-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PXtqsH3V+owrlwIiPfVN5/V+gh7eWBHt1Lj8oS7d0yQJit+ocyVvNpJI1kTPkkq+ VpPjVQwfgIkhN8ewyVMovg== 0000950149-97-001566.txt : 19970815 0000950149-97-001566.hdr.sgml : 19970815 ACCESSION NUMBER: 0000950149-97-001566 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENEVA STEEL CO CENTRAL INDEX KEY: 0000860192 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 930942346 STATE OF INCORPORATION: UT FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10459 FILM NUMBER: 97661497 BUSINESS ADDRESS: STREET 1: 10 SOUTH GENEVA ROAD CITY: VINEYARD STATE: UT ZIP: 84058 BUSINESS PHONE: 8012279000 10-Q 1 FORM 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ______________ Commission File #1-10459 GENEVA STEEL COMPANY (Exact name of registrant as specified in its charter) UTAH 93-0942346 (State of Incorporation) (I.R.S. Employer Identification No.) 10 South Geneva Road Vineyard, Utah (Address of principal executive offices) 84058 (Zip Code) Registrant's telephone number, including area code: (801) 227-9000 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 --- --- Indicate the number of shares outstanding of each class of the issuer's common stock, as of the latest practicable date. 13,921,574 and 19,151,348 shares of Class A and Class B common stock, respectively, outstanding as of July 31, 1997. 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS GENEVA STEEL COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited) ASSETS
June 30, September 30, 1997 1996 --------- --------- Current assets: Cash and cash equivalents $ -- $ 597 Accounts receivable, net 79,587 76,527 Inventories 99,017 93,139 Deferred income taxes 8,716 7,637 Prepaid expenses and other 14,249 15,410 Related party receivable 700 250 --------- --------- Total current assets 202,269 193,560 --------- --------- Property, plant and equipment: Land 1,990 1,990 Buildings 16,109 16,109 Machinery and equipment 633,497 600,290 Mineral property and development costs 8,425 8,425 --------- --------- 660,021 626,814 Less accumulated depreciation (203,693) (172,291) --------- --------- Net property, plant and equipment 456,328 454,523 --------- --------- Other assets 7,873 9,303 --------- --------- $ 666,470 $ 657,386 ========= =========
The accompanying notes to condensed consolidated financial statements are an integral part of these condensed consolidated balance sheets. Page 2 of 20 3 GENEVA STEEL COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Continued) (Dollars in thousands) (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, September 30, 1997 1996 --------- ------------- Current liabilities: Accounts payable $ 53,537 $ 59,575 Accrued liabilities 20,916 18,353 Accrued payroll and related taxes 12,562 10,867 Production prepayments -- 9,763 Accrued interest payable 12,728 4,746 Accrued dividends payable 11,763 4,682 Accrued pension and profit sharing costs 1,682 2,259 --------- --------- Total current liabilities 113,188 110,245 --------- --------- Long-term debt 404,295 388,431 --------- --------- Deferred income tax liabilities 9,734 10,446 --------- --------- Redeemable preferred stock 55,985 55,437 --------- --------- Stockholders' equity: Preferred stock -- -- Common stock: Class A 87,979 87,979 Class B 10,110 10,110 Warrants to purchase Class A common stock 5,360 5,360 Retained earnings (deficit) (9,332) 5,077 Class A common stock held in treasury, at cost (10,849) (15,699) --------- --------- Total stockholders' equity 83,268 92,827 --------- --------- $ 666,470 $ 657,386 ========= =========
The accompanying notes to condensed consolidated financial statements are an integral part of these condensed consolidated balance sheets. Page 3 of 20 4 GENEVA STEEL COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 1997 AND 1996 (In thousands, except per share data) (Unaudited)
1997 1996 --------- --------- Net sales $ 194,089 $ 183,105 Cost of sales 173,357 173,685 --------- --------- Gross margin 20,732 9,420 Selling, general and administrative expenses 5,467 6,871 --------- --------- Income from operations 15,265 2,549 --------- --------- Other income (expense): Interest and other income 70 253 Interest expense (10,355) (9,305) Other expense -- (638) --------- --------- (10,285) (9,690) --------- --------- Income (loss) before provision (benefit) for income taxes 4,980 (7,141) Provision (benefit) for income taxes 1,018 (2,781) --------- --------- Net income (loss) 3,962 (4,360) Less redeemable preferred stock dividends and accretion for original issue discount 2,625 2,295 --------- --------- Net income (loss) applicable to common shares $ 1,337 $ (6,655) ========= ========= Net income (loss) per common share $ .08 $ (.43) ========= ========= Weighted average common shares outstanding $ 15,831 $ 15,319 ========= =========
The accompanying notes to condensed consolidated financial statements are an integral part of these condensed consolidated statements. Page 4 of 20 5 GENEVA STEEL COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS NINE MONTHS ENDED JUNE 30, 1997 AND 1996 (In thousands, except per share data) (Unaudited)
1997 1996 --------- --------- Net sales $ 546,791 $ 509,326 Cost of sales 505,208 479,899 --------- --------- Gross margin 41,583 29,427 Selling, general and administrative expenses 16,508 18,770 --------- --------- Income from operations 25,075 10,657 --------- --------- Other income (expense): Interest and other income 299 525 Interest expense (30,129) (26,188) Other expense -- (1,749) --------- --------- (29,830) (27,412) --------- --------- Loss before benefit for income taxes (4,755) (16,755) Benefit for income taxes (1,804) (6,378) --------- --------- Net loss (2,951) (10,377) Less redeemable preferred stock dividends and accretion for original issue discount 7,628 6,694 --------- --------- Net loss applicable to common shares $ (10,579) $ (17,071) ========= ========= Net loss per common share $ (.68) $ (1.12) ========= ========= Weighted average common shares outstanding $ 15,598 $ 15,284 ========= =========
The accompanying notes to condensed consolidated financial statements are an integral part of these condensed consolidated statements. Page 5 of 20 6 GENEVA STEEL COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED JUNE 30, 1997 AND 1996 (Dollars in thousands) (Unaudited) Increase (Decrease) in Cash and Cash Equivalents
1997 1996 -------- -------- Cash flows from operating activities: Net loss $ (2,951) $(10,377) Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Depreciation 31,695 31,643 Amortization 1,433 1,864 Deferred income taxes (1,791) (6,378) (Gain) loss on sale of equipment 64 (45) (Increase) decrease in current assets-- Accounts receivable, net (3,060) (31,484) Inventories (5,878) 31 Prepaid expenses and other 711 (11,604) Increase (decrease) in current liabilities-- Accounts payable (6,038) (4,872) Accrued liabilities (385) (885) Accrued payroll and related taxes 2,716 2,336 Production prepayments (9,763) 5,000 Accrued interest payable 7,982 8,426 Accrued pension and profit sharing costs (577) 63 -------- -------- Net cash provided by (used for) operating activities 14,158 (16,282) -------- -------- Cash flows from investing activities: Purchases of property, plant and equipment (33,584) (23,626) Proceeds from sale of property, plant and equipment 21 213 Change in other assets -- 889 -------- -------- Net cash used for investing activities $(33,563) $(22,524) ======== ========
