-----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, Vwl+XhlP0hpYLfmcW/18aAUzJdo+xpd370AgnNHdJ3HnHtlcWJ1peRwaRhXRQFM0 NVf6CqMvhUFE2xJfwOwdXA== /in/edgar/work/20000808/0000910394-00-000003/0000910394-00-000003.txt : 20000921 0000910394-00-000003.hdr.sgml : 20000921 ACCESSION NUMBER: 0000910394-00-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000701 FILED AS OF DATE: 20000808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KENTUCKY ELECTRIC STEEL INC /DE/ CENTRAL INDEX KEY: 0000910394 STANDARD INDUSTRIAL CLASSIFICATION: [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: 688212 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 0001.txt 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 July 1, 2000 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 August 8, 2000, is as follows: 4,065,830 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 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) July 1, Sept. 25, 2000 1999 ASSETS CURRENT ASSETS Cash and cash equivalents $ 141 $ 184 Accounts receivable, less allowance for doubtful accounts and claims of $520 at July 1, 2000 and $430 at September 25, 1999 14,497 14,180 Inventories 20,914 22,751 Operating supplies and other current assets 5,649 5,294 Refundable income taxes 80 315 Deferred tax assets 768 683 Total current assets 42,049 43,407 PROPERTY, PLANT AND EQUIPMENT Land and buildings 4,765 4,621 Machinery and equipment 45,451 45,324 Construction in progress 2,874 2,470 Less - accumulated depreciation (21,159) (18,307) Net property, plant and equipment 31,931 34,108 DEFERRED TAX ASSETS 4,782 5,253 OTHER ASSETS 572 173 Total assets $ 79,334 $ 82,941 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Advances on line of credit $ 11,115 $ 14,510 Accounts payable 8,537 8,731 Capital expenditures payable 296 335 Accrued liabilities 3,298 3,988 Current portion of long-term debt 3,458 125 Total current liabilities 26,704 27,689 LONG-TERM DEBT 16,667 20,000 Total liabilities 43,371 47,689 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, 5,017,111 and 5,003,874 share issued, respectively 50 50 Additional paid-in capital 15,767 15,728 Less treasury stock - 942,581 and 932,581 shares at cost, respectively (4,292) (4,272) Deferred compensation - (30) Retained earnings 24,438 23,776 Total shareholders' equity 35,963 35,252 Total liabilities and shareholders' equity $ 79,334 $ 82,941 See notes to condensed consolidated financial statements
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands, Except Share and Per Share Data) (Unaudited) Three Months Ended Nine Months Ended July 1, June 26, July 1, June 26, 2000 1999 2000 1999 NET SALES $ 30,629 $ 27,421 $ 89,106 $ 78,997 COST OF GOODS SOLD 27,383 23,710 81,183 71,250 Gross profit 3,246 3,711 7,923 7,747 SELLING AND ADMINISTRATIVE EXPENSES 1,963 2,229 5,787 5,862 Operating income 1,283 1,482 2,136 1,885 INTEREST INCOME AND OTHER 831 1,147 880 1,197 INTEREST EXPENSE (632) (584) (1,949) (1,704) Income before income taxes 1,482 2,045 1,067 1,378 PROVISION FOR INCOME TAXES 562 776 405 524 Net income $ 920 $ 1,269 $ 662 $ 854 NET INCOME PER COMMON SHARE - BASIC AND DILUTED $ .23 $ .31 $ .16 $ .21 WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 4,075,760 4,064,920 4,075,781 4,090,817 WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED 4,075,760 4,064,920 4,076,564 4,092,949 See notes to condensed consolidated financial statements
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) Nine Months Ended July 1, June 26, 2000 1999 Cash Flows From Operating Activities: Net income $ 662 $ 854 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 2,926 2,688 Change in deferred taxes 471 572 Change in other (443) 100 Change in current assets and current liabilities: Accounts receivable (317) (1,541) Inventories 1,837 212 Operating supplies and other current assets (355) (317) Refundable income taxes 235 - Deferred tax assets (85) (148) Accounts payable (194) 1,562 Accrued liabilities (690) (112) Environmental liabilities - (982) Net cash flows from operating activities 4,047 2,888 Cash Flows From Investing Activities: Capital expenditures (675) (2,370) Change in capital expenditures payable (39) (482) Net cash flows from investing activities (714) (2,852) Cash Flows From Financing Activities: Net advances (repayments) on line of credit (3,395) 929 Purchases of treasury stock (20) (1,018) Issuance of common stock 39 44 Net cash flows from financing activities (3,376) (45) Net increase (decrease) in cash and cash equivalents (43) (9) Cash and Cash Equivalents at Beginning of Period 184 150 Cash and Cash Equivalents at End of Period $ 141 $ 141 Interest Paid, net of amount capitalized $ 2,288 $ 2,082 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 and nine-month periods ended July 1, 2000, are not necessarily indicative of the results that may be expected for the year ending September 30, 2000. 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 25, 1999. (2) Accounting Policies Fiscal Year End The Company's fiscal year ends on the last Saturday of September. The fiscal year normally consists of fifty-two weeks; however, the fiscal year ended September 30, 2000 has fifty-three weeks. The nine months ended July 1, 2000 consists of forty weeks as compared to thirty-nine weeks for the nine months ended June 26, 1999. 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. Derivative Financial Instruments In June 1998, the Financial Accounting Standards Board issued Statement No. 133 (SFAS No. 133) "Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, (collectively referred to as derivatives) and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The impact of adoption is not expected to be material. The Company is required to adopt SFAS No. 133 effective as of the beginning of the first quarter of fiscal 2001. (3) Inventories Inventories at July 1, 2000 and September 25, 1999 consist of the following ($000's): July 1, Sept. 25, 2000 1999 Raw materials $ 3,136 $ 2,824 Semi-finished and finished goods 17,778 19,927 Total inventories $ 20,914 $ 22,751 (4) Earnings Per Share 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 July 1, 2000 June 26, 1999 Per Per Share Share Income Shares Amount Income Shares Amount Amounts for Basic Earnings Per Share $ 920 4,075,760 $.23 $1,269 4,064,920 $ .31 Effect of Dilutive Securities Options - - - - - - Amounts for Diluted Earnings Per Share $ 920 4,075,760 $.23 $1,269 4,064,920 $ .31 For the Nine For the Nine Months Ended Months Ended July 1, 2000 June 26, 1999 Per Per Share Share Income Shares Amount Income Shares Amount Amounts for Basic Earnings Per Share $ 662 4,075,781 $.16 $ 854 4,090,817 $ .21 Effect of Dilutive Securities Options - 783 - - 2,132 - Amounts for Diluted Earnings Per Share $ 662 4,076,564 $.16 $ 854 4,092,949 $ .21
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: For the Three For the Three For the Nine For the Nine Months Ended Months Ended Months Ended Months Ended Options July 1, 2000 June 26, 1999 July 1, 2000 June 26, 1999 Transition stock 51,825 57,524 51,825 57,524 Employee stock 561,052 469,860 469,860 378,668
(5) 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. 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 and such amounts can be estimated. The Company has no recorded reserves for environmental matters as of July 1, 2000. However, new information or developments with respect to known matters or unknown conditions could result in the recording of accruals in the periods in which they become known. The Company believes that any liability that may ultimately be determined with respect to commercial, product liability, environmental or other matters will not have a material effect on its financial condition or results of operation. (6) Claim Settlement The fiscal 1999 and 2000 third quarter and nine month periods include other income of $1.1 million and $.8 million, respectively, for a claim settlement pertaining primarily to the Company's purchase of electrodes during the years 1992 to 1997. 