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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D C 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
Commission File Number 1-10244
WEIRTON STEEL CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 06-1075442
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(State or other jurisdiction (IRS employer identification #)
of incorporation or organization)
400 Three Springs Drive, Weirton, West Virginia 26062
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(304)-797-2000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Common Stock, par New York Stock Exchange
value $.01 per share
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by checkmark 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[ ]
Indicate by checkmark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X]
As of March 15, 1994, the aggregate market value of the voting
stock held by nonaffiliates of the Registrant was $309,062,878.
(The foregoing calculation includes shares allocated under the
Registrant's 1984 and 1989 Employee Stock Ownership Plans to the
accounts of employees who are not otherwise affiliates and
unallocated shares under the Registrant's 1989 Employee Stock
Ownership plan subject to voting instructions of employees who are
not otherwise affiliates.)
The number of shares of Common Stock ($.01 par value) of the
Registrant outstanding as of March 15, 1994 was 26,639,894.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Certain portions of the Registrant's 1993 Annual Report to
Stockholders are incorporated by reference into Parts I and II of
this Annual Report on Form 10-K to the extent provided herein.
(2) Certain portions of the Registrant's definitive Proxy
Statement filed pursuant to Regulation 14A (filed within 120 days
after the end of the fiscal year covered hereby) in connection with
the 1994 Annual Meeting of Stockholders are incorporated by
reference into Part III of this Annual Report on Form 10-K to the
extent provided herein.
PART I
Item 1. Description of Business
BACKGROUND
Weirton Steel Corporation, together with its wholly owned
subsidiary Weirton Receivables, Inc., (the "Company") and its
predecessor companies have been in the business of making and
finishing steel products for more than eighty years at the
Company's facility located in Weirton, West Virginia. From
November 1929 to January 1984, the Company's business had been
operated as a division of National Steel Corporation ("National").
Incorporated in Delaware in November 1982, the Company acquired the
principal assets of National's former Weirton Steel Division ("the
Division") in January 1984.
PRINCIPAL PRODUCTS
The Company is a major integrated producer of flat rolled
carbon steels with principal product lines consisting of sheet
products and tin mill products ("TMP"). The Company offers a full
range of sheet products that include hot and cold rolled sheet
steel up to 48" wide and both hot-dipped and electrolytic
galvanized products. TMP includes tin plate, chrome coated, and
black plate. Historically, the Company's products have emphasized
the narrow to medium widths reflective of its rolling and finishing
equipment and covered a broad range of gauges, finishes and
performance specifications. The Company has developed significant
expertise in filling orders with demanding specifications. The
Company does not produce bars, wire or structural products.
The Company's sales as a percentage of its total revenues
for each year in the period 1989 through 1993 are shown in the
following table.
(Percentage of revenues)
1993 1992 1991 1990 1989
Sheet products ...... 54% 48% 46% 53% 58%
Tin mill products ... 46 52 54 47 42
100% 100% 100% 100% 100%
The above table includes secondary products, principally those not
meeting prime specifications. Semi-finished products have been
included in sheet products.
[TEXT]
PRINCIPAL MARKETS
The following table shows the percentage of total net
tons of steel products shipped for each year in the period 1989
through 1993 by the Company to each of its principal markets.
1993 1992 1991 1990 1989
Service Centers and Sheet
and Strip Converters... 46% 41% 33% 45% 45%
Food and Beverage........ 37 41 44 42 40
Construction............. 9 8 7 8 9
Consumer Durables........ 4 6 8 4 5
Other ................... 4 4 8 1 1
100% 100% 100% 100% 100%
[TEXT]
A substantial portion of the Company's revenues are
derived from long-time, steady customers, although the Company
actively seeks new customers and constantly seeks new markets for
its products. A substantial share of the Company's TMP and sheet
products are shipped to customers located in the eastern portion of
the United States. The Company's products are sold through
salaried Company representatives who operate from 12 district sales
offices. Sales orders taken in the field are subject to home
office approval.
Trade orders on hand for the Company's products at
December 31, 1993, 1992, and 1991 amounted to approximately 449
thousand tons, 308 thousand tons, and 307 thousand tons,
respectively. Substantially all orders on hand at any time are
expected to be filled within a twelve month period. Since the
Company produces steel in response to orders primarily of
established grades and specifications, resulting in short order
processing time and relatively rapid inventory turnover, it does
not believe that order backlog is a material aspect of its
business.
SHEET PRODUCTS. Hot rolled products are sold directly
from the hot strip mill as "hot bands," or are further processed
using hydrochloric acid to remove surface scale and are sold as
"hot rolled pickled." Hot rolled sheet is used for unexposed parts
in machinery, construction products and other durable goods. Most
of the Company's sales in hot rolled have been to pipe and tube
manufacturers and converters and, to a lesser extent, steel service
centers. In 1993, the Company sold 658 thousand tons of hot rolled
sheet, which accounted for 17.8% of its total revenues.
Cold rolled sheet, which requires further processing
consisting of additional rolling, annealing and tempering to
enhance ductility and surface characteristics, is used in the
construction, steel service center, commercial equipment and
container markets, primarily for exposed parts where appearance and
surface quality are important considerations. In 1993, the Company
sold 169 thousand tons of cold rolled sheet, which accounted for
6.6% of its total revenues.
Galvanized hot-dipped and electrolytic sheet, which is
coated primarily with zinc compounds to provide extended anti-
corrosive properties, is sold to the electrical, construction,
automotive, container, appliance and steel service center markets.
In 1993, the Company sold 642 thousand tons of galvanized products,
which accounted for 28.7% of total revenues. Generally, the
Company's more highly processed sheet products provide higher
profit margins.
The following table, based on AISI information, shows the
Company's historical share of the domestic Sheet Products market.
Sheet Products
Historical Market Share
(In thousands of tons)
1993 1992 1991 1990 1989
Industry Shipments..... 41,616 38,099 35,590 39,652 39,581
Company shipments(a)... 1,536 1,206 1,082 1,285 1,480
Company market share... 3.7% 3.2% 3.0% 3.2% 3.7%
(a) Includes secondaries.
[TEXT]
While the Company's presence in the overall sheet market
is limited, the Company has concentrated on developing its
offerings of more highly processed products and production capacity
to provide the larger coils favored by most of its customers. The
Company's goals for development of its sheet business are focused
on increasing its percentage of coated products, such as
galvanized, while capitalizing on developing specialty markets such
as construction where the Company believes that its GALFAN product
has potential in roofing and framing applications. As part of its
sheet marketing strategy, the Company is also making efforts to
enhance high quality end use of its products marketed through steel
service centers, as well as developing the hot rolled market for
heavier gauge and higher carbon applications for all markets.
Tin Mill Products. The Company has enjoyed substantial
market share and a widely held reputation as a high quality
producer of TMP. TMP comprise a wide variety of light gauge coated
steels. Tin plate and black plate products are sold under the
Company name and under such trademarks as WEIRITE and WEIRLITE. In
addition to tin plate and black plate, the Company produces
electrolytic chromium coated steel under the trademark WEIRCHROME.
Based upon the Company's share of the domestic market for
TMP, which has remained relatively constant in recent years, the
Company believes it is one of the largest domestic producers of
TMP. In 1993, the Company accounted for approximately 22% of the
TMP market, a slight decrease from the 23% market share it held in
1992. TMP shipments on an industry-wide basis have remained
relatively steady over the same period even as plastic, aluminum,
composites and other materials competed for potential growth in
some applications. The TMP market is now primarily directed at
food, beverage, and general line cans. The majority of the
Company's TMP sales have been to can manufacturing and packaging
companies, a substantial amount of whose annual requirements are
established in advance. This market is characterized by a
relatively low number of manufacturers. During 1993, shipments to
ten major can manufacturers accounted for approximately 90% of the
Company's TMP sales and its five largest TMP customers accounted
for approximately 29.6% of total revenues. One customer, Crown
Cork & Seal Company, a major can manufacturer, accounted for
approximately 11% of total revenues. The balance of the TMP output
is sold to other can manufacturers, manufacturers of caps and
closures and specialty products ranging from film cartridges,
lighting fixtures and battery jackets to cookie sheets and curtain
rods. As a result of predictable sales patterns for TMP, the
Company is able to gauge in advance a significant portion of its
production requirements which allows the Company to operate its
production facilities more efficiently and adjust its marketing and
production efforts for other products.
The following table, based on AISI information, shows the
Company's historical share of the domestic TMP market.
Tin Mill Products
Historical Market Share
(In thousands of tons)
1993 1992 1991 1990 1989
TMP industry shipments(a) 4,123 3,927 4,040 4,032 4,116
Company shipments(a)..... 895 890 857 874 894
Company market share..... 22% 23% 21% 22% 22%
(a) Includes secondaries.
[TEXT]
Steelmaking and hot rolling improvements derived from the
Company's recent capital improvement program have allowed for the
production of sufficient quantities of "clean" steel to fill
anticipated TMP orders for the near term. Expansion of downstream
annealing and tempering capacity, however, would be necessary
before large TMP production increases could be effected. The
Company's facilities and expertise also allow it to produce the
lightest gauges of tin plate, enhancing the manufacturing
efficiencies of the Company's customers and promoting the use of
its steel in leading edge technology products such as thin-walled
containers.