The accompanying notes to condensed consolidated financial statements are an integral part of these condensed consolidated statements. Page 6 of 20 7 GENEVA STEEL COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) NINE MONTHS ENDED JUNE 30, 1997 AND 1996 (Dollars in thousands) (Unaudited)
1997 1996 -------- -------- Cash flows from financing activities: Proceeds from issuance of long-term debt $ 47,285 $ 38,550 Payments on long-term (31,421) (13,028) Payments for deferred loan costs and other assets (4) (1,686) Change in bank overdraft 2,948 2,162 -------- -------- Net cash provided by financing activities 18,808 25,998 -------- -------- Net decrease in cash and cash equivalents (597) (12,808) Cash and cash equivalents at beginning of period 597 12,808 -------- -------- Cash and cash equivalents at end of period $ -- $ -- ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest (net of amount capitalized) $ 20,714 $ 16,620
Supplemental schedule of noncash financing activities: For the nine months ended June 30, 1997 and 1996, the Company increased redeemable preferred stock by $548 and $536, respectively, for the accretion required over time to amortize the original issue discount on the redeemable preferred stock incurred at the time of issuance. In addition, the Company increased the redeemable preferred stock liquidation preference by $3,690 in lieu of paying a cash dividend during the nine months ended June 30, 1996. At June 30, 1997, the Company had accrued dividends payable of $11,763. The accompanying notes to condensed consolidated financial statements are an integral part of these condensed consolidated statements. Page 7 of 20 8 GENEVA STEEL COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars In Thousands) (Unaudited) - ------------------------------------------------------------------------------- (1) INTERIM CONSOLIDATED FINANCIAL STATEMENTS The accompanying condensed consolidated financial statements of Geneva Steel Company and Geneva Steel Funding Corporation, a wholly-owned subsidiary of Geneva Steel Company (collectively, the "Company"), have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the financial position and results of operations of the Company. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's latest Annual Report on Form 10-K. (2) INVENTORIES Inventories were comprised of the following components:
June 30, September 30, 1997 1996 ------- ------------- Raw materials $28,119 $31,064 Semi-finished and finished goods 63,236 53,604 Operating materials 7,662 8,471 ------- ------- $99,017 $93,139 ======= =======
(3) NET INCOME (LOSS) PER COMMON SHARE Net income (loss) per common share is calculated based upon the weighted average number of common and common equivalent shares outstanding during the periods. Common equivalent shares consist of warrants and options to purchase Class A common stock which have a dilutive effect when applying the treasury stock method. Class B common stock is included in the weighted average number of common shares outstanding at one share for every ten shares outstanding because the Class B common stock is convertible to Class A common stock at this same rate. Page 8 of 20 9 The net income (loss) for the three and nine-month periods ended June 30, 1997 and 1996 was adjusted for redeemable preferred stock dividends and the accretion required over time to amortize the original issue discount on the redeemable preferred stock incurred at the time of issuance. (4) PRODUCTION PREPAYMENTS A production prepayment arrangement with Mannesmann has historically provided the Company with up to $8 million in added liquidity. The Company's production prepayment arrangement with Mannesmann was terminated in May 1997. (5) INSURANCE CLAIM RECEIVABLE At June 30, 1997, the Company had recorded an insurance claim receivable of $11 million for lost income associated with the January 1996 power outage, which is included in prepaid expenses and other in the accompanying consolidated financial statements. See "Part II Other Information, Item 1 Legal Proceedings." (6) CERTAIN RECLASSIFICATIONS Certain reclassifications have been made in the prior period financial statements to conform to the current period presentation. Page 9 of 20 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS The following table sets forth the percentage relationship of certain cost and expense items to net sales for the periods indicated:
Three Months Ended Nine Months Ended June 30, June 30, ------------------ -------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Net sales 100.0% 100.0% 100.0% 100.0% Cost of sales 89.3 94.9 92.4 94.2 ----- ----- ------ ----- Gross margin 10.7 5.1 7.6 5.8 Selling, general and administrative expenses 2.8 3.7 3.0 3.7 ----- ----- ----- ----- Income from operations 7.9 1.4 4.6 2.1 ----- ----- ----- ----- Other income (expense): Interest and other income -- 0.1 0.1 0.1 Interest expense (5.4) (5.1) (5.5) (5.2) Other expense -- (0.3) -- (0.3) ----- ----- ----- ----- (5.4) (5.3) (5.4) (5.4) ----- ----- ----- ----- Income (loss) before provision (benefit) for income taxes 2.5 (3.9) (0.8) (3.3) Provision (benefit) for income taxes .5 (1.5) (0.3) (1.3) ----- ----- ----- ----- Net income (loss) 2.0% (2.4)% (0.5)% (2.0)% ===== ===== ===== =====
The following table sets forth the sales product mix as a percentage of net sales for the periods indicated:
Three Months Ended Nine Months Ended June 30, June 30, ------------------ -------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Sheet 27.9% 28.3% 33.3% 30.8% Plate 46.7 48.5 42.7 43.0 Pipe 11.3 8.5 9.2 6.4 Slab 11.0 12.0 11.7 17.1 Non-Steel 3.1 2.7 3.1 2.7 ----- ----- ----- ----- 100.0% 100.0% 100.0% 100.0% ===== ===== ===== =====