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. The Company's fiscal year ends on the last Saturday of September. The fiscal year normally consists of fifty-two weeks; however, the fiscal year ended September 30, 2000 has fifty-three weeks. The nine months ended July 1, 2000 consists of forty weeks as compared to thirty-nine weeks for the nine months ended June 26, 1999. Net Sales. Net sales increased $3.2 million (11.7%) in the third quarter of fiscal 2000 to $30.6 million, as compared to $27.4 million for the third quarter of fiscal 1999. The increase in sales for the third quarter is due to an increase in tons shipped offset by a decrease in average selling price. Third quarter fiscal 2000 finished goods tons shipped increased 9.0% over the comparable period in fiscal 1999 to 69,800 tons. The average selling price for finished goods shipped was down 1.8% in the third quarter of fiscal 2000 as compared to the third quarter of fiscal 1999. The decrease in finished goods selling price for the third quarter of fiscal 2000 is primarily attributable to a change in product mix as the Company increased its participation in the lower priced spring and commodity SBQ markets. In addition, fiscal 2000 third quarter shipments included 5,800 tons of billets (semi-finished product) as compared to 400 tons in fiscal 1999. Net sales for the nine months ended July 1, 2000 increased $10.1 million (12.8%) to $89.1 million, as compared to $79.0 million for the nine months ended June 26, 1999. The increase in net sales for the first nine months of fiscal 2000 is attributed to an increase in shipments offset by a decrease in average selling price. Finished goods shipments for the first nine months of fiscal 2000 increased 15.4% over the comparable period in fiscal 1999 to 209,300 tons. The average selling price per finished goods shipped was down 3.7% in the first nine months of fiscal 2000. The decrease in finished goods average selling price for the nine months of fiscal 2000 is primarily attributable to a change in product mix as the Company increased its participation in the lower priced spring and commodity SBQ markets. In addition, fiscal 2000 shipments included 6,000 tons of billets as compared to 400 tons of billets in fiscal 1999. Cost of Goods Sold. Cost of goods sold increased $3.7 million (15.5%) in the third quarter of fiscal 2000 to $27.4 million, as compared to $23.7 million for the third quarter of fiscal 1999. As a percentage of net sales, cost of goods sold increased from 86.5% for the third quarter of fiscal 1999 to 89.4% for the third quarter of fiscal 2000. The increase in cost of goods sold for the third quarter of fiscal 2000 from the comparable period in fiscal 1999 is primarily due to the increase in shipments (as discussed above) and a small increase in per ton manufacturing costs. The increase in per ton manufacturing costs reflects higher scrap metal prices partially offset by lower conversion costs due to improvements in productivity. The increase in cost of goods sold as a percentage of net sales for the third quarter of fiscal 2000 as compared to the third quarter of fiscal 1999 is primarily attributed to higher scrap prices and to a lesser extent the 1.8% decrease in average selling price. Cost of good sold for the nine months ended July 1, 2000 increased $9.9 million (13.9%) to $81.2 million as compared to $71.3 million for the nine months ended June 26, 1999. As a percentage of net sales, cost of goods sold increased from 90.2% for the nine months ended June 26, 1999 to 91.1% for the nine months ended July 1, 2000. The increase in cost of goods sold for the first nine months of fiscal 2000 from the comparable period in fiscal 1999 is primarily due to the increase in shipments (as discussed above) offset by a decrease in the per ton cost of tons shipped. The decrease in the per ton manufacturing costs of tons shipped resulted from lower conversion costs due to increased productivity offset by higher scrap costs. The increase in cost of goods sold as a percentage of net sales for the first nine months of fiscal 2000, as compared to the first nine months of fiscal 1999, reflects lower selling prices (as discussed above) partially offset by lower per ton manufacturing costs. Gross Profit. As a result of the above, gross profit for the third quarter of fiscal 2000 decreased by $.5 million (12.5%) to $3.2 million from $3.7 million for the third fiscal quarter of 1999. As a percentage of net sales, gross profit decreased from 13.5% for the third quarter of fiscal 1999 to 10.6% for the third quarter of fiscal 2000. As a result of the above, gross profit for the nine months ended July 1, 2000 increased by $.2 million (2.3%) to $7.9 million as compared to $7.7 million for the nine months ended June 26, 1999. As a percentage of net sales, gross profit decreased from 9.8% for the first nine months of fiscal 1999 to 8.9% for the first nine months of fiscal 2000. 