The Company has been a leading innovator in the
development of can making technology through its WEIRTEC research
and development center. Although accounting for less than 5% of
the domestic beverage container market in recent years, largely due
to highly competitive prices for aluminum, the Company believes
that two piece thin-walled steel beverage containers have
significant potential for growth. This is primarily because of
improved production efficiencies for cans and increased industry
success in promoting the recycling of steel. The Company engages
in other end product research and development and provides support
services to its customers. The Company believes these services
have been of significant assistance, particularly to its TMP
customers, and promotes the consumption of the Company's products.
See "Research and Development."
A 1.1 million square foot Finished Products Warehouse
with storage and staging areas for TMP has been located near the
Company's mill to facilitate "just in time" production and delivery
to several of the Company's major customers who are located in
attached, or nearby, manufacturing facilities. As steel coils are
needed by customers' operations, they are moved from the adjoining
central storage areas and loaded directly on to their production
lines. This arrangement provides significant savings for the
Company and its customers.
PRODUCTION AND SHIPMENTS
In 1991, after three years of close to 100 million tons
of raw steel production per year, the domestic steel industry's raw
steel production fell to 87.3 million tons and shipments declined
to 78.9 million tons. However, starting with December 1991 and
continuing through 1993, the steel industry experienced a rebound
in both production and shipments. Steel production for 1993 was up
approximately 4.9% to 96.1 million tons compared to 1992, while
shipments increased by approximately 7.4% to 88.4 million tons.
Similarly, capacity utilization which had dropped to 74% in 1991
rebounded to 87.4% in 1993.
During 1991 and 1992 in particular, the Company's
production, and consequently its ability to sell steel products,
was constrained by facilities' outages stemming from the Company's
capital improvement program. See "Investment in Facilities" in
Item 7 hereof for a more complete discussion of the Company's
capital improvement program. Although these factors for the most
part concerned the Company's primary steelmaking and first stage
finishing facilities, downstream operations were also affected. In
many instances, with the cooperation of its customers, the Company
limited orders it would accept for finished products, rather than
take orders it could not fill.
The Company seeks to maximize the utilization of its
production capacity. Until the Company began implementing its
capital program in 1989, historically it had exceeded the industry
average in that regard. However, during 1990 and 1991, outages and
complications from several installations adversely affected the
Company's relative position in the industry at a time when the
industry itself was operating at near recessionary levels.
Facilities outages, both planned and unplanned, which plagued
operations during installation phases became less frequent
throughout the break-in period for new equipment and, in 1993, were
reduced to only one 2-day unscheduled outage due to flood water
damage.
In 1993, the Company produced 2.7 million tons of raw
steel and shipped 2.4 million tons of finished and semi-finished
steel products. The following table sets forth annual production
capability, utilization rates and shipment information for the
Company and the domestic steel industry (as reported by the
American Iron and Steel Institute ("AISI")) for the period 1989
through 1993.
Production and Shipments
(In millions of tons)
1993 1992 1991 1990 1989
Company
Raw steel production... 2.7 2.5 2.3 2.7 2.9
Capability............. 3.0* 3.0* 3.4 3.4 3.4
Utilization............ 91% 83% 68% 79% 85%
Shipments ............. 2.4 2.1 1.9 2.2 2.5
Shipments as percentage
of industry total... 2.7% 2.6% 2.4% 2.6% 3.0%
Industry
Raw steel production... 96.1 91.6 87.9 98.9 97.9
Capability............. 109.9 113.1 117.6 116.7 115.9
Utilization............ 87% 81% 74% 84% 84%
Shipments ............. 88.4 82.3 78.9 84.7 84.1
*Reflects the discontinuation of ingot teeming and reduction
operations.
[TEXT]
STEELMAKING PROCESS
In primary steelmaking, iron ore pellets, iron ore, coke,
limestone and other raw materials are consumed in blast furnaces to
produce molten iron or "hot metal." The Company then converts the
hot metal into raw or liquid steel through its basic oxygen
furnaces where impurities are removed, recyclable scrap is added
and metallurgy for end use is determined on a batch by batch basis.
The Company's basic oxygen process shop ("BOP") is one of the
largest in North America, employing two vessels, each with a
steelmaking capacity of 360 tons per heat. Liquid steel from the
BOP is then formed into slabs through the process of continuous
casting. The Company operates a multi-strand continuous caster,
rebuilt in 1990, which allows the Company to cast 100% of its steel
requirements. The slabs are then reheated, reduced and finished by
extensive rolling, shaping, tempering and, in many cases, by the
application of plating or coating at the Company's downstream
operations. Finished products are normally shipped to customers in
the form of coils. The Company believes that its hot rolling mill,
with two walking beam reheat furnaces, reversing rougher and
millstand drive and control improvements, greatly enhances its
competitive capabilities. In addition, the Company has linked its
steelmaking and rolling equipment with computer-control systems and
is in the process of installing an integrated manufacturing control
system to coordinate production and sales activities.
RAW MATERIALS
The Company purchases iron ore pellets, iron ore, coal,
coke, limestone, scrap and other necessary raw materials in the
open market. Substantially all the Company's raw materials needs
are available through multiple sources where the primary concern is
price rather than availability of supply; however, the Company
continues to explore potential new sources of raw materials.
In October 1991, the Company entered into a contract with
a subsidiary of Cleveland-Cliffs Inc ("Cliffs") to purchase a
substantial part of the Company's standard and/or flux grade iron
ore pellet requirements for a twelve year period which began in
1992. The contract provides for a minimum tonnage of pellets to be
supplied based on the production capacity of the mining source
during the contract periods, and for additional tonnages of pellets
in specified circumstances. Purchase prices established under the
contract formulas may vary depending on whether the Company's
Redeemable Preferred Stock, Series B, acquired by Cliffs at the
time the supply agreement was entered into, has been redeemed. See
Note 10 to the Company's Financial Statements included as Item 8
hereof for a more complete discussion of the Series B Preferred.
The Company also has other contracts for iron ore pellets and iron
ore through 1994.
The Company and other steelmakers are installing
technology calculated to achieve some reduction in the consumption
of coke in blast furnace operations. However, if coke making
capacity available to the industry continues to decline, future
coke prices may be subject to significant escalation. Unlike many
of the other major integrated producers, the Company does not have
its own coke making facilities. From time to time, the Company has
considered rebuilding the former coke making facilities of the
Division; however, in view of the availability of metallurgical
coke, its price and the emergence of alternative non-coking
technologies for ironmaking, the Company does not believe an
investment to rebuild those facilities is justified at this time.
In July 1993, the Company entered into an agreement with USX
Corporation to purchase blast furnace coke. The agreement provides
for tonnages of 750,000 per calendar year in 1994 through 1996, or
the actual annual requirements of the Company if less than the
stated amount. The price is to be the prevailing market price for
blast furnace coke determined each October prior to the delivery
year.
In 1990, the Company's continuous caster was rebuilt and
placed back in service with enhanced capacity. Since that time,
the rebuilt caster has achieved production levels which enable it
to provide substantially all the Company's requirements for slabs.
The increased capacity of the caster allowed the Company to close
its ingot teeming and reduction operations in 1991. The Company's
requirements for slabs have from time to time exceeded its caster's
production ability and it has purchased and may continue to
purchase slabs from other sources in order to meet the demand for
its products and to maximize the overall production efficiency of
its entire operations. In general, the Company does not expect to
have undue difficulty in purchasing slabs as and when needed.
However, in times of high capability utilization, slabs of certain
required specifications may not be available from other producers.
The primary sources of energy used by the Company in its
steel manufacturing process are natural gas, oil, coal and
electricity. The Company generates a significant amount of
electricity and steam for processing operations from a mixture of
excess blast furnace gas and natural fuels. The Company
continually attempts to conserve and reduce the consumption of
energy in its steelmaking operations. A number of the Company's
facilities have alternate fuel burning capability.
In recent years, due to the increased availability and
sources of natural gas, the Company has entered into natural gas
purchase contracts with gas suppliers and transportation contracts
with transmission companies in an effort to reduce prices paid for
gas. A substantial increase in the Company's energy costs or a
shortage in the availability of its sources could have an adverse
effect on the Company.
Management believes that the Company's long term raw
materials contracts are at competitive terms over the course of a
business cycle.
COMPETITION AND OTHER INDUSTRY FACTORS
The domestic steel industry is a cyclical business with
intense competition among producers. Manufacturers of products
other than steel, including plastics, aluminum, cardboard, ceramics
and glass, have made substantial competitive inroads into
traditional steel markets. During recessionary periods, the
industry's high level of production capacity relative to demand
levels has resulted in a lack of ability to achieve satisfactory
selling prices across a broad range of products.
