-----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, JunbhRZy+ntBedrHsSJfgLplVMkR7YUXcagl30qu4CewZS1q2QpwymLCmeNVhABG j1WbRP8BDcYz5m/8sKXOAw== 0000084278-95-000007.txt : 19950615 0000084278-95-000007.hdr.sgml : 19950615 ACCESSION NUMBER: 0000084278-95-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950131 FILED AS OF DATE: 19950316 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROANOKE ELECTRIC STEEL CORP CENTRAL INDEX KEY: 0000084278 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 540585263 STATE OF INCORPORATION: VA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-02389 FILM NUMBER: 95521280 BUSINESS ADDRESS: STREET 1: 102 WESTSIDE BLVD N W CITY: ROANOKE STATE: VA ZIP: 24017 BUSINESS PHONE: 7033421831 MAIL ADDRESS: STREET 1: PO BOX 13948 CITY: ROANOKE STATE: VA ZIP: 24038 10-Q 1 1ST QUARTER 10-Q 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 January 31, 1995 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) (703) 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 January 31, 1995. 5,348,909 Shares outstanding ROANOKE ELECTRIC STEEL CORPORATION FORM 10-Q CONTENTS Page 1. Part I - Financial Information 3 - 9 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 e. Independent Accountants' Report 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 9 2. Part II - Other Information 10 Item 1. Legal Proceedings 10 Item 4. Submission of Matters to a Vote of Security Holders 10 Item 6. Exhibits and Reports on Form 8-K 10 3. Signatures 11 4. Exhibit Index pursuant to Regulation S-K 12 5. Exhibits a. Financial Data Schedule 13 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS ROANOKE ELECTRIC STEEL CORPORATION Consolidated Balance Sheets ASSETS
(Unaudited) (Audited) January 31, October 31, 1995 1994 CURRENT ASSETS Cash and cash equivalents $ 3,212,778 $ 150,036 Investments 3,909,139 5,333,895 Accounts receivable 31,728,735 34,840,838 Inventories 33,033,746 26,969,662 Prepaid expenses 774,678 1,159,074 Deferred income taxes 1,215,551 1,215,551 Total current assets 73,874,627 69,669,056 PROPERTY, PLANT AND EQUIPMENT Land 4,666,070 3,243,426 Buildings 16,670,108 15,712,110 Other property and equipment 102,850,353 94,942,955 Assets under construction 2,507,455 9,664,843 Total 126,693,986 123,563,334 Less--accumulated depreciation 55,027,077 53,088,234 Property, plant and equipment, net 71,666,909 70,475,100 OTHER ASSETS Unamortized excess of cost of investment in subsidiary over net assets acquired 62,158 108,777 Other 218,053 220,577 Total other assets 280,211 329,354 TOTAL $ 145,821,747 $ 140,473,510 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $ 3,723,960 $ 4,791,834 Notes payable 12,000,000 6,500,000 Accounts payable 17,090,269 16,560,157 Dividends payable 641,869 1,337,227 Employees' taxes withheld 330,033 254,965 Accrued profit sharing contribution 1,386,330 3,269,640 Accrued wages and expenses 1,364,564 1,764,863 Accrued income taxes 2,693,853 685,950 Total current liabilities 39,230,878 35,164,636 LONG-TERM DEBT Notes payable 22,578,125 25,521,000 Less--current portion 3,723,960 4,791,834 Total long-term debt 18,854,165 20,729,166 POSTRETIREMENT LIABILITIES 305,148 242,000 DEFERRED INCOME TAXES 11,830,039 11,920,039 STOCKHOLDERS' EQUITY Common stock--no par value--authorized 10,000,000 shares, issued 5,946,738 shares 1,330,650 1,330,650 Capital in excess of stated value 9,349,429 9,349,429 Retained earnings 66,116,306 62,932,458 Total 76,796,385 73,612,537 Less--treasury stock, 597,829 shares--at cost 1,194,868 1,194,868 Total stockholders' equity 75,601,517 72,417,669 TOTAL $ 145,821,747 $ 140,473,510
The accompanying notes to consolidated financial statements are an integral part of this statement. ROANOKE ELECTRIC STEEL CORPORATION Consolidated Statements of Earnings (Unaudited) Three Months Ended January 31, 1995 1994 SALES $ 57,520,532 $ 47,052,752 COST OF SALES 45,571,355 40,998,635 GROSS EARNINGS 11,949,177 6,054,117 OTHER OPERATING EXPENSES Administrative 3,667,022 3,307,537 Interest, net 500,267 454,737 Profit sharing 1,386,330 567,721 Total 5,553,619 4,329,995 EARNINGS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLES 6,395,558 1,724,122 INCOME TAX EXPENSE 2,569,842 692,526 EARNINGS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLES 3,825,716 1,031,596 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLES FOR INCOME TAXES - 3,093,940 NET EARNINGS $ 3,825,716 $ 4,125,536 Weighted average number of common shares outstanding * 5,348,909 5,306,751 Earnings per share of common stock Earnings before cumulative effect of accounting change $ 0.72 $ 0.20 Cumulative effect of accounting change for income taxes - 0.58 Net earnings per share of common stock $ 0.72 $ 0.78 Cash dividends per share of common stock $ 0.12 $ 0.12 * Adjusted for stock options exercised. The accompanying notes to consolidated financial statements are an integral part of this statement. ROANOKE ELECTRIC STEEL CORPORATION Consolidated Statements of Cash Flows