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 decreased by approximately $.3 million and $.1 million for the three months and nine months ended July 1, 2000, as compared to the same periods in fiscal 1999. As a percentage of net sales, such expenses decreased from 8.1% for the third quarter of fiscal 1999 to 6.4% for the third quarter of fiscal 2000, and from 7.4% for the nine months ended June 26, 1999 to 6.5% for the nine months ended July 1, 2000. The decrease in selling and administrative expenses is due primarily to a decrease in legal and professional fees and self-insured health benefit costs. The decrease in legal and professional fees is primarily due to unusually high legal and consulting fees incurred during the third fiscal quarter of 1999 related to the Company's electric service contract and a pending trade case with the Department of Commerce. Operating Income. For the reasons described above, operating income decreased $.2 million from $1.5 million in the third quarter of fiscal 1999 to $1.3 million in the third quarter of fiscal 2000. As a percentage of net sales, operating income decreased from 5.4% in the third quarter of 1999 to 4.2% in the third quarter of 2000. Operating income increased $.2 million from $1.9 million for the first nine months of fiscal 1999 to $2.1 million for the nine months ended July 1, 2000. As a percentage of net sales, operating income remained at 2.4% for both the nine months ended June 26, 1999 and the nine months ended July 1, 2000. Interest Income and Other. Interest and other income decreased by $.3 million for the three months ended July 1, 2000 from $1.1 million for the third quarter of fiscal 1999 to $.8 million for the third quarter of fiscal 2000. Interest and other income decreased by $.3 million for the nine months ended July 1, 2000 from $1.2 million for the nine months ended June 26, 1999 to $.9 million for the nine months ended July 1, 2000. The third quarter and nine month periods for fiscal 2000 and fiscal 1999 include other income of $.8 million and $1.1 million, respectively, for a claim settlement pertaining primarily to the Company's purchase of electrodes during the years 1992 to 1997. Interest Expense. Interest expense increased by $48,000 for the three months ended July 1, 2000 from $584,000 for the third quarter of fiscal 1999 to $632,000 for the third quarter of fiscal 2000. Interest expense increased by $245,000 for the nine months ended July 1, 2000 from $1.7 million for the nine months ended June 26, 1999 to $1.9 million for the nine months ended July 1, 2000. The increase in interest expense for the third quarter is primarily due to an increase in the interest rate on the Company's line of credit. The increase in interest expense for the first nine months of fiscal 2000 is due to an increase in the average amount outstanding as well as an increase in the interest rate on the Company's line of credit. Net Income. As a result of the above, net income decreased $.4 million from $1.3 million for the third quarter of fiscal 1999 to $.9 million for the third quarter of fiscal 2000. As a result of the above, net income decreased $.2 million from $.9 million for the first nine months of fiscal 1999 to $.7 million for the first nine months of fiscal 2000. Liquidity and Capital Resources The cash flows provided by operating activities were $4.0 million for the first nine months of fiscal 2000 as compared to $2.9 million for the first nine months of fiscal 1999. The first nine months of fiscal 2000 reflect the profitable operations of $.7 million, $2.9 million in depreciation and amortization, a decrease in inventories of $1.8 million and a decrease in accrued liabilities of $.7 million. The decrease in inventories reflects lower billet and finished goods tons due to an increase in tons shipped and lower per ton cost of finished goods. The decrease in accrued liabilities reflects semi-annual interest payment made in the third quarter. The first nine months of fiscal 1999 reflect the profitable operations of $.9 million, $2.7 million in depreciation and amortization, an increase of $1.5 million in accounts receivable, an increase of $1.6 million in accounts payable and a decrease of $1.0 million in environmental liabilities. The cash flows used by investing activities were $.7 million for the first nine months of fiscal 2000 as compared to $2.9 million for the first nine months of fiscal 1999. The cash flows used by investing activities for the first nine months of fiscal 2000 consist of $.7 million in capital expenditures. The cash flows used by investing activities for the first nine months of fiscal 1999 consist of capital expenditures of $2.4 million and a reduction in capital expenditures payable of $.5 million. The cash flows used in financing activities were $3.4 million for the first nine months of fiscal 2000 as compared to cash flows used of $45,000 for the first nine months of fiscal 1999. The cash flows used in financing activities for the first nine months of fiscal 2000 reflect repayments of $3.4 million on the Company's line of credit. The cash flows used in financing activities for the first nine months of fiscal 1999 reflect net advances of $1.0 million on the Company's line of credit which were used primarily for capital expenditures and $1.0 million used for purchase of treasury stock. Working capital at July 1, 2000 was $15.3 million as compared to $15.7 million at September 25, 1999, and the current ratio was 1.6 to 1.0 at the end of both periods. The Company's primary ongoing cash requirements are for current capital expenditures and ongoing working capital requirements. In addition, principal payments on the unsecured senior notes commence on November 1, 2000 and are due in annual installments of $3.3 million over six years. The two sources for the Company's liquidity are internally generated funds and its bank credit facility. The Company has a $24.5 million unsecured bank credit facility, which expires January 31, 2002. Borrowings are limited to defined percentages of eligible inventory and accounts receivable. As of July 1, 2000, the Company had $11.1 million outstanding and $9.6 million available under its line of credit. The Company believes that the bank credit facility and internally generated funds will be sufficient to fund its ongoing cash needs. Outlook Management believes that, while the Company's backlog of orders remains firm, there appears to be some market softening. Management will closely monitor market conditions during the next quarter. Quantitative and Qualitative 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, reliance on the 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. 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 Statements on Form S-1 (No. 33-67140), 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 99 Ownership of Certain Beneficial Owners and Management 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. DATED: August 8, 2000 KENTUCKY ELECTRIC STEEL, INC. (Registrant) William J. Jessie William J. Jessie, Vice President, Secretary, Treasurer, and Principal Financial Officer EX-99 2 0002.txt OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information regarding the amount of the Common Stock beneficially owned, as of August 8, 2000, by persons known to the Company to be the beneficial owners of more than five percent of the Common Stock and by each director of the Company, the executive officers of the Company named in the Summary Compensation Table of the Company's 2000 proxy statement dated February 1, 2000, and all directors and executive officers as a group. On August 8, 2000, there were issued and outstanding 4,065,830 shares of Common Stock. Shares Beneficially Name Owned (1) Percent State of Wisconsin Investment Board . . 500,000 (2) 12.3% P. O. Box 7842 Madison, Wisconsin 53707 Franklin Resources, Inc. . . . . . . . 437,500 (3) 10.8% 777 Mariners Island Boulevard San Mateo, California 94404 NS Group, Inc. . . . . . . . . . . . . 400,000 (4) 9.8% Ninth and Lowell Streets Newport, Kentucky 41072 FMR Corp. . . . . . . . . . . . . . . . 367,500 (5) 9.0% 82 Devonshire Street Boston, Massachusetts 02109-3614 Tontine Partners, L.P. . . . . . . . . 237,700 (6) 5.8% 200 Park Avenue New York, NY 10166 Charles C. Hanebuth . . . . . . . . . . 241,068 (7) 5.7% Clifford R. Borland . . . . . . . . . . 8,537 (8) Carl E. Edwards, Jr. . . . . . . . . . 10,649 (8) J. Marvin Quin II . . . . . . . . . . . 18,296 (8) David C. Struve . . . . . . . . . . . . 17,100 (8) William J. Jessie . . . . . . . . . . . 116,964 (9) 2.8% Joseph E. Harrison . . . . . . . . . . 85,965 (10) 2.1% William H. Gerak . . . . . . . . . . . 61,286 (11) 1.5% Directors and Executive Officers as a Group (8 persons) . . . . . . . 559,865 (12) 12.8%
(1) Under the rules of the Securities and Exchange Commission ("SEC"), persons who have power to vote or dispose of securities, either alone or jointly with others, are deemed to be the beneficial owners of such securities. (2) Based on Amendment No. 6 to Schedule 13G filed with the SEC on February 10, 2000, the State of Wisconsin Investment Board has sole voting and dispositive power as to 500,000 shares. (3) Based on Amendment No. 2 to Schedule 13G filed with the SEC on January 19, 2000 by Franklin Resources, Inc. ("Franklin Resources"), Franklin Resources, an institutional investment manager, has sole voting power and shared dispositive power as to 437,500 shares. (4) NS Group, Inc., a Kentucky corporation ("NS Group"), obtained such shares in connection with the initial public offering of shares of the Company's Common Stock as partial consideration for the transfer of all of the assets and liabilities of a subsidiary of NS Group to the Company. Clifford R. Borland, a director of the Company, serves as Chairman and Chief Executive Officer of NS Group. Mr. Borland disclaims beneficial ownership of the shares owned by NS Group. (5) Based on Schedule 13G date February 14, 2000 filed with the SEC by FMR Corp. ("FMR"). Fidelity Management & Research Company ("Fidelity"), a wholly-owned subsidiary of FMR, provides investment advisory service to various investment companies (the "Fidelity Funds"). Fidelity Low-Priced Stock Fund, one of the Fidelity Funds, owns the 367,500 shares. The Edward C. Johnson III family, together with trusts for the benefit of his family, own stock representing approximately 49% of the voting power of FMR. Edward C. Johnson III, through control of FMR and Fidelity, has sole dispositive power as to 367,500 shares. The Board of Trustees of Fidelity Low-Priced Stock Fund has sole voting power as to 367,500 shares. (6) Based on Amendment No. 2 to Schedule 13G filed with the SEC on February 9, 2000 by Tontine Partners, L.P., a Delaware limited partnership ("TP"), Tontine Management, L.L.C., a Delaware limited liability company ("TM"), Tontine Overseas Associates, L.L.C., a Delaware limited liability company and investment advisor ("TOA"), and Jeffrey L. Gendell, an individual, TP, TM, TOA and Mr. Gendell have shared voting power and shared dispositive power as to 237,700 shares. (7) Includes 172,605 share which Mr. Hanebuth has the right to acquire upon the exercise of stock options within 60 days of August 8, 2000. Excludes 203 shares owned separately by Mr. Hanebuth's spouse and children; Mr. Hanebuth disclaims that he is the beneficial owner of such shares. (8) Shares beneficially owned do not exceed one percent of the outstanding shares of Common Stock. (9) Includes 55,217 shares which Mr. Jessie has the right to acquire upon the exercise of stock options within 60 days of August 8, 2000. (10) Includes 52,882 shares which Mr. Harrison has the right to acquire upon the exercise of stock options within 60 days of August 8, 2000. (11) Includes 35,964 shares which Mr. Gerak has the right to acquire upon the exercise of stock options within 60 days of August 8, 2000. (12) Includes 316,668 shares subject to options as described in the foregoing notes. EX-27 3 0003.txt ART.5 FDS FOR 3RD 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 nine month period ended July 1, 2000 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 9-MOS SEP-30-2000 SEP-26-1999 JUL-01-2000 1 141 0 15,017 520 20,914 42,049 53,090 21,159 79,334 26,704 20,000 50 0 0 35,913 79,334 89,106 89,106 81,183 81,183 0 0 1,949 1,067 405 662 0 0 0 662 .16 .16
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