-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, QM8WSrcZ/3E37zrwUeDGg4EiVwzIFyh9tvAJbUurvXMdlFX3K5CLWBvM/KJvvAHf woengZBUIz0FJaeL96/fQQ== 0000950134-95-000026.txt : 19950608 0000950134-95-000026.hdr.sgml : 19950608 ACCESSION NUMBER: 0000950134-95-000026 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19941130 FILED AS OF DATE: 19950113 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMERCIAL METALS CO CENTRAL INDEX KEY: 0000022444 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-METALS SERVICE CENTERS & OFFICES [5051] IRS NUMBER: 750725338 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04304 FILM NUMBER: 95501308 BUSINESS ADDRESS: STREET 1: 7800 STEMMONS FRWY STREET 2: P O BOX 1046 CITY: DALLAS STATE: TX ZIP: 75221 BUSINESS PHONE: 2146894300 MAIL ADDRESS: STREET 1: 7800 STEMMONS FRWY STREET 2: PO BOX 1046 CITY: DALLAS STATE: TX ZIP: 75221 10-Q 1 FORM 10-Q 1 FORM 1O-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 2O549 ---------------------------------- QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------------------------- For quarter ended November 30, 1994 Commission File Number 1-4304 COMMERCIAL METALS COMPANY - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 75-0725338 - ------------------------------- ----------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 7800 Stemmons Freeway P. O. Box 1046 Dallas, Texas 75221 ------------------------------------------------------ ( Address of principal executive offices ) ( Zip Code ) (214) 689-4300 ------------------------------------------------------ ( Registrant's telephone number, including area code ) ------------------------------------------------------ Former name, former address and former fiscal year, if changed since last report 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 ----- ----- As of November 30, 1994 there were 15,172,706 shares of the Company's Common Stock issued and outstanding excluding 959,877 shares held in the Company's treasury. 2 COMMERCIAL METALS COMPANY AND SUBSIDIARIES INDEX
Page No. --------- PART I - Financial Statements: Consolidated Balance Sheets - November 30, 1994 and August 31, 1994 2 - 3 Consolidated Statements of Earnings - Three Months ended November 30, 1994 4 and November 30, 1993 Consolidated Statements of Cash Flows - Three months ended November 30, 1994 and November 30, 1993 5 Consolidated Statement of Stockholders' Equity - November 30, 1994 6 Notes to Consolidated Financial Statements 7 Management's Discussion and Analysis of Consolidated Financial Statements 8 - 12 PART II - Other Information and Signatures 13 - 14 Index to Exhibits 15 Exhibit 11 (a) - Calculation of Primary and Fully Diluted Earnings per Share Exhibit 27 - Financial Data Schedule
Page 1 3 COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS ( In thousands except share data )
Nov. 30, August 31, 1994 1994 ---------- --------- CURRENT ASSETS: Cash and temporary investments $22,385 $38,269 Accounts receivable (less allowance for collection losses of $3,937 and $3,528) 239,239 228,035 Financial services loans and advances 500 19,560 Inventories 138,635 133,748 Net working capital - SMI Owen Steel 20,065 Other 31,980 26,473 --------- --------- TOTAL CURRENT ASSETS 452,804 446,085 OTHER ASSETS 2,229 1,984 PROPERTY, PLANT, AND EQUIPMENT, at cost: Land 10,747 10,747 Buildings 32,367 32,367 Equipment 361,521 304,977 Leasehold improvements 15,730 15,585 Construction in process 9,124 6,880 --------- --------- 429,489 370,556 Less accumulated depreciation and amortization (220,620) (213,748) --------- --------- 208,869 156,808 --------- --------- $663,902 $604,877 ========= =========
See notes to consolidated financial statements. Page 2 4 COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY ( In thousands except share data )
Nov. 30, August 31, 1994 1994 ---------- --------- CURRENT LIABILITIES: Commercial paper $10,000 $20,000 Notes payable 40,000 21,000 Financial services notes payable 25,659 50,912 Accounts payable 83,584 84,644 Other payables and accrued expenses 74,850 85,220 Income taxes payable 3,498 4,338 Current maturities of long-term debt 4,855 4,852 --------- --------- TOTAL CURRENT LIABILITIES 242,446 270,966 DEFERRED INCOME TAXES 19,077 19,077 LONG-TERM DEBT 129,877 72,061 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Capital stock: Preferred stock -- -- Common stock, par value $5.00 a share; authorized 20,000,000 shares; issued 16,132,583 shares, outstanding 15,172,706 and 14,275,007 shares 80,663 80,663 Additional paid-in capital 11,016 1,019 Retained earnings 197,654 192,997 --------- --------- 289,333 274,679 Less treasury stock, 959,877 and 1,857,576 at cost (16,831) (31,906) --------- --------- 272,502 242,773 --------- --------- $663,902 $604,877 ========= =========
See notes to consolidated financial statements. Page 3 5 COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS ( In thousands except share data )
Three Months ended November 30, ---------------------- 1994 1993 REVENUES: Net sales $411,434 $380,016 Other, primarily interest income 2,304 1,744 --------- --------- 413,738 381,760 COSTS AND EXPENSES: Cost of goods sold 365,683 343,410 Selling, general and administrative expenses 27,324 25,409 Interest expense 3,029 1,835 Employees' pension and profit sharing plans 2,354 1,875 Litigation accrual 6,650 --------- --------- 405,040 372,529 EARNINGS BEFORE INCOME TAXES 8,698 9,231 INCOME TAXES 2,326 3,508 --------- --------- NET EARNINGS $6,372 $5,723 ========= ========= Net earnings per share $0.44 $0.38 Cash dividends per share $0.12 $0.10 Average shares outstanding 14,537,716 15,254,412
See notes to consolidated financial statements. Page 4 6 COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) Three months ended November 30, ------------------------ 1994 1993 - ---------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $6,372 $5,723 Adjustments to earnings not requiring cash: Depreciation and amortization 8,202 7,186 Provision for losses on receivables 331 372 Other (188) (31) -------- -------- Cash flows from operations before changes in operating assets and liabilities 14,717 13,250 Changes in operating assets and liabilities: Decrease (increase) in accounts receivable (11,535) (8,478) Decrease (increase) in financial services loans and advances 19,060 (8,770) Decrease (increase) in inventories (4,887) 24,005 Decrease (increase) in other assets 987 1,500 Increase (decrease) in accounts payable, accrued expenses and income taxes (12,271) (36,362) -------- -------- Net Cash Flows from (Used by) Operating Activities 6,071 (14,855) - ---------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquistion of Owen Steel: Net working capital (26,804) Property, plant and equipment (55,245) Temporary investments 13,168 9,888 Purchase of property, plant and equipment (5,018) (14,092) Sales of property, plant and equipment 188 31 -------- -------- Net Cash Used by Investing Activities (73,711) (4,173) - ---------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Commercial paper - net change (10,000) Notes payable - net change 19,000 Financial services notes payable (25,253) 18,551 New long-term debt: 0 Acquisition of Owen Steel 25,055 Refinance Owen Steel long-term debt 31,938 Other 3,007 Treasury stock used to acquire Owen Steel 25,055 Payments on long-term debt (2,181) (2,175) Stock issued under option/bonus plans (1,315) 384 Tax benefits related to stock option plans 1,332 Dividends paid (1,714) (1,440) -------- -------- Net Cash Provided by Financing Activities 64,924 15,320 - ---------------------------------------------------------------------------- Increase (Decrease) in Cash and Cash Equivalents (2,716) (3,708) Cash and Cash Equivalents at Beginning of Year 19,095 18,780 -------- -------- Cash and Cash Equivalents at End of Period $16,379 $15,072 ======== ========
See notes to consolidated financial statements. Page 5 7 COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY ( In thousands except share data )
Common Stock Treasury Stock ---------------------- Add'l ------------------ Number of Paid-In Retained Number of Shares Amount Capital Earnings Shares Amount ----------- --------- -------- ---------- --------- -------- Balance September 1, 1994 16,132,583 $80,663 $1,019 $192,996 (1,857,576) ($31,906) Net earnings for three months ended November 30, 1994 6,372 Cash dividends - $.12 a share (1,714) Treasury stock issued in connection with acquisition of Owen Steel 8,710 932,301 16,345 Stock issued under stock option, purchase and bonus plans 1,287 (34,602) (1,270) ---------- ------- ------- -------- --------- ------- Balance, November 30, 1994 16,132,583 $80,663 $11,016 $197,654 (959,877) ($16,831) ========== ======= ======= ======== ========= =======