Page 10 of 20 11 THREE MONTHS ENDED JUNE 30, 1997 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1996 Net sales increased 6.0% due to an increase in shipments of approximately 14,400 tons, a shift in product mix to higher-priced pipe and plate products from lower-priced slab and sheet products and an increase in overall average selling prices for the three months ended June 30, 1997 as compared to the same period in the previous fiscal year. The weighted average sales price (net of transportation costs) per ton of sheet and slab products increased by 7.7% and 2.3%, respectively, while the weighted average sales price of plate and pipe products decreased by 1.0% and 4.7%, respectively, in the three months ended June 30, 1997 compared to the same period in the previous fiscal year. The decrease in plate prices was due to continued pricing pressure from unfairly traded imports and other market factors. Shipped tonnage of plate and pipe increased approximately 6,800 tons or 2.9% and 17,000 tons or 47.7%, respectively, while shipped tonnage of sheet and slab products decreased approximately 4,800 tons or 2.7% and 4,600 tons or 4.9%, respectively, between the two periods. During the quarter a shortage of railcars caused shipments to be slightly lower than expected. Although the Company's primary rail carrier is building additional railcars over the next several months to meet the Company's increased needs, the shortage is expected to also limit shipments during the fourth fiscal quarter. Consistent with the Company's strategic objectives, plate shipments have increased, in part through utilization of outside processors to level and cut plate from coils. The Company is currently experiencing increased demand for pipe and is increasing its production of pipe. The Company continues to sell slabs to maximize production from the continuous caster while efforts to increase rolling mill throughput continue. The Company is currently in the process of installing the rolling mill finishing stands upgrade, which is expected to increase rolling mill throughput and product quality. In light of recent disruptions to operations caused by work on the upgrade, the Company has elected to extend the schedule for future work to reduce the ongoing impact. In November 1996, the Company, together with another domestic plate producer, filed anti-dumping petitions with the Department of Commerce and the International Trade Commission against imports of cut-to-length carbon plate from the Russian Federation, Ukraine, the People's Republic of China and the Republic of South Africa (the "Plate Trade Cases"). The petitions allege large dumping margins and also set forth the injury to the U.S. industry caused by dumped imports from the subject countries. In its preliminary injury determination, the International Trade Commission ("ITC") ruled unanimously in late December that dumped imports of cut-to-length carbon plate were causing or threatening to cause material injury to the domestic industry. During the quarter ended June 30, 1997, the Department of Commerce announced its preliminary determination that imports of cut-to-length steel plate from these countries were sold at significant dumping margins, and imposed substantial preliminary margins on cut-to-length steel plate imports from those countries. The Company believes that the allegations of injurious dumping will be upheld by the Commerce Department and the ITC in their respective final determinations. Failure to win the Plate Trade Cases, or a governmental settlement of the cases on terms adverse to the Company, would have a material Page 11 of 20 12 adverse effect upon the Company. Dumped imports from countries not covered by the Plate Trade Cases continue to suppress plate prices. The Company continues to monitor plate imports from other countries as well as imports of other of its products and may file additional trade cases in the future. Domestic competition remains intense and imported steel continues to adversely affect the market. The Company sells substantially all of its products in the spot market at prevailing market prices. The Company believes its percentage of such sales is significantly higher than that of most of the other domestic integrated producers. Consequently, the Company may be affected by price increases or decreases more quickly than many of its competitors. The Company intends to react to price increases or decreases in the market as required by competitive conditions. Cost of sales includes raw materials, labor costs, energy costs, depreciation and other operating and support costs associated with the production process. The Company's cost of sales, as a percentage of net sales, decreased to 89.3% for the three months ended June 30, 1997 from 94.9% for the same period in the previous fiscal year. The overall average cost of sales per ton shipped decreased approximately $9 per ton between the two periods primarily as a result of a decrease in operating costs, offset slightly by a shift in product mix to higher-cost plate and pipe products from lower-cost sheet and slab products. Operating costs decreased as a result of significant improvements in product yields and throughput rates, lower plant administrative costs and lower freight rates partially offset by production disruptions associated with the rolling mill finishing stands upgrade, higher wages and benefits and other increased costs as compared to the same quarter in the previous year. Depreciation costs included in cost of sales increased approximately $0.5 million for the three months ended June 30, 1997 compared with the same period in the previous fiscal year. This increase was due to increases in the asset base resulting primarily from the No. 1 blast furnace reline. Selling, general and administrative expenses for the three months ended June 30, 1997 decreased approximately $1.4 million as compared to the same period in the previous fiscal year. These lower expenses resulted primarily from Company efforts to reduce administrative staff, to decrease outside services and to reduce other costs. Interest expense increased approximately $1.1 million during the three months ended June 30, 1997 as compared to the same period in the previous fiscal year as a result of significantly lower capitalized interest and higher levels of borrowing. The higher levels of borrowing resulted, in part, from the termination of the Company's receivables securitization facility and termination of the Company's prepayment arrangement with Mannesmann. In May 1996, the Company terminated its receivables securitization facility in connection with an amendment to and restatement of the Company's revolving Page 12 of 20 13 credit facility. As a result, other expense decreased approximately $0.6 million for the three months ended June 30, 1997, as compared with the same period in the previous fiscal year. For the three months ended June 30, 1997, the Company utilized a net operating loss carryforward of approximately $2.3 million, which resulted in a lower provision for income taxes of approximately $875,000. As of June 30, 1997, the Company had utilized all net operating loss carryforwards for financial reporting purposes. NINE MONTHS ENDED JUNE 30, 1997 COMPARED WITH NINE MONTHS ENDED JUNE 30, 1996 Net sales increased 7.4% due to increased shipments of approximately 53,900 tons, a shift in product mix to higher priced plate, pipe and sheet products from lower-priced slab products and increased overall average selling prices for the nine months ended June 30, 1997 as compared to the same period in the previous fiscal year. The weighted average sales price (net of transportation costs) per ton of sheet and slab products increased by 4.6% and 0.2%, respectively, while the weighted average sales price per ton of plate and pipe products decreased by 1.8% and 2.1%, respectively, in the nine months ended June 30, 1997 compared to the