-----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, mS1oyq34WzyHgUdGbdqG/pUxlMiKMJINrfwat04T5I9JKbuTG4c1f0E1Dtf2ov+k 3ffl/1bsYw1SmO1CPu/QHg== 0000950134-94-000021.txt : 19940118 0000950134-94-000021.hdr.sgml : 19940118 ACCESSION NUMBER: 0000950134-94-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19931130 FILED AS OF DATE: 19940114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMERCIAL METALS CO CENTRAL INDEX KEY: 0000022444 STANDARD INDUSTRIAL CLASSIFICATION: 5051 IRS NUMBER: 750725338 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 34 SEC FILE NUMBER: 001-04304 FILM NUMBER: 94501420 BUSINESS ADDRESS: STREET 1: 7800 STEMMONS FRWY STREET 2: P O BOX 1046 CITY: DALLAS STATE: TX ZIP: 75221 BUSINESS PHONE: 2146894300 10-Q 1 FORM 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ---------------------------------- QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------------------------- For quarter ended November 30, 1993 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, 1993 there were 11,082,159 (pre-split) 14,775,542 (post-split) shares of the Company's Common Stock issued and outstanding excluding 1,017,905 (pre-split) 1,357,041 (post-split) 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, 1993 and August 31, 1993 2 - 3 Consolidated Statements of Earnings - Three Months ended November 30, 1993 4 and November 30, 1992 Consolidated Statements of Cash Flows - Three months ended November 30, 1993 and November 30, 1992 5 Consolidated Statement of Stockholders' Equity - November 30, 1993 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 Exhibit 11 (a) - Calculation of Primary and Fully Diluted Earnings per Share 15
Page 1 3 COMMERCIAL METALS COMPANY AND SUBSIDIARIES ------------------------------------------ CONSOLIDATED BALANCE SHEETS --------------------------- ASSETS ------ (In thousands except share data)
Nov. 30, August 31, 1993 1993 ---------- --------- CURRENT ASSETS: Cash and temporary investments $ 33,843 $ 47,439 Accounts receivable (less allowance for collection losses of $3,142 and $3,217) 171,492 163,387 Financial services loans and advances 44,538 35,768 Inventories 112,596 136,601 Other 14,163 15,300 -------- -------- TOTAL CURRENT ASSETS 376,632 398,495 OTHER ASSETS 3,780 4,143 PROPERTY, PLANT, AND EQUIPMENT, at cost: Land 10,163 10,165 Buildings 30,700 30,695 Equipment 259,281 257,537 Leasehold improvements 13,351 13,252 Construction in process 27,267 15,517 -------- -------- 340,762 327,166 Less accumulated depreciation and amortization (194,533) (187,843) -------- -------- 146,229 139,323 -------- -------- $526,641 $541,961 ======== ========
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, 1993 1993 ---------- --------- CURRENT LIABILITIES: Commercial paper $ $ Financial services notes payable 59,554 41,003 Accounts payable 70,566 100,587 Other payables and accrued expenses 56,374 64,507 Income taxes payable 5,901 4,109 Current maturities of long-term debt 4,821 4,824 -------- -------- TOTAL CURRENT LIABILITIES 197,216 215,030 DEFERRED INCOME TAXES 14,773 14,773 LONG-TERM DEBT 74,565 76,737 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Capital stock: Preferred stock -- -- Common stock, par value $5.00 a share; authorized 20,000,000 shares; issued 12,100,064 shares pre-split and 16,132,583 post-split: outstanding 11,082,159 pre-split, 14,775,542 post-split and 11,060,613 shares 80,663 60,500 Additional paid-in capital -- 3,919 Retained earnings 177,895 189,865 -------- -------- 258,558 254,284 Less treasury stock, 1,017,905 pre-split, 1,357,041 post-split and 1,039,451 shares at cost (18,471) (18,863) -------- -------- 240,087 235,421 -------- -------- $526,641 $541,961 ======== ========
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 Nov. 30, Nov. 30, 1993 1992 -------- -------- REVENUES: Net sales $380,016 $324,380 Other revenues 1,744 1,838 ---------- ---------- 381,760 326,218 COSTS AND EXPENSES: Cost of goods sold 343,410 293,909 Selling, general and administrative expenses 25,409 23,307 Interest expense 1,835 2,795 Employees' pension and profit sharing plans 1,875 1,604 ---------- ---------- 372,529 321,615 EARNINGS BEFORE INCOME TAXES 9,231 4,603 INCOME TAXES 3,508 1,749 ---------- ---------- NET EARNINGS $ 5,723 $ 2,854 ========== ========== Net earnings per share $0.38 $0.20 Cash dividends per share $0.10 $0.10 Average shares outstanding 15,254,412 14,520,760
