-----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, KWSKbW8OC1S4utE01MmDmUorZGauHGIhJiQy20Bt6hqEVW4Ck2BndnkufxbgjF8w cQdYB3wBXQ7SpIEI9OGZ+g== 0000950150-96-000792.txt : 19960809 0000950150-96-000792.hdr.sgml : 19960809 ACCESSION NUMBER: 0000950150-96-000792 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960808 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RELIANCE STEEL & ALUMINUM CO CENTRAL INDEX KEY: 0000861884 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-METALS SERVICE CENTERS & OFFICES [5051] IRS NUMBER: 951142616 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13122 FILM NUMBER: 96606234 BUSINESS ADDRESS: STREET 1: 2550 EAST 25TH ST CITY: LOS ANGELES STATE: CA ZIP: 90058 BUSINESS PHONE: 2135822272 MAIL ADDRESS: STREET 1: 2550 E. 25TH STREET CITY: LOS ANGELES STATE: CA ZIP: 90058 10-Q 1 FORM 10-Q FOR PERIOD ENDED JUNE 30, 1996 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 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: 001-13122 RELIANCE STEEL & ALUMINUM CO. (Exact name of registrant as specified in its charter) California 95-1142616 - ---------------------------------- ------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2550 East 25th Street Los Angeles, California 90058 (213) 582-2272 --------------------------------------------------------------- (Address of principal executive offices and telephone number) 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 July 31, 1996, 10,314,212 shares of the registrant's common stock, no par value, were outstanding. 2 INDEX PART I -- FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Consolidated Statements of Income (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Consolidated Statements of Cash Flows (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Notes to Consolidated Financial Statements (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 PART II -- OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3 PART I -- FINANCIAL INFORMATION RELIANCE STEEL & ALUMINUM CO. Consolidated Balance Sheets (In thousands except share amounts)
JUNE 30 DECEMBER 31 1996 1995 ------------------------------------------- (unaudited) (Note) ASSETS Current assets: Cash and cash equivalents $ 6,197 $ 18,012 Accounts receivable, less allowance for doubtful accounts of $3,182 at June 1996 and $3,253 at December 1995 73,506 68,874 Inventories 76,569 71,976 Prepaid expenses and other assets 4,257 5,550 Deferred income taxes 1,163 2,525 ------------------------------------------- Total current assets 161,692 166,937 Property, plant and equipment, at cost: Land 16,683 14,873 Buildings 49,161 36,688 Machinery and equipment 71,703 67,802 Allowances for depreciation (53,262) (53,077) ------------------------------------------- 84,285 66,286 Investment in 50%-owned company 27,875 25,561 Purchase price in excess of cost 10,880 1,689 ------------------------------------------- Total assets $284,732 $260,473 =========================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 52,384 $ 52,878 Wages and related accruals 3,641 5,292 Income taxes payable 905 5,136 Current maturities of long-term debt 2,900 2,900 ------------------------------------------- Total current liabilities 59,830 66,206 Long-term debt (Note 3) 45,950 30,350 Shareholders' equity (Note 2): Preferred stock, no par value: Authorized shares - 5,000,000 None issued or outstanding --- --- Common stock, no par value: Authorized shares - 20,000,000 Issued and outstanding shares - 10,314,212 at June 1996 and 10,272,307 at December 1995, stated capital 61,001 60,344 Retained earnings 117,951 103,573 ------------------------------------------- Total shareholders' equity 178,952 163,917 ------------------------------------------- Total liabilities and shareholders' equity $284,732 $260,473 ===========================================
See Notes to Consolidated Financial Statements. NOTE: The Balance Sheet at December 31, 1995 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. 1. 4 RELIANCE STEEL & ALUMINUM CO. Consolidated Statements of Income (Unaudited) (In thousands except share and per share amounts)
THREE MONTHS ENDED JUNE 30 1996 1995 ------------------------------------------- Net sales $164,628 $140,753 Other income 1,366 569 ------------------------------------------- 165,994 141,322 Costs and expenses: Cost of sales 125,506 109,512 Warehouse, delivery, selling, administrative and general 25,612 21,027 Depreciation and amortization 2,109 1,258 Interest 879 217 ------------------------------------------- 154,106 132,014 Income before equity in earnings of 50%-owned company and joint ventures and income taxes 11,888 9,308 Equity in earnings of 50%-owned company and joint ventures 1,265 376 ------------------------------------------- Income before income taxes 13,153 9,684 Income taxes: Federal 4,164 3,162 State 1,223 901 ------------------------------------------- 5,387 4,063 ------------------------------------------- Net income $ 7,766 $ 5,621 =========================================== Earnings per share $ .74 $ .55 =========================================== Weighted average shares outstanding 10,469,000 10,296,000 ===========================================
2. 5 RELIANCE STEEL & ALUMINUM CO. Consolidated Statements of Income (Unaudited) (In thousands except share and per share amounts)
SIX MONTHS ENDED JUNE 30 1996 1995 ------------------------------------------- Net sales $322,262 $277,255 Other income 3,414 1,200 ------------------------------------------- 325,676 278,455 Costs and expenses: Cost of sales 246,091 215,210 Warehouse, delivery, selling, administrative and general 50,589 42,037 Depreciation and amortization 3,709 2,489 Interest 1,308 473 ------------------------------------------- 301,697 260,209 Income before equity in earnings of 50%-owned company and joint ventures and income taxes 23,979 18,246 Equity in earnings of 50%-owned company and joint ventures 2,480 1,028 ------------------------------------------- Income before income taxes 26,459 19,274 Income taxes: Federal 8,388 6,293 State 2,461 1,793 ------------------------------------------- 10,849 8,086 ------------------------------------------- Net income $ 15,610 $ 11,188 =========================================== Earnings per share $ 1.49 $ 1.07 =========================================== Weighted average shares outstanding 10,454,000 10,458,000 ===========================================
3. 6 RELIANCE STEEL & ALUMINUM CO. Consolidated Statements of Cash Flows (Unaudited) (In thousands)
SIX MONTHS ENDED JUNE 30 1996 1995 ---------------------------------------- OPERATING ACTIVITIES Net income $15,610 $11,188 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 3,709 2,489 (Gain) loss on sales of machinery and equipment 101 (2) Net gain on sale of real estate (1,519) --- Increase in LIFO inventory reserve --- 5,287 Equity in earnings of 50%-owned company and joint ventures (2,480) (1,028) Changes in operating assets and liabilities: Accounts receivable 101 (10,507) Inventories 9,725 (11,481) Prepaid expenses and other assets 4,522 1,228 Income taxes (4,231) 349 Accounts payable and accrued expenses (4,367) 12,155 ---------------------------------------- Net cash provided by operating activities 21,171 9,678 ---------------------------------------- INVESTMENT ACTIVITIES Purchases of property, plant and equipment (10,693) (4,708) Proceeds from sales of property and equipment 106 70 Acquisition of CCC Steel, Inc. (24,974) --- Dividends received from 50%-owned company 165 --- ---------------------------------------- Net cash used in investing activities (35,396) (4,638) ---------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt 33,000 --- Payments on long-term debt (30,018) (1,731) Dividends paid (1,231) (1,042) Issuance of common stock 657 312 Repurchase of common stock --- (7,628) ---------------------------------------- Net cash provided by (used in) financing activities 2,408 (10,089) ---------------------------------------- Decrease in cash (11,815) (5,049) Cash and cash equivalents at beginning of period 18,012 8,343 ---------------------------------------- Cash and cash equivalents at end of period $ 6,197 $ 3,294 ======================================== SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING ACTIVITIES: Interest paid during the period $ 1,080 $ 399 Income taxes paid during the period 14,730 7,757
4. 7 RELIANCE STEEL & ALUMINUM CO. Notes to Consolidated Financial Statements (Unaudited) June 30, 1996 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for fair presentation, with respect to the interim financial statements have been included. The results of operations for the three month and six month periods ended June 30, 1996 are not necessarily indicative of the results for the full year ending December 31, 1996. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 1995, included in the Reliance Steel & Aluminum Co. Form 10-K. 2. SHAREHOLDERS' EQUITY In December 1994, the Board of Directors approved a Stock Repurchase Plan, authorizing the Company to purchase up to 500,000 shares of its Common Stock from time to time in the open market or in privately-negotiated transactions. Repurchased shares are redeemed and treated as authorized but unissued shares. In February 1995, the Board of Directors authorized the Company to purchase up to an additional 500,000 shares. As of June 30, 1996, the Company had repurchased a total of 651,800 shares of its Common Stock under the Stock Repurchase Plan at an average cost per share of $12.18. No shares were repurchased by the Company during the six month period ended June 30, 1996. In March 1996, 16,573 shares of Common Stock were issued to officers of the Company under the 1995 Key Man Incentive Plan. In January 1996, non-qualified stock options to purchase 221,500 shares of the Company's Common Stock at $18.25 per share were granted at the fair market value at the date of grant under the Incentive and Non-Qualified Stock Option Plan. The options become exercisable on a cumulative basis at the rate of 25% per year, commencing one year from the date of grant and expire five years from the date of grant. Earnings per share are computed using the weighted average number of shares of common stock and common stock equivalents attributable to stock options, which are not material, outstanding during each period. Common stock equivalents were calculated using the treasury stock method. 5. 8 RELIANCE STEEL & ALUMINUM CO. Notes to Consolidated Financial Statements (continued) 3. LONG-TERM DEBT Long-term debt consists of the following (in thousands):
June 30 December 31 1996 1995 ------------------------------------------ (unaudited) (audited) Revolving line of credit ($100,000 limit), due July 31, 1999, interest at variable rates, payable monthly $42,000 $25,000 Variable Rate Demand Industrial Development Revenue Bonds, Series 1989 A, due July 1, 2014 with interest payable quarterly 3,650 3,650 9% Senior Notes, due March 1, 1997, semiannual payments of $1,400, with interest payable quarterly 3,200 4,600 -------------------------------------------- 48,850 33,250 Less current portion (2,900) (2,900) ----------------------------------------- $45,950 $30,350 =========================================
The Company's long-term loan agreements include certain restrictions on the amount of corporate borrowings, leasehold obligations, investments, cash dividends, capital expenditures, and acquisition of the Company's Common Stock, among other things. In addition, the agreements require the maintenance of certain financial ratios. In June 1996, the Company's borrowing limit under the revolving line of credit was increased from $65 million to $100 million, and the subsidiaries of the Company issued guaranties under the line of credit. 4. ACQUISITION On April 3, 1996, the Company purchased 100% of the outstanding capital stock of CCC Steel, Inc. for approximately $25 million in cash. CCC Steel, Inc., was a privately-held, carbon steel service center, which has facilities in Los Angeles and Salt Lake City. The pre-tax income and assets of CCC Steel represented less than 10% of the pre-tax income and assets of the Company at the date of acquisition. This acquisition was funded by borrowings under the Company's revolving line of credit. On January 9, 1996, the Company purchased certain assets of a metals service center in Albuquerque, New Mexico. These assets were combined with the Company's existing non-ferrous metal center operations in Albuquerque. This transaction had no material effect on the Company's results of operations or financial position. 6. 9 RELIANCE STEEL & ALUMINUM CO. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table sets forth certain income statement data for the Company's metals service centers and Valex Corp. for the three month and six month periods ended June 30, 1996 and June 30, 1995 (dollars are shown in thousands and certain amounts may not calculate due to rounding):
Three Months Ended June 30, Six Months Ended June 30, -------------------------------------- -------------------------------- 1996 1995 1996 1995 -------------------------------------- -------------------------------- % of % of % of % of $ Net Sales $ Net Sales $ Net Sales $ Net Sales -------------------------------------------------------------------------------- NET SALES: Metals service centers . . $150,896 91.7% $131,693 93.6% $291,738 90.5% $259,749 93.7% Valex Corp. . . . . . . . . 13,732 8.3 9,060 6.4 30,524 9.5 17,506 6.3 ------------------------------------------------------------------------------- Total sales . . . . . . . 164,628 100.0 140,753 100.0 322,262 100.0 277,255 100.0 GROSS PROFIT: Metals service centers . . 34,128 20.7 28,426 20.2 64,208 19.9 55,933 20.2 Valex Corp. . . . . . . . . 4,994 3.0 2,815 2.0 11,963 3.7 6,112 2.2 ------------------------------------------------------------------------------- Total gross profit . . . 39,122 23.8 31,241 22.2 76,171 23.6 62,045 22.4 OPERATING EXPENSES: Metals service centers . . 24,778 15.1 20,539 14.6 48,432 15.0 41,178 14.9 Valex Corp. . . . . . . . . 2,943 1.8 1,745 1.2 5,866 1.8 3,348 1.2 ------------------------------------------------------------------------------- Total operating expense . 27,721 16.8 22,284 15.8 54,298 16.8 44,526 16.1 INCOME FROM OPERATIONS: Metals service centers. . . 9,350 5.7 7,887 5.6 15,776 4.9 14,755 5.3 Valex Corp. . . . . . . . . 2,051 1.2 1,070 .8 6,097 1.9 2,764 1.0 ------------------------------------------------------------------------------- Total operating income. . $11,401 6.9% $ 8,957 6.4% $ 21,873 6.8% $ 17,519 6.3% =============================================================================== FIFO INCOME FROM OPERATIONS . . $10,548 6.4% $11,653 8.3% $ 21,873 6.8% $ 22,806 8.2% ===============================================================================
Inventories for the Company's metals service centers have been stated on the last-in, first-out ("LIFO") method, which is not in excess of market. The Company uses the LIFO method of inventory valuation because it results in a better matching of costs and revenues. Under the LIFO method, the effect of suppliers' price increases or decreases is reflected directly in the cost of goods sold. During periods of increasing prices, LIFO accounting will cause reported income to be lower than would otherwise result from the use of the first-in, first-out ("FIFO") method of inventory valuation. The table above and the discussions which follow present certain information as if the Company used the FIFO method. This information is for supplementary purposes only in order to facilitate a comparison of the Company's results of operations with those of other similar companies who use the FIFO method. Inventories for Valex Corp. have been stated on the FIFO method, which is not in excess of market. THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995 (DOLLAR AMOUNTS IN THOUSANDS OTHER THAN SHARE AND PER SHARE AMOUNTS) Consolidated net sales for the three month period ended June 30, 1996 increased $23,875, or 17.0%, compared to the same period of 1995. These amounts include net sales of Valex, which increased $4,672, or 51.6%, in the 1996 period, compared to the 1995 period. Valex's increase over the first quarter of 1995 is due to an increase in the construction activities of the semiconductor manufacturing industry. The increase in metals service centers' net sales of $19,203, or 14.6%, reflects an increase of 50.6% in tons sold which was offset by a decrease in the average sales price per ton of 23.8% for the three month period ended June 30, 1996 compared to the corresponding period of 1995. The tons increased and average selling prices decreased for the 1996 period due mainly to the change in product mix from the 1995 period. The change in product mix occurred primarily due to the inclusion in 1996 of the net sales of CCC Steel, Inc., acquired on April 3, 1996, and of the Los Angeles service center which Reliance received upon the dissolution of the Feralloy Reliance Company, L.P. ("FRLP") joint venture on September 30, 1995. These facilities sell a significant volume of carbon steel products, which generally have lower prices than other products sold by the Company, such as aluminum and stainless steel. Excluding the sales from CCC Steel and the Los Angeles service center results in a decrease in tons sold of 0.7% and a decrease in the average selling price per ton of 1.1% for the 1996 period compared to the 1995 period. The average selling price per ton has decreased in response to the softening of costs of certain metals, and changes in the product mix. 7. 10 Total gross profit increased $7,881, or 25.2%, in the three month period ended June 30, 1996 compared to the corresponding period of 1995. Expressed as a percentage of sales, gross profit increased from 22.2% in 1995 to 23.8% in 1996. The increase was due primarily to the gross profit contributed by Valex. On a FIFO basis, gross profit for the metals service centers decreased to 22.1% of sales for the three month period ended June 30, 1996, from 23.6% for the corresponding period of 1995. This decrease was mainly due to the inclusion of the sales of CCC Steel and the Los Angeles service center, whose products generally have lower margins overall; and the change in pricing of aluminum and stainless steel products, which had a restricted supply in the 1995 period but not in the 1996 period, resulting in a more competitive sales market in 1996. However, the FIFO gross profit margin for the metals service centers, excluding CCC Steel, improved slightly in the second quarter of 1996 as compared to first quarter of 1996. The decrease in the LIFO reserve of $853 during the three month period ended June 30, 1996 was caused by a softening of the costs of the Company's raw materials during the 1996 period. Valex's gross profit of $4,994 for the 1996 period increased 77.4% from the same period in 1995. This increase was due to the increase in Valex sales volume experienced in 1996. Valex's gross profit was 36.4% of sales for the three month period ended June 30, 1996, compared to 31.1% for the same period in 1995. The increase in gross profit in 1996 as compared to 1995 was due primarily to increased sales and production efficiencies. Valex's gross profit percentage declined from 41.5% in the first quarter of 1996 due to a more competitive sales market in the second quarter of 1996 caused by a general slowdown in the semiconductor manufacturing industry. Warehouse, delivery, selling and general and administrative ("G&A") expenses increased $4,585, or 21.8%, in the three months ended June 30, 1996 compared to the corresponding period of 1995 and amounted to 15.6% and 14.9% of sales, respectively. The dollar increase in expenses reflects the increase in sales volume for the 1996 period, which includes the sales and related expenses of CCC Steel and the Los Angeles facility received upon the dissolution of FRLP. Interest expense increased by $662 due to an increase in the average debt outstanding during the three months ended June 30, 1996 as compared to the corresponding period of 1995. The increased debt outstanding related primarily to the borrowings for the acquisition of CCC Steel in April 1996, and borrowings made in the third quarter of 1995 to fund a portion of the acquisition of American Steel, L.L.C. and to pay off debt related to the Los Angeles operations received upon the dissolution of the FRLP joint venture. Equity in earnings of a 50%-owned company and joint ventures increased $889 in the three months ended June 30, 1996, as compared to the same period in 1995. This increase is due to the acquisition of a 50% interest in American Steel in July 1995, and the dissolution of the FRLP joint venture in September 1995. SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995 (DOLLAR AMOUNTS IN THOUSANDS OTHER THAN SHARE AND PER SHARE AMOUNTS) Consolidated net sales increased $45,007, or 16.2%, compared to the first six months of 1995. These amounts include net sales of Valex, which increased $13,018, or 74.4%, due to the increased construction activities of the semiconductor manufacturing industry in 1996. The rate of increase in Valex's net sales declined from 98.8% in the first quarter of 1996 compared to 51.6% in the second quarer of 1996 as a result of a general slowing in construction activity in the second quarter of 1996, which is expected to last through the third quarter of 1996. The increase in metals service centers' net sales of $31,989, or 12.3%, reflects an increase of 34.6% in tons sold offset by a decrease in the average sales price per ton of 15.5% for the first six months of 1996 compared to the corresponding period of 1995. The tons increased and the average selling prices decreased for the 1996 period due mainly to the change in product mix from the first six months of 1995. The change in product mix occurred mainly due to the inclusion in 1996 of the net sales of CCC Steel, acquired by the Company in April 1996, and the net sales of the Los Angeles service center received upon the dissolution of the FRLP joint venture on September 30, 1995. These facilities sell a significant volume of carbon steel products, which generally have lower prices than other products sold by the Company, such as aluminum and stainless steel. If the sales of CCC Steel and the Los Angeles service center were excluded from the calculation, this would result in a decrease in tons sold of 0.8% and an increase in the average selling price per ton of 0.4% for the 1996 period compared to the 1995 period for the metals service centers. Included in other income for the first six months of 1996 is a net gain of $1,519 realized on the sale of the property at the existing Bralco Metals facility near Los Angeles. Land was purchased in 1995 and construction is in progress to relocate the Bralco Metals facility, which is expected to occur during the fourth quarter of 1996. 8. 11 Total gross profit increased $14,126, or 22.8%, in the first six months of 1996 compared to the first six months of 1995. Expressed as a percentage of sales, gross profit increased from 22.4% in 1995 to 23.6% in 1996. The increase was primarily due to LIFO inventory accounting and the gross profit contributed by Valex. On a FIFO basis, gross profit for the metals service centers declined to 22.0% of sales for the first six months of 1996, compared to 23.6% for the first six months of 1995; however, the gross profit margin, excluding CCC Steel, improved slightly in the second quarter of 1996 as compared to the first quarter of 1996. The LIFO reserve remained constant during the first six months of 1996, due to a softening of the costs of the Company's raw materials during the second quarter of 1996. Valex's gross profit increased by $5,851, or 95.7%, during the first six months of 1996, as compared to the same period of 1995 and was 39.2% of sales for the first six months of 1996, compared to 34.9% for the same period in 1995. These increases were due to the increase in Valex sales volume experienced in 1996 and production efficiency gains realized from capital improvements. Warehouse, delivery, selling and general and administrative ("G&A") expenses increased $8,552, or 20.3%, in the first six months of 1996 compared to the corresponding period of 1995 and amounted to 15.7% and 15.2% of sales, respectively. The dollar increase in expenses reflects the increase in sales volume for the 1996 period, which includes the sales and related expenses of CCC Steel and the Los Angeles facility received upon the dissolution of FRLP. Interest expense increased by $835 due to an increase in the average debt outstanding during the first six months of 1996 as compared to the corresponding period of 1995. This increase was due primarily to borrowings made for the acquisition of CCC Steel in April 1996, and for borrowings made in the third quarter of 1995 to fund a portion of the acquisition of American Steel and to pay off debt related to the Los Angeles operations received upon the dissolution of the FRLP joint venture. Equity in earnings of a 50%-owned company and joint ventures increased $1,452 in the first six months of 1996 as compared to the corresponding period of 1995, due to the acquisition of a 50% interest in American Steel in July 1995, and the dissolution of the FRLP joint venture in September 1995. The FRLP joint venture was not performing at desired levels for the Company's return on investment. Earnings per share for the six month period ended June 30,1996 of $1.49 includes $.09 per share attributable to the sale of the Bralco Metals property. LIQUIDITY AND CAPITAL RESOURCES (DOLLAR AMOUNTS IN THOUSANDS OTHER THAN SHARE AND PER SHARE AMOUNTS) At June 30, 1996, working capital amounted to $101,862 compared to $100,731 at December 31, 1995. The Company's capital requirements are primarily for working capital, acquisitions and capital expenditures for continued improvements in plant capacities and material handling and processing equipment. The Company's primary sources of liquidity are from internally generated funds from operations and the Company's revolving credit facility. In June 1996, the Company's borrowing limit under the revolving line of credit was increased from $65,000 to $100,000, and the subsidiaries of the Company issued guaranties under the line of credit. The increase in cash provided by operations of $11,493 during the six month period ended June 30, 1996 compared to the corresponding 1995 period was due primarily to reductions in inventory and accounts receivable, and an increase in net income. In December 1994, the Company adopted a Stock Repurchase Plan, authorizing the Company to purchase up to 500,000 shares of its outstanding Common Stock. In February 1995, the Company authorized the purchase of up to an additional 500,000 shares. As of June 30, 1996, the Company had repurchased a total of 651,800 shares of its Common Stock, at an average purchase price of $12.18 per share, all of which are being treated as authorized but unissued shares. The Company did not repurchase any shares of its Common Stock during the six months ended June 30, 1996. The Company believes such purchases enhance shareholder value and reflect its confidence in the long-term growth potential of the Company. Capital expenditures were $10,693 for the six months ended June 30, 1996. The Company purchased CCC Steel for approximately $25,000. The Company had no material commitments for capital expenditures as of June 30, 1996. The acquisition of CCC Steel in April 1996, including the repayment of certain of CCC Steel's debt, was funded by borrowings under the Company's revolving line of credit. The Company anticipates that funds generated from operations and funds 9. 12 available under its existing bank line of credit will be more than sufficient to meet its working capital needs in the foreseeable future. SEASONALITY The Company recognizes that some of its customers may be in seasonal businesses, especially customers in the construction industry. As a result of the Company's geographic, product and customer diversity, however, the Company's operations have not shown any material seasonal trends, although the months of November and December traditionally have been less profitable because of a reduced number of working days on which the Company is able to ship its products and seasonal closures for some of its customers. There can be no assurance that period-to- period fluctuations will not occur. Results of any one or more quarters are therefore not necessarily indicative of annual results. ACQUISITION On April 3, 1996, the Company purchased 100% of the outstanding capital stock of CCC Steel, Inc., a privately-held, carbon steel service center with facilities in Los Angeles and Salt Lake City, for approximately $25 million in cash. CCC Steel is one of the largest structural steel distribution companies in the Western U.S. 10. 13 PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. Not applicable. ITEM 2. CHANGES IN SECURITIES. (a) Not applicable. (b) Not applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. (a) Not applicable. (b) Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. (a) The annual meeting of Reliance Steel & Aluminum Co. shareholders was held on May 24, 1995. (b) [Need not be answered because (1) proxies for the meeting were solicited pursuant to Regulation 14 under the Securities Exchange Act of 1934, (2) there was no solicitation in opposition to management's nominees as listed in the proxy statement, and (3) all such nominees were elected.] (c) The following is a brief description of matters voted upon at the meeting: Four Directors were elected at the annual meeting. Joe D. Crider: 8,862,791 shares were voted for election and 66,836 shares were withheld. William T. Gimbel: 8,864,991 shares were voted for election and 64,636 shares were withheld. David H. Hannah: 8,824,151 shares were voted for election and 105,476 shares were withheld. William I. Rumer: 8,927,291 shares were voted for election and 2,336 shares were withheld. The Board of Directors selected Ernst & Young as independent auditors to audit the financial statements of the Company and its subsidiaries for 1996, subject to ratification by the shareholders. The selection was approved: 8,924,259 shares were voted for the proposal, 100 shares were voted against it, and 5,268 shares abstained. ITEM 5. OTHER INFORMATION. Not applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits First Amended and Restated Business Loan Agreement dated June 26, 1996 between the Company and Bank of America. (b) Form 8-K The Company filed a Form 8-K, dated April 3,1996, reporting the acquisition of CCC Steel, Inc. 11. 14 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. RELIANCE STEEL & ALUMINUM CO. Dated: August 6, 1996 By: /s/ David H. Hannah ------------------------------- David H. Hannah President By: /s/ Steven S. Weis ------------------------------- Steven S. Weis Chief Financial Officer 12. EX-99.(A) 2 FIRST AMENDED AND RESTATED BUSINESS LOAN AGREEMENT 1 FIRST AMENDED AND RESTATED BUSINESS LOAN AGREEMENT This Agreement dated as of June 26, 1996, is between Bank of America National Trust and Savings Association (the "Bank") and Reliance Steel & Aluminum Co. (the "Borrower"). 1. FACILITY NO. 1: LINE OF CREDIT AMOUNT AND TERMS 1.1 Line of Credit Amount. (a) During the availability period described below, the Bank will provide a line of credit ("Facility No. 1") to the Borrower. The amount of the line of credit (the "Facility No. 1 Commitment") is One Hundred Million Dollars ($100,000,000). (b) This is a revolving line of credit. During the availability period, the Borrower may prepay principal amounts and reborrow them. (c) The Borrower agrees not to permit the outstanding principal balance of the line of credit to exceed the Facility No. 1 Commitment. 1.2 Availability Period. The line of credit is available between the date of this Agreement and July 31, 1999 (the "Expiration Date") unless the Borrower is in default. 1.3 Interest Rate. (a) Unless the Borrower elects an optional interest rate as described below, the interest rate is the Bank's Reference Rate. (b) The Reference Rate is the rate of interest publicly announced from time to time by the Bank in San Francisco, California, as its Reference Rate. The Reference Rate is set by the Bank based on various factors, including the Bank's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans. The Bank may price loans to its customers at, above, or below the Reference Rate. Any change in the Reference Rate shall take effect at the opening of business on the day specified in the public announcement of a change in the Bank's Reference Rate. 1.4 Repayment Terms. (a) The Borrower will pay interest on August 1, 1996, and then monthly thereafter until payment in full of any principal outstanding under this line of credit. - 1 - 2 (b) The Borrower will repay in full all principal and any unpaid interest or other charges outstanding under this line of credit no later than the Expiration Date. 1.5 Optional Interest Rates. Instead of the interest rate based on the Bank's Reference Rate, the Borrower may elect the optional interest rates listed below for this Facility No. 1 during interest periods agreed to by the Bank and the Borrower. The optional interest rates shall be subject to the terms and conditions described later in this Agreement. Any principal amount bearing interest at an optional rate under this Agreement is referred to as a "Portion." The following optional interest rates are available: (a) LIBOR Rate plus .50 percentage points. (b) the Cayman Rate plus .50 percentage points. 2. FACILITY NO. 2: LETTERS OF CREDIT AMOUNT AND TERMS 2.1 Letters of Credit. At the request of the Borrower, between the date of this Agreement and the Expiration Date, the Bank will issue: (a) commercial letters of credit with a maximum maturity of 365 days but not to extend more than 180 days beyond the Expiration Date. Each commercial letter of credit will require drafts payable at sight or up to 30 days after sight. (b) standby letters of credit with a maximum maturity of 365 days but not to extend more than 180 days beyond the Expiration Date. The standby letters of credit may include a provision providing that the maturity date will be automatically extended each year for an additional year unless the Bank gives written notice to the contrary. (c) The following letters of credit are outstanding from the Bank for the account of the Borrower:
Letter of Credit Number Amount ----------------------- ------ LASB# 214833 $ 375,000.00 LASB# 216483 188,570.90 LASB# 216484 1,300,000.00 LASB# 217917 1,464,000.00 LASB# 217918 714,000.00
As of the date of this Agreement, these letters of credit shall be deemed to be outstanding under this Agreement, and shall be subject to all the terms and conditions stated in this Agreement. 2.2 Amount. The amount of the letters of credit outstanding at any one time (including the drawn and unreimbursed - 2 - 3 amounts of the letters of credit) may not exceed Ten Million Dollars ($10,000,000); provided, however, that if Metal Center Inc. should be merged into the Borrower, then that certain standby letter of credit # LASB 216449 shall be deemed to be outstanding under this Agreement and the amount of letters of credit outstanding at any one time (including the drawn and unreimbursed amounts of letters of credit) may not exceed Thirteen Million Six Hundred Fifty Thousand Dollars ($13,650,000). 2.3 Other Terms. The Borrower agrees: (a) if there is a default under this Agreement, to immediately prepay and make the Bank whole for any outstanding letters of credit. (b) the issuance of any letter of credit and any amendment to a letter of credit is subject to the Bank's written approval and must be in form and content satisfactory to the Bank and in favor of a beneficiary acceptable to the Bank. (c) to sign the Bank's form Application and Agreement for Commercial Letter of Credit or Application and Agreement for Standby Letter of Credit. (d) to pay any issuance and/or other fees that the Bank notifies the Borrower will be charged for issuing and processing letters of credit for the Borrower. (e) to allow the Bank to automatically charge its checking account for applicable fees, discounts, and other charges. (f) to pay the Bank a non-refundable fee equal to 7/8% per annum of the outstanding undrawn amount of each standby letter of credit, payable annually in advance, calculated on the basis of the face amount outstanding on the day the fee is calculated. If there is a default under this Agreement, at the Bank's option, the amount of the fee shall be increased to 2% per annum, effective starting on the day the Bank provides notice of the increase to the Borrower. 3. OPTIONAL INTEREST RATES 3.1 Optional Rates. Each optional interest rate is a rate per year. Interest will be paid on the last day of each interest period, and, if the interest period is longer than 90 days, then on the first day of each month during the interest period. At the end of any interest period, the interest rate will revert to the rate based on the Reference Rate, unless the Borrower has designated another optional interest rate for the Portion. No Portion will be converted to a different interest rate during the applicable interest period. Upon the occurrence of an event of default under this Agreement, the Bank may - 3 - 4 terminate the availability of optional interest rates for interest periods commencing after the default occurs. 3.2 LIBOR Rate. The election of LIBOR Rates shall be subject to the following terms and requirements: (a) The interest period during which the LIBOR Rate will be in effect will be one, two, or three weeks, or one, two, three, four, five, six, seven, eight, nine, ten, eleven, or twelve months. The first day of the interest period must be a day other than a Saturday or a Sunday on which the Bank is open for business in California, New York and London and dealing in offshore dollars (a "LIBOR Banking Day"). The last day of the interest period and the actual number of days during the interest period will be determined by the Bank using the practices of the London inter-bank market. (b) Each LIBOR Rate portion will be for an amount not less than Five Hundred Thousand Dollars ($500,000) for interest periods of one month or longer. For shorter maturities, each Libor Rate portion will be for an amount which, when multiplied by the number of days in the applicable interest period, is not less than fifteen million (15,000,000) dollar-days. (c) The "LIBOR Rate" means the interest rate determined by the following formula, rounded upward to the nearest 1/100 of one percent. (All amounts in the calculation will be determined by the Bank as of the first day of the interest period.) LIBOR Rate = London Inter-Bank Offered Rate ---------------------------------- (1.00 - Reserve Percentage) Where, (i) "London Inter-Bank Offered Rate" means the interest rate at which the Bank's London Branch, London, Great Britain, would offer U.S. dollar deposits for the applicable interest period to other major banks in the London inter-bank market at approximately 11:00 a.m. London time two (2) London Banking Days before the commencement of the interest period. A "London Banking Day" is a day on which the Bank's London Branch is open for business and dealing in offshore dollars. (ii) "Reserve Percentage" means the total of the maximum reserve percentages for determining the reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency Liabilities, as defined in Federal Reserve Board Regulation D, rounded upward to the nearest 1/100 of one percent. The percentage will be expressed as a decimal, and will include, but not be limited to, marginal, emergency, supplemental, special, and other reserve percentages. - 4 - 5 (d) The Borrower shall irrevocably request a LIBOR Rate Portion no later than 12:00 noon San Francisco time on the LIBOR Banking Day preceding the day on which the London Inter-Bank Offered Rate will be set, as specified above. (e) The Borrower may not elect an interest period for a LIBOR Rate which is scheduled to end more than six months after the Expiration Date. (f) Any Portion of the principal balance already bearing interest at the LIBOR Rate will not be converted to a different rate during its interest period. (g) Each prepayment of a LIBOR Rate Portion, whether voluntary, by reason of acceleration or otherwise, will be accompanied by the amount of accrued interest on the amount prepaid and a prepayment fee as described below. A "prepayment" is a payment of an amount on a date earlier than the scheduled payment date for such amount as required by this Agreement. The prepayment fee shall be equal to the amount (if any) by which: (i) the additional interest which would have been payable during the interest period on the amount prepaid had it not been prepaid, exceeds (ii) the interest which would have been recoverable by the Bank by placing the amount prepaid on deposit in the domestic certificate of deposit market, the eurodollar deposit market, or other appropriate money market selected by the Bank, for a period starting on the date on which it was prepaid and ending on the last day of the interest period for such Portion (or the scheduled payment date for the amount prepaid, if earlier). (h) The Bank will have no obligation to accept an election for a LIBOR Rate Portion if any of the following described events has occurred and is continuing: (i) Dollar deposits in the principal amount, and for periods equal to the interest period, of a LIBOR Rate Portion are not available in the London inter-bank market; or (ii) the LIBOR Rate does not accurately reflect the cost of a LIBOR Rate Portion. 3.3 Cayman Rate. The election of Cayman Rates shall be subject to the following terms and requirements: (a) The interest period during which the Cayman Rate will be in effect will be one year or less. The last day of the interest period will be determined by the Bank - 5 - 6 using the practices of the offshore dollar inter-bank market. (b) Each Cayman Rate Portion will be for an amount not less than Five Hundred Thousand Dollars ($500,000) for interest periods of 30 days or longer. For shorter maturities, each Cayman Rate Portion will be for an amount which, when multiplied by the number of days in the applicable interest period, is not less than fifteen million (15,000,000) dollar-days. (c) The Borrower may not elect an interest period for a Cayman Rate which is scheduled to end more than 180 days after the Expiration Date. (d) The "Cayman Rate" means the interest rate determined by the following formula, rounded upward to the nearest 1/100 of one percent. (All amounts in the calculation will be determined by the Bank as of the first day of the interest period.) Cayman Rate = Cayman Base Rate -------------------------- (1.00 - Reserve Percentage) Where, (i) "Cayman Base Rate" means the interest rate at which the Bank's Grand Cayman Branch, Grand Cayman, British West Indies, would offer U.S. dollar deposits for the applicable interest period to other major banks in the offshore dollar inter-bank market. (ii) "Reserve Percentage" means the total of the maximum reserve percentages for determining the reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency Liabilities, as defined in Federal Reserve Board Regulation D, rounded upward to the nearest 1/100 of one percent. The percentage will be expressed as a decimal, and will include, but not be limited to, marginal, emergency, supplemental, special, and other reserve percentages. (e) Each prepayment of a Cayman Rate Portion, whether voluntary, by reason of acceleration or otherwise, will be accompanied by the amount of accrued interest on the amount prepaid, and a prepayment fee as described below. A "prepayment" is a payment of an amount on a date earlier than the scheduled payment date for such amount as required by this Agreement. The prepayment fee shall be equal to the amount (if any) by which: (i) the additional interest which would have been payable during the interest period on the amount prepaid had it not been prepaid, exceeds - 6 - 7 (ii) the interest which would have been recoverable by the Bank by placing the amount prepaid on deposit in the domestic certificate of deposit market, the eurodollar deposit market, or other appropriate money market selected by the Bank for a period starting on the date on which it was prepaid and ending on the last day of the interest period for such Portion (or the scheduled payment date for the amount prepaid, if earlier). (f) The Bank will have no obligation to accept an election for a Cayman Rate Portion if any of the following described events has occurred and is continuing: (i) Dollar deposits in the principal amount, and for periods equal to the interest period, of a Cayman Rate Portion are not available in the offshore Dollar inter-bank market; or (ii) the Cayman Rate does not accurately reflect the cost of a Cayman Rate Portion. 4. FEES, EXPENSES AND COