-----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, QVzpCGyvNyzjJhQxXhnuSPRYX8GSaw9Du6v9EatZQTaWbC6up9Sg/3Be2aHT2Lhi Eg30zByRreMjB2g2TvQh4g== /in/edgar/work/20000612/0000084278-00-000007/0000084278-00-000007.txt : 20000919 0000084278-00-000007.hdr.sgml : 20000919 ACCESSION NUMBER: 0000084278-00-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000430 FILED AS OF DATE: 20000612 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROANOKE ELECTRIC STEEL CORP CENTRAL INDEX KEY: 0000084278 STANDARD INDUSTRIAL CLASSIFICATION: [3312 ] IRS NUMBER: 540585263 STATE OF INCORPORATION: VA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-02389 FILM NUMBER: 653174 BUSINESS ADDRESS: STREET 1: 102 WESTSIDE BLVD N W STREET 2: P O BOX 13948 CITY: ROANOKE STATE: VA ZIP: 24038 BUSINESS PHONE: 5403421831 MAIL ADDRESS: STREET 1: 102 WESTSIDE BLVD N W CITY: ROANOKE STATE: VA ZIP: 24017 10-Q 1 0001.txt 1ST QUARTER 2000 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 2000 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ____________________ Commission file number 0-2389 ROANOKE ELECTRIC STEEL CORPORATION (Exact name of Registrant as specified in its charter) Virginia 54-0585263 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 102 Westside Blvd., N.W., Roanoke, Virginia 24017 (Address of principal executive offices) (Zip Code) (540) 342-1831 (Registrant's telephone number, including area code) N/A (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, 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 of the Registrant's classes of common stock, as of April 30, 2000. 10,955,688 Shares outstanding ROANOKE ELECTRIC STEEL CORPORATION FORM 10-Q CONTENTS Page 1. Part I - Financial Information 3 - 14 Item 1. Financial Statements a. Consolidated Balance Sheets 3 b. Consolidated Statements of Earnings 4 c. Consolidated Statements of Cash Flows 5 d. Notes to Consolidated Financial Statements 6 - 9 e. Independent Accountants' Report 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 - 13 Item 3. Quantitative and Qualitative Disclosures About Market Risk 14 2. Part II - Other Information 15 Item 1. Legal Proceedings 15 Item 4. Submission of Matters to a Vote of Security Holders 15 Item 6. Exhibits and Reports on Form 8-K 15 3. Signatures 16 4. Exhibit Index pursuant to Regulation S-K 17 5. Exhibits a. Financial Data Schedule 18
PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS ROANOKE ELECTRIC STEEL CORPORATION Consolidated Balance Sheets ASSETS (Unaudited) April 30, October 31, 2000 1999 * CURRENT ASSETS Cash and cash equivalents $ 27,260,111 $ 33,286,934 Investments 11,663,532 11,772,902 Accounts receivable, net of allowances of $2,248,484 in 2000 and $2,000,327 in 1999 55,082,820 57,692,504 Inventories 75,782,970 64,525,619 Prepaid expenses 1,350,040 1,476,561 Deferred income taxes 5,879,314 5,879,314 Total current assets 177,018,787 174,633,834 PROPERTY, PLANT AND EQUIPMENT Land 8,077,943 8,077,943 Buildings 41,317,729 40,816,558 Other property and equipment 193,091,726 189,012,488 Assets under construction 4,786,637 2,135,854 Total 247,274,035 240,042,843 Less--accumulated depreciation 86,432,052 78,530,036 Property, plant and equipment, net 160,841,983 161,512,807 GOODWILL 15,083,419 15,488,343 OTHER ASSETS 1,235,623 1,110,828 TOTAL ASSETS $354,179,812 $352,745,812 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $ 15,036,469 $ 15,034,131 Accounts payable 27,333,852 22,821,864 Dividends payable 1,095,569 1,102,579 Employees' taxes withheld 578,342 530,139 Accrued profit sharing contribution 3,227,494 6,353,611 Accrued wages and expenses 10,390,500 11,138,478 Accrued income taxes 3,101,320 411,874 Total current liabilities 60,763,546 57,392,676 LONG-TERM DEBT Notes payable 131,428,165 138,944,689 Less--current portion 15,036,469 15,034,131 Total long-term debt 116,391,696 123,910,558 DEFERRED INCOME TAXES 31,200,236 30,902,712 OTHER LIABILITIES 3,456,662 3,381,735 STOCKHOLDERS' EQUITY Common stock--no par value--authorized 20,000,000 shares, issued 12,228,802 shares in 2000 and 12,298,902 in 1999 3,933,327 3,699,678 Retained earnings 139,252,213 134,276,321 Total 143,185,540 137,975,999 Less--treasury stock, 1,273,114 shares -- at cost 817,868 817,868 Total stockholders' equity 142,367,672 137,158,131 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $354,179,812 $352,745,812 * Restated for change in method of accounting for certain inventories. The accompanying notes to consolidated financial statements are an integral part of these statements.