same period in the previous fiscal year. Shipped tonnage of plate, pipe and sheet increased approximately 50,000 tons or 8.7% , 43,700 or 56.3% and 60,000 tons or 11.2%, respectively, while shipped tonnage of slabs decreased approximately 99,800 tons or 26.9% between the two periods. The Company's cost of sales, as a percentage of net sales, decreased to 92.4% for the nine months ended June 30, 1997 from 94.2% for the same period in the previous fiscal year. The overall average cost of sales per ton shipped increased approximately $5 per ton between the two periods primarily as a result of a shift in product mix to higher-cost plate, pipe and sheet products from lower-cost slab products as well as an increase in operating costs. Operating costs increased as a result of increased natural gas and other fuel costs, hot metal costs associated with a blast furnace reline, higher wages and benefits and other increased costs. These increased costs were partially offset by significant improvements in production yields and throughput rates. Depreciation costs included in cost of sales increased approximately $0.1 million for the nine months ended June 30, 1997 compared with the same period in the previous fiscal year. Selling, general and administrative expenses for the nine months ended June 30, 1997 decreased approximately $2.3 million as compared to the same period in the previous fiscal year. The lower expenses resulted primarily from reduced outside services and other costs. Interest expense increased approximately $3.9 million for the nine months ended June 30, 1997 as compared to the same period in the previous fiscal year, reflecting higher levels of borrowing, in part from the termination of the Page 13 of 20 14 Company's receivables securitization facility, and lower levels of capitalized interest. Other expense decreased approximately $1.7 million for the nine months ended June 30, 1997, as compared to the same period in the previous fiscal year as a result of the termination in May 1996 of the Company's receivables securitization facility. LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity requirements arise from capital expenditures and working capital requirements, including interest payments. The Company has met these requirements principally from the sale of equity, the incurrence of long-term indebtedness, including borrowings under the Company's credit facilities, equipment lease financing and cash provided by operations. As of June 30, 1997, the Company's eligible inventories and accounts receivable supported access to $111.5 million under the revolving credit facility (the "Revolving Credit Facility"). As of June 30, 1997, the Company had $79.3 million in borrowings and $8.4 million in letters of credit outstanding under the Revolving Credit Facility, leaving $23.8 million in additional borrowing availability. The terms of the Revolving Credit Facility and of the Company's 11 1/8% senior notes issued in March 1993 and 9 1/2% senior notes issued in February 1994 (collectively, the "Senior Notes") include cross default and other customary provisions. Financial covenants contained in the Revolving Credit Facility and/or the Senior Notes also include, among others, a limitation on dividends and distributions on capital stock of the Company, a tangible net worth requirement, a cash interest coverage requirement, a cumulative capital expenditure limitation, limitations on the incurrence of additional indebtedness unless certain financial tests are satisfied, a limitation on mergers, consolidations and dispositions of assets and limitations on liens. In the event of a change in control, the Company must offer to purchase all Senior Notes then outstanding at a premium. The Company's ability to pay cash dividends on its 14% cumulative redeemable exchangeable preferred stock (the "Redeemable Preferred Stock") is subject to covenants and tests contained in the indentures governing the Senior Notes and in the Company's Revolving Credit Facility. Restricted payment limitations under the Company's Senior Notes precluded payment of the quarterly preferred stock dividends beginning with the dividend due June 15, 1996. Unpaid dividends were approximately $11.8 million at June 30, 1997. Unpaid dividends accumulate until paid and accrue additional dividends at a rate of 14% per annum. As a result of the Company's failure to pay four full quarterly dividends, the holders of the Redeemable Preferred Stock elected two directors on May 30, 1997. The right of such holders to elect directors continues until the Company has paid all dividends in arrears and has paid the dividends due for two consecutive quarters thereafter. While not affecting net income/loss, dividends and the accretion required over time to amortize the original issue discount associated with the Redeemable Page 14 of 20 15 Preferred Stock will negatively impact quarterly earnings per share by approximately $.17 per share. Besides these financing activities, the Company's major source of liquidity has been cash provided by operating activities. Net cash provided by operating activities was $14.2 million for the nine months ended June 30, 1997, compared with net cash used for operating activities of $16.3 million for the nine months ended June 30, 1996. The sources of cash provided by operating activities during the nine months ended June 30, 1997 included depreciation and amortization of $33.1 million and an increase in accrued interest of $8.0 million. These sources of cash flow were offset in part by an increase in accounts receivable of $3.1 million, an increase in inventories of $5.9 million related to stocking inventories at the Company's outside processors, a decrease in deferred income tax liabilities of $1.8 million, a decrease in production prepayments of $9.8 million, a decrease in accounts payable and accrued liabilities of $4.3 million and a net loss of $3.0 million. In addition to ongoing operations, the Company's potential sources of liquidity include resolving its outstanding insurance claim associated with a January 1996 power outage. During the quarter ended June 30, 1997, the production prepayment arrangement with Mannesmann was terminated, resulting in approximately $8 million in reduced liquidity. Termination of the production prepayment arrangement does not otherwise affect Mannesmann's sales agency arrangement with the Company. Capital expenditures were approximately $33.6 million for the nine months ended June 30, 1997. Capital expenditures for fiscal year 1997 are estimated at $45 million, which include capital spending for its No. 1 Blast Furnace reline and No. 2 Blast Furnace repairs. Capital expenditures for the fiscal year were higher than anticipated due to increased reline costs and repairs on the No. 1 and No. 2 Blast Furnaces, respectively. The No. 1 Blast Furnace reline was completed and the furnace placed in service in early January 1997. The No. 2 Blast Furnace repairs are currently in process and are expected to be completed in September 