See notes to consolidated financial statements. Page 4 6 COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Three months ended ------------------ Nov. 30, Nov. 30, 1993 1992 -------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 5,723 $ 2,854 Adjustments to earnings not requiring cash: Depreciation and amortization 7,186 6,809 Provision for losses on receivables 372 285 Deferred income taxes - - Other (31) (22) ------- ------- Cash flows from operations before changes in operating assets and liabilities 13,250 9,926 Changes in operating assets and liabilities: Decrease (increase) in receivables (8,478) (4,124) Decrease (increase) in financial services loans and advances (8,770) (3,281) Decrease (increase) in inventories 24,005 1,036 Decrease (increase) in other assets 1,500 (3,154) Increase (decrease) in accounts payable, accrued expenses and income taxes (36,362) (3,672) ------- ------- Net Cash Flows (Used) in Operating Activities (14,855) (3,269) CASH FLOWS FROM INVESTING ACTIVITIES: Temporary investments 9,888 17,814 Purchase of property, plant and equipment (14,092) (6,319) Sales of property, plant and equipment 31 22 ------- ------- Net Cash Provided (Used) by Investing Activities (4,173) 11,517 CASH FLOWS FROM FINANCING ACTIVITIES: Financial services notes payable 18,551 (3,695) Payments on long-term debt (2,175) (1,657) Stock issued under bonus plans 384 443 Dividends paid (1,440) (1,387) ------- ------- Net Cash Provided (Used) by Financing Activities 15,320 (6,296) Increase (Decrease) in Cash and Cash Equivalents (3,708) 1,952 Cash and Cash Equivalents at Beginning of Year 18,780 11,460 ------- ------- Cash and Cash Equivalents at End of Period $15,072 $13,412 ======= =======
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, 1993 12,100,064 $60,500 $3,919 $189,864 (1,039,451) ($18,863) Net earnings for three months ended November 30, 1993 5,723 Cash dividends - $.10 a share ( restated for stock split ) (1,440) Stock split (four-for-three) Payable 12/27/93 4,032,519 20,163 (3,911) (16,252) (339,136) Stock issued under stock option, purchase and bonus plans (8) 21,546 392 ---------- ------- ------ -------- ---------- -------- Balance, November 30, 1993 16,132,583 $80,663 $ 0 $177,895 (1,357,041) ($18,471) ========== ======= ====== ======== ========== ========
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 25,714 4,286 21,428 8.15% note due 1996 3,334 417 2,917 Other 338 118 220 -------- -------- -------- $79,386 $4,821 $74,565 ======== ======== ========
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 - STOCK DIVIDEND: On November 22, 1993 the Board of Directors declared a four-for- three stock split in the form of a 33 1/3% stock dividend on the Company's common stock payable December 27, 1993 to shareholders of record December 6, 1993. Earnings per share, average shares out- standing and dividends per share have been adjusted for the four-for- three stock split. NOTE D - QUARTERLY FINANCIAL DATA: In the opinion of Management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of November 30, 1993, 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. Page 7 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED RESULTS OF OPERATIONS
( In millions ) 1ST QTR 1st Qtr FY 1994 FY 1993 ------- ------- Revenues $ 382 $ 326 Net earnings 5.7 2.9 Cash flow 13.3 9.9 LIFO reserve 12.7 11.8
SIGNIFICANT EVENTS AFFECTING THE COMPANY THIS QUARTER: - Net earnings doubled over the previous year. - Strong earnings increase in the CMC Steel Group as shipments continued to increase. - Recycling segment was profitable for the fourth consecutive quarter. - Board of Directors declared a four-for-three stock split in the form of a 33 1/3% stock dividend. - Board of Directors increased the quarterly cash dividend 23% to 12 cents per share on the post-split shares. LIFO The LIFO method of inventory valuation decreased net earnings for the quarter $647 thousand (4 cents per share) compared to an increase in net earnings of $97 thousand (1 cent per share) for the comparable period last year. PAGE 8 10 SEGMENT OPERATING DATA Revenues and operating profit by business segment are shown in the following table:
Three months ended November 30, ------------------------------- 1993 1992 ---- ---- REVENUES: Manufacturing $136,741 $114,967 Marketing and Trading 183,207 146,744 Recycling 68,945 72,079 Financial Services 712 1,196 Corporate and Eliminations (7,845) (8,768) -------- -------- $381,760 $326,218 ======== ======== OPERATING PROFIT: Manufacturing $ 9,382 $ 7,966 Marketing and Trading 3,286 1,400 Recycling 414 (1,308) Financial Services 399 377 Corporate and Eliminations (2,819) (1,774) -------- -------- $ 10,662 $ 6,661 ======== ========
MANUFACTURING - Manufacturing segment revenues for the quarter were up 19% over last year as a result of strong demand primarily due to the modestly improved U.S.A. economy. Operating profits were 18% higher than a year ago. CMC Steel Group sales for the quarter were up 23% over last year on a 17% increase in shipping tonnage. Operating profit increased 34% from last year's first quarter. Steel mill shipments for the quarter were up 12% from a year ago and operating profits were 49% higher. Average selling prices for the mills increased 8% over last year but the increase was partially offset by escalating ferrous scrap prices. PAGE 9 11 Steel Fabrication division results for the quarter were slightly below last year's quarter as average selling prices dropped 10% from last year. In September concrete related products operations expanded with the purchase of six Shepler warehousing operations in Texas. These acquisitions were not significant to the consolidated company. Copper Tube shipments for the quarter were up 18% over last year as housing starts continued strong. However, the sharp decline in the copper market caused lower selling prices and margins compared to the very strong first quarter last year. Operating profit was 43% below the same period last year. MARKETING AND TRADING - Revenues for the quarter were up 25% due primarily to high levels of steel shipments by the International Division. Operating profits were more than double last year's results. RECYCLING - Operations in the Recycling segment were slightly profitable for the quarter compared to last year's operating loss. Revenues for the quarter were 4% lower than last year on a 5% increase in volume. Ferrous volume was 10% higher than last year and average prices were 41% higher due to strong demand and tight supplies. Aluminum and copper volume was off 12% and prices fell 19%. FINANCIAL SERVICES - Revenues for the quarter were lower than last year and operating profit was about even with last year. Trade financing activity associated with our international marketing and trading business increased but net interest income 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. PAGE 10 12 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. OTHER On November 30, 1993, the Federal Energy Regulatory Commission entered an order that imposes liability upon a subsidiary of the Company for alleged overcharges for crude oil during the period December 1977 to January 1979. The alleged overcharges plus applicable interest through January 1993 total approximately $6,600,000. CMC Oil Company intends to vigorously contest any liability under the FERC order and will seek review of the FERC order in federal district court. At this time management of CMC Oil Company cannot reasonably estimate what, if any, liability may ultimately be incurred. OUTLOOK We expect the recovery in the U.S.A. to broaden at a moderate pace with the housing, motor vehicle and capital goods sectors performing well. There is an improvement in low-rise commercial construction. The Chinese government now is attempting to ease China's austerity program. There are some indications that Europe's economy is bottoming, however, in Japan we see no reversal yet of the decline in consumption. Infrastructure spending is increasing around the world, and steel prices should firm further. Nonferrous metals most likely will remain depressed for several more quarters but we now see evidence of a cyclical low. We believe that the passage of the North American Free Trade Agreement is a major long-term positive factor for our Company. LIQUIDITY Cash flow from operations before changes in operating assets and liabilities for the quarter was $13 million compared to $10 million last year. Depreciation expense was $7 million, the same as a year ago. The Company's effective tax rate was 38% for this year and last year. PAGE 11 13 Net working capital was $179 million at November 30, 1993 compared to $183 at August 31, 1993. The current ratio was 1.9 at November 30, 1993 and August 31, 1993. Capital expenditures for the first quarter were $14 million. Capital spending for fiscal 1994 is projected at about $54 million. These expenditures are expected to be funded from internally generated funds and from cash and temporary investments. Long-term debt as a percent of total capitalization was 23% at November 30, 1993 compared to 24% at August 31, 1993. In November 1993, the Company renewed its $30 million unsecured revolving credit facility with a group of five banks. On November 22, 1993 the Board of Directors declared a dividend on the Company's common stock payable December 27, 1993. Subsequently the Board of Directors increased the quarterly cash dividend 23% to 12 cents per share on the post split shares. Stockholders' equity at November 30, 1993 was $240 million or $16.25 per share (post-split basis). At November 30, 1993 there were 11,082,159 (pre-split), 16,132,583 (post-split) shares issued and outstanding net of 1,017,905 (pre-split), 1,357,041 (post-split) 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 under Item 3. Legal Proceedings in the Company's Annual Report on Form 10-K for the year ending August 31, 1993 filed November 26, 1993, with the Securities and Exchange Commission. On November 30, 1993, the Federal Energy Regulatory Commission ("FERC") entered an Order (the "FERC Order") affirming in part and reversing in part the 1989 decision and proposed order of a administrative law judge affirming in part, reversing in part and remanding a Remedial Order issued in 1986 by the Office of Hearings and Appeals of the Department of Energy to RFB Petroleum, Inc. (RFB) and CMC Oil Company (CMC Oil) (FERC Docket No. RO87-2-000, RFB Petroleum, Inc.). The FERC Order finds CMC Oil liable for alleged overcharges constituting violations of crude oil reseller regulations arising from the purchase and sale of crude oil in joint ventures between CMC Oil and RFB totaling approximately $1,400,000 plus interest from their occurrence (December, 1977, to January, 1979) to present as calculated under the Department of Energy's interest rate policy. Utilizing that interest calculation, interest accrued to January, 1993, is estimated to be approximately $5,200,000. CMC Oil Company intends to vigorously contest its liability under the FERC Order and will seek review of the FERC Order in federal district court. 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 Page 13 15 ITEM 5. OTHER INFORMATION On November 22, 1993, the Board of Directors of the Company declared a four-for-three stock split in the form of a stock dividend which was paid on December 27, 1993, to stockholders of record December 6, 1993. The Company also announced that the cash dividend rate on the shares outstanding after the stock dividend would be established at twelve cents a share resulting in a 23% increase in the cash dividend. In December, 1993 the Board of Directors declared a twelve cent per share cash dividend to be paid January 27, 1994 to stockholders of record January 7, 1994. 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 B. The Corporation did not file a Form 8-K report during the quarter ended November 30, 1993. 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 /s/ January 13, 1994 Lawrence A. Engels Vice President, Treasurer & Chief Financial Officer /s/ January 13, 1994 Jack T. Mulos Controller Page 14 EX-11.A 2 CALCULATION OF PRIMARY AND DILUTED EARNINGS PER SH 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, 1993 1992 ---------- --------- Net earnings $5,723 $2,854 Weighted average number of shares outstanding 11,070,415 10,665,982 Dilutive effect of stock option and purchase plans, after application of treasury stock method 370,394 224,588 Shares used in calculating primary net earnings per share before 11,440,809 10,890,570 December 1993 four-for-three stock split Adjustment for December 1993 four-for-three stock split 3,813,603 3,630,190 Shares used in calculating primary 15,254,412 14,520,760 net earnings per share Earnings per share before the December 1993 four-for-three stock split $0.50 $0.26 Earnings per share after the December 1993 four-for-three stock split $0.38 $0.20
* Fully diluted earnings per share are identical to primary earnings per share. Page 15 -----END PRIVACY-ENHANCED MESSAGE-----