ROANOKE ELECTRIC STEEL CORPORATION Consolidated Statements of Earnings (Unaudited) (Unaudited) Three Months Ended Six Months Ended April 30, April 30, 2000 1999 * 2000 1999 * SALES $ 99,712,737 $101,338,801 $191,117,869 $174,742,368 COST OF SALES 81,358,236 80,378,957 156,312,565 139,085,226 GROSS EARNINGS 18,354,501 20,959,844 34,805,304 35,657,142 OTHER OPERATING EXPENSES Administrative 6,692,855 6,793,591 13,139,152 12,733,441 Interest, net 1,509,923 2,081,674 3,285,764 3,294,617 Profit sharing 2,016,847 2,236,747 3,545,824 3,650,261 Total 10,219,625 11,112,012 19,970,740 19,678,319 EARNINGS BEFORE INCOME TAXES 8,134,876 9,847,832 14,834,564 15,978,823 INCOME TAX EXPENSE 3,309,517 3,978,907 6,054,822 6,430,928 NET EARNINGS $ 4,825,359 $ 5,868,925 $ 8,779,742 $ 9,547,895 Net earnings per share of common stock: Basic $ 0.44 $ 0.53 $ 0.80 $ 0.86 Diluted $ 0.44 $ 0.53 $ 0.79 $ 0.86 Cash dividends per share of common stock $ 0.10 $ 0.095 $ 0.20 $ 0.19 Weighted average number of common shares outstanding : Basic 10,966,394 11,087,000 10,987,307 11,081,352 Diluted 11,051,688 11,140,651 11,064,939 11,144,390 * Restated for change in method of accounting for certain inventories. The accompanying notes to consolidated financial statements are an integral part of these statements.
ROANOKE ELECTRIC STEEL CORPORATION Consolidated Statements of Cash Flows (Unaudited) Six Months Ended April 30, 2000 1999 * CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 8,779,742 $ 9,547,895 Adjustments to reconcile net earnings to net cash provided by operating activities: Deferred compensation liability 117,971 280,286 Postretirement liabilities 156,956 160,225 Depreciation and amortization 8,473,177 7,157,467 (Gain) loss on sale of investments and property, plant and equipment 14,076 (41,152) Deferred income taxes 297,524 729,000 Changes in assets and liabilities which provided (used) cash, exclusive of changes shown seperately (5,145,604) (2,664,498) Net cash provided by operating activities 12,693,842 15,169,223 CASH FLOWS FROM INVESTING ACTIVITIES Expenditures for property, plant and equipment (7,366,607) (6,956,419) Proceeds from sale of property, plant and equipment 8,094 274,553 Sale of investments 93,078 520,418 Acquisition of Steel of West Virginia, Inc. --- (67,921,073) Other (161,495) (202,141) Net cash used in investing activities (7,426,930) (74,284,662) CASH FLOWS FROM FINANCING ACTIVITIES Cash dividends (2,194,538) (2,106,010) Increase (decrease) in dividends payable (7,010) 1,590 Proceeeds from exercise of common stock options 233,649 431,126 Payment of long-term debt (7,516,524) (84,916,468) Proceeds from long-term debt --- 150,000,000 Repurchase of common stock (1,609,312) (311,750) Loan costs --- (513,793) Interest rate reverse swap settlement from lender (200,000) --- Net cash provided by (used in) financing activities (11,293,735) 62,584,695 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (6,026,823) 3,469,256 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 33,286,934 16,167,025 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 27,260,111 $ 19,636,281 CHANGES IN ASSETS AND LIABILITIES WHICH PROVIDED (USED) CASH, EXCLUSIVE OF CHANGES SHOWN SEPARATELY (Increase) decrease in accounts receivable $ 2,609,684 $ 6,625,864 (Increase) decrease in inventories (11,257,351) 1,271,348 (Increase) decrease in prepaid expenses 126,521 1,127,927 Increase (decrease) in accounts payable 4,511,988 (10,007,466) Increase (decrease) in employees' taxes withheld 48,203 (340,932) Increase (decrease) in accrued profit sharing contribution (3,126,117) (2,726,816) Increase (decrease) in accrued wages and expenses (747,978) (555,728) Increase (decrease) in accrued income taxes 2,689,446 1,941,305 Total $ (5,145,604) $ (2,664,498) * Restated for change in method of accounting for certain inventories. The accompanying notes to consolidated financial statements are an integral part of these statements.
ROANOKE ELECTRIC STEEL CORPORATION Notes to Consolidated Financial Statements April 30, 2000 Note 1. In the opinion of the Registrant, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position as of April 30, 2000 and the results of operations for the three months and six months ended April 30, 2000 and 1999 and cash flows for the six months ended April 30, 2000 and 1999. Note 2. Effective November 1, 1999, the Company changed its inventory costing method for a fabricating subsidiary's raw material (steel bar) inventory from LIFO to FIFO. One reason for the change was to bring this portion of inventory in line with all other inventories reported consistently throughout the Company on the FIFO method. Further, due to fluctuating steel prices, the move to FIFO reporting will provide for accounting simplification. The effect of the change in accounting principle was to reduce net earnings reported for the 2000 second quarter by $68,670, or $.00 per basic share, and to reduce net earnings for the six months ended April 30, 2000 by $171,688, or $.01 per basic share. The change has been applied to prior years by retroactively restating the financial statements. The effect of this restatement was to increase retained earnings as of October 31, 1999 by $616,590, and to increase net earnings for the quarter ended April 30, 1999 by $97,240, or $.01 per basic share, and to decrease net earnings for the six months ended April 30, 1999 by $83,904, or $.01 per basic share. Inventories include the following major classifications: (Unaudited) April 30, October 31, 2000 1999* Scrap steel $ 6,375,011 $ 5,090,322 Melt supplies 3,702,798 3,520,825 Billets 15,584,002 14,477,006 Mill supplies 3,997,686 4,274,660 Work-in-process 5,948,696 4,234,402 Finished steel 40,174,777 32,928,404 Total inventories 75,782,970 64,525,619 * Restated for change in method of accounting for certain inventories. Note 3. In February 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings per Share", which changed the method of calculating earnings per share. SFAS No. 128 requires the presentation of "basic" earnings per share and "diluted" earnings per share on the face of the income statement. Basic earnings per share is computed by dividing the net income available to common shareholders by the weighted average shares of outstanding common stock. The calculation of diluted earnings per share is similar to basic earnings per share except that the denominator includes dilutive common stock equivalents such as stock options and warrants. Basic earnings per share and diluted earnings per share calculated in accordance with SFAS No. 128 are presented in the consolidated statements of earnings. Note 4. The Registrant retired all of its treasury stock applicable to the shares recently acquired through its common stock repurchase plan. Note 5. In June 1997, the Financial Accounting Standards Board issued SFAS No. 130, "Comprehensive Income", and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information". SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. The Company adopted SFAS No. 130 during the 1999 first quarter, but comprehensive income, and its required disclosure, is the same as that shown in the consolidated statements of earnings. SFAS No. 131 establishes disclosure standards regarding information about operating segments in interim and annual financial statements. The Company adopted SFAS No. 131 at the close of fiscal year 1999. The Company's business consists of one industry segment, which is the extracting of scrap metal from discarded automobiles and the manufacturing, fabricating and marketing of merchant steel bar products, specialty steel sections, reinforcing bars, open-web steel joists and billets. The industry segment consists of three classes of products - merchant steel products and specialty steel sections, fabricated bar joists and reinforcing bars and billets.
Financial Information Relating to Classes of Products (Unaudited) (Unaudited) Three Months Ended Six Months Ended April 30, April 30, 2000 1999 2000 1999 Sales to unaffiliated customers: Merchant steel and specialty steel sections $ 60,828,602 $ 61,756,340 $ 117,167,016 $ 99,157,212 Bar Joist and rebar 31,043,992 30,887,570 61,185,605 59,651,712 Billets 7,840,143 8,694,891 12,765,248 15,933,444 Total consolidated sales $ 99,712,737 $ 101,338,801 $ 191,117,869 $ 174,742,368
Note 6. On December 16, 1998, the Registrant acquired all of the outstanding common shares of Steel of West Virginia, Inc. ("SWVA"), a Huntington, West Virginia steel manufacturer, upon completion of its cash tender offer. The consideration given was approximately $117.1 million, including the assumption of approximately $52.3 million of indebtedness, which translates into $10.75 net per SWVA share, for approximately 6,028,000 shares on a fully-diluted basis. Upon merger, SWVA became a wholly-owned subsidiary of Roanoke Electric Steel Corporation, and each share of SWVA common stock not purchased in the offer (approximately 3.6% of SWVA's outstanding shares) was converted, subject to appraisal rights, into the right to receive $10.75 in cash, without interest. Funding for the acquisition was provided by a syndicate of four banks, including First Union National Bank, Agent. SWVA operates a mini-mill in Huntington, West Virginia, and steel fabrication facilities in Huntington and Memphis, Tennessee, while custom designing and manufacturing special steel products principally for use in the construction of truck trailers, industrial lift trucks, off-highway construction equipment (such as bulldozers and graders), manufactured housing, guardrail posts and mining equipment. The acquisition has been accounted for as a purchase. Accordingly, the results of operations and cash flows are reflected in the consolidated financial statements from the date of acquisition, and the acquired assets and liabilities are included in the accompanying October 31,1999 consolidated balance sheet at values based on a purchase price allocation, rendered through appraisals and other evaluations. The purchase price allocation is summarized below: December 16,1998 Accounts and other receivables $ 17,811,730 Inventories 35,089,765 Prepaid expenses and other current assets 1,848,853 Property, plant and equipment 79,914,154 Goodwill 16,196,961 Other assets 304,356 Acounts and other payables (9,596,233) Accrued expenses and other current liabilities (7,194,079) Long-term debt (52,804,120) Other liabilities (13,650,314) Net purchase price $ 67,921,073 Unaudited pro forma consolidated results of operations for the six month period ended April 30, 1999, assuming the SWVA acquisition had occurred at the beginning of the period, is as follows: (Unaudited) Six Months Ended April 30, 1999* Sales $ 186,901,479 Net earnings $ 8,327,103 Net earnings per share of common stock: Basic $ .75 Diluted $ .75 * Restated for change in method of accounting for certain inventories. The pro forma consolidated results of operations include adjustments to give effect to amortization of goodwill, interest expense on acquisition debt and certain other adjustments, together with related income tax effects. The unaudited pro forma information is not necessarily indicative of the results of operations that would have occurred had the purchase been made at the beginning of the period presented or the future results of the combined operations. Note 7. Supplemental cash flow information: (Unaudited) Six Months Ended April 30, 2000 1999 Cash paid during the period for: Interest $ 4,571,726 $ 3,495,976 Income taxes $ 3,067,853 $ 3,760,623 Detail of acquisition: Fair value of assets acquired $ 151,165,819 Liabilities assumed (83,244,746) Net cash paid for acquisition $ 67,921,073 INDEPENDENT ACCOUNTANTS' REPORT Board of Directors Roanoke Electric Steel Corporation We have reviewed the accompanying consolidated balance sheet of Roanoke Electric Steel Corporation (the "Corporation") and subsidiaries as of April 30, 2000, and the related consolidated statements of earnings and cash flows for the three-month and six-month periods ended April 30, 2000 and 1999. These financial statements are the responsibility of the Corporation's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of Roanoke Electric Steel Corporation and subsidiaries as of October 31, 1999, and the related consolidated statements of earnings, stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated November 19, 1999, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of October 31, 1999 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. As discussed in Note 2 to the consolidated financial statements, the Corporation changed its method of accounting for certain inventories. Deloitte & Touche LLP Winston-Salem, North Carolina June 5, 2000 PART I - ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management's discussion and analysis of certain significant factors which have affected the Company's earnings during the periods included in the accompanying consolidated statements of earnings. A summary of the period to period changes in the principal items included in the consolidated statements of earnings is shown below:
Comparison of Increases (Decreases) Three Months Ended Six Months Ended April 30, April 30, 2000 1999* 2000 1999* Amount Percent Amount Percent Sales (1,626,064) (1.6) 16,375,501 9.4 Cost of Sales 929,279 1.2 17,227,339 12.4 Administrative Expenses (100,736) (1.5) 405,711 3.2 Interest Expense (571,751) (27.5) (8,853) (0.3) Profit Sharing Expense (219,900) (9.8) (104,437) (2.9) Earnings before Income Taxes (1,712,956) (17.4) (1,144,259) (7.2) Income Tax Expense (669,390) (16.8) (376,106) (5.8) Net Earnings (1,043,566) (17.8) (768,153) (8.0) * Restated for change in method of accounting for certain inventories.
Sales for the six months increased significantly, due mainly to the acquisition of Steel of West Virginia, Inc. ("SWVA"), on December 16, 1998. Sales for the current year included SWVA's revenues for the entire period, whereas sales for last year included only the portion of SWVA's revenues from the date of acquisition. Increased tons shipped of fabricated products, together with improved selling prices for merchant bar products and billets, favorably impacted sales for the six months. However, sales were negatively affected by a substantial decrease in tons shipped of billets, together with a decline in selling prices for fabricated products, while shipment levels for bar products were flat. The decline in sales for the quarter was primarily the result of significantly lower billet shipments, reduced shipment levels for all other product classes and a drop in selling prices for specialty products; even though, selling prices were considerably higher for bar products and billets, and slightly up for fabricated products. For the quarter, specialty steel shipments were slightly lower due to decreased demand within certain markets segments. Average selling prices for specialty steel sections were down during both periods compared, as a result of the mix of higher sales volumes of much lower priced products. A dramatic change in market conditions for billets brought diminished demand and declines in tons shipped of 30% for the six months and 24% for the quarter. Billet selling prices increased in both periods with sharp rises in scrap prices which normally trigger changes in billet pricing. The improvement in merchant bar product selling prices, during both periods compared, was due mainly to rising scrap steel costs which prompted a number of industry-wide price increases during the past year. More cautious buying patterns at steel service centers, due to rising prices, contributed to the reduced tons shipped of bar products for the quarter. The six month increase in shipments of fabricated products was due mainly to continued strong construction activity; however, shipments lagged for the quarter, hampered by shortages of structural steel components at construction sites. The decline in fabricated product selling prices, during the six month period, was caused by increased competition within the commercial construction industry; even though, business conditions continued strong and backlogs remained high. Fabricated product selling prices increased slightly for the quarter, influenced mainly by higher raw material costs. Cost of sales increased for the six months compared mainly due to the impact of SWVA costs, the increased shipments of fabricated products and an increase in the cost of scrap steel, our main raw material. Cost of sales increased for the three months compared primarily as a result of higher scrap steel and other raw material costs, in spite of the effects of the decreased tons shipped for all product classes. Gross profit as a percentage of sales declined from 20.4% to 18.2% and from 20.7% to 18.4% for the six month and three month periods, respectively. These lower margins, for both periods compared, primarily resulted from higher scrap costs and lower specialty product selling prices, which more than offset higher bar and billet selling prices and the effects of increased production levels on costs. Both gross profit and net earnings declined for the six months compared, due mainly to the reduced margins in spite of the improved shipment levels. The decline in gross profit margins at the reduced shipment levels caused the reductions in gross profit and net earnings for the quarter. Administrative expenses increased for the six months mainly as a result of the inclusion of SWVA's expenses in 2000 covering a longer period than in the 1999 results. For the three months, administrative expenses declined as a result of reductions in a number of expenses. Administrative expenses, as a percentage of sales, dropped from 7.3% to 6.9% for the six month period, while the three month period remained at 6.7%. Interest expense for the six months was virtually unchanged as higher interest income, coupled with lower interest rates, offset lower capitalized interest and higher average borrowings, related to the SWVA acquisition. For the three months, interest expense decreased as higher interest income, lower average borrowings and lower interest rates more than offset lower capitalized interest. Profit sharing expense is based on earnings before income taxes in accordance with the provisions of various plans. For both periods compared, profit sharing expense declined as a result of lower earnings. The effective income tax rate is higher in both 2000 periods compared due to nondeductible amortization of the excess investment in SWVA net assets. Working capital decreased $985,917 during the period to $116,255,241 mainly as a result of capital expenditures, dividends, debt maturities and repurchases of common stock amounting to $7,366,607, $2,194,538, $7,516,524 and $1,609,312, respectively, which exceeded working capital provided from operations. The current ratio of 2.9 to 1 and the quick ratio of 1.5 to 1 both indicate very strong liquidity and a healthy financial condition. In addition, cash, cash equivalents and investments total $38,923,643. Due to the new credit facilities in conjunction with the SWVA acquisition, current debt maturities are approximately $15,000,000 annually, which will affect working capital and future liquidity. Our unused $30,000,000 revolving credit facility combined with strong earnings and the cash and investments mentioned above should provide the liquidity and capital resources necessary to remain competitive, fund operations and meet required debt retirement. At April 30, 2000, there were commitments for the purchase of property, plant and equipment of approximately $11,500,000, a significant portion of which is for SWVA's #2 mill state-of-the-art shearing and gauging equipment and finishing stands, expected to be in operation by the third quarter with anticipated improvements in rolling mill productivity and efficiency. These commitments will also affect working capital and future liquidity and will be financed from internally generated funds, the revolving credit facility and existing cash reserves. During the first half of the year, the ratio of debt to equity decreased to 1.5 to 1, and the percentage of long-term debt to total capitalization declined to 45.0%, due to current maturities of $7,516,524 reducing long-term debt to $116,391,696. Stockholders' equity increased to $142,367,672 mainly due to net earnings of $8,779,742 exceeding dividends of $2,194,538 and common stock repurchases of $1,609,312. From time to time, the Company may publish forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products, research and development activities and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements. The risks and uncertainties that may affect the operations, performance, development and results of the Company's business include economic and industry conditions, availability and prices of supplies, prices of steel products, competition, governmental regulations, interest rates, inflation, labor relations, environmental concerns, and others. The Company successfully completed its efforts to ensure Year 2000 readiness for all of its critical systems. As a result, the Company experienced no interruption in its operations during the transition to the Year 2000. The cost of the Company's Year 2000 efforts totaled approximately $590,000. PART I - ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Quantitative and qualitative information about market risk was addressed in Form 10-K for fiscal year ended October 31, 1999, as previously filed with the commission. There has been no material changes to that information required to be disclosed in this 2nd quarter 10-Q filing. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. To the best of Registrant's information and belief no new legal proceedings were instituted against Registrant or any of its wholly-owned subsidiaries during the period covered by this report and there was no material development in or termination of the legal proceedings reported earlier by the Registrant on Form 10-K for fiscal year ended October 31, 1999 and Form 10-Q for the quarter ended January 31, 2000, as previously filed with the Commission. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. On February 15, 2000, the Annual Meeting of Shareholders was held and the following persons were elected as Class A directors of the Registrant, with terms expiring in 2003: Authority Not Director For Withheld Voted George B. Cartledge, Jr. 10,179,933 19,823 826,032 Thomas L. Robertson 10,175,043 24,713 826,032 Donald G. Smith 10,179,933 19,823 826,032 The following persons continued to serve as Class B and Class C directors of the Registrant after the annual meeting: Class B directors, with terms expiring in 2001 Frank A. Boxley Timothy R. Duke George W. Logan Class C directors, with terms expiring in 2002 Charles I. Lunsford, II Paul E. Torgersen John D. Wilson ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. a. Exhibits. (27) Financial Data Schedule b. Reports on Form 8-K. No reports on Form 8-K have been filed during the quarter for which this report is filed. Items 2, 3 and 5 are omitted because the information required by these items is not applicable. 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. ROANOKE ELECTRIC STEEL CORPORATION Registrant Date June 5, 2000 Donald G. Smith Donald G. Smith, Chairman, President, Treasurer and Chief Executive Officer (Principal Financial Officer) Date June 5, 2000 John E. Morris John E. Morris, Vice President-Finance and Assistant Treasurer (Chief Accounting Officer) EXHIBIT INDEX Exhibit No. Exhibit Page (27) Financial Data Schedule 18 EXHIBIT NO. 27 FINANCIAL DATA SCHEDULE EX-27 2 0002.txt
5 The Schedule contains summmary financial information extracted from the 2nd Quarter Consolidated Balance Sheets and Statement of Earnings and is qualified in its entirety by reference to such financial statements. 6-MOS OCT-31-2000 APR-30-2000 27,260,111 11,663,532 55,082,820 0 75,782,970 177,018,787 247,274,035 86,432,052 354,179,812 60,763,546 116,391,696 0 0 3,933,327 138,434,345 354,179,812 191,117,869 191,117,869 156,312,565 156,312,565 16,684,976 0 3,285,764 14,834,564 6,054,822 8,779,742 0 0 0 8,779,742 0.80 0.79
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