See notes to consolidated financial statements. Page 6 8 COMMERCIAL METALS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - LONG-TERM DEBT (in thousands):
Amount Current Long-Term Outstanding Maturities Debt ----------- ---------- --------- 8.49% notes due 2001 $50,000 $ $50,000 8.75% note due 1999 21,428 4,286 17,142 8.15% note due 1996 2,917 417 2,500 Notes due 1997 60,000 60,000 Other 387 152 235 -------- -------- -------- $134,732 $4,855 $129,877 ======== ======== ========
New long-term debt in the form of $60 million notes due 1997 was used principally to finance the acquisition of Owen Steel Company. NOTE B - TAXES ON INCOME: Provision for taxes on income includes estimated United States taxes on undistributed earnings of subsidiaries outside the United States. NOTE C - QUARTERLY FINANCIAL DATA: In the opinion of Management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals except for the item discussed in Note D ) necessary to present fairly the financial position as of November 30, 1994, the results of operations for the three months then ended and cash flows for the same periods. The results of operations for the three month periods are not necessarily indicative of the results to be expected for a full year. Note D - LITIGATION On November 22, 1994, the United States District Court for the Southern District of Texas granted the federal government's motion for summary judgment and entered a Final Order in the principal amount of $1.3 million against CMC Oil Company, a subsidiary of the Company. The allegation involves overcharges for crude oil sales during the late 1970's. With interest, the total judgment is approximately $6.7 million and has been accrued in the financial statements. Page 7 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED RESULTS OF OPERATIONS
(in millions) 1ST QTR 1st Qtr FY 1995 FY 1994 ------- ------- Revenues $ 414 $ 382 Net earnings 6.4 5.7 Cash flow 14.7 13.3 LIFO reserve 21.4 12.7
SIGNIFICANT EVENTS AFFECTING THE COMPANY THIS QUARTER: - A record first quarter operating profit, an increase of 65% over the same period last year. - Steel Group posts record first quarter shipments and profits. - Cash flow from operations was $14.7 million compared to $13.3 million last year. - The Company added $60 million in new long-term debt. - Acquisition of Owen Steel Company completed. - U.S. District Court enters final order denying CMC Oil Company's motion for summary judgement. - Income tax provision reduced by resolution of tax issues. Page 8 10 CONSOLIDATED DATA The LIFO method of inventory valuation reduced net earnings for the quarter $73 thousand (1 cent per share) compared to a decrease in net earnings of $647 thousand (4 cents per share) last year. On November 15, 1994 Commercial Metals Company completed its previously announced acquisition of Owen Steel Company, Columbia, S.C. and its affiliated companies. The acquisition will increase CMC's annual steel production capacity to about 1.7 million tons and steel fabrication capacity to more than 500,000 tons. The purchase price was $50 million, paid in the form of $25 million in cash and 932,301 shares of CMC common stock issued from treasury shares. CMC also provided funds for the retirement of $32 million of Owen debt at the closing. Approximately $9 million of the acquisition price is presently maintained in a third party escrow account, subject to resolution of the net worth of Owen Steel at the purchase date and certain contingencies. The escrow account has a maximum life of two years past the purchase date. On November 22, 1994, the United States District Court entered a Final Order denying CMC Oil Company's motion for summary judgement and affirming the previously reported November, 1993 Remedial Order issued by the Federal Energy Regulatory Commission alleging that CMC Oil Company overcharged for crude oil sales during the period December 1977 to January 1979. Judgment was entered in favor of the government in the principal sum of $1.3 million plus interest estimated to be approximately $5.4 million. CMC Oil Company is evaluating its options, including appeal. Due to the District Court Ruling, a nonrecurring charge for the litigation reduced net earnings for the quarter by $4.1 million. This was partially offset by a credit to income tax expense of $1.0 million resulting from the favorable resolution of tax issues with the Internal Revenue Service for years audited. Page 9 11 SEGMENT OPERATING DATA Revenues and operating profit by business segment are shown in the following table:
Three months ended November 30, ------------------------------- 1994 1993 -------- -------- REVENUES: Manufacturing $ 161,738 $ 136,741 Recycling 100,821 68,945 Marketing and Trading 161,986 183,207 Financial Services 477 712 Corporate and Eliminations (11,284) (7,845) --------- --------- $ 413,738 $ 381,760 ========= ========= OPERATING PROFIT: Manufacturing $ 13,822 $ 9,382 Recycling 2,269 414 Marketing and Trading 3,025 3,286 Financial Services 353 399 Corporate and Eliminations (8,190) (2,819) --------- --------- $ 11,279 $ 10,662 ========= =========
MANUFACTURING - Manufacturing segment revenues for the quarter were up 18% over last year as steel markets continued strong and prices improved. Operating profits were 47% higher than a year ago. CMC Steel Group sales for the quarter were 16% above last year on an 8% increase in shipping tonnage. Operating profit increased 50% over last year's first quarter. Steel mill shipments for the quarter were higher than a year ago and operating profits were over 30% higher. Average selling prices for the mills increased 8% over last year. Steel Fabrication division results for the quarter were double last year's quarter. Sales were up 8% and average selling prices increased 10% over last year. Tonnage shipped increased 7%. Page 10 12 Copper Tube results were slightly lower than last year. Average selling prices were up 20% and shipments were 10% higher, however, margins were squeezed by the surge in scrap copper prices during the quarter. RECYCLING - Revenues were 46% higher than a year ago due to higher volume and prices principally in the nonferrous group. Ferrous volume was 11% higher and average prices were up 5%. Copper and aluminum volume was up 32% over a year ago and average prices were 51% higher. Our markets continued to be strong. Scrap availability was good while demand was considerably better than last year. MARKETING AND TRADING - Revenues for the quarter were 12% lower and operating profit was 8% lower due primarily to a decline in our global steel shipments. Steel volume was 26% lower than a year ago. Steel Sales to the Far East were lower mainly on account of continued weakness in the Chinese market and pricing pressures from high levels of shipments by the C.I.S. FINANCIAL SERVICES - Net interest income for the quarter was slightly higher than a year ago while operating profit was slightly lower. ENVIRONMENTAL ACTIVITIES The Company is subject to federal, state and local pollution control laws and regulations in all locations where it has operating facilities. It anticipates that compliance with these laws and regulations will involve continuing capital expenditures and operating costs. In the ordinary course of conducting its business, the Company becomes involved in environmental litigation, administrative proceedings and governmental investigations. Certain of these environmental matters or other proceedings may result in fines, penalties or judgments against the Company which may have a material impact on earnings for a particular quarter. While the Company is unable to estimate precisely the ultimate dollar amount of exposure to loss in connection with such matters, it makes timely accruals as warranted. It is the opinion of the Company's management that the outcome of such proceedings, individually or in the aggregate, will not have a material adverse effect on the business or consolidated financial position of the Company. Page 11 13 OUTLOOK The outlook near term is favorable and our order flow continues at a healthy level. The only major end market which has slowed thus far in the U.S.A. is single family residential housing, but apartment construction is sharply higher and demand for building materials still is strong. The manufacturing sector, especially capital goods, remains robust. Highway spending has picked up in recent months. Private nonresidential construction is steady and activity in the Southwest has risen. The turnaround in Japan appears to be taking hold and the European economies are improving. Most of the balance of the Pacific Rim is being affected by the near term problems in China, but Australia is strong. Overall, consumption of steel and nonferrous metals should remain strong and our product prices firm. LIQUIDITY Net working capital was $210 million at November 30, 1994 compared to $175 million at August 31, 1994. The current ratio was 1.9 at November 30, 1994 and 1.6 at August 31, 1994. Cash flow from operations before changes in operating assets and liabilities for the quarter was $14.7 million compared to $13.3 million last year. Depreciation expense was $8 million compared to $7 million a year ago. The Company's effective tax rate for the quarter was 27% this year compared to 38% last year. This quarter's lower rate was due to a credit to income tax expense of $1 million due to the favorable resolution of tax issues with the Internal Revenue Service for the years audited. Capital expenditures for the first quarter were $5 million, excluding the Owen Steel acquisition. Capital spending for fiscal 1995 excluding Owen Steel is projected at about $38 million. Long-term debt as a percent of total capitalization was 31% at November 30, 1994 compared to 22% at August 31, 1994. During the quarter long-term debt increased $60 million to $130 million as a result of new long-term agreements that were concluded with the Company's banking group. The proceeds were used to finance the acquisition of Owen Steel Company, Inc. and for other corporate purposes. Stockholders' equity at November 30, 1994 was $273 million or $17.96 per share. At November 30, 1994 there were 15,172,706 shares issued and outstanding net of 959,877 shares held in the Company's treasury. Page 12 14 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Reference is made to the information incorporated by reference from Item 3. Legal Proceedings in the Company's Annual Report on Form 10-K for the year ending August 31, 1994 filed November 28, 1994, with the Securities and Exchange Commission and to the information incorporated by reference from Item 5. Other Events in the Company's Report on Form 8- K filed November 30, 1994, with the Securities and Exchange Commission. ITEM 2. CHANGES IN SECURITIES Not Applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable ITEM 4. SUBMISSION OF MATTERS TO A VOTE ON SECURITY HOLDERS Not Applicable ITEM 5. OTHER INFORMATION Not Applicable Page 13 15 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K A. Exhibits required by Item 601 of Regulation S-K. Exhibit No. 11. Computation of Per Share Earnings (a) Calculation of Primary and Fully Diluted Earnings Per Share 27. Financial Data Schedule B. The Company filed a Report on Form 8-K November 30, 1994, dated November 15, 1994, reporting under Item 2. the acquisition of Owen Steel Company, Inc. and affiliates and under Item 5. the United States District Court's action granting the government's Motion for Summary Judgment against the Company's subsidiary, CMC Oil Company and the Court's entry of judgment against CMC Oil Company in the sum of $1,330,399 plus interest estimated to be approximately $5,400,000. 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. COMMERCIAL METALS COMPANY January 13, 1995 /s/ Lawrence A. Engels Lawrence A. Engels Vice President, Treasurer & Chief Financial Officer January 13, 1995 /s/ Jack T. Mulos Jack T. Mulos Controller Page 14 16 INDEX TO EXHIBITS Exhibit No. Description ----------- ----------- 11. Computation of Per Share Earnings (a) Calculation of Primary and Fully Diluted Earnings Per Share 27. Financial Data Schedule Page 15 EX-11.(A) 2 CALCULATION OF EPS 1 EXHIBIT 11 (a) COMMERCIAL METALS COMPANY AND SUBSIDIARIES CALCULATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE* ( In thousands except share data )
Three Months ended ---------------------- Nov. 30, Nov. 30, 1994 1993 ---------- --------- Net earnings $6,372 $5,723 Weighted average number of shares outstanding 14,261,097 14,760,553 Dilutive effect of stock option and purchase plans, after application of treasury stock method 276,619 493,859 Shares used in calculating primary net earnings per share 14,537,716 15,254,412 Earnings per share $0.44 $0.38
*Fully diluted earnings per share are identical to primary earnings per share. EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 QTR-1 AUG-31-1994 SEP-01-1994 NOV-30-1994 22,385 0 243,176 3,937 138,635 452,804 429,489 220,620 663,902 242,446 129,877 80,663 0 0 191,839 663,902 411,434 413,738 365,683 365,683 35,997 331 3,029 8,698 2,326 6,372 0 0 0 6,372 .44 .44
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