------- ------- Cash and Cash Equivalents at End of Period $ 134 $ 126 Interest Paid $ 937 $ 957 Income Taxes Paid $ 100 $ - See notes to condensed consolidated financial statement
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (1) Basis of Presentation The accompanying unaudited condensed consolidated financial statements represent Kentucky Electric Steel, Inc. and its wholly- owned subsidiary, KESI Finance Company (collectively the Company). All significant intercompany accounts and transactions have been eliminated. These statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three month period ended December 26, 1998, are not necessarily indicative of the results that may be expected for the year ending September 25, 1999. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended September 26, 1998. (2) Accounting Policies Fiscal Year End The Company's fiscal year ends on the last Saturday of September. Property, Plant, Equipment and Depreciation Property, plant and equipment is recorded at cost, less accumulated depreciation. For financial reporting purposes, depreciation is provided on the straight-line method over the estimated useful lives of the assets, generally 3 to 12 years for machinery and equipment and 15 to 30 years for buildings and improvements. Depreciation for income tax purposes is computed using accelerated methods. Expenditures for maintenance and repairs are charged to expense as incurred. Expenditures for equipment renewals which extend the useful life of any asset are capitalized. Comprehensive Income In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130 (SFAS No. 130), "Reporting Comprehensive Income", which established standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general- purpose financial statements. The Company adopted SFAS No. 130 in the quarter ended December 26, 1998. For the periods disclosed, comprehensive income is equal to net income reported. (3) Inventories Inventories at December 26, 1998 and September 26, 1998 consist of the following ($000's): Dec. 26, Sept. 26, 1998 1998 Raw materials $ 2,889 $ 1,984 Semi-finished and finished goods 17,392 18,379 Total inventories $ 20,281 $ 20,363 (4) Long-Term Debt The Company's bank credit facility was amended effective December 19, 1997. This amendment increased the bank credit facility from $17.5 million to $24.5 million and extended the maturity date to January 31, 2001. (5) Earnings Per Share Statement of Financial Accounting Standards No. 128 (SFAS No. 128) related to earnings per share (E.P.S) requires dual presentation of basic and diluted E.P.S. on the face of the income statement for all entities with complex capital structures. The Company adopted SFAS No. 128 during the first quarter of fiscal 1998. The following is the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations. For the Three For the Three Months Ended Months Ended December 26, 1998 December 27, 1997 Per Per Net Share Net Share (Loss) Shares Amount Income Shares Amount Basic Earnings Per Share Income (loss) available to common stockholders $(88) 4,147,178 $(.02) $ 41 4,626,383 $ .01 Effect of Dilutive Securities Options - - - 16,690 Diluted Earnings Per Share Income (loss) available to common stockholders plus assumed conversions $(88) 4,147,178 $(.02) $ 41 4,643,073 $ .01
The following options were not included in the computation of diluted earnings per share because to do so would have been antidilutive for the applicable period: December 26, 1998 December 27, 1997 Transition stock options 91,106 147,184 Employee stock options 386,668 315,976 (6) Insurance Claim Receivable and Environmental Liabilities The Company's melt shop operations were shut down for twelve days during the third quarter of fiscal 1997 in order to decontaminate its baghouse facilities after detection of a radioactive substance in the baghouse dust, a by-product of the melting process. The $1.0 million in environmental liabilities recorded as a current liability on the balance sheet represents final payment due an environmental services company for treatment and disposal of the contaminated baghouse dust. Payment for the disposal will occur within the next twelve months. Although it is possible that the ultimate disposal costs may change from current estimates, the effect of the change, if any, is not expected to be material to the financial statements due to the Company having applicable insurance coverage. (7) Commitments and Contingencies The Company has various commitments for the purchase of materials, supplies and energy arising in the ordinary course of business. The Company is subject to various claims, lawsuits and administrative proceedings arising in the ordinary course of business with respect to commercial, product liability and other matters, which seek remedies or damages. The Company believes that any liability that may ultimately be determined will not have a material effect on its financial position or results of operations. The Company generates both hazardous wastes and non-hazardous wastes which are subject to various governmental regulations. Estimated costs to be incurred in connection with environmental matters are accrued when the prospect of incurring costs for testing or remedial action is deemed probable. The Company is not aware of any material asserted or unasserted environmental claims against the Company and no accruals for such matters have been recorded in the accompanying balance sheets except as disclosed in Note 6. However, discovery of unknown conditions could result in the recording of accruals in the periods in which they become known. KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General. The Company manufactures special bar quality alloy and carbon steel bar flats to precise customer specifications for sale in a variety of niche markets. Its primary markets are manufacturers of leaf- spring suspensions and flat bed truck trailers, cold drawn bar converters and steel service centers. Net Sales. Net sales decreased $.4 million (1.5%) in the first quarter of fiscal 1999 to $25.6 million, as compared to $26.0 million for the first quarter of fiscal 1998. The decrease in net sales is primarily attributed to a 1.3% decrease in shipments. Cost of Goods Sold. Cost of goods sold decreased $131,000 (.6%) in the first quarter of fiscal 1999 to $23.5 million, as compared to $23.7 million for the first quarter of fiscal 1998. As a percentage of net sales, cost of goods sold increased from 91.0% for the first quarter of fiscal 1998 to 91.9% for the first quarter of fiscal 1999. The increase in cost of goods sold as a percentage of net sales reflects higher per ton conversion costs due to lower productivity and higher repair and maintenance expense, offset by lower scrap costs. Production decreased due to equipment problems leading up to our scheduled maintenance outage in late December. Gross Profit. As a result of the above, the first quarter of fiscal 1999 reflected a gross profit of $2.1 million as compared to a gross profit of $2.3 million for the first quarter of fiscal 1998. As a percentage of net sales, gross profit decreased from 9.0% for the first quarter of fiscal 1998 to 8.1% for the first quarter of fiscal 1999. Selling and Administrative Expenses. Selling and administrative expenses include salaries and benefits, corporate overhead, insurance, sales commissions and other expenses incurred in the executive, sales and marketing, shipping, personnel, and other administrative departments. Selling and administrative expenses for the first quarter of fiscal 1999 were unchanged from the comparable period in fiscal 1998. As a percentage of net sales, such expenses increased from 6.5% for the three months ended December 27, 1997 to 6.6% for the three months ended December 26, 1998. The increase, as a percentage of sales, is the result of the decrease in net sales (as discussed above) for the quarter ended December 26, 1998. Operating Income. For the reasons described above, operating income decreased by $266,000 from an operating income of $652,000 in the first quarter of fiscal 1998 to an operating income of $386,000 in the first quarter of fiscal 1999. As a percentage of net sales, operating income decreased from 2.5% in the first quarter of 1998 to 1.5% in the first quarter of 1999. Interest Expense. Interest expense decreased by $42,000 for the three months ended December 26, 1998 from $595,000 for the first quarter of fiscal 1998 to $553,000 for the first quarter of fiscal 1999. The decrease in interest expense is due to a decrease in the average amount outstanding and a slight decline in the interest rate on the Company's line of credit during the first quarter of fiscal 1999 as compared to the first quarter of fiscal 1998. Net Income (Loss). As a result of the above, net income decreased by $129,000 for the three months ended December 26, 1998 from net income of $41,000 for the first quarter of fiscal 1998 to a net loss of $88,000 for the first quarter of fiscal 1999. Liquidity and Capital Resources. The cash flows provided by operating activities were $.2 million for the first quarter of fiscal 1999 as compared to cash flow used by operations of $3.6 million for the first quarter of fiscal 1998. First quarter of fiscal 1999 cash flows reflect the net loss of $88,000, $.9 million in depreciation and amortization, an increase of $.5 million in accounts payable and a $.9 million reduction in accrued liabilities. The decrease in accrued liabilities is attributed to the payment of interest on long-term debt, the annual deposit of profit sharing and 401K matching funds with the trustee, and a reduction in the workers compensation accrual. First quarter of fiscal 1998 operating cash flows reflect the increases in accounts receivable and inventories (due primarily to the increased level of sales and production) and the decrease in accrued liabilities, which were slightly offset by an increase in accounts payable. The cash flows used by investing activities were $1.0 million for the first quarter of fiscal 1999 as compared to $.5 million for the first quarter of fiscal 1998. The cash flows used by investing activities consist of $.8 million in capital expenditures and a decrease in capital expenditures payable of $.2 million for the first fiscal quarter of 1999. The cash flows used by investing activities for the first quarter of fiscal 1998 consist of capital expenditures of $.8 million offset somewhat by an increase in capital expenditures payable of $.3 million. The cash flows provided from financing activities were $.8 million for the first quarter of fiscal 1999 as compared to $4.1 million for the first quarter of fiscal 1998. The cash flows provided from financing activities for the first quarter of fiscal 1999 reflect net advances of $1.8 million on the Company's line of credit which were used primarily for capital expenditures as discussed above and $1.0 million used for the purchase of treasury stock. The cash flows provided from financing activities for the first quarter of fiscal 1998 reflect net advances of $4.1 million on the Company's line of credit which were used primarily for working capital needs and capital expenditures. Working capital at December 26, 1998 was $13.0 million as compared to $14.2 million at September 26, 1998, and the current ratio was 1.5 to 1.0 as compared to 1.6 to 1.0. The Company's primary ongoing cash requirements are for current capital expenditures. The two sources for the Company's liquidity are internally generated funds and its bank credit facility. The Company has $13.2 million in borrowings outstanding on its line of credit as of December 26, 1998. The Company believes that the unused portion of its $24.5 million bank credit facility and internally generated funds will be sufficient to fund its ongoing cash needs. Year 2000 Compliance The following Year 2000 discussion is provided in response to the Securities and Exchange Commission's recent interpretative statement expressing its view that public companies should include detailed discussion of Year 2000 issues in their MD&A. The Company is currently assessing the issues confronting it related to the "Year 2000 problem", which is the result of the inability of many computer systems and electronic equipment to distinguish the Year 2000 from the Year 1900. The Company is following an organized program to assure the Company's information technology systems and related infrastructure will be Year 2000 compliant. The Company has divided its Year 2000 issues into three areas including: computer hardware and software business systems, manufacturing process control devices and related systems, and facility support systems. The Company's Year 2000 program include three phases: (1) an audit and assessment phase designed to identify Year 2000 issues; (2) a modification phase designed to correct Year 2000 issues (this phase includes testing of individual modifications as they are installed); and (3) a testing phase to test entire systems for Year 2000 compliance after individual modifications have been installed and tested. The Company has completed the audit and assessment phase for the computer hardware and software business systems and the facility support systems. The audit and assessment phase for the manufacturing process control devices and related systems is substantially completed and should be finalized by March 31, 1999. The Company has completed the modification phase for its computer hardware and software business systems and expects to conduct final testing of these systems in the first calendar quarter of 1999. Modifications and final testing of the facility support systems are expected to be completed by March 31, 1999. The Company currently expects to complete the modification phase for its manufacturing process control devices and related systems during the second calendar quarter of 1999. After all modifications have been made, appropriate testing of the system is expected to be performed prior to July 31, 1999. Management has estimated that the cost for correction of Year 2000 issues, including any software and hardware changes and the cost of personnel involved in working on the project, will be approximately $300,000. The Company estimates that 40% of the total cost has been spent to date. The Year 2000 updates are being funded out of funds generated from operations and account for less than 30% of the Company's information technology budget. The Company's Year 2000 program includes investigation of the Year 2000 readiness status of our major vendors and customers. The Company is using letters, questionnaires and protocols to determine its vendors' and customers' 2000 readiness. The Company has contacted all major vendors including energy and scrap suppliers and external service providers including banks, insurance companies and phone service providers to determine their Year 2000 compliance status. If any such vendor indicates that they will not be Year 2000 compliant, the Company will develop contingency plans to address the issue, which may include identifying and developing other vendors. The Company has also contacted significant customers to determine their progress towards Year 2000 compliance and to identify issues, if any, which might develop if a customer is unable to become year 2000 compliant on a timely basis. If any issues are identified, the Company expects to develop procedures to permit the Company to continue to supply the customer despite Year 2000 issues. The Company does not have a contingency plan to operate in the event that its business systems are not Year 2000 compliant. As our work progresses, if the results of our testing suggest that there is a significant risk that the business systems might not be Year 2000 compliant, a contingency plan will be developed. Outlook Management continues to see somewhat lower demand in the Company's major markets and downward pricing on many of our products. However, the Company's current backlog and shipping levels are stable to increasing. During the scheduled major maintenance outage from December 23, 1998 through January 3, 1999, both furnaces were overhauled and several other capital and major maintenance projects were completed. Management is optimistic that the benefits of these projects combined with continued stable to increasing shipment levels will help the Company minimize the effect of lower demand and declining prices. Qualitative and Quantitative Disclosure About Market Risk Management does not believe that there is any material market risk exposure with respect to derivative or other financial instruments that would require disclosure under this item. Forward-Looking Statements The matters discussed or incorporated by reference in this Report on Form 10-Q that are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995) involve risks and uncertainities. These risks and uncertainities include, but are not limited to, the reliance on truck and utility vehicle industry; excess industry capacity; product demand and industry pricing; volatility of raw material costs, especially steel scrap; intense foreign and domestic competition; management's estimate of niche market data; the cyclical and capital intensive nature of the industry; and cost of compliance with environmental regulations. These risks and uncertainities could cause actual results of the Company to differ materially from those projected or implied by such forward-looking statements. Without limiting the foregoing, various statements in the previous discussion of Year 2000 are likewise forward-looking statements. These statements include statements of the Company's expectations, statements with regard to schedules and expected completion dates and statements regarding expected Year 2000 compliance. These forward-looking statements are subject to various risk factors which may materially affect the Company's efforts to achieve Year 2000 compliance. These risk factors include the inability of the Company to complete the plans and modifications that it has identified, the failure of software vendors to deliver the upgrades and repairs to which they have committed, the wide variety of information technology systems and components, both hardware and software, that must be evaluated and the large number of vendors and customers with which the Company interacts. The Company's assessments of the effects of Year 2000 on the Company are based, in part, upon information received from third parties and the Company's reasonable reliance on that information. Therefore, the risk that inaccurate information is supplied by third parties upon which the Company reasonably relied must be considered as a risk factor that might affect the Company's Year 2000 efforts. The Company is attempting to reduce the risks by utilizing an organized approach, extensive testing, and allowance of ample contingency time to address issues identified by tests. PART II. - OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K A) Exhibits 3.1 - Certificate of Incorporation of Kentucky Electric Steel, Inc., filed as Exhibit 3.1 to Registrant's Registration Statement on Form S-1 (No. 33-67410), and incorporated by reference herein. 3.2 - By-Laws of Kentucky Electric Steel, Inc., filed as Exhibit 3.2 to Registrant's Registration Statement on Form S-1 (No. 33-67140), and incorporated by reference herein. 27 - Financial Data Schedule B) Reports on Form 8-K - None EX-27 2 ART.5 FDS FOR 1ST QUARTER 10-Q
5 This schedule contains summary financial information extracted from Kentucky Electric Steel, Inc.'s condensed consolidated financial statements as of and for the three month period ended December 26, 1998 included in this Company's quarterly report on Form 10-Q and is qualified in its entirety by reference to such condensed consolidated financial statements. 0000910394 KENTUCKY ELECTRIC STEEL, INC. 1,000 U.S. DOLLARS 3-MOS SEP-25-1999 SEP-27-1998 DEC-26-1998 1 134 0 12,444 440 20,281 38,502 50,413 15,632 80,502 25,506 20,000 50 0 0 34,066 80,502 25,624 25,624 23,549 23,549 0 0 553 (142) (54) (88) 0 0 0 (88) (.02) (.02)
-----END PRIVACY-ENHANCED MESSAGE-----