(Unaudited) Three Months Ended January 31, 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 3,825,716 $ 4,125,536 Adjustments to reconcile net earnings to net cash provided by operating activities: Cumulative effect of change in accounting for income taxes - (3,093,940) Postretirement liabilities 63,148 60,500 Depreciation and amortization 1,992,865 1,865,385 Deferred income taxes (90,000) (92,000) Changes in assets and liabilities which provided (used) cash, exclusive of changes shown separately (2,238,111) 3,081,070 Net cash provided by operating activities 3,553,618 5,946,551 CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for property, plant and equipment (3,130,652) (2,558,243) Sales (purchases) of investments 1,419,878 (980,865) Other - (42,474) Net cash used in investing activities (1,710,774) (3,581,582) CASH FLOWS FROM FINANCING ACTIVITIES: Notes payable--net 5,500,000 (1,000,000) Cash dividends (641,869) (637,069) Increase (decrease) in dividends payable (695,358) 480 Proceeds from exercise of common stock options - 29,000 Redemption of long-term debt (2,942,875) (2,178,875) Net cash provided by (used in) financing activities 1,219,898 (3,786,464) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,062,742 (1,421,495) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 150,036 3,067,418 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,212,778 $ 1,645,923 CHANGES IN ASSETS AND LIABILITIES WHICH PROVIDED (USED) CASH, EXCLUSIVE OF CHANGES SHOWN SEPARATELY: (Increase) decrease in accounts receivable $ 3,112,103 $ 4,081,745 (Increase) decrease in inventories (6,064,084) (162,728) (Increase) decrease in prepaid expenses 384,396 (20,487) Increase (decrease) in accounts payable 530,112 (123,315) Increase (decrease) in employees' taxes withheld 75,068 45,238 Increase (decrease) in accrued profit sharing contribution (1,883,310) (1,112,525) Increase (decrease) in accrued wages and expenses (400,299) (346,940) Increase (decrease) in accrued income taxes 2,007,903 720,082 Total $ (2,238,111) $ 3,081,070 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 601,218 $ 592,639 Income taxes $ 651,507 $ 64,443
The accompanying notes to consolidated financial statements are an integral part of this statement. ROANOKE ELECTRIC STEEL CORPORATION Notes to Consolidated Financial Statements January 31, 1995 Note 1. In the opinion of the Registrant, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of January 31, 1995 and the results of operations and cash flows for the three months ended January 31, 1995 and 1994. Note 2. Inventories include the following major classifications: (Unaudited) (Audited) January 31, October 31, 1995 1994 Scrap Steel $ 4,873,977 $ 4,737,074 Melt Supplies 2,190,646 1,888,830 Billets 4,865,267 3,209,030 Mill Supplies 3,034,295 2,867,779 Finished Steel 18,069,561 14,266,949 $ 33,033,746 $ 26,969,662 Note 3. The Company adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes", effective November 1, 1993. The cumulative effect of adopting SFAS No. 109 on the Company's statements was to increase income by $3,093,940 ($.58 per share) for the three months ended January 31, 1994. Note 4. Certain amounts included in the consolidated financial statements for 1994 have been reclassified from their original presentation to conform with the current year presentation. INDEPENDENT ACCOUNTANTS' REPORT DELOITTE & TOUCHE LLP Suite 1401 Telephone: (910) 721-2300 500 West Fifth Street Facsimile: (910) 721-2301 Winston-Salem, North Carolina 27152 Board of Directors Roanoke Electric Steel Corporation: We have reviewed the accompanying consolidated balance sheet of Roanoke Electric Steel Corporation and subsidiaries as of January 31, 1995, and the related consolidated statements of earnings and cash flows for the three-month periods ended January 31, 1995 and 1994. 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 generally accepted auditing standards, 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 generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Roanoke Electric Steel Corporation and subsidiaries as of October 31, 1994, 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 18, 1994, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as October 31, 1994 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Deloitte & Touche LLP February 24, 1995 Deloitte Touche Tohmatsu International 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 January 31, 1995 and 1994 Amount Percent Sales 10,467,780 22.2 Cost of Sales 4,572,720 11.2 Administrative Expenses 359,485 10.9 Interest Expense 45,530 10.0 Profit Sharing Expense 818,609 144.2 Earnings before Income Taxes and Cumulative Effect of Change in Accounting 4,671,436 270.9 Principles Income Tax Expense 1,877,316 271.1 Earnings before Cumulative Effect of Change in Accounting Principles 2,794,120 270.9 Cumulative Effect of Change in Accounting Principles for Income Taxes (3,093,940) * Net Earnings (299,820) (7.3) * Cannot be calculated Sales for the periods compared increased significantly as a result of increases in selling prices and tons shipped for both merchant bar products and fabricated products (bar joists and rebar). Sales were negatively affected by lower billet tons shipped, eventhough selling prices for billets were improved. The increased bar product shipments were due to the continued improvement in market conditions, while merchant bar selling prices improved as a result of higher scrap costs and increased demand, both prompting industry-wide price increases. Shipments of fabricated products increased substantially, fueled both by increased activity and an easing of competition within the construction industry, while fabricated product selling prices increased mainly as a result of higher raw material costs and less competitive conditions. Billet selling prices increased primarily due to rising scrap prices which normally trigger changes in billet pricing. The decrease in billet tons shipped resulted from the lack of available billets as demand and market conditions remained strong. Cost of sales increased as a result of the increases in both tons shipped of merchant bar and fabricated products and the cost of scrap steel, our main raw material, in spite of the reduction in billet tons shipped and the cost savings realized with the start-up of our modern auto shredding operation. Gross profit as a percentage of sales increased by approximately 7.9% primarily as a result of the higher selling prices for all product classes and increased production levels for raw steel, merchant bar and fabricated products which reduced unit costs for fixed expenses, in spite of higher scrap costs. The increase in gross profit margins at the higher shipment levels was the reason for the significant improvements in gross profit and net earnings from operations for the period. Administrative expenses increased mainly as a result of increased executive and other compensation, based on various incentive arrangements. Interest expense increased as higher interest rates and reduced capitalized interest and interest income more than offset lower average borrowings. Profit sharing expense, computed as a percentage of pretax income, increased due to the improvement in earnings. The effective income tax rate is relatively constant for both periods compared. The 1994 quarter reflects the adoption of an accounting principles change in reporting for income taxes, resulting in the cumulative effect of $3,093,940 of increased income through a deferred tax benefit. Working capital increased $139,329 during the period to $34,643,749 mainly as a result of working capital provided from operations exceeding capital expenditures, dividends and current maturities of long-term debt amounting to $3,130,652, $641,869 and $1,875,001, respectively. The current ratio of 1.9 and the quick ratio of 1.0 both indicate very sound liquidity and a healthy financial condition. Borrowings against the Registrant's $37,500,000 lines of credit were $12,000,000 leaving a balance of $25,500,000 for future use. As a condition of our loan agreements, the real estate and equipment at the Roanoke plant have been pledged as security for the loans. In addition, the terms do not allow consolidated current assets or the assets of Socar, Inc. to be pledged. However, the secured creditors are over collateralized and additional long-term funding is available to the Company through its various lenders, who have expressed their confidence and willingness to provide additional financing. At January 31, 1995, there were commitments for the purchase of plant and equipment amounting to $13,351,299. Funding for most of these expenditures will come from internally generated funds and the use of the credit lines mentioned above. A portion of the above commitments includes the upgrade of an electric arc furnace and the addition of a ladle furnace to the Company's melt shop operations. The ladle furnace and upgrade will increase raw steel production, improve quality, decrease production costs and improve operating efficiencies. Start-up is anticipated in 1996. The percentage of long-term debt to total capital decreased from 22.2% to 20.0% during the quarter, due to current maturities reducing long-term debt by $1,875,001, while stockholders' equity increased as net earnings of $3,825,716 exceeded dividends of $641,869. 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 were no material developments in or terminations of the legal proceedings reported earlier by Registrant on Form 10-K for fiscal year ended October 31, 1994, as previously filed with the commission. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. On January 16, 1995, the Annual Meeting of Shareholders was held and the following persons were elected as Directors of the Registrant: AUTHORITY DIRECTOR FOR WITHHELD Frank A. Boxley 4,852,327 1,820 T.A. Carter 4,848,377 5,770 George B. Cartledge, Jr. 4,852,327 1,820 Charles I. Lunsford, II 4,852,327 1,820 William L. Neal 4,852,127 2,020 Thomas L. Robertson 4,852,327 1,820 Donald G. Smith 4,852,327 1,820 Paul E. Torgersen 4,852,327 1,820 Gordon C. Willis 4,852,127 2,020 John D. Wilson 4,849,827 4,320 No other matters were voted on at the Annual Meeting. 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 3/15/95 Donald G. Smith Donald G. Smith, Chairman, President, Treasurer and Chief Executive Officer (Principal Financial Officer) Date 3/15/95 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 13 EXHIBIT NO. 27 FINANCIAL DATA SCHEDULE EX-27 2
5 The Schedule contains summary financial information extracted from the 1st Quarter Consolidated Balance Sheets and Statement of Earnings and is qualified in its entirety by reference to such financial statements. 1 3-MOS OCT-31-1995 JAN-31-1995 3,212,778 3,909,139 31,728,735 0 33,033,746 73,874,627 126,693,986 55,027,077 145,821,747 39,230,878 18,854,165 1,330,650 0 0 74,270,867 145,821,747 57,520,532 57,520,532 45,571,355 45,571,355 5,053,352 0 500,267 6,395,558 2,569,842 3,825,716 0 0 0 3,825,716 .72 .72
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