UNITED STATES
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 October 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to __________
Commission file number: 33-67532
SHEFFIELD STEEL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 74-2191557
(State or other (I.R.S. Employer
jurisdiction of incorporation) identification No.)
220 North Jefferson Street
Sand Springs, OK 74063
(Address of principal executive offices)
(918) 245-1335
(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 _____
-----
At the date of this filing, there were 3,516,987 shares of the Registrant's
$.01 par value Common Stock outstanding. The aggregate market value of voting
stock held by nonaffiliates is unknown as the Registrant's stock is not traded
on an established public trading market.
SHEFFIELD STEEL CORPORATION
FORM 10-Q
Index
Page
----
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
April 30, 1999 and October 31, 1999 3
Consolidated Condensed Statements of Operations -
Three and six month periods ended October 31, 1998 and 1999 4
Consolidated Condensed Statements of Cash Flows -
Six months ended October 31, 1998 and 1999 5
Notes to Consolidated Condensed Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-14
Part II. Other Information
Item 1. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 15
Signature 16
2
SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(In thousands)
October 31,
April 30, 1999
Assets 1999 Unaudited
------ ---- ---------
Current assets:
Cash and cash equivalents $ 86 84
Accounts receivable, less allowance for doubtful accounts of $658
at April 30, 1999 and $808 at October 31, 1999 19,943 21,271
Inventories 44,034 44,752
Other current assets 4,839 4,449
-------- -------
Total current assets 68,902 70,556
Property, plant and equipment, net 68,310 67,697
Intangible assets, net 10,011 9,558
Other assets 3,626 4,466
Deferred income tax asset, net 1,712 1,792
-------- -------
$152,561 154,069
======== =======
Liabilities and Stockholders' Deficit
-------------------------------------
Current liabilities:
Current portion of long-term debt $ 2,885 2,628
Accounts payable 14,878 12,654
Accrued interest payable 5,362 5,305
Accrued liabilities 6,455 9,661
-------- -------
Total current liabilities 29,580 30,248
Long-term debt, excluding current portion 122,710 122,611
Accrued post-retirement benefit costs 12,380 13,170
Other liabilities 1,088 1,088
-------- -------
Total liabilities 165,758 167,117
-------- -------
Stockholders' deficit:
Common stock 35 35
Additional paid-in capital 2,024 2,451
Accumulated deficit (14,202) (14,458)
-------- -------
Total stockholders' deficit (12,143) (11,972)
Less loans to stockholders 1,054 1,076
-------- -------
(13,197) (13,048)
-------- -------
$152,561 154,069
======== =======
See accompanying notes to consolidated condensed financial statements.
3
SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
October 31, October 31,
----------------------------- -------------------------------
1998 1999 1998 1999
---- ---- ---- ----
Sales $40,592 42,513 83,669 85,452
Cost of sales 31,068 32,789 64,916 64,610
------- ------ ------ ------
Gross profit 9,524 9,724 18,753 20,842
Selling, general and administrative expense 3,836 3,819 7,438 7,917
Depreciation and amortization expense 1,890 2,075 3,754 4,159
Postretirement benefit expense other than pensions 730 646 1,460 1,292
Litigation settlement (2,200) - (2,200) (2,326)
------- ------ ------ ------
Operating income 5,268 3,184 8,301 9,800
Other expense:
Interest expense, net 3,657 3,710 7,138 7,408
Other 15 15 30 148
------- ------ ------ ------
3,672 3,725 7,168 7,556
------- ------ ------ ------
Income (loss) from operations before
Income taxes 1,596 (541) 1,133 2,244
Income tax expense - - - -
------- ------ ------ ------
Net income (loss) $ 1,596 (541) 1,133 2,244
======= ====== ====== ======
See accompanying notes to consolidated condensed financial statements.
4
SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
October 31,
---------------------------
1998 1999
---- ----
Cash flows from operating activities:
Net income $ 1,133 2,244
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 3,917 4,321
Loss (gain) on sale of assets held for sale (2) 118
Accrual of postretirement benefits other than pensions,
Net of cash paid 960 790
Changes in assets and liabilities, net of effects from
Acquisition of business (13,479) (4,473)
-------- ------
Net cash (used in) provided by operating activities (7,471) 3,000
-------- ------
Cash flows from investing activities:
Capital expenditures (3,641) (3,229)
Acquisition of business, net of cash acquired (2,635) -
Proceeds from sale of assets held for sale - 182
-------- ------
Net cash used in investing activities (6,276) (3,047)
-------- ------
Cash flows from financing activities:
Net increase (decrease) in long-term debt 12,530 (356)
Other (1,009) 401
-------- ------
Net cash provided by financing activities 11,521 45
-------- ------
Net decrease in cash (2,226) (2)
Cash and cash equivalents at beginning of period 2,590 86
-------- ------
Cash and cash equivalents at end of period $ 364 84
======== ======
Supplemental disclosure of cash flow information
- ------------------------------------------------
Cash paid during the period for interest $ 6,845 7,203
======== ======
Cash paid during the period for income taxes $ - 105
======== ======
Noncash item:
Dividend declared $ - 2,500
======== ======
See accompanying notes to consolidated condensed financial statements.
5
SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
October 31, 1998 and 1999
(In thousands)
(Unaudited)
1) Basis of Presentation and Summary of Accounting Policies
The consolidated financial statements of Sheffield Steel Corporation (the
Company, which may be referred to as we, us or our) include the accounts of its
divisions, Sheffield Steel-Sand Springs (Sand Springs), Sheffield Steel-Kansas
City (Kansas City), and Sheffield Steel-Joliet (Joliet) and its wholly owned
subsidiaries, Sheffield Steel Corporation-Oklahoma City (Oklahoma City),
Waddell's Rebar Fabricators, Inc. (Waddell), Wellington Industries, Inc.
(Wellington) since October 7, 1998 and Sand Springs Railway Company (the
Railway). HMK Enterprises, Inc. (HMK) owns approximately 91% of our currently
issued and outstanding common stock. All material intercompany transactions and
balances have been eliminated in consolidation. Our primary business is the
production of concrete reinforcing bar, fence posts, and a range of hot rolled
bar products including rounds, flats and squares. Our products are sold
throughout the continental United States. We operate in a single operating
segment providing steel products and services to the steel manufacturing and
fabricating industry.
These condensed consolidated interim financial statements have been prepared by
us without audit, according to the rules and regulations of the Securities and
Exchange Commission and reflect all adjustments that we believe were necessary
for a fair statement of the results for the interim periods. All adjustments
made were normal recurring accruals. We suggest that these interim financial
statements are read in conjunction with the financial statements and notes
contained in our Form 10-K for the year ended April 30, 1999. Operating results
for the quarter and six months ended October 31, 1999 are not necessarily
indicative of the results that we expect for the year ending April 30, 2000.
2) Inventories
The components of inventories are as follows:
October 31,
April 30, 1999
1999 (Unaudited)
---- -----------
Raw materials and storeroom supplies $12,408 10,550
Work in process 13,390 13,108
Finished goods 18,236 21,094
------- ------
$44,034 44,752
======= ======
6
SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements, Continued
3) Long-term Debt
Long-term debt is comprised of the following: October 31,
April 30, 1999
1999 (Unaudited)
---- -----------
First mortgage notes $110,000 110,000
Revolving credit agreement 6,285 8,527
Railway term loan 1,000 500
Railway revolving credit agreement 620 18
Equipment notes 4,931 4,199
Notes payable 2,759 1,995
-------- -------
125,595 125,239
Less current portion 2,885 2,628
-------- -------
$122,710 122,611
======== =======
4) Litigation Settlement
We were party to a lawsuit with several other steel manufacturers against
certain manufacturers of graphite electrodes related to price fixing within the
electrode industry. We recognized approximately $2,326 related to settlements
reached this fiscal year ($2,200 in fiscal '99) with certain of the defendents.
With respect to the current fiscal year settlement, we have received
approximately $1,325 in cash and the remainder is secured by a letter of credit
and included in accounts receivable.
7
SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
ITEM 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations
---------------------------------------------
The following discussion should be read in conjunction with our
Consolidated Condensed Financial Statements and notes included in this Form 10-
Q.
Results of Operations
The results of operations are dependent on the level of construction,
infrastructure spending, oil and gas, agribusiness, and general economic
activity in the U.S. Our sales are seasonal with the third fiscal quarter
generally being weaker than the rest of the year. The major cost components of
our products are steel scrap and other raw materials, energy, labor, warehousing
and handling, and freight costs.
The following table provides information regarding the historical results
of operations (in thousands) for the quarters ended October 31, 1998 and 1999:
Three Months Ended October 31,
---------------------------------------------------------------------
1998 1999
------------------------------------ --------------------------------
Operating Results: Net Sales % of Sales Net Sales % of Sales
--------- ---------- --------- ----------
Sales $40,592 100.0% 42,513 100.0%
Cost of sales 31,068 76.5% 32,789 77.1%
------- ------
Gross Profit 9,524 23.5% 9,724 22.9%
Selling and administrative 3,836 9.5% 3,819 9.0%
Depreciation and amortization 1,890 4.7% 2,075 4.9%
Postretirement benefit expense 730 1.8% 646 1.5%
Litigation settlement (2,200) (5.4%) - -
------- ------
Operating income 5,268 12.98% 3,184 7.5%
Interest expense, net 3,657 9.0% 3,710 8.7%
Other 15 0.0% 15 0.0%
------- ------
Income (loss) from operations
before income taxes 1,596 3.9% (541) (1.3%)
Income tax expense - - - -
------- ------
Net income (loss) $ 1,596 3.9% (541) (1.3%)
======= ======
8
SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
The following table provides information regarding the historical shipment
levels and average selling prices per ton:
Three Months Ended October 31,
------------------------------
1998 1999
-------- --------
Tons shipped:
Hot Rolled Bars 38,943 38,648
Rebar 47,372 47,795
Fabricated Products 12,511 17,106
-------- -------
Total finished products 98,826 103,549
Billets 2,969 14,618
-------- -------
Total tons shipped 101,795 118,167
======== =======
Price per ton:
Hot Rolled Bars $ 470 442
Rebar 306 288
Fabricated Products 522 494
Billets 214 181
Average price per ton shipped 399 360
Average production cost per ton 305 277
Three Months Ended October 31, 1999 As Compared To Three Months Ended October
31, 1998
Sales. Sales for the second quarter of fiscal 2000 were $42.5 million.
Shipments increased in comparison to the same quarter in the prior year, while
pricing generally decreased as summarized below:
. In comparison to the second quarter of fiscal 1999, shipments and pricing of
our hot rolled bar products in Joliet have been impacted by market conditions
with pricing and shipments both decreasing approximately 5%. Hot rolled bar
shipments from Sand Springs increased 10% over the same period in the prior year
and excluding sales to Wellington (which we purchased October 6, 1998) from the
prior year number, the increase is approximately 50%. However, we continue to
experience lower sales of hot rolled bars that support certain industries such
as agricultural and oil field equipment.
. Finished goods prices are down in comparison to this quarter in fiscal 1999
in part due to reductions in steel scrap raw material costs. However, during the
second quarter of fiscal 2000, our scrap raw material costs began to increase
and this is having an adverse effect on cost of sales. In the short term, we may
be unable to increase sales prices by an amount sufficient to offset these cost
increases and margins may be affected.
. Billet shipments increased 392% over the same quarter in the prior year. This
was a non-recurring sale that caused total average selling prices to decrease.
Average selling prices decreased 10% including billets and only 5% excluding
billets. Billet pricing is related to scrap raw material costs.
. In October 1998, we purchased Wellington, a railroad track spike
manufacturer, which increased our sales of fabricated products. Railroad track
spike sales have lowered the average selling price for fabricated products but
have improved our overall average selling prices.
9
SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
Cost of Sales and Expenses. Average product cost per ton decreased to $277 in
the second quarter of fiscal 2000 from $305 in the second quarter of fiscal 1999
due to decreases in steel scrap raw material costs and a higher sales mix of
billets which have a low cost per ton in comparison with other finished goods.
This decrease was partially offset by higher costs associated with finished
goods product mix and higher operating costs. Sand Springs experienced several
power outages at the beginning of the quarter that affected melt shop production
and efficiency. We also produced a higher percentage of hot rolled bar product
in the Sand Springs rolling mill this quarter in comparison to the same quarter
in the prior year, which resulted in less production tons and higher costs per
ton.
Six Months Ended October 31, 1999 As Compared To Six Months Ended October 31,
1998
The following table provides information regarding the historical results of
operations (in thousands) for the six months ended October 31, 1998 and 1999:
Six Months Ended October 31,
--------------------------------------------------------------
1998 1999
---------------------------- --------------------------
Operating Results: Net Sales % of Sales Net Sales % of Sales
--------- ---------- --------- ----------
Sales $83,669 100.0% 85,452 100.0%
Cost of sales 64,916 77.6% 64,610 75.6%
------- ------
Gross Profit 18,753 22.4% 20,842 24.4%
Selling and administrative 7,438 8.9% 7,917 9.3%
Depreciation and amortization 3,754 4.5% 4,159 4.9%
Postretirement benefit expense 1,460 1.7% 1,292 1.5%
Litigation settlement (2,200) (2.6%) (2,326) (2.7%)
------- ------
Operating income 8,301 9.9% 9,800 11.5%
Interest expense, net 7,138 8.5% 7,408 8.7%
Other 30 0.0% 148 0.2%
------- ------
Income (loss) from operations
before income taxes 1,133 1.4% 2,244 2.6%
Income tax expense - - - -
------- ------
Net income (loss) $ 1,133 1.4% 2,244 2.6%
======= ======
10
SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
The following table provides information regarding the historical shipment
levels and average selling prices per ton:
Six Months Ended October 31,
---------------------------
1998 1999
------- -------
Tons shipped:
Hot Rolled Bars 83,607 77,100
Rebar 89,041 98,693
Fabricated Products 27,049 34,679
-------- -------
Total finished products 199,697 210,472
Billets 12,416 23,011
-------- -------
Total tons shipped 212,113 233,483
======== =======
Price per ton:
Hot Rolled Bars $ 462 445
Rebar 304 288
Fabricated Products 508 499
Billets 221 181
Average price per ton shipped 394 366
Average production cost per ton 306 277
Sales. Sales for the six months ended October 31, 1999 were $85.5 million.
Shipments increased in comparison to the same period in the prior year, while
pricing generally decreased as summarized below:
. In comparison to the six months ended October 31, 1998, shipments and pricing
of our hot rolled bar products in Joliet have been impacted by market conditions
with shipments decreasing approximately 9% and pricing decreasing 3%. Hot rolled
bar shipments from Sand Springs decreased 5% over the same period in the prior
year but excluding sales to Wellington from the prior year number, shipments
increased approximately 36%. We continue to experience lower sales of hot rolled
bars that support certain industries such as agricultural and oil field
equipment.
. Rebar shipments rebounded due to our favorable inventory position in
comparison to the six months ended October 31, 1998. In the prior year, we had
very low inventories due to the rolling mill outage at the Sand Springs Facility
in the fourth quarter of fiscal 1998. Rebar demand continues to be strong,
however, pricing has been impacted by imports and lower scrap raw material
costs.
. Finished goods prices are down in comparison to the six month period ended
October 31, 1998, in part due to reductions in steel scrap raw material costs.
However, during the second quarter of fiscal 2000, our scrap raw material costs
began to increase and this is having an adverse effect on cost of sales. In the
short term, we may be unable to increase sales prices by an amount sufficient to
offset these cost increases and margins may be affected.
. In October 1998, we purchased Wellington, a railroad track spike
manufacturer, which increased our sales of fabricated products and improved
overall average selling prices.
11
SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
Cost of Sales and Expenses. Average product cost per ton decreased to $277 in
the six month period ended October 31, 1999 from $306 in the same period in the
prior year due to decreases in steel scrap raw material costs and a higher sales
mix of billets which have a low cost per ton in comparison with other finished
goods. This decrease was partially offset by higher costs associated with
finished goods product mix.
Selling, general and administrative expenses increased approximately $0.5
million over the first six months of fiscal 1999, due to recruiting and
severance costs as well as the acquisition of Wellington in October 1998.
During fiscal 1999, we were parties in a lawsuit with several other steel
manufacturers against certain graphite electrodes manufacturers related to price
fixing within the electrode industry. During the second quarter of fiscal 1999,
we recorded approximately $2.2 million related to this lawsuit. In the first
quarter of fiscal 2000, we recorded an additional $2.3 million from different
defendants, of which $1.3 million was received during the first quarter of
fiscal 2000.
Liquidity and Capital Resources
As of October 31, 1999, we had long-term indebtedness of $125.2 million and
approximately $31.1 million of additional borrowing availability under our
revolving credit agreements. We continue to comply with all of our loan
covenants. Borrowings under our revolving credit agreements bear interest at a
floating rate. To the extent that interest rates increase, and to the extent
that amounts outstanding under the revolving credit agreements increase, there
will be corresponding increases in our interest obligations. In addition to
borrowings under the revolving credit agreements, we have historically used cash
flow from operations and equipment financing agreements to fund our investing
activities, including capital expenditures.
Cash flow provided by operating activities was approximately $3.0 million for
the six month period ended October 31, 1999, as compared with cash flow used in
operating activities of approximately $7.5 million for the six month period
ended October 31, 1998. Improvements in cash flow from operating activities is a
result of our improved operating performance, offset, in part, by increases to
accounts receivable and inventory and decreases in accounts payable. Cash used
in investing activities in the six months ended October 31, 1999 was
approximately $3.0 million, consisting of capital expenditures and proceeds from
the sale of assets held for sale. Primarily all of the capital expenditures
consisted of normal capital projects required or justified economically. For the
six month period ended October 31, 1999, cash provided by financing activities
consisted of payments on notes payable offset by increases to the revolving
credit agreement and other financing activities.
We have signed an agreement to enter into a $10 million operating lease for a
new reheat furnace for the Sand Springs rolling mill. The lease term is five
years and contains an option to purchase the equipment at fair market value at
the end of the lease term.
Earnings before interest, taxes, depreciation, amortization, and the non-cash
portion of the post-retirement expense (EBITDA) was approximately $5.7 million
for the quarter ended October 31, 1999 compared to approximately $5.4 million
for the same quarter in the prior year, excluding the electrode
12
SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
litigation settlement. We believe that EBITDA is a valuable measure of our
operating cash flow and we consider it an indicator of our ability to meet
interest payments and fund capital expenditures. EBITDA does not represent and
should not be considered as an alternative to net income or cash flow from
operations as determined by generally accepted accounting principles and EBITDA
does not necessarily indicate whether cash flow will be sufficient for cash
requirements.
Our cash flow from operating activities and borrowings under our revolving
credit facilities are expected to be sufficient to fund capital improvements and
meet any near-term working capital requirements. We estimate that our annual
amount of necessary maintenance capital expenditures is approximately $3
million. On a long-term basis, we have significant future debt service
obligations. Our ability to satisfy these obligations and to secure adequate
capital resources in the future will be dependent on our ability to generate
adequate operating cash flow. We expect that our cash flow from operations and
borrowing availability under the revolving credit facilities will be sufficient
to service the First Mortgage Notes and other investing activities. This will be
dependent on our overall operating performance and is subject to general
business, financial and other factors affecting us and others in the domestic
steel industry, as well as prevailing economic conditions, certain of which are
beyond our control. The leveraged position we are in and the restrictive
covenants we have in our bond Indenture and the revolving credit facilities
could significantly limit our ability to withstand competitive pressures or
adverse economic conditions.
Year 2000 Compliance
State of Readiness. We recognized the Year 2000 (Y2K) Information Technology
issues in 1986 and began to address the problem with the re-design of our
internal information systems. We instituted a comprehensive Year 2000 strategy
in 1997. In early 1998, we created a formal Y2K Task Force with executive
oversight to examine Y2K issues as they pertain to areas outside internal
information systems including the following:
Information Systems Infrastructure. Hardware, networks and operating systems
that support our software.
Desktop Applications. Private user spreadsheets and data collection that may
have Y2K issues.
Facilities. Basic infrastructure items as well as backup power, fire control
systems, security systems, scales and phones.
Manufacturing/Distribution. Process control equipment and software and other
manufacturing operations that have personal computers, board level computers, or
PLC's (Programmable Logic Controllers) interfaced to them.
Product Compliance. Primarily testing equipment. Spectrometers, personal
computers interfaced to testing equipment, meters and gauges used by the quality
assurance department.
Supply Chain. Supply vendors, transportation and utilities, third party support
organizations, banking and finance.
The Task Force is responsible for taking an inventory of all systems software
and equipment to identify potential Y2K issues and for developing remediation
plans for problems identified. To date, the financial and commercial systems
have been converted to full Y2K compliance.
Only minor problems were identified with electronic equipment and third party
software. Our
13
SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
rolling mill and shear line in Sand Springs were both installed in the last four
years. The rolling mill relies on a third party system that has been represented
to us as being Y2K compliant. All remaining third party software has been
examined and has been represented by the vendor as being Y2K compliant. The Task
Force has surveyed all vendors with invoices that total over $10,000 in the
previous calendar year in an attempt to ascertain the potential risks within the
supply chain, specifically in the areas of raw materials and utilities. We have
received responses from approximately 90% of the vendors surveyed and the Task
Force has recommended additional follow up for vendors failing to respond to the
survey. To date, we have not received any unfavorable responses from significant
vendors. It is anticipated that the vendor survey process will be completed by
December of 1999. Although others in the steel industry will be required to
spend significant amounts to become Y2K compliant, we identified problem areas
early and upgraded equipment and systems in the normal course of business. The
historical and estimated future costs related to Y2K issues have been and are
expected to remain insignificant. Costs incurred to date have been under
$100,000.
The Risks of Year 2000 Issues and Contingency Plans. While we believe we have
taken the necessary steps to identify and remediate our Y2K issues, the failure
to do so prior to January 1, 2000 could result in system/equipment failures
causing disruption in routine business activities including the production of
goods. We believe that our greatest risk of Y2K issues to be with third party
suppliers and customers. The failure of third parties upon whom we rely to
timely remediate their Y2K issues could result in disruption to our daily
operations including the production of steel products. As a result of our
reliance on third parties to resolve their Y2K issues, the overall risks
associated with the year 2000 remain difficult to accurately describe and
quantify. There can be no assurance that the Y2K issues will not have a material
adverse impact on us or on our operations. We have developed contingency plans
in areas where the risk of Y2K failures appears to be possible and where the
cost of a contingency plan is not prohibitive.
14
SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not a party to any significant pending legal proceedings other than
litigation incidental to our business that we believe will not materially affect
our financial position or results of operations. Such claims against us are
ordinarily covered by insurance. We can give no assurance, however, that
insurance will be available in the future at reasonable rates.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLERS
At the Annual Meeting of Stockholders held on September 3, 1999, for which
proxies for the meeting were solicited pursuant to Regulation 14A of the
Securities Exchange Act of 1934, the stockholders of the Company unanimously
elected Steven E. Karol, Robert W. Ackerman, Dale S. Okonow, Howard H.
Stevenson, Robert Schaal, and Jane M. Karol to serve as members of the Board of
Directors for a period of one year.
At the Annual Meeting of Stockholders, the stockholders also unanimously
approved the reappointment of KPMG LLP as independent auditors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
See exhibit index.
B. Reports on Form 8-K
No reports on Form 8-K were filed during the second quarter ended October 31,
1999.
15
SHEFFIELD STEEL CORPORATION AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-Q to be signed on its behalf
by the undersigned thereunto duly authorized.
SHEFFIELD STEEL CORPORATION
Date: December 10, 1999 /s/ Robert W. Ackerman
--------------------- ---------------------------------
Robert W. Ackerman, Chairman
and Chief Executive Officer
Date: December 10, 1999 /s/ Stephen R. Johnson
--------------------- ---------------------------------
Stephen R. Johnson, Vice President
and Chief Financial Officer
16
Exhibit Index
Exhibit No. Description Page No.
- ---------- ----------- -------
4.21 First Supplemental Indenture dated December 6, 1999
by Sheffield Steel Corporation and State Street Bank
and Trust Company, as Trustee.
10.37 Project Lease Agreement between TA Steel I, LLC,
as Lessor and Sheffield Steel Corporation, as Lessee
dated November 23, 1999.