-----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, Fs99ORcmd1t0crBwkbmVnU+P84ZQPGVc9Ly9CqEgWS/9EJCCRNt+QIMcuE40pyRT Zs0/UBYA3nc1ttbPzS/9HQ== 0000950134-94-000792.txt : 19940719 0000950134-94-000792.hdr.sgml : 19940719 ACCESSION NUMBER: 0000950134-94-000792 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940531 FILED AS OF DATE: 19940713 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: 1934 Act SEC FILE NUMBER: 001-04304 FILM NUMBER: 94538620 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 May 31, 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 May 31, 1994 there were 14,180,417 shares of the Company's Common Stock issued and outstanding excluding 1,952,166 shares held in the Company's treasury. 2 COMMERCIAL METALS COMPANY AND SUBSIDIARIES INDEX
Page No. --------- PART I - Financial Statements: Consolidated Balance Sheets - May 31, 1994 and August 31, 1993 2 - 3 Consolidated Statements of Earnings - Three months and nine months ended 4 May 31, 1994 and May 31, 1993 Consolidated Statements of Cash Flows - Nine months ended May 31, 1994 and May 31, 1993 5 Consolidated Statement of Stockholders' Equity - May 31, 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 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 )
May 31, August 31, 1994 1993 -------- -------- CURRENT ASSETS: Cash and temporary investments $32,263 $47,439 Accounts receivable (less allowance for collection losses of $3,805 and $3,217) 222,261 163,387 Financial services loans and advances 28,271 35,768 Inventories 131,484 136,601 Other 17,721 15,300 -------- -------- TOTAL CURRENT ASSETS 432,000 398,495 OTHER ASSETS 2,242 4,143 PROPERTY, PLANT, AND EQUIPMENT, at cost: Land 10,558 10,165 Buildings 31,343 30,695 Equipment 294,321 257,537 Leasehold improvements 14,626 13,252 Construction in process 11,449 15,517 -------- -------- 362,297 327,166 Less accumulated depreciation and amortization (208,136) (187,843) -------- -------- 154,161 139,323 -------- -------- $588,403 $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 )
May 31, August 31, 1994 1993 ---- ---- CURRENT LIABILITIES: Commercial paper $25,000 $ Notes payable banks 21,000 Financial services notes payable 58,867 41,003 Accounts payable 78,555 100,587 Other payables and accrued expenses 75,125 64,506 Income taxes payable 4,642 4,109 Current maturities of long-term debt 4,821 4,824 -------- -------- TOTAL CURRENT LIABILITIES 268,010 215,029 DEFERRED INCOME TAXES 14,773 14,773 LONG-TERM DEBT 72,201 76,738 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; outstanding 14,180,417 and 11,060,613 (pre-split) shares. 80,663 60,500 Additional paid-in capital 610 3,919 Retained earnings 185,679 189,865 -------- -------- 266,952 254,284 Less treasury stock, 1,952,166 and 1,039,451 (pre-split) shares at cost (33,533) (18,863) -------- -------- 233,419 235,421 -------- -------- $588,403 $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 Nine months ended May 31, May 31, -------------------- --------------------- 1994 1993 1994 1993 -------- -------- --------- --------- REVENUES: Net sales $440,649 $435,041 $1,210,578 $1,171,133 Other revenues 2,170 3,405 6,225 6,889 -------- -------- --------- --------- 442,819 438,446 1,216,803 1,178,022 COST AND EXPENSES: Cost of goods sold 399,733 399,422 1,100,226 1,071,415 Selling, general and administrative expenses 27,115 24,323 77,156 71,026 Interest expense 2,713 2,248 6,524 7,496 Employees' pension and profit sharing plans 2,011 2,047 5,722 5,259 -------- -------- --------- --------- 431,572 428,040 1,189,628 1,155,196 EARNINGS BEFORE INCOME TAXES 11,247 10,406 27,175 22,826 INCOME TAXES 4,102 3,954 10,035 8,674 -------- -------- --------- --------- NET EARNINGS $7,145 $6,452 $17,140 $14,152 ======== ======== ========= ========= Net earnings per share $0.48 $0.43 $1.13 $0.96 Cash dividends per share $0.12 $0.10 $0.34 $0.29 Average shares outstanding 15,026,215 14,950,380 15,136,721 14,720,283
See notes to consolidated financial statements. Page 4 6 COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Nine months ended May 31, -------------------------- 1994 1993 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $17,140 $14,152 Adjustments to earnings not requiring cash: Depreciation and amortization 22,374 20,454 Provision for losses on receivables 1,211 1,313 Deferred income taxes Other (129) (251) ------- ------- Cash flows from operations before changes in operating assets and liabilities 40,596 35,668 Changes in operating assets and liabilities: Decrease (increase) in receivables (60,085) (20,722) Decrease (increase) in financial services loans and advances 7,497 (771) Decrease (increase) in inventories 5,117 (2,852) Decrease (increase) in other assets (520) 959 Increase (decrease) in accounts payable, accrued expenses and income taxes (10,881) 12,957 ------- ------- Net Cash Flows from (used by) Operating Activities (18,276) 25,239 CASH FLOWS FROM INVESTING ACTIVITIES: Temporary investments 9,690 17,440 Purchase of property, plant and equipment (37,212) (22,196) Sales of property, plant and equipment 129 251 ------- ------- Net Cash provided (used) by Investing Activities (27,393) (4,505) CASH FLOWS FROM FINANCING ACTIVITIES: Commercial paper - net change 25,000 Notes payable banks - net change 21,000 Financial services notes payable 17,864 (12,141) Payments on long-term debt (4,539) (6,459) Stock issued under employee plans 2,972 4,247 Treasury stock acquired (17,120) Dividends paid (4,994) (4,204) ------- ------- Net Cash provided (used) by Financing Activities 40,183 (18,557) Increase (Decrease) in Cash and Cash Equivalents (5,486) 2,177 Cash and Cash Equivalents at Beginning of Year 18,780 11,460 ------- ------- Cash and Cash Equivalents at End of Period $13,294 $13,637 ======= =======
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 $189,865 (1,039,451) ($18,863) Net earnings for nine months ended May 31, 1994 17,140 Cash dividends - $.34 a share ( restated for stock split ) (4,994) Stock split (four-for-three) Paid 12/27/93 4,032,519 20,163 (3,831) (16,332) (346,318) Treasury stock acquired (748,100) (17,120) Stock issued under stock option, purchase and bonus plans 522 181,703 2,450 ---------- ------- ------ -------- ---------- -------- Balance, May 31, 1994 16,132,583 $80,663 $610 $185,679 (1,952,166) ($33,533) ========== ======= ====== ======== ========== ========
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 23,571 4,286 19,285 8.15% note due 1996 3,125 417 2,708 Other 326 118 208 ------- ------- ------- $77,022 $ 4,821 $72,201 ------- ------- -------
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: The Company paid a four-for-three stock split in the form of a 33 1/3% stock dividend on the Company's common stock to shareholders on December 27, 1993. Prior year's earnings per share, average shares outstanding 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 May 31, 1994, the results of operations for the nine months then ended and cash flows for the same periods. The results of operations for the nine 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) 3RD QTR 3rd Qtr FY 1994 FY 1993 ------- ------- Revenues $ 443 $ 438 Net earnings 7.1 6.5 Cash flow 15.5 13.5 LIFO reserve 16.6 12.7
NINE MONTHS Nine Months FY 1994 FY 1993 ----------- ----------- Revenues $ 1,217 $ 1,178 Net earnings 17.1 14.2 Cash flow 40.6 35.7
SIGNIFICANT EVENTS AFFECTING THE COMPANY THIS QUARTER: - Net earnings for the quarter were 11% higher than last year's third quarter, and year to date earnings were 21% higher. - Startup of the new $28 million Direct Current melt shop at Birmingham. - LIFO effect impacted net earnings $1.6 million. - Acquisition of substantially all the assets of Proler International Corp.'s Vinton (El Paso), Texas scrap metal processing facility. - After quarter end acquisition of the assets of CS&W of Utah, Inc in Brigham City, Utah, a steel fence post manufacturing and marketing operation. - Ferrous scrap prices fell sharply while nonferrous prices, particularly copper, moved higher. Page 8 10 - Steel demand and prices for our product lines in the U.S. edged upward whereas prices abroad declined. - The Company repurchased 748,100 shares of its common stock. The LIFO method of inventory valuation decreased net earnings for the quarter $1.6 million (ten cents per share) compared to an increase of $55 thousand (one cent per share) last year. For the nine months LIFO reduced net earnings by $3.1 million (twenty-one cents per share) compared to a decrease of $467 thousand (three cents per share) last year. The aforementioned acquisitions, either individually or in the aggregate, are not material relative to the total consolidated assets of the Company. SEGMENT OPERATING DATA Revenues and operating profit by business segment are shown in the following table:
Three months ended Nine months ended May 31 May 31 ------------------- --------------------- 1994 1993 1994 1993 -------- -------- ---------- -------- Revenues: Manufacturing $152,546 $127,731 $ 420,895 $ 353,296 Recycling 96,095 75,351 238,924 215,152 Marketing and Trading 203,033 242,470 580,415 629,094 Financial Services 581 793 2,126 2,901 Corporate and Eliminations (9,436) (7,899) (25,557) (22,421) -------- -------- ---------- ----------- $442,819 $438,446 $1,216,803 $1,178,022 ======== ======== ========== ========== Operating profit: Manufacturing $ 8,794 $ 9,281 $ 24,507 $ 23,239 Recycling 2,140 212 3,782 (733) Marketing and Trading 4,022 4,615 10,262 11,173 Financial Services 415 436 1,300 1,323 Corporate and Eliminations (1,913) (2,197) (7,518) (6,167) -------- -------- ---------- --------- $ 13,458 $ 12,347 $ 32,333 $ 28,835 ======== ======== ========== ==========
Page 9 11 MANUFACTURING - Manufacturing segment revenues for the quarter were up 19% over last year's same quarter, while operating profit was 5% lower. LIFO reduced operating profit for the quarter by approximately $2.1 million. For the nine months revenues were up 19% and operating profit was 5% higher (including the reduction in operating profit of approximately $4.0 million for LIFO). CMC Steel Group sales for the quarter were up 25% over last year's same quarter on a 14% increase in shipping tonnage propelled by private nonresidential and infrastructure spending. Average selling prices were 10% higher than a year ago. For the nine months sales were up 24% on a 14% increase in shipping tonnage. Average selling prices for the nine months were 9% higher than a year ago. Steel mill shipments for the quarter were up 9% over the same quarter last year. Operating profits increased only 2% over last year due to the impact of rising scrap costs in inventory and approximately $2 million of expenses and costs associated with the startup of the new melt shop at the Alabama mill. Steel Fabrication division sales and operating profits were up significantly over last year's quarter. For the nine months sales and operating profits were well ahead of a year ago. Copper Tube division shipments for the quarter were 8% lower than last year. Sales were 16% lower than the same quarter last year and selling prices were 8% lower. Operating profits were lower for the quarter and the nine months compared to the robust third quarter a year ago. Weaker markets narrowed margins as rising interest rates impacted residential construction. RECYCLING - Operations in the Recycling segment during the nine months improved significantly over last year; shipments were up 14% and sales were up 11%. For the quarter shipments were up 22% and sales were up 28% compared to the same quarter last year. While the third quarter last year was profitable, this year's third quarter was significantly better. Ferrous scrap prices fell dramatically during the quarter as overseas demand dropped and domestic scrap supplies increased. Aluminum scrap prices showed continued strength during the quarter due to exceptional demand and tighter supply sources. Copper scrap prices moved significantly higher. Generally, demand for nonferrous scrap remained good as the U.S. economy continued to improve and the German and Japanese economies showed bottoming signs. Page 10 12 MARKETING AND TRADING - Sales revenues for the quarter were 16% lower than the same quarter a year ago due principally to the high level of steel shipments into China and other Pacific Rim markets during last year's third quarter, a level which was not sustainable. For the nine months sales revenues were 8% lower on a 20% lower shipping volume. Operating profits for the quarter were 13% lower and were 8% lower for the nine month period. FINANCIAL SERVICES - Revenues for the quarter and the nine months were lower than a year ago due to reduced margins on financing transactions. Operating profits for the quarter were slightly lower but were about even with last year for the nine month period. 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. OUTLOOK Our order flow is good. Although the economic recovery in the U.S.A. appears to be moderating as a result of the increase in interest rates, most of our markets, especially the capital goods sector, are behaving satisfactorily. Private nonresidential and public construction spending have picked up in recent months. We see signs of a turnaround in Japan led by housing construction. Western European economies are benefiting from higher auto sales and exports. We expect China and the rest of the Pacific region to perk up again later this calendar year. Steel prices should remain firm Page 11 13 OUTLOOK - continued and nonferrous metals supply/demand fundamentals are improving. Progress will continue with the startup of the Birmingham melt shop through the fourth quarter, and we expect improved performance in the first quarter of next fiscal year. LIQUIDITY Cash flow from operations before changes in operating assets and liabilities was $41 million for the nine months compared to $36 million last year. Depreciation expense was $22 million compared to $20 million a year ago. The Company's effective tax rate was 36.9% for this year compared to 38% a year ago. Net working capital was $164 million at May 31, 1994 compared to $183 million at August 31, 1993. Short-term borrowings increased to finance expansion of accounts receivable. The current ratio was 1.6 at May 31, 1994 compared to 1.9 at August 31, 1993. Capital expenditures for the nine months ended May 31, 1994 were $37 million, highlighted by our melt shop addition in Birmingham. Capital spending for fiscal 1994 is projected at approximately $54 million. Long-term debt as a percent of total capitalization was 23% at May 31, 1994 compared to 24% at August 31, 1993. Stockholders' equity at May 31, 1994 was $233 million or $16.46 per share. At May 31, 1994 there were 14,180,417 shares issued and outstanding net of 1,952,166 shares held in the Company's treasury. During the quarter the Company repurchased 748,100 shares of its common stock for approximately $17 million. 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, and to the information incorporated under Part II, Item 1. Legal Proceedings in the Company's quarterly report on Form 10-Q for the quarter ended November 30, 1993, filed January 14, 1994, and for the quarter ended February 28, 1994, filed April 12, 1994, with the Securities and Exchange Commission. On May 17, 1994, the Company was served in a lawsuit filed on behalf of the State of Florida Department of Environmental Protection (State of Florida, Department of Environmental Protection v. Allied Scrap Processors, Inc., et al, No. 94-464-CA, 14th Judicial Circuit Court, Jackson County, Florida). Plaintiff seeks recovery of approximately $1,900,000 for alleged unreimbursed removal or remedial expense at the Sapp Battery Superfund Site near Cottondale, in Jackson County, Florida. The Company and the eight other corporations named as defendants are alleged to have arranged for the disposal of hazardous substances at the site by having sold used batteries to the Sapp Battery Salvage Company, the operator of the site who reclaimed lead. The Company had previously been named as a Potentially Responsible Party (PRP) at the site by the E.P.A. and has joined along with approximately twenty six other PRPs in an agreement providing for cost sharing of certain remedial actions being undertaken at the site pursuant to a consent decree. That same group of PRPs have tentatively agreed to share defense costs and any liability resulting from the State of Florida litigation under the terms of the amended PRP allocation agreement among the twenty six parties. The Company and the other defendants who are parties to the PRP agreement have filed a joint Answer asserting various defenses to the Complaint. While the Company is unable to estimate the ultimate dollar amount of exposure to loss in connection with the above described litigation, it is the opinion of the Company's management that this litigation will not have a material adverse effect on the business or the consolidated financial position of the Company. ITEM 2. CHANGES IN SECURITIES Not Applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable Page 13 15 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable ITEM 5. OTHER INFORMATION Not Applicable 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 May 31, 1994. 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/ LAWRENCE A. ENGELS July 12, 1994 Lawrence A. Engels Vice President, Treasurer & Chief Financial Officer /s/ JACK T. MULOS July 12, 1994 Jack T. Mulos Controller Page 14 16 INDEX TO EXHIBITS Exhibit Number Exhibit - - ------- ------- 11(a) Calculation of Primary and Fully Diluted Earnings Per Share EX-11.A 2 COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 (a) COMMERCIAL METALS COMPANY AND SUBSIDIARIES CALCULATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE* (In thousands except share data)
Nine months ended May 31, -------------------------- 1994 1993 ---------- --------- Net earnings $17,140 $14,152 Weighted average number of shares outstanding 14,787,290 10,785,070 Dilutive effect of stock option and purchase plans, after application of treasury stock method 349,431 255,142 Shares used in calculating primary net earnings per share before 11,040,212 December 1993 four-for-three stock split Adjustment for December 1993 four-for-three stock split 3,680,071 Shares used in calculating primary 15,136,721 14,720,283 net earnings per share Earnings per share before the December 1993 four-for-three stock split $1.28 Earnings per share after the December 1993 four-for-three stock split $1.13 $0.96
*Fully diluted earnings per share are identical to primary earnings per share. Page 15 -----END PRIVACY-ENHANCED MESSAGE-----