1997. Additional capital projects for fiscal year 1997 consist of installation of certain rolling mill finishing stand equipment and various other projects designed to reduce costs and increase product quality and throughput. The Company anticipates incurring start-up and transition costs as the rolling mill finishing stand equipment is installed and implemented. Depending on market, operational, liquidity and other factors, the Company may elect further to adjust the design, timing and budgeted expenditures of its capital plan. In addition, the Revolving Credit Facility contains certain limitations on capital expenditures. The Company has formed a limited liability company with certain unrelated parties, which in turn has entered into a cooperative agreement with the United States Department of Energy ("DOE") for the demonstration of a cokeless ironmaking facility and associated power generation and air separation facilities. As of June 30, 1997, the Company had spent approximately $1.1 million in connection with Page 15 of 20 16 the project, which has been included in construction in progress in the accompanying consolidated financial statements. Expenditures on the project are subject to government cost sharing arrangements. Completion of the project remains subject to several contingencies. Under certain circumstances, the Company may be required to repay some or all of the government cost share funds and expense other funds included in construction in progress in the event the project is terminated. The Company is required to make substantial interest and dividend payments on the Senior Notes, outstanding balances under the Revolving Credit Facility and its Redeemable Preferred Stock. Currently, the Company's annual cash interest expense is approximately $39.9 million and its annual dividends on preferred stock are approximately $10.5 million. FACTORS AFFECTING FUTURE RESULTS The Company's future operations will be impacted by, among other factors, pricing, product mix, throughput levels and production efficiencies. The Company has efforts underway to increase throughput and production efficiencies and to continue shifting its product mix to higher-margin products. There can be no assurance that the Company's efforts will be successful or that sufficient demand will exist to support the Company's additional throughput capacity. Pricing in future periods is a key variable to the Company's future operating results that remains subject to significant uncertainty. Future pricing will be affected by several factors including the level of imports, the final outcome of the Plate Trade Cases, future capacity additions and other market factors such as increased domestic plate production capacity currently coming on line. The short-term and long-term liquidity of the Company is also dependent upon several other factors, including availability of financing, foreign currency fluctuations, competitive and market forces, capital expenditures and general economic conditions. Moreover, the United States steel market is subject to cyclical fluctuations that may affect the amount of cash internally generated by the Company and the ability of the Company to obtain external financing. Although the Company believes that the anticipated cash from future operations and borrowings under the Revolving Credit Facility will provide sufficient liquidity for the Company to meet its debt service requirements and to fund ongoing operations, including required capital expenditures, there can be no assurance that these or other possible sources will be adequate. As stated above, pricing remains a key variable with respect to future operating results. Moreover, because of the Company's current leverage situation, its financial flexibility is limited. Inflation can be expected to have an effect on many of the Company's operating costs and expenses. Due to worldwide competition in the steel industry, the Company may not be able to pass through such increased costs to its customers. Page 16 of 20 17 This quarterly report contains certain forward-looking statements with respect to the Company that are subject to risks and uncertainties that include, but are not limited to, those identified throughout this report, described from time to time in the Company's other Securities and Exchange Commission filings or discussed in the Company's press releases. Actual results may vary materially from expectations. Page 17 of 20 18 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On February 25, 1997, the Company filed a Verified Complaint in the Fourth Judicial District Court for Utah County, State of Utah, against Commerce & Industry Insurance Company ("Commerce & Industry"), a New York corporation, seeking recovery under the Company's policy of insurance with Commerce & Industry (the "Policy") of losses and damages to the Company's steel plant arising out of a storm-related power outage occurring on January 24, 1996 (the "Incident"). The Complaint was filed but not served on Commerce & Industry as investigation and discussion of the Company's claims was ongoing. On April 9, 1997, the Company filed and caused to be served its First Amended Verified Complaint asserting its claims and seeking judgement against Commerce & Industry for all Incident-related losses and damages properly payable under the policy in an amount to be proven at trial, as well as the Company's reasonable attorneys' fees and costs. On the same date, the Company submitted a Proof of Loss for its claims to Commerce & Industry of approximately $99 million. The claims have been and are expected to be the subject of extensive investigation and discussion and there can be no assurance that the amounts ultimately recovered through negotiation or litigation will approximate the amount of the claims asserted. The Company's insurance is a layered program, and therefore, the Company secured insurance on the deductibles under the Policy in the amount of $5 million from a separate group of insurers, all of which has been paid to the Company. On May 1, 1997, Commerce & Industry filed a Notice of Removal of the Action to the United States District Court for the District of Utah, Central Division. Commerce & Industry has not yet filed an answer to the First Amended Verified Complaint. Page 18 of 20 19 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. 