Printer Friendly


 MISHAWAKA, Ind., Oct. 14 /PRNewswire/ -- National Steel Corporation (NYSE: NS) today reported a net loss of $32.5 million and an operating loss of $23.5 million for the third quarter of 1993.
 The operating loss included a non-cash charge of $16.4 million for employee post-retirement benefits (OPEB) and an unusual charge of $3.3 million related to a pension window offered as part of the company's functional consolidation program. During the same quarter last year, the company reported a net loss of $11.1 million and an operating profit of $4.3 million.
 National's net and operating losses for the first three quarters of 1993 totaled $103.6 million and $74.2 million, respectively. This compares with a net profit of $50.6 million and an operating profit of $20.8 million in the same 1992 period. Net income for the 1992 period was restated to reflect a $76.3 million credit for the cumulative effect of a change in the company's method of accounting for income taxes.
 The company reported its third quarter net loss applicable to common shareholders as $0.97 per common share. The net loss per common share, excluding the amortization of the OPEB transition obligation, amounted to $0.85. The amortization of the transition obligation results in a net after-tax annual charge to earnings of $18.4 million, which adversely impacts earnings per share by $0.54 a year or $0.12 for the quarter based on the weighted average number of common shares outstanding.
 National's net sales for the third quarter and nine months were $623.3 million and $1.83 billion, respectively, slightly above the $615.2 million and $1.80 billion reported for the same 1992 periods.
 Steel shipments for the third quarter totaled 1,264,000 tons, 1.6 percent less than the 1,284,000 tons shipped in the same period of 1992. For the nine months, shipments were 3,846,000 tons, 1.3 percent more than the 3,795,000 tons shipped in that period last year.
 Raw steel production of 1,331,000 tons in the third quarter was slightly more than the 1,330,000 tons reported in the same 1992 quarter. For the nine months, it totaled 4,118,000 tons, an increase of 1.7 percent over the 4,048,000 tons reported in the same period last year.
 Ronald H. Doerr, president and chief executive officer, said that labor-related expenses and a poor operating performance were major contributors to the net loss.
 Labor-related expenses included: the cost of a blast furnace shutdown to prepare for a possible Aug. 1 strike by the United Steelworkers of America (USWA); business lost to competitors because of the possibility of a strike; a lump-sum payment and other costs related to the company's new six-year contract with the USWA; costs of the pension window; and expenses and lost shipments from an ongoing strike by the USWA against a subsidiary, National Steel Pellet Company.
 The chief executive reported that National's productivity, as measured by its prime yield, declined during the quarter, contributing to an unfavorable shift in product mix. He also noted that a scheduled shutdown for the relining of a blast furnace at the company's Great Lakes Division idled the furnace for the entire third quarter.
 Doerr, who was named chief executive officer earlier today in advance of the planned year-end retirement of Chairman Kokichi Hagiwara, said that correcting operational trouble spots will be the company's top short-term priority. "We've assigned full responsibility for doing this to our newly designated chief operating officer, James N. Howell," he said, "and we have restructured so that all parts of the organization involved with the production and marketing of our products will report to Mr. Howell to ensure full coordination of these efforts."
 Doerr noted that in order to stabilize operations and improve on-time delivery performance, the company will slightly reduce its total product bookings in the fourth quarter.
 Doerr also reported that he has established a special strategic planning committee which will concentrate on the company's long-term direction. "Our industry is in a period of significant change," he commented. "We need to look closely at our own strengths and weaknesses and at the environment in which we'll be operating in the years ahead so that we can determine the best course of action. I've asked the group to examine every aspect of our business."