Integrated steelmakers also face increased competition
from mini-mills. Mini-mills are relatively efficient, low-cost
producers that generally produce steel from scrap in electric
furnaces, utilize new technologies, have lower employment costs and
target regional markets. Mini-mills historically have produced
lower profit margin bars, rods, wire and other commodity-type steel
products not produced by the Company. Recently developed thin cast
technology has allowed mini-mills to enter certain of the sheet
markets supplied by integrated producers, and certain mini-mills
have built, or are building, facilities to do so. One such
facility has been placed in operation and is competing in the hot
rolled, cold rolled and galvanized marketplace.
During the past decade, a number of domestic steelmakers
have gone through reorganization under Chapter 11 of the United
States Bankruptcy Code, including several of the Company's major
competitors. Reorganization under Chapter 11 generally has enabled
bankrupt companies to reduce costs, making them more efficient
competitors.
In response to increased competition, domestic steel
producers have invested heavily in new plant and equipment, which
has improved efficiency and increased productivity. Many of these
improvements are in active service and, together with the
achievement of other production efficiencies such as manning and
other work rule changes, have tended to lower competitors' costs.
The Company has responded to technological competitive pressures
through its capital improvement program and strategies for future
operating efficiencies.
Foreign competition also remains a major concern. The
VRAs covering 17 steel exporting nations and the European
Community, which limited steel imports into the United States
market, expired on March 31, 1992, and negotiations among
governments in 36 countries to achieve a global multilateral steel
agreement to reduce subsidies and other unfair trade practices by
foreign producers have not yet resulted in any agreement being
reached. The prospects of such an agreement being reached in the
near future are not good. During 1993, steel imports were
approximately 18% of total domestic steel consumption. Imports
represent a slightly smaller percentage of consumption of sheet
products and TMP, amounting to 13% and 11% of such consumption,
respectively, in 1993. As a result of anti-dumping cases brought
by domestic steelmakers, the Commerce Department, earlier in 1993,
imposed tariffs averaging approximately 36.5% on imported, flat-
rolled carbon steel from a number of countries. On July 27, 1993,
however, the U.S. International Trade Commission (the "ITC") found
that the domestic industry had sustained no injury from imports of
hot rolled sheet, and no injury from 9 of 12 importing countries on
cold rolled sheet. Several domestic producers have filed appeals
of the ITC rulings. The ITC did affirm that the domestic industry
had sustained injury from imports of coated sheet products, which
has since reduced imports of the same and consequently improved
domestic coated sheet pricing and volume.
The Company's primary competitors in sheet products
consist of substantially the entire steel industry. The Company's
primary TMP competitors in recent years have been USX Corporation,
LTV Corporation, Bethlehem Steel Corporation, National Steel
Corporation, Wheeling-Pittsburgh Steel Corporation and USS-POSCO
Industries.
The Company experiences strong competition in all its
principal markets with respect to price, service and quality. The
Company believes that it competes effectively in all these
categories by focusing its marketing efforts on high quality
products and strong customer relationships.
RESEARCH AND DEVELOPMENT
The Company engages in research and devlopment for the
improvement of existing products, the development of new products,
and the development of product applications. It also seeks more
efficient operating techniques. During 1993, 1992 and 1991,
respectively, the Company spent approximately $5.4 million, $4.7
million, and $5.3 million for Company sponsored research and
development activities. Expenditures for customer sponsored
research have not been material to the Company. The Company
operates WEIRTEC, its research and development center specializing
in the advancement of steel food and beverage packaging and steel
manufacturing processes. WEIRTEC maintains research and prototype
steel packaging manufacturing facilities and analytical laboratory
facilities located in Weirton. The facilities are engaged in
improving the Company's production and finishing processes for TMP
and sheet products. In recent years, WEIRTEC has played a central
role in the development of thin-wall, two piece beverage can
technology and other products seeking to capitalize on the
Company's production expertise, particularly in coated products.
See "Principal Products." The Company believes that the facilities
and the scientists, engineers and technicians at WEIRTEC enhance
the Company's technical excellence, product quality and customer
service.
The Company owns a number of patents that relate to a
wide variety of products and applications and steel manufacturing
processes, has pending a number of patent applications, and has
access to other technology through agreements with other companies.
The Company believes that none of its patents or licenses, which
expire from time to time, or any group of patents or licenses
relating to a particular product or process, is of material
importance in its overall business. The Company also owns a number
of registered trademarks for its products which, unlike patents and
licenses, do not expire when they are continued in use and are
properly protected.
ENVIRONMENTAL CONTROL
COMPLIANCE. The Company's business operations are
affected by extensive federal, state and local laws and regulations
governing discharges into the air and water, as well as the
handling and disposal of solid and hazardous wastes. The Company
is also subject to federal and state requirements governing the
remediation of environmental contamination associated with past
releases of hazardous substances. In recent years, environmental
control regulations have been marked by increasingly strict
compliance standards. Governmental authorities have the power to
enforce compliance with these requirements, and violators may be
subject to civil or criminal penalties, injunctions or both. Third
parties also may have the right to sue to enforce compliance.
Expenditures for environmental control facilities were
approximately $1 million in 1993, $1 million in 1992, and $2
million in 1991. For 1994, the Company has budgeted approximately
$3.3 million in capital expenditures toward environmental control
facilities. Given the nature of the steelmaking industry, it can
be expected that substantial additional capital expenditures will
be required from time to time to permit the Company to remain in
compliance with environmental regulations.
In the past, the Company has entered into consent
decrees with certain environmental authorities pursuant to which it
has paid various fines and penalties relating to violations, or
alleged violations, of laws and regulations in the environmental
control area. Those payments have not been material to the
Company's financial position or its cash flows. The Company
believes that, at the present time, it is in substantial compliance
with the various environmental control consent orders and
agreements applicable to it and does not anticipate any material
problems in taking required actions to remain in compliance with
such orders and agreements. The Company does not operate coke
making facilities and, accordingly, has not been affected by the
stringent Clean Air Act limitations imposed on those installations.
The Company's near-term focus for environmental
compliance centers on procedures to achieve ambient air quality and
water pollution control standards. In addition to improving its
monitoring and study programs, the Company anticipates taking
affirmative action to reduce sulfur dioxide and particulate
emissions primarily by changing operating policies and by improving
the quality of maintenance procedures. In an effort to improve its
water pollution discharge compliance performance, the Company
initiated in 1993 a full-time, round-the-clock environmental
control supervisory function and is seeking to create a mobile
maintenance group dedicated to high quality, environmentally safe
operation.
WASTE SITES AND PROCEEDINGS. Under the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as
amended ("CERCLA"), and similar state statutes, the Environmental
Protection Agency (the "EPA") and state regulators generally have
authority to impose joint and several liability on waste
generators, owners, operators and others with respect to superfund
sites as potentially responsible parties ("PRPs"), regardless of
fault or the legality of the original disposal activity. The
Company is entitled to indemnification from National for certain
environmental liabilities, including those relating to CERCLA and
similar statutes, as more fully described below. The Company
believes that National has registered a number of sites as required
by CERCLA, some of which had been used by the Division prior to its
sale to the Company, and two of which subsequently became the
property of the Company. The Company understands that National has
been involved, at the request of the EPA or state agencies, in
voluntary remedial activities with respect to some sites; National
has declined to participate with respect to some sites; National
has declined to participate with respect to others (because its
records do not indicate any involvement with those sites); and
National has not been notified with respect to other sites.
Insofar as any of those sites involve liabilities under CERCLA or
other environmental laws or regulations for prior Division
activities, the Company believes it is fully indemnified by
National.
In March 1988 and September 1989, respectively, the
Pennsylvania Department of Environmental Resources and/or the EPA
notified the Company that it was considered to be among a number of
PRPs for the dumping of wastes at the Municipal and Industrial
Disposal Company site near Elizabeth, Pennsylvania and at the Tex
Tin site near Texas City, Texas, and requested the Company's
voluntary participation in certain remedial actions. The Company's
records do not indicate any involvement with either site by the
Company. The Company believes that National would be responsible
for any remedial actions, if there had been prior involvement by
the Division. The Company has given all required notices to
National for the purpose of facilitating its response to this
matter.
During February 1991, the Company received notification
under CERCLA that it may incur or may have incurred a liability as
a PRP with respect to a drum site located near Avenue H in Weirton,
West Virginia. According to Company records, the drum site is on
property owned, but never used, by the Company. Following
consultation with appropriate agencies, the Company initiated a
voluntary remediation program at the site, which program has been
substantially completed. The Company has entered into negotiations
with the EPA to resolve all remaining issues raised by the
notification. The Company believes that National, under its
agreements with the Company, is responsible for any environmental
liabilities involving the site, including reimbursement for the
total cost of the remediation program. National has reimbursed the
Company for the $761,000 spent by the Company to date on the
remediation program at this site. The Company believes that any
future expenditures related to the remediation program will not
exceed $100,000.
In May 1992, the Company received notice from the
Pennsylvania Department of Environmental Resources that it was
considering a closure plan and post-closure plan for a solid waste
landfill facility in Hanover Township, Pennsylvania (the "Hanover
Site") operated by Starvaggi Industries Inc. From at least the
1960's through mid-1983, National and, after mid-1983, the Division
and the Company disposed of solid wastes at the facility. The
Company believes that certain of the solid wastes disposed of at
the facility by National were classified as hazardous wastes under
applicable law. The Company believes that while it disposed of
various materials which were residual to the steelmaking industry,
such materials were not classified as hazardous wastes under
applicable law. At this time, definitive closure plans and post-
closure care plans have not been adopted. National's liability to
the Company under the indemnification agreements for liabilities
which may result from the closure of this facility is limited to
$1.0 million. However, the Company does not believe that any costs
associated with these plans for which it would be responsible would
exceed that amount.
In October 1992, the Company entered into a consent order
with the West Virginia Division of Environmental Protection (the
"DEP") that provided for administrative fines and penalties to be
assessed against the Company for asserted spills of various
substances under provisions of the Federal Clean Water Act
administered by such agency. The consent order required the
payment of an administrative settlement in the amount of $99,000,
as well as the application of $40,000 to a "Best Management
Practices" ("BMP") plan to reduce or eliminate the frequency of
hazardous waste spills, which plan is being implemented. The
consent order also provides for stipulated penalties upon the
occurrence of future spills. The Company is seeking to improve its
operating practices to minimize the occurrence of spills.
In January 1993, the Company received a notification from
the DEP that four ground water monitoring wells situated at the
Division's former coke making facilities on Brown's Island in
Hancock County, West Virginia tested in excess of maximum
contaminant levels established by the EPA and DEP for certain
elements specified in the notice. The DEP requested the Company to
supply it with additional data regarding the site and stated that
it felt additional investigation, and possible remediation, would
be required. The Company and the DEP are discussing the
implementation of an enhanced ground water monitoring program for
the area. As required by the relevant indemnification agreements,
the Company has given notice to National of the DEP communication.
As described more fully below, the Company believes that National
will be responsible for any required remediation.
In December 1993, the Company was informed by the DEP
that the EPA was considering initiating a "multimedia" enforcement
action against the Company during 1994. Such a proceeding could
involve coordinated enforcement proceedings relating to water, air
and waste-related issues stemming from a number of federal statutes
and rules. The DEP has indicated that it prefers first to issue
new NPDES water discharge permits to the Company and then monitor
compliance by the Company before making any recommendation to the
EPA. The Company expects that such permits could be issued by
April 1994. However, no assurance can be given that a permit will
be issued or that improved compliance by the Company or any
recommendation by West Virginia environmental authorities to the
EPA not to initiate such a proceeding will result in avoiding
commencement of a multimedia enforcement action by the EPA. In
recent years, such actions have resulted in penalties and other
commitments being obtained from many of the Company's competitors.
INDEMNIFICATION. According to the agreements by which
the Company acquired the assets of the Division from National, the
parties determined to apportion their respective responsibilities
for environmental liability claims based on two dates, May 1, 1983
(the "Purchase Date"), and January 11, 1984 (the "Closing Date").
In general, the Company is entitled to indemnification from
National for liabilities, including governmental and third-party
claims, arising from violations prior to the Purchase Date, and
National is entitled to indemnification from the Company for such
items after the Purchase Date. In addition, the Company, subject
to the $1.0 million limitation applicable to the Hanover Site
described above, is entitled to reimbursement for clean-up costs
related to facilities, equipment or areas involved in the
management of solid or hazardous wastes of the Division ("Waste
Sites"), as long as the Waste Sites were not used by the Company
after the Closing Date. Third-party liability claims relating to
Waste Sites are likewise covered by the parties' respective
indemnification undertakings, in each case based on whether the
particular site was used by the Company after the Closing Date.
Until 1993, National had performed in accordance with its
responsibilities under the applicable agreements with the Company.
However, in July 1993, National indicated that it would not
reimburse the Company for approximately $210,000 expended by the
Company in cleaning out tar and other bottom sludge sediments from
a lagoon at National's former Brown's Island Coke Plant (acquired
by the Company on the Closing Date, but never operated). The
Company performed this remediation in 1990 to avoid the facility
becoming an unpermitted hazardous waste disposal site, but did not
submit a final invoice until February 1993. National has indicated
its belief that the Company was not entitled to reimbursement for
remediation at this site. The Company believes that National's
interpretation of the relevant agreements as applied to this site
is erroneous. As a result of these developments, the Company's
ability to obtain future reimbursement or indemnification relating
to environmental claims from National has become more dependent on
factors beyond the Company's control. These factors include, in
addition to National's continued financial viability, the nature of
future claims made by the Company, whether the parties can settle
their differences relating to indemnification rights and the
outcome of any necessary litigation.
Although it is possible that the Company's future results
of operations in particular quarterly or annual periods could be
materially affected by the future costs of environmental
compliance, the Company does not believe the future costs of
environmental compliance will have a material adverse effect on its
financial position or on its competitive position with respect to
other integrated domestic steelmakers that are subject to the same
environmental requirements.
EMPLOYEES
At December 31, 1993, the Company had 6,026 employees, of
whom 4,542 were engaged in the manufacture of steel products, 779
in support services, 71 in sales and marketing activities and 634
in management and administration. The number of employees at
December 31, 1993 represented an 8% reduction compared to the prior
year end. The Company continues to implement a program as part of
its business strategy designed to reduce its workforce primarily
through retirement programs and attrition. The Company's goal by
1997 is to reduce its workforce by another 15% from the 1993 year
end level.
The Company has new collective bargaining agreements with
the Independent Steelworkers Union, which represents 4,966
employees in bargaining units covering production and maintenance
workers, clerical workers, nurses, and the Independent Guard Union,
which represents 39 employees. The agreements run through
September 25, 1996. The Company believes that its compensation
structure places a heavier emphasis on profit sharing compared to
other major integrated steel producers. This tends to cause the
wage portion of the Company's employment costs to be relatively
higher during periods of profitability and relatively lower during
periods of low earnings or losses.
The agreements provide for the payment of bonuses in the
gross amount of $3,500 per employee, paid in installments, but do
not provide for wage increases. Through the end of the new
agreements, the Company's profit sharing plan, which covers
substantially all employees, provides for participants to share in
the Company's profits each year at a rate equal to 1/3 of the
Company's "adjusted net earnings" for that year as defined under
the plan, provided its net worth exceeds $100 million. If,
however, payment of the full profit sharing amount would reduce the
Company's net worth below $100 million, payments are reduced to an
amount necessary to maintain the $100 million threshold. If the
Company's net worth is in excess of $250 million, the profit
sharing rate increases to 35%. However, if payment of the full
profit sharing amount would reduce the Company's net worth below
$250 million, payments at this rate would be limited as necessary
to maintain the $250 million threshold and the remainder of the
payment would be made at the 1/3 rate. The agreements limit the
Company's exposure to increased costs of healthcare while providing
increased medical coverages through a mandatory managed healthcare
"point of service" program and a ceiling on the Company's cash
basis cost of healthcare for future retirees. Although no
assurances can be given, the Company anticipates a savings of
approximately $24 million over three years as a result of these
healthcare programs. The agreements also contain limitations on
the Company's ability to reduce its workforce by layoffs, with
exceptions for adverse financial, operational, and business
circumstances. In addition, the parties have agreed to certain
improvements in the Company's pension plan, which the Company
anticipates will increase costs on an annual basis by approximately
$7.5 million.
From January 1984 until June 1989, the Company was owned
in its entirety by its employees through an Employee Stock
Ownership Plan (the "1984 ESOP"). In June 1989, the 1984 ESOP
completed a public offering of 4.5 million shares of common stock
of the Company, which security is now listed and traded on the New
York Stock Exchange. In connection with the public offering of
common stock, the Company also sold 1.8 million shares of
Convertible Voting Preferred Stock, Series A (the "Series A
Preferred") to a new Employee Stock Ownership Plan which shares are
entitled to ten times the number of votes of the common stock into
which it is convertible.
Substantially all of the Company's employees participate
in the two ESOPs which, after giving effect to the above-mentioned
and certain other transactions, owned approximately 52% of the
combined issued and outstanding common and preferred shares of the
Company at December 31, 1993. This, in turn, accounts for
approximately 75% of the voting power of the Company's voting
stock.
Item 2. Properties and Facilities
The Company owns approximately 2,500 acres in the
Weirton, West Virginia, area which are devoted to the production
and finishing of steel products, research and development, storage,
support services and administration. The Company owns trackage and
railroad rolling stock for materials movement, water craft for
barge docking, power generation facilities and numerous items of
heavy industrial equipment. The Company has no material leases for
property. The Company's mill and related facilities are accessible
by water, rail and road transportation. The Company believes that
its facilities are suitable to its needs and are adequately
maintained.
The Company's operating facilities include four blast
furnaces; however, its current operating strategy employs a two
blast furnace configuration with an annual hot metal capacity of
approximately 2.5 million tons. One currently idled furnace is
being refurbished and will replace one operating furnace that is
nearing the end of its campaign which is estimated to be in 1995,
at which time the Company will undertake a major reline of that
furnace. Although the Company does not anticipate operating a
three blast furnace configuration in the near term, under this
operating scenario, its annual hot metal capacity could be
increased to 3.2 million tons. The Company's primary steelmaking
facilities also include a sinter plant, and a two vessel BOP with
an annual capacity of 3.0 million tons of raw steel based on a two
blast furnace operation. During December 1993, the Company began
the installation of a new vessel in its BOP furnace, replacing one
that had been in service for nearly 20 years. The new vessel was
placed in service in early February 1994. The Company's primary
steelmaking facilities also include a CAS-OB facility, two RH
degassers, a four strand continuous caster with an annual slab
production capacity of up to 3.0 million tons. The Company's
downstream operations include a hot strip mill with a design
capacity of 3.8 million tons, two continuous picklers, three tandem
cold reduction mills, three hot dip galvanize lines, one electro-
galvanize line, two tin platers, one chrome plater, one bi-metallic
chrome/tin plating line and various annealing, temper rolling,
shearing, cleaning and edge slitting lines, together with
packaging, storage and shipping and receiving facilities. See the
"Production and Shipments" section of Item 1 for additional
information regarding production capacity and utilization rates.
Item 3. Legal Proceedings
On August 7, 1992, an action entitled "Larry G. Godich,
et. al. v Herbert Elish, et. al." was commenced in the West
Virginia Circuit Court for Hancock County against ten current
members of the Company's Board of Directors, certain officers of
the Company, former Board members, the Company's outside counsel,
and the Company. The suit purports to be brought derivatively by
stockholders on behalf of the Company and seeks a recovery on its
behalf. The plaintiffs' complaint alleges that the defendants were
negligent or grossly negligent in the selection and supervision of
contractors engaged by the Company to design and construct reheat
furnaces for the hot mill project under the capital improvement
program, thereby breaching their respective fiduciary and other
duties to the Company and, as a result, that the Company incurred
substantial cost overruns in connection with the specific project.
The complaint seeks compensatory damages, jointly and severally,
against all defendants in the amount of $30 million. In November
1992, plaintiffs dismissed the claims against outside counsel. A
trial date for this suit has been scheduled for the second quarter
of 1994.
Following dismissal of claims against outside counsel,
plaintiffs made demands on the Board of Directors to initiate legal
proceedings for malpractice against outside counsel and a director
who is a member of that firm, a former director and the law firm of
which he is a member, and the Company's independent public
accountants. In July 1993, plaintiffs reinstituted suit against
outside counsel and also filed suit against an additional officer
of the Company. This suit is in the early stages of discovery.
Since both suits are on behalf of the Company, if the
plaintiffs prevail, the Company would receive the net benefit of
any recovery.
The Company is involved in other litigation relating to
claims arising out of its operations in the normal course of
business. Such claims are generally covered by insurance. It is
management's opinion that any liability resulting from existing
litigation would not have a material adverse effect on the
Company's business or financial position.
Item 4. Submission of Matters to a Vote of Security Holders
The Company scheduled a Special Meeting of Stockholders
for November 11, 1993 to approve a proposal to amend the Company's
Restated Certificate of Incorporation to increase its authorized
capital. On November 9, 1993, the Company's Board of Directors
canceled the meeting. Reference is made to Item 5 of the Company's
quarterly report on Form 10-Q dated November 15, 1993 for
additional information in response to this item.
PART II
Item 5. Market for the Registrant's Common Stock and Related
Security Holder Matters
As of March 15, 1994, there were 26,639,894 shares of
common stock, $.01 par value ("Common Stock"), outstanding held by
2,907 stockholders of record. The principal market for the Common
Stock is the New York Stock Exchange, on which that security has
been listed since June 1989. Prior to that date, all Common Stock
was held by the Company's 1984 ESOP and did not trade on any
exchange.
Dividends on the Company's Common Stock are paid when and
as declared by the Company's Board of Directors. Quarterly cash
dividends of $0.16 per share on Common Stock were last paid on
December 15, 1990. The payment of future dividends is subject to
the applicable provisions of Delaware corporate law governing the
Company and the discretion of the Company's Board of Directors,
which normally will take into consideration applicable provisions
of the Company's Certificate of Incorporation, as well as its
financial performance, and its capital requirements.
Under covenants of the indenture covering the Company's
11-1/2% Senior Notes, the Company's ability to pay dividends on its
Common Stock is limited as to the payment of aggregate dividends
after March 31, 1993, to the greater of (i) $5.0 million or (ii)
$5.0 million plus one-half of the Company's cumulative consolidated
net income since March 31, 1993, plus the net proceeds from future
issuances of certain capital stock less certain allowable payments.
As of December 31, 1993, pursuant to this covenant, the Company's
ability to pay dividends on its Common Stock was limited to $5.0
million.
As of March 15, 1994, 12,826,723 shares of Common Stock,
or 47.7% of the outstanding shares of Common Stock, were held by
one stockholder of record, United National Bank - North, as Trustee
of the 1984 ESOP. As of that date, the 1984 ESOP had approximately
7,735 participants who were active or former employees of the
Company. In addition, as of March 15, 1994 there were 1,779,681
shares of Series A Preferred Stock outstanding held by 240
stockholders of record. As of that date, United National Bank -
North, as Trustee of the Company's 1989 ESOP, was the record owner
of 1,774,164 shares of the Series A Preferred Stock, or over 99% of
the outstanding shares of Series A Preferred Stock, subject to the
terms and conditions of said Plan. As of that date, the 1989 ESOP
had approximately 7,829 participants who were active or former
employees of the Company. The Series A Preferred Stock is not
listed for trading on any exchange. The Series A Preferred Stock
has a preference of $5 per share over the Common Stock on
liquidation and is convertible into one share of Common Stock,
subject to adjustment. Each share of Series A Preferred Stock is
entitled to 10 times the number of votes as the Common Stock into
which it is convertible. Participants in the Company's two ESOPs
have full voting rights over all shares allocated to their
accounts. See "Employees" included in Item 1.
As of March 15, 1994, there were 500,000 shares of the
Company's Redeemable Preferred Stock, Series B outstanding, held by
one stockholder of record. The Series B Preferred Stock, which is
ordinarily non-voting, was issued in October 1991 to evidence a $25
million investment in the Company by Cliffs. See Note 10 to the
Financial Statements.
The following table sets forth, for the periods
indicated, the high and low sales prices of the Common Stock as
reported in the consolidated transaction reporting system.
1992 1993 1994
Quarter High Low High Low High Low
First 5-1/2 3 7-1/8 3-7/8 *11 6-1/4
Second 6-3/8 4-7/8 10 6-1/4
Third 6-1/4 4-1/8 9-1/8 5-3/8
Fourth 4-3/8 3-3/8 7-7/8 5-3/4
*First Quarter 1994 through 3/15/94
[TEXT]
Item 6. Selected Financial Data
The information required by this Item is incorporated
herein by reference to "Selected Financial and Statistical Data" on
page 48 of the Company's 1993 Annual Report to Stockholders. With
the exception of the information specifically incorporated by
reference, the 1993 Annual Report to Stockholders is not to be
deemed filed as part of this Report for purposes of this Item.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The information required by this Item is incorporated
herein by reference to pages 19 to 24, inclusive, of the Company's
1993 Annual Report to Stockholders. With the exception of the
information specifically incorporated by reference, the 1993 Annual
Report to Stockholders is not to be deemed filed as part of this
Report for purposes of this Item.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data required
by this Item are incorporated herein by reference to pages 25 to
46, inclusive, of the Company's 1993 Annual Report to Stockholders
and are listed in "Item 14.--Exhibits, Financial Statement
Schedules and Reports on Form 10-K" hereof.
Item 9. Changes in or Disagreements with Accountants on
Accounting and Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
Directors of the Company
The information required by this item with respect to
Directors of the Company is incorporated herein by reference to the
caption "Election of Directors" in the Company's definitive Proxy
Statement relating to its 1994 Annual Meeting of Stockholders.
With the exception of the information specifically incorporated by
reference, said definitive Proxy Statement is not to be deemed
filed as part of this report for purposes of this item.
Executive Officers of the Company
The executive officers of the Company as of March 15,
1994, were as follows:
Age at
March 15,
NAME 1994 OFFICE
Herbert Elish 60 President, Chairman
and Chief Executive
Officer
Craig T. Costello 46 Vice President -
Operations
William C. Brenneisen 52 Vice President - Human
Resources
James B. Bruhn 53 Vice President - Tin
Mill Products
Business
Thomas W. Evans 57 Vice President -
Materials Management
David M. Gould 55 Vice President -
Sales and Marketing
Sheet Products
William R. Kiefer 44 Vice President - Law
and Secretary
Dennis R. Mangino 50 Vice President -
Product Quality &
WEIRTEC
Narendra M. Pathipati 36 Treasurer
Richard K. Riederer 50 Vice President and
Chief Financial
Officer
Mac S. White, Jr. 61 Vice President -
Engineering
Unless otherwise indicated below, the executive officers
of the Company have held the positions described for at least the
last five years.
Herbert Elish has been Chairman of the Board of
Directors, President and Chief Executive Officer of the Company
since July 1987. He has been a director of the Company since 1983.
From April 1986 until July 1987, Mr. Elish was Senior Vice
President of Dreyfus Corp., a company engaged in financial
services. Previously, he served as a Senior Vice President of
International Paper Company, a producer of paper, paper packaging
and forest products.
William C. Brenneisen has served as the Company's Vice
President - Human Resources since February 1988. From September
1985 through February 1988, he was the Director of Industrial
Relations for the Company.
James B. Bruhn joined the Company as Vice President -
Sales and Marketing - Tin Mill Products in July 1987. He has been
a director of the Company since May 1990. He was appointed Vice-
President Tin Mill Products Business, with added responsibility for
tin finishing operations in November 1992. From May 1985 until
July 1987, he served as Vice President - Sales and Marketing for
Titanium Metals Corporation of America.
Craig T. Costello has been Vice President - Operations
since October 1993. Mr. Costello served as General Manager -
Operations since 1988 and prior to that was responsible for the
design, building, and operation of the Hot Mill Rebuild.
Thomas W. Evans has been Vice President - Materials
Management since February 1988. From April 1986 to February 1988,
he was Vice President - Purchasing and Traffic. From 1979 to April
1986, he was Vice President - Material Control for Sharon Steel
Corporation.
David M. Gould has served as the Company's Vice President
- - Sales and Marketing - Sheet Products since 1983. He was a
director of the Company from February 1989 to May 1990. Mr. Gould
has been employed by the Company and its predecessor for over 30
years.
William R. Kiefer has been the Company's Vice President -
Law and Secretary since May 1990. From March 1988 to May 1990 he
was Director - Legal Affairs and Secretary. From February 1985 to
March 1988, he was Corporate Attorney and Assistant Secretary for
the Company.
Dennis R. Mangino has served as a Vice President of the
Company at WEIRTEC since November 1989. From February 1986 to
October 1989, Mr. Mangino was employed by Enichem America where he
served as Director - Corporate Division and General Manager -
Electrical Materials Division.
Narendra M. Pathipati has served as Treasurer of the
Company since August 1991. From February 1990 to July 1991, he
served as Director of Financial Planning and Analysis for the
Company. Mr. Pathipati served as Treasurer for Century II, Inc.,
a multi-national capital goods manufacturer, from April 1988 to
January 1990. Previous to that, he was responsible for financial
planning at Harnischfeger Industries, Inc.
Richard K. Riederer has been Vice President and Chief
Financial Officer of the Company since January 1989. He has been
a director of the Company since October 1993. From March 1986 to
December 1988, he served as Vice President and Treasurer of
Harnischfeger Industries, Inc., a producer of manufacturing
equipment. Mr. Riederer is also a director of Portico Funds Inc.
Mac S. White, Jr. has been Vice President - Engineering
of the Company since May 1992. From April 1989 to April 1992, Mr.
White was Director of Engineering for the Company. Prior to that,
he was Director of Project Management for Italimpianti, Spa., a
steel mill equipment builder.
Item 11. Executive Compensation
The information required by this Item is incorporated
herein by reference to the caption "Executive Compensation" in the
Company's definitive Proxy Statement relating to its 1994 Annual
Meeting of Stockholders. With the exception of the information
specifically incorporated by reference, said definitive Proxy
Statement is not to be deemed to be filed as part of this report.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information required by this Item is incorporated
herein by reference to the caption "Security Ownership of Certain
Beneficial Owners and Management" in the Company's definitive Proxy
Statement relating to its 1994 Annual Meeting of Stockholders.
With the exception of the information specifically incorporated by
reference, said definitive Proxy Statement is not to be deemed to
be filed as part of this report.
Item 13. Certain Relationships and Related Transactions
The information required by this Item is incorporated
herein by reference to the caption "Certain Relationships and
Related Transactions" in the Company's definitive Proxy Statement
relating to its 1994 Annual Meeting of Stockholders. With the
exception of the information specifically incorporated by
reference, said definitive Proxy Statement is not to be deemed to
be filed as part of this report.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K
1. The list of financial statements required to be filed by "Item
8--Financial Statements and Supplementary Data" of this Annual
Report on Form 10-K is as follows: Page
Financial Statements
a. Independent Public Accountants' Report *
b. Statements of Income for the years ended
December 31, 1993, 1992, and 1991. . . *
c. Balance Sheets as of December 31,
1993 and 1992 . . . . . . . . . *
d. Statements of Cash Flows for the years
ended December 31, 1993, 1992, and 1991 *
e. Notes to Financial Statements. . . . . *
Supplementary Financial Information *
* Incorporated in this Report by reference from pages 25 to 46,
inclusive, of the Company's 1993 Annual Report to Stockholders
referred to below.
2. The list of financial statement schedules required to be filed
by "Item 8--Financial Statements and Supplementary Data" of this
Annual Report on Form 10-K is as follows:
a. Independent Accountants' Report
on Financial Statement
Schedules . . . . . . . . . . . . . S-1
b. Schedules:
III - Condensed Financial Information
of Registrant S-2
V - Property, Plant and Equipment S-3
VI - Accumulated Depreciation of
Property, Plant and Equipment S-4
VIII - Valuation and Qualifying Accounts S-5
IX - Short-term Borrowings S-6
X - Supplementary Income Statement
Information S-7
3. Exhibits
The following listing of exhibits are included in this Report
or incorporated herein by reference.
Exhibit 3.1 Restated Certificate of Incorporation of the
Company (incorporated by reference to Exhibit
3.1 to the Company's Registration Statement on
Form S-1 filed May 3, 1989, Commission File No.
33-28515).
Exhibit 3.2 By-laws of the Company (incorporated by
reference to Exhibit 3.3 to the Company's
Registration Statement on Form S-1 filed May 3,
1989, Commission File No. 33-28515).
Exhibit 3.3 Certificate of the Designation, Powers,
Preferences and Rights of the Convertible
Voting Preferred Stock, Series A (incorporated
by reference to Exhibit 3.2 to the Company's
Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 on Form
10-K filed March 28, 1990, Commission File No.
1-10244).
Exhibit 3.4 Certificate of Designation, Powers, Preferences
and Rights of the Redeemable Preferred Stock,
Series B (incorporated by
reference to Exhibit 4.1 to the Company's
Current Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 on Form
8-K filed October 9, 1991, Commission File No.
1-10244).
Exhibit 4.1 Indenture dated October 17, 1989 between the
Company and First Bank (N.A.) as Trustee,
pursuant to which the 10-7/8% Senior Notes due
October 15, 1999 Notes were issued
(incorporated by reference to Exhibit 4.1 to
the Company's Annual Report pursuant to Section
13 or 15(d) of the Securities Exchange Act of
1934 on Form 10-K filed March 28, 1990,
Commission File No. 1-10244).
Exhibit 4.2 Form of Notes (included as Exhibit A to Exhibit
4.1).
Exhibit 10.1 Pellet Sale Agreement dated June 25, 1991,
between USX Corporation and the Company
(incorporated by reference to Exhibit 10.2 to
the Company's Annual Report pursuant to Section
13 or 15(d) of the Securities Exchange Act of
1934 on Form 10-K filed March 27, 1992,
Commission File No. 1-10244).
Exhibit 10.2 1984 Employee Stock Ownership Plan, as amended
and restated (incorporated by reference to
Exhibit 10.3 to the Company's Annual Report
pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 on Form 10-K
filed March 28, 1990, Commission File No. 1-
10244).
Exhibit 10.3 1989 Employee Stock Ownership Plan
(incorporated by reference to Exhibit 10.4 to
the Company's Annual Report pursuant to Section
13 or 15(d) of the Securities Exchange Act of
1934 on Form 10-K filed March 28, 1990,
Commission File No. 1-10244).
Exhibit 10.4 1987 Stock Option Plan (incorporated by
reference to Exhibit 10.5 to the Company's
Registration Statement on Form S-1 filed May 3,
1989, Commission File No. 33-28515).
Exhibit 10.5 Employment Agreement between Herbert Elish and
the Company dated as of July 1, 1990
(incorporated by reference to Exhibit 10.6 to
the Company's Annual Report pursuant to
Section 13 or 15(d) of the Securities Exchange
Act of 1934 on Form 10-K, filed April 1, 1991,
Commission File No. 1-10244).
Exhibit 10.6 Employment Agreement between Warren E. Bartel
and the Company (incorporated by reference to
Exhibit 10.8 to the Company's Registration
Statement on Form S-1 filed May 3, 1989,
Commission File No. 33-28515).
Exhibit 10.7 Employment Agreement between James B. Bruhn and
the Company (incorporated by reference to
Exhibit 10.11 to the Company's Registration
Statement on Form S-1 filed May 3, 1989,
Commission File No. 33-28515).
Exhibit 10.8 Employment Agreement between Thomas W. Evans
and the Company dated April 21, 1987 (filed
herewith).
Exhibit 10.9 Employment Agreement between Richard K.
Riederer and the Company (incorporated by
reference to Exhibit 10.12 to the Company's
Registration Statement on Form S-1 filed May 3,
1989, Commission File No. 33-28515).
Exhibit 10.10 Stock Purchase and Contribution Agreement dated
September 27, 1991 among the registrant and
U.S. Trust Company of California, N.A., as
investment manager (incorporated by reference
to Exhibit 10.1 to the Company's Current
Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 on Form 8-K
filed October 9, 1991, Commission File No. 1-
10244).
Exhibit 10.11 Preferred Stock Purchase Agreement dated as of
September 30, 1991 between the registrant and
Cleveland-Cliffs Inc (incorporated by reference
to Exhibit 10.2 to the Company's Current Report
pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 on Form 8-K
filed October 9, 1991, Commission File No. 1-
10244).
Exhibit 10.12 Registration Rights Agreement dated October 2,
1991 between the registrant and Cleveland-
Cliffs Inc (incorporated by reference to
Exhibit 10.3 to the Company's Current Report
pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 on Form 8-K
filed October 9, 1991, Commission File No. 1-
10244).
Exhibit 10.13 Redacted Pellet Sale and Purchase Agreement
dated as of September 30, 1991 between the
Cleveland-Cliffs Iron Company and the Company
(incorporated by reference to Exhibit 10.18 to
the Company's Quarterly Report pursuant to
Section 13 or 15(d) of the Securities Exchange
Act of 1934 on Form 10-Q filed August 14, 1992,
Commission File No. 1-10244).
Exhibit 10.14 Deferred Compensation Plan for Directors
effective as of January 1, 1991, for all
directors who are not officers or other
employees of the Company (incorporated by
reference to Exhibit 10.19 of the Company's
Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 on form
10-K filed April 1, 1991, Commission File No.
1-10244).
Exhibit 10.15 Registration Rights Agreement dated September
30, 1991, between the Company and U.S.Trust
Company of California, N.A. (incorporated by
reference to Exhibit 1 to the Company's
Quarterly Report pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 on
Form 10-Q filed November 14, 1991, Commission
File No. 1-10244).
Exhibit 10.16 Amendment No. 1 dated September 30, 1992, to
the Registration Rights Agreement dated
September 30, 1991, among the Company and U.S.
Trust Company of California, N.A. (incorporated
by reference to Exhibit 10.34 of Amendment 2 to
the Company's Registration Statement on Form S-
2 filed February 9, 1993, Commission File No.
33-53476).
Exhibit 10.17 Stock Contribution Agreement dated September
30, 1992, between the Company and U.S. Trust
Company of California, N.A., as investment
manager (incorporated by reference to Exhibit
10.36 of Amendment 2 to the Company's
Registration Statement on Form S-2 filed
February 9, 1993, Commission File No. 33-
53476).
Exhibit 10.18 Coke Sale Agreement dated January 1, 1993 and
signed July 13, 1993 between the Registrant and
USX Corporation (incorporated by reference to
Exhibit 10.30 to the Company's quarterly report
pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 filed August
13, 1993, Commission File No. 1-10244).
Exhibit 10.19 Employment Agreement between Craig T. Costello
and the Company dated July 20, 1993
(filed herewith).
Exhibit 10.20 Employment Agreement between William R. Kiefer
and the Company dated July 21, 1993 (filed
herewith).
Exhibit 10.21 Employment Agreement between Dennis R. Mangino
and the Company dated July 26, 1993 (filed
herewith).
Exhibit 10.22 Employment Agreement between John H. Walker and
the Company dated July 21, 1993 (filed
herewith).
Exhibit 10.23 Employment Agreement between Narendra M.
Pathipati and the Company dated December 16,
1993 (filed herewith).
Exhibit 10.24 Employment Agreement between Mac S. White and
the Company dated July 28, 1993 (filed
herewith).
Exhibit 10.25 Amendment dated August 5, 1993 to the
Employment Agreement dated July 1, 1990 between
Herbert Elish and the Company (filed herewith).
Exhibit 10.26 Amendment dated July 19, 1993 to the Employment
Agreement dated June 8, 1987 between David M.
Gould and the Company (filed herewith).
Exhibit 10.27 Amendment dated July 21, 1993 to the Employment
Agreement dated June 8, 1987 between William C.
Brenneisen and the Company (filed herewith).
Exhibit 10.28 Amendment dated July 19, 1993 to the Employment
Agreement dated April 21, 1987 between Thomas
W. Evans and the Company (filed herewith).
Exhibit 13.1 1993 Annual Report to Stockholders of Weirton
Steel Corporation (filed herewith). Except for
those portions of the Annual Report
specifically incorporated by reference, such
report is furnished for the information of the
Securities and Exchange Commission and is not
to be deemed filed as part of this Annual
Report on Form 10-K.
Exhibit 22.1 Subsidiaries of the Registrant (filed
herewith).
Exhibit 24.1 Consent of Arthur Andersen & Co., independent
public accountants (filed herewith).
(b) The Registrant filed a report on Form 8-K in
reference to Item 5 thereof on November 23, 1993.
(c) The exhibits as listed under Item 14.(a)(3), are
filed herewith or incorporated herein by reference.
(d) The financial statement schedules listed under Item
14.(a)(2), are filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended, Weirton Steel
Corporation has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized, on the 28th day of
March, 1994.
WEIRTON STEEL CORPORATION
By /s/ Herbert Elish
Herbert Elish
Chairman, President and
Chief Executive Officer
/s/ Richard K. Riederer
Richard K. Riederer
Vice President and Chief
Financial Officer (Principal
Financial and Accounting
Officer)
Pursuant to the requirements of the Securities Exchange
Act of 1934, as amended, this Report has been signed below by the
following persons on behalf of Weirton Steel Corporation and in the
capacities indicated on the 28th day of March, 1994.
/s/ Herbert Elish /s/ F. James Rechin
Herbert Elish F. James Rechin
Chairman of the Board Director
/s/ Richard K. Riederer /s/Richard F. Schubert
Richard K. Riederer Richard F. Schubert
Director Director
/s/ James B. Bruhn
James B. Bruhn Phillip H. Smith
Director Director
/s/ Harvey L. Sperry
Robert J. D'Anniballe, Jr. Harvey L. Sperry
Director Director
Mark G. Glyptis Thomas R. Sturges
Director Director
/s/ Gordon C. Hurlbert /s/ David I.J. Wang
Gordon C. Hurlbert David I.J. Wang
Director Director
Phillip A. Karber
Director
Arthur Andersen & Co.
2100 One PPG Place
Pittsburgh, PA 15222
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of Weirton Steel Corporation:
We have audited in accordance with generally accepted
auditing standards, the consolidated financial statements included
in Weirton Steel Corporation's Annual Report to shareholders
incorporated by reference in this Form 10-K, and have issued our
report thereon dated January 24, 1994. Our audit was made for the
purpose of forming an opinion on those basic financial statements
taken as a whole. The schedules listed in the index in Item 14-
2(b) of the Form 10-K are the responsibility of the Company's
management and are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not a part of
the basic financial statements. These schedules have been
subjected to the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a
whole.
/s/Arthur Andersen & Co.
ARTHUR ANDERSEN & CO.
Pittsburgh, Pennsylvania
January 24, 1994
S-1
WEIRTON STEEL CORPORATION-UNCONSOLIDATED
SEC SCHEDULE III
CONDENSED FINANCIAL STATEMENTS
OF PARENT COMPANY
UNCONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
1993 1992 1991
-----------------------------
NET SALES(1) $1,201,093 $1,078,691 $1,036,335
OPERATING COSTS:
Cost of Sales(1) 1,105,558 1,010,022 1,019,280
Discount on Sale of Finance 5,209 - -
Receivables to Subsidiary(2)
Selling, General, 31,535 30,470 29,148
Administrative
Depreciation 49,113 38,617 34,335
Restructuring Charge 17,340 - -
--------- --------- ---------
Total Operating Costs 1,208,755 1,079,109 1,082,763
--------- --------- ---------
LOSS FROM OPERATIONS (7,662) (418) (46,428)
OTHER INCOME(EXPENSE):
Interest Expense (52,634) (40,921) (32,833)
Interest Income 2,737 3,073 3,156
Dividends Received from 2,168 - -
Subsidiary(2)
--------- --------- ---------
Net Other Income(Expense) (47,729) (37,848) (29,677)
--------- --------- ---------
LOSS BEFORE ESOP CONTRIBUTION (55,391) (38,266) (76,105)
ESOP Contribution 2,610 2,610 2,610
--------- --------- ---------
LOSS BEFORE INCOME TAXES (58,001) (40,876) (78,715)
Income Tax Benefit 13,988 4,763 4,000
--------- --------- ---------
LOSS BEFORE EXTRAORDINARY ITEM (44,013) (36,113) (74,715)
Extraordinary item-loss on
early extinguishment of debt 6,549 - -
--------- --------- ---------
LOSS BEFORE CUMULATIVE EFFECT (50,562) (36,113) (74,715)
OF ACCOUNTING CHANGES
Cumulative effect on prior (179,803) 4,356 -
years of accounting changes
--------- --------- ---------
NET LOSS $(230,365) $(31,757) $(74,715)
========= ========= ========
(1) Excludes $575,455 of net
sales of finance receiva-
bles to subsidiary that
are eliminated in consol-
idation.
(2) Amounts eliminated in
consolidation.
NET LOSS $ (230,365) $ (31,757) $ (74,715)
Less: Preferred stock dividend 3,125 3,125 -
requirement --------- --------- ---------
NET LOSS APPLICABLE TO COMMON $ (233,490) $ (34,882) $ (74,715)
SHARES ========= ========= =========
PER SHARE DATA:
Weighted average number of 26,473 24,914 21,406
common shares & equivalents
Loss per common share before $(1.78) $(1.57) $(3.49)
extraordinary item
Extraordinary item (0.25) - -
--------- --------- ---------
Loss per common share before (2.03) (1.57) (3.49)
cumulative effect on prior
years of accounting changes
Cumulative effect of (6.79) 0.17 -
accounting changes --------- --------- ---------
NET LOSS PER COMMON SHARE $ (8.82) $ (1.40) $ (3.49)
======== ======== ========
WEIRTON STEEL CORPORATION-UNCONSOLIDATED
SEC SCHEDULE III
CONDENSED FINANCIAL STATEMENTS
OF PARENT COMPANY
UNCONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands, except per share amount)
1993 1992
------- -------
ASSETS:
Current Assets:
Cash, and equivalents, $ 76,805 $ 61,195
includes restricted cash of
$602 and $491, respectively
Receivables, less allowances 22,286 123,894
$5,719 and $5,545,
respectively(3)
Inventories:
Raw materials 74,766 78,017
Work-in-process 74,109 74,950
Finished goods 93,784 91,599
Deferred income taxes 25,732 -
Other current assets 4,142 8,182
--------- ---------
Total current assets 371,624 437,837
Property, plant, and 523,728 559,074
equipment, net
Investment in Weirton 116,913 -
Receivables, Inc.
Intangible assets 91,289 -
Deferred income taxes 117,990 -
Other assets and deferred 18,050 8,535
charges --------- ---------
Total Assets $1,239,594 $1,005,446
========= ==========
LIABILITIES, REDEEMABLE STOCK
AND STOCKHOLDERS' EQUITY:
Liabilities:
Current liabilities:
Current maturities of debt $ - $ 11,964
obligations
Payables 109,937 88,139
Employment costs 66,519 41,102
Pension liability 20,394 28,698
Other 31,189 27,163
-------- --------
Total current liabilities 228,038 200,134
Long term debt obligations 495,252 491,277
Long term pension obligation 142,894 32,231
Postretirement benefits other 308,985 -
than pensions
Other long term liabilities 30,188 16,334
--------- ---------
Total Liabilities 1,205,358 739,976
(3) Includes $5,367 of receiv-
ables from subsidiary that
are eliminated in consoli-
dation.
Redeemable Stock 36,721 34,202
Stockholders' Equity:
Common stock, $.01 par value; 267 264
30,000,000 shares authorized;
26,719,752, and 26,419,705
shares issued
Additional paid-in capital 335,776 334,834
Retained earnings (337,656) (104,168)
Other stockholders' equity (872) 338
--------- ---------
Total Stockholders' Equity (2,485) 231,268
(Deficit) --------- ---------
Total Liabilities, Redeemable $1,239,594 $1,005,446
Stock and Stockholders' Equity ========= =========
WEIRTON STEEL CORPORATION-UNCONSOLIDATED
SEC SCHEDULE III
CONDENSED FINANCIAL STATEMENTS
OF PARENT COMPANY
UNCONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
1993 1992 1991
------- ------- -------
NET CASH PROVIDED BY $173,881 $ 13,322 $ 3,116
OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING
ACTIVITIES:
Expenditures for property, (13,324) (44,610) (113,881)
plant and equipment
Investment in Weirton (116,913) - -
Receivables, Inc. --------- --------- --------
Net cash used by investing (130,237) (44,610) (113,881)
activities
CASH FLOWS FROM FINANCING
ACTIVITIES:
Repayments of debt obligations (148,114) (2,171) (2,715)
Proceeds from issuance of debt 140,000 - 109,000
obligations
Debt issance fees (13,230) - -
Proceeds from issuance of - 8,250 15,000
common stock
Proceeds from issuance of - - 25,000
preferred stock
Other (6,690) 2,241 (7,529)
--------- -------- --------
Net cash (used) provided by (28,034) 8,320 138,576
financing activities
NET CHANGE IN CASH AND EQUIVALENTS 15,610 (22,968) 27,991
CASH AND EQUIVALENTS AT BEGINNING 61,195 84,163 56,172
OF PERIOD ------- ------- -------
CASH AND EQUIVALENTS AT END OF $76,805 $61,195 $84,163
PERIOD ======= ======= =======
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid, net of interest 47,311 40,937 31,068
capitalized
Income taxes paid (refunded) 1,779 11,009 -
Dividends received from Weirton 2,166 - -
Receivables, Inc.
S-2
SEC SCHEDULE V
WEIRTON STEEL CORPORATION and SUBSIDIARY
PROPERTY, PLANT, AND EQUIPMENT
For each of the three years ended December 31, 1993
(Dollars in thousands)
Description Balance Additions Retirements Balance
at beg. of Writeoffs at end
period of period
- ----------- ---------- --------- ----------- ---------
1993
Land $ 810 $ 0 $ 0 $ 810
Buildings 7,918 0 0 7,918
Machinery, 649,679 36,442 (258) 685,863
Equipment,Other
Construction in 84,982 (22,033) (558) 62,391
Progress ------- -------- ------- -------
Total $743,389 $14,409 $(816) $756,982
======= ====== ======= =======
1992
Land 808 3 1 810
Buildings 7,712 206 0 7,918
Machinery, 555,470 94,233 24 649,679
Equipment,Other
Construction in 134,788 (49,806) 0 84,982
Progress ------- -------- ------ -------
Total $698,778 $44,636 $25 $743,389
======= ====== ====== =======
1991
Land 815 1 8 808
Buildings 6,533 1,179 0 7,712
Machinery, 432,555 123,360 445 555,470
Equipment,Other
Construction in 145,164 (10,376) 0 134,788
Progress ------- -------- ------ -------
Total $585,067 $114,164 $453 $698,778
======= ======= ====== =======
S-3
SEC SCHEDULE VI
WEIRTON STEEL CORPORATION and SUBSIDIARY
ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION OF
PROPERTY, PLANT, AND EQUIPMENT
For each of the three years ended December 31, 1993
(Dollars in thousands)
Description Balance Additions Retirements Balance
at beg. of charged at end
period to expense of period
- ----------- ---------- --------- ----------- ---------
1993
Buildings $ 2,844 $ 359 $ 0 $ 3,203
Machinery, 181,471 48,754 174 230,051
Equipment,Other ------- ------- -------- -------
Total $184,315 $49,113 $ 174 $233,254
======= ====== ======= =======
1992
Buildings 2,485 359 0 2,844
Machinery, 147,571 33,917 17 181,471
Equipment,Other ------- ------ ------ -------
Total $150,056 $34,276 (1) $17 $184,315
======= ====== ====== =======
1991
Buildings 2,075 410 0 2,485
Machinery, 113,815 33,925 171 147,571
Equipment,Other ------- ------- ------ -------
Total $115,890 $34,335 $171 $150,056
======= ======= ====== =======
(1) Net of cumulative effect of accounting change which decreased
depreciation expense attributable to prior years by $4.4 million.
S-4
SEC SCHEDULE VIII
WEIRTON STEEL CORPORATION and SUBSIDIARY
VALUATION AND QUALIFYING ACCOUNTS
For each of the three years ended December 31, 1993
(Dollars in thousands)
Description Balance Deductions Balance
at beg. of Charged from at end
period to expense Reserves of period
- ----------- ---------- --------- ----------- ---------
1993
$5,545 $16,346 $16,172 $5,719
Allowance for
Doubtful accnts,
Discounts,Claims
and Allowances
Valuation allow-
ance for deferred
tax assets - 50,768 - 50,768
1992
Allowance for $8,339 $19,935 $22,729 $5,545
Doubtful accnts,
Discounts,Claims
and Allowances
1991
Allowance for $5,119 $27,478 $24,258 $8,339
Doubtful accnts,
Discounts,Claims
and Allowances
S-5
SEC SCHEDULE IX
WEIRTON STEEL CORPORATION and SUBSIDIARY
SHORT-TERM BORROWINGS
For each of the Three Years Ended December 31, 1993
1993 1992 1991
Payable to Payable to Payable to
Banks Banks Banks
----------------------------------------
Balance at end of (b) - - (b) -
period
Weighted Average - - -
interest rate
Maximum amount - $109,000 -
outstanding
during period
Average amount
outstanding
during period(a) - $ 42,000 -
Weighted average - 4.10% -
interest rate
during period(a)
(a) Average borrowings are based on month-end balances. The
average interest rate is based on month-end balances and the
month-end interest rates.
(b) There were no short-term borrowings during 1991 or 1993.
S-6
SEC SCHEDULE X
WEIRTON STEEL CORPORATION and SUBSIDIARY
REPAIR AND MAINTENANCE CHARGED TO EXPENSE
For each of the three years ended December 31, 1993
(Dollars in thousands)
1993 1992 1991
-------- --------- --------
Maintenance and $177,217 $160,190 $143,336
Repairs charged to
expense
S-7