10.1 Amendment No. 1 to the Geneva Steel X Management Employee Savings and Pension Plan, effective as of January 1 1997, dated June 25, 1997 27 Financial Data Schedule X (b) Reports on Form 8-K. The Company did not file any reports on Form 8-K during the three months ended June 30, 1997. Page 19 of 20 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GENEVA STEEL COMPANY By: \s\ Dennis L. Wanlass -------------------------------- Vice President, Treasurer and Chief Financial Officer Dated: August 14, 1997 Page 20 of 20 EX-10.1 2 AMENDMENT #1 TO SAVINGS & PENSION PLAN 1 EXHIBIT 10.1 AMENDMENT NO. 1 TO THE GENEVA STEEL MANAGEMENT EMPLOYEE SAVINGS AND PENSION PLAN The Geneva Steel Management Employee Savings and Pension Plan (the "Plan"), as amended and restated generally effective January 1, 1994, is hereby amended effective (unless otherwise provided below) as of January 1, 1997 as follows: 1. Section 2.1 shall be amended by the deletion of the word "or" from the end of Section 2.1(c), and the addition of the following after Section 2.1(d): (e) Compensated for services by an entity other than a Participating Company and for any reason is deemed to be an Employee; (f) Subject to a written agreement that provides that such individual is ineligible to participate in the Plan; (g) Designated (or is in a group of Employees who are designated) in writing by a Participating Company as ineligible to participate in the Plan; or (h) Is an individual who has not been treated by a Participating Company as an Employee and, for that reason, the Participating Company has not withheld employment taxes with respect to that individual, even in the event that the individual is determined, retroactively, to have been an Employee. 2. The first sentence of Section 7.1 shall be amended to read as follows: 7.1 Limitation on Contributions. The Annual Additions allocated or contributed to a Participant for any Plan Year shall not exceed the lesser of the following: (a) $30,000; or (b) 25% of the Participant's Compensation for such year. 2 3. Effective August 1, 1997, Section 8.2 shall be amended to read as follows: 8.2 Investment Funds. The Trust Fund established under the Plan shall consist of the Balanced Fund, the Equity Fund, the Short-Term Income Fund, the Bond Fund, the Geneva Stock Fund, and the Life Insurance Fund. The Company may change the available Investment Funds at any time in its sole discretion by adding Investment Funds, removing Investment Funds, or changing Investment Funds. The Balanced, Equity, Short-Term Income, Bond, Geneva Stock and Life Insurance Funds shall be invested and reinvested as follows: (a) The Balanced Fund shall be invested in those investments selected by the Company that are designed to achieve a balance between capital appreciation and preservation of capital and generation of income. (b) The Equity Fund shall be invested in equity securities or in such other types of equity investments as are authorized by the Trust Agreement. (c) The Short-Term Income Fund shall be invested in short term fixed-income investments as are authorized by the Trust Agreement. (d) The Bond Fund shall be invested primarily in debt instruments or other types of debt investments as are authorized by the Trust Agreement. (e) The Geneva Stock Fund shall be invested primarily in Geneva Stock, except that small amounts in the Stock Fund may be invested in interest-bearing short-term debt obligations, money market instruments, savings accounts or similar investments. The Geneva Stock Fund shall consist of all Stock Fund investments held by the Trustee and all cash held by the Trustee which is derived from dividends on Geneva Stock, interest and other income from Stock Fund investments, Company Contributions to be invested in the Geneva Stock Fund and proceeds from sales of Geneva Stock and Stock Fund investments. -2- 3 (f) The Life Insurance Fund shall be invested in life insurance policies on the lives of those Participants who elected before September 1, 1989 to have their Accounts invested in life insurance contracts. As of September 1, 1989, Participants whose Accounts were not invested in the Life Insurance Fund could not (and still cannot) elect to invest their Accounts in the Life Insurance Fund. 4. Effective August 1, 1997, Section 8.4 shall be amended to read as follows: 8.4 Investment of Accounts. A Participant's Pension Contribution Account shall be invested in the Balanced Fund, which may consist of a Balanced Fund that is different from the Balanced Fund for other Accounts. A Participant's Geneva Stock Account shall be invested solely in the Geneva Stock Fund, provided, however, that a Participant may, in accordance with Section 8.5, elect to transfer an amount from the Geneva Stock Fund to those Investment Funds selected under this Section. A Participant's Salary Deferral Account, Discretionary Contribution Account, Matching Contribution Account and Rollover Account, if any, shall be apportioned among one or more of the Investment Funds in such whole percentages as the Participant may specify pursuant to the election procedures prescribed by the Company. If the Company receives no valid investment directions from the Participant, such Accounts shall be invested entirely in the Short-Term Income Fund. A Participant may change the investment instructions with respect to future contributions with such frequency as shall be established by the Company. Any such change shall be made in the manner prescribed by the Company. 5. Effective August 1, 1997, Section 8.5 shall be amended to read as follows: 8.5 Transfers Among Accounts. With such frequency as shall be established by the Company, a Participant may elect to transfer all or any part of his or her Accounts (except for his or her Pension Contribution Account and Geneva Stock Account) to one or more of the Investment Funds in the manner prescribed by the Company. Any such transfer shall be applicable as soon administratively feasible pursuant to the procedure established by the Company. With -3- 4 respect to the Geneva Stock Account, prior to the end of each Plan quarter, a Participant may elect to transfer ten percent (10%) of the vested portion of his or her Geneva Stock Account to one or more of the Investment Funds (other than the Life Insurance Fund) as elected pursuant to Section 8.4. Such a transfer from the Geneva Stock Account shall be effective as soon as administratively feasible following the end of the Plan quarter in which the election is made. Upon attainment of age 55, a Participant may elect prior to the end of each Plan quarter to transfer all (or any portion in 10% increments) of his or her Geneva Stock Account to one or more of the Investment Funds as elected pursuant to Section 8.4. Any transfer from the Geneva Stock Fund shall be made in accordance with the requirements of this Section 8.5 and such additional rules as may be prescribed by the Company. 6. Effective August 1, 1997, Section 8.6 shall be amended to read as follows: Each Account shall be revalued at fair market value and adjusted each Valuation Date for contributions, distributions and other items since the last Valuation Date, to reflect the Participant's share of any realized or unrealized investment income, gains, losses and investment expenses of the Fund or Funds in which such Account was invested that have accrued since the prior Valuation Date. A Participant's share shall be proportionate to the ratio that the adjusted balance in his or her Account bears to the total adjusted balances of all Accounts invested in the Funds determined as of the Valuation Date. 7. Effective August 1, 1997, Section 8.8 shall be amended to read as follows: 8.8 Life Insurance Fund Rules. (a) No Participant shall have any right, title, interest or incident of ownership in any life insurance contract purchased by the Trustee, except at the time or times and upon the terms and conditions set forth in this Plan. The Trustee shall be the sole owner of all incidents of ownership in each life insurance contract but the Company may direct the Trustee as to the exercise of all such incidents of ownership. (b) The aggregate premiums for all ordinary life insurance purchased for each Participant shall at all times be less than 50% of the Company Contributions allocated to the Participant's Accounts, 25% in the case of term insurance. In the event that -4- 5 payment of any life insurance premiums would cause the aggregate premiums to exceed these limitations, then the premium will not be made, and the insurance contract shall be converted to a paid-up contract. Alternatively, the face amount of insurance shall be reduced so that the premium will not exceed the limitations. (c) Upon the death of a Participant, the proceeds of any life insurance contract(s) will be paid to the Trustee and distributed in accordance with the terms of this Plan. Upon a Participant's change in investment election involving a transfer of all of his or her assets out of the Life Insurance Fund, the life insurance contract must be surrendered and the cash value of the surrendered contract shall be paid to the Trustee to be disposed of in accordance with the terms of this Plan and the Participant's investment election. Upon a Participant's termination of employment, the life insurance contract must be surrendered and the cash value of the surrendered contract shall be paid to the Trustee to be disposed of in accordance with the terms of this Plan unless the Participant has elected to receive a lump sum distribution of his or her Plan Benefit, in which case the Participant may elect to receive either the cash value of the surrendered contract, or a distribution of the contract. 8. Section 10.4 shall be amended by deleting the third sentence thereof, and inserting the following in its place: Notwithstanding any other provision of the Plan to the contrary, distribution of the Plan Benefit of a Participant shall be made no later than April 1 of the calendar year following the later of (a) the calendar year in which the Participant attains age 70 1/2 or (b) the calendar year in which the employee retires. Notwithstanding the above, Section 10.04(b) shall not apply to any Participant who is a "5-percent owner" (as defined in section 416 of the Code) with respect to the Plan Year ending in the calendar year in which the Participant attains age 70 1/2. To the extent that the Commissioner of the Internal Revenue Service determines in a ruling, notice or other document of general authority, that the required beginning date set forth in the Plan prior to January 1, 1997 for distributions with respect to Participants who remain Employees on or after attaining age 70 1/2 constitutes a "protected benefit" within the meaning of section 411(d)(6) of the Code, the provisions of the Plan in effect as of December 31, 1996 shall continue to apply, as elected by the Participant. -5- 6 9. Section 15.1 shall be amended by deleting the last paragraph thereof. 10. Effective October 12, 1996, Section 16.8 shall be added to the Plan as follows: 16.8 Military Service Notwithstanding any provision of this Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with section 414(u) of the Code. Loan payments will be suspended under this Plan as permitted under section 414(u)(4) of the Code. 11. Effective May 1, 1997, Section 18.5 shall be added to the Plan as follows: 18.5 Transfer to Union Plan. If an Employee ceases to be an Eligible Employee and commences participation in the Company's Union Employee Savings and Pension Plan (the "Union Plan"), his or her Accounts may be transferred, at the request of the Participant, to the Union Plan and he or she shall be subject to the Union Plan's vesting schedule; provided, however, that the Participant shall suffer no reduction in the vested percentage of his or her Accounts transferred to the Union Plan. 12. Section 19.9 shall be amended by deleting the last sentence thereof. 13. Section 19.18 shall be deleted in its entirety and the remaining Sections of the Plan renumbered accordingly. Former Section 19.19 (renumbered Section 19.18) shall be amended to read as follows: 19.18 "Investment Funds" means the Funds established under the Trust Fund pursuant to Section 8.2. 14. Section 1.2 of Appendix I shall be amended by replacing "3.1(c)" with "3.1(d)." 15. Section 1.3 of Appendix I shall be amended by replacing "2.1(c)" with "2.1(d)." -6- 7 16. Section 1.8 of Appendix I shall be amended to read as follows: 1.8 "Highly Compensated Employee" means an active Employee who: (a) During the look-back year received Total Compensation of more than $80,000 (or such larger amount as may be adopted by the Commissioner of Internal Revenue to reflect a cost-of-living adjustment) and was a member of the Top-Paid Group; or (b) At any time during the look-back year or the determination year was a five-percent owner (as defined in section 416(i)(1) of the Code). For purposes of this Section, the determination year shall be the Plan Year. The look-back year shall be the 12-month period immediately preceding the determination year. The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the Top-Paid Group and the Total Compensation that is considered, will be made in accordance with section 414(q) of the Code and regulations thereunder. The term "Highly Compensated Employee" shall also include a former Employee who separated from service (or is deemed to have separated) prior to the determination year, performs no service for any member of the Affiliated Group during the determination year, and was a Highly Compensated Employee as an active Employee for either the separation year or any determination year ending on or after the Employee's 55th birthday. The Company may elect to modify the method described in this Section for defining "Highly Compensated Employee" by electing to apply the $80,000 limit described above without regard to whether an Employee is in the Top-Paid Group. 17. Section 1.11(e) of Appendix I shall be amended by replacing "402(a)(8)" with "402(e)(3)." 18. Section 1.12 of Appendix I shall be amended by the addition of the following at the end thereof: -7- 8 The Company may elect, in a consistent and uniform manner, to apply one or more of the age-and-service-based exclusions above by substituting a younger age or shorter period of service, or by not excluding individuals on the basis of age or service. 19. Section 2.1 of Appendix I shall be amended to read as follows: 2.1 Percentage Limitations. The Plan shall satisfy the average deferral percentage test, as provided in section 401(k)(3) of the Code and the regulations issued thereunder. Subject to the special rules described in this Appendix, the Salary Deferral Contributions of Highly Compensated Employees shall not exceed the limits described below: (a) A "Deferral Percentage" shall be determined for each Highly Compensated Employee who, at any time during the Plan Year, is a Participant or is eligible to participate in the Plan, which Deferral Percentage shall be the ratio, computed to the nearest one-hundredth of one percent, of the Highly Compensated Employee's Salary Deferral Contributions for the Plan Year to the Highly Compensated Employee's Section 414(s) Compensation for the Plan Year; (b) For Plan Years beginning prior to January 1, 1997, a Deferral Percentage shall be determined for each Nonhighly Compensated Employee who, at any time during the Plan Year, is a Participant or is eligible to participate in the Plan, which Deferral Percentage shall be the ratio, computed to the nearest one-hundredth of one percent, of the Nonhighly Compensated Employee's Salary Deferral Contributions for the Plan Year to the Nonhighly Compensated Employee's Section 414(s) Compensation for the Plan Year; (c) For Plan Years beginning after December 31, 1996, and except to the extent that the Company elects (in accordance with applicable law) to apply Subsection (b) rather than this Subsection (c), a Deferral Percentage shall be determined for each Nonhighly Compensated Employee who, at any time during the preceding Plan Year, was a Participant or who was eligible to participate in the Plan, which Deferral -8- 9 Percentage shall be the ratio, calculated to the nearest one-hundredth of one percent, of the Nonhighly Compensated Employee's Salary Deferral Contributions for the preceding Plan Year to the Nonhighly Compensated Employee's Section 414(s) Compensation for the preceding Plan Year; (d) The Aggregate 401(k) Contributions of Highly Compensated Employees shall constitute Excess Before-Tax Contributions and shall be reduced, pursuant to Section 2.2 of this Appendix I, to the extent that the average Deferral Percentage (the "Before-Tax Percentage") of Highly Compensated Employees exceeds the greater of (i) 125 percent of the Before-Tax Percentage of Nonhighly Compensated Employees or (ii) the lesser of (A) 200 percent of the Before-Tax Percentage of Nonhighly Compensated Employees or (B) the Before-Tax Percentage of Nonhighly Compensated Employees plus two percentage points. 20. Section 2.2 of Appendix I shall be amended to read as follows: 2.2 Reduction of Salary Deferred Contributions. The reduction of the Salary Deferral Contributions of Highly Compensated Employees as required by Section 2.1(d) of this Appendix I shall be made on the basis of the amount of contributions by or on behalf of each Highly Compensated Employee. Such reductions in Before-Tax Contributions shall be made in accordance with applicable regulations and shall constitute "Excess Before-Tax Contributions." For all affected Highly Compensated Employees such Excess Before-Tax Contributions shall be eliminated as provided for in Article 5 of this Appendix I. 21. Section 3.1 of Appendix I shall be amended to read as follows: 3.1 Percentage Limitations. To the extent Matching Contributions are not treated as Salary Deferral Contributions and tested under Article 2 of this Appendix I, the Aggregate 401(m) Contributions of Highly Compensated Employees for any Plan Year shall not exceed the limits described below: (a) A "Contribution Percentage" shall be determined for each Highly Compensated -9- 10 Employee who, at any time during the Plan Year, is a Participant or is eligible to participate in the Plan, which Contribution Percentage shall be the ratio, computed to the nearest one-hundredth of one percent, of the Highly Compensated Employee's Aggregate 401(m) Contributions for the Plan Year to the Highly Compensated Employee's Section 414(s) Compensation for the Plan Year; (b) For Plan Years beginning prior to January 1, 1997, a Contribution Percentage shall be determined for each Nonhighly Compensated Employee who, at any time during the Plan Year, is a Participant or is eligible to participate in the Plan, which Contribution Percentage shall be the ratio, computed to the nearest one-hundredth of one percent, of the Nonhighly Compensated Employee's Aggregate 401(m) Contributions for the Plan Year to the Nonhighly Compensated Employee's Section 414(s) Compensation for the Plan Year; (c) For Plan Years beginning after December 31, 1996, and except to the extent that the Company elects (in accordance with applicable law) to apply Subsection (b) rather than this Subsection (c), a Contribution Percentage shall be determined for each Nonhighly Compensated Employee who, at any time during the preceding Plan Year, was a Participant or who was eligible to participate in the Plan, which Contribution Percentage shall be the ratio, calculated to the nearest one-hundredth of one percent, of the Nonhighly Compensated Employee's Aggregate 401(m) Contributions for the preceding Plan Year to the Nonhighly Compensated Employee's Section 414(s) Compensation for the preceding Plan Year; and (d) The Aggregate 401(m) Contributions of Highly Compensated Employees shall constitute Excess Aggregate 401(m) Contributions and shall be reduced, pursuant to Section 3.2 of this Appendix I, to the extent that the average of the Contribution Percentages (the "Aggregate 401(m) Percentage") of Highly Compensated Employees exceeds the greater of (1) 125 percent of the Aggregate 401(m) Percentage of Nonhighly Compensated Employees or (2) the lesser of -10- 11 (A) 200 percent of the Aggregate 401(m) Percentage of Nonhighly Compensated Employees or (B) the Aggregate 401(m) Percentage of Nonhighly Compensated Employees plus two percentage points. 22. Section 3.2 of Appendix I shall be amended to read as follows: 3.2 Reduction of Aggregate 401(m) Contributions. The reduction in the Aggregate 401(m) Contributions of Highly Compensated Employees as required by Section 3.1(d) of this Appendix I shall be made on the basis of the amount of contributions by or on behalf of each Highly Compensated Employee. Such reductions shall be made in accordance with applicable regulations and shall constitute "Excess Aggregate 401(m) Contributions." For all affected Highly Compensated Employees, such Excess Aggregate 401(m) Contributions shall be eliminated as provided for in Article 5 hereof. IN WITNESS WHEREOF, the Company hereby adopts this First Amendment this 25th day of June, 1997. GENEVA STEEL By /s/ Carl E. Ramnitz --------------------------------- As Its Vice President Human Resources -11- EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE REGISTRANT'S CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS AS OF AND FOR THE NINE MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO. 1,000 U.S. DOLLARS 9-MOS SEP-30-1997 OCT-01-1997 JUN-30-1997 1 0 0 79,587 3,240 99,017 202,269 660,021 (203,693) 666,470 113,188 404,295 55,985 0 87,240 (3,972) 666,470 546,791 546,791 505,208 505,208 16,508 5,426 29,830 (4,755) (1,804) (2,951) 0 0 0 (2,951) (.68) (.68)
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