 The chief executive reported that National's order book remains strong and that market conditions appear to be holding up in the fourth quarter. "Fourth quarter build schedules in the automotive market, our largest customer, are well above those of the third quarter. And we've noted some recovery in the construction market, another major customer."
 These strong market conditions have helped to sustain the price increases that took effect April 4 and July 4, Doerr added. "We continue to realize these increases in spot market business and have been able to achieve some price increases in contracts that have been renewed during the year.
 "Still," he continued, "steel prices remain relatively low compared to historical levels, and we have announced an increase of $15 to $20 a ton effective Jan. 2, 1994, and a further increase of $10 per ton effective July 3, 1994, on hot-rolled, cold-rolled and coated products."
 Doerr noted that National and other major domestic producers remain concerned about the possible effect of increased steel imports as a result of the refusal by the International Trade Commission (ITC) to uphold the imposition of duties in 42 trade cases dealing with hot- and cold-rolled products. The industry appealed the ITC's decision in those cases to the Court of International Trade on Sept. 30, charging that the industry had, in fact, been severely damaged by dumping and subsidization.
 "Our industry intends to vigorously defend any appeals brought by foreign producers in 30 other trade cases where the ITC determined that damaged caused by imports did occur and upheld duties imposed earlier by the Commerce Department," he said. "We have also asked the Commerce Department to monitor imports to detect at an early stage any surge in imports of subsidized or dumped foreign steel."
 Doerr noted that National's employment expenses have risen significantly as a result of its new contracts with the USWA and other smaller bargaining groups. "More than ever before," he said, "it will be necessary for us to focus aggressively on cost reduction and control in all phases of our business. And we must regain the upward curve of productivity and product quality that had characterized our operations in recent years."
 National steel is the nation's fourth-largest steel company, with production facilities in Ecorse, Mich., near Detroit; Granite City, Ill., near St. Louis; and Portage, Ind., near Chicago. The company is headquartered in Mishawaka, and employs 10,100 people.
 The company's consolidated income summary follows.
 Statements of Consolidated Income
 (In millions of dollars, except per share data)
 Periods Ended Three Months Nine Months
 Sept. 30 1993 1992 1993 1992
 Net sales $623.3 $615.2 $1,833.4 $1,800.5
 Cost of products sold 574.0 543.1 1,700.4 1,590.5
 Selling, general and
 administrative 35.7 31.5 103.0 97.8
 Depreciation, depletion
 and amortization 34.1 28.0 102.2 83.7
 Equity income of
 affiliates (0.3) (0.7) (1.3) (4.1)
 Unusual items 3.3 9.0 3.3 11.8
 Income (loss) from
 operations (23.5) 4.3 (74.2) 20.8
 Financing costs 15.5 15.4 47.0 46.4
 Loss before income taxes
 and cumulative effect of
 accounting change (39.0) (11.1) (121.2) (25.6)
 Income tax provision
 (credit) (6.5) -- (17.6) 0.1
 Loss before cumulative
 effect of accounting
 change (32.5) (11.1) (103.6) (25.7)
 Cumulative effect of
 accounting change -- -- -- 76.3
 Net income (loss) (32.5) (11.1) (103.6) 50.6
 Less: dividends on
 preferred stock 2.8 4.3 10.6 12.9
 Net income (loss)
 applicable to common
 shareholders $(35.3) $(15.4) $(114.2) $37.7
 Per common share data
 Loss before cumulative
 effect of a change in
 accounting method $(0.97) $(0.61) $(3.46) $(1.51)
 Cumulative effect
 adjustment -- -- -- 2.99
 Net income (loss) per
 common share $(0.97) $(0.61) $(3.46) $1.48
 SFAS 106 transition
 obligation 0.12 -- 0.41 --
 Adjusted net income
 (loss) per weighted
 average common share
 outstanding $(0.85) $(0.61) $(3.05) $1.48
 Weighted average shares
 outstanding 36,361,100 25,500,000 33,051,990 25,500,000
 -0- 10/14/93
 /CONTACT: media, Robert R. Toothman, 219-273-7552, or 412-391-1469, or analysts, Joseph A. Rainis, 219-273-7158, of National Steel/

CO: National Steel Corporation ST: Indiana IN: MNG SU: ERN

KC-CD -- PG015 -- 2473 10/14/93 17:32 EDT
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Oct 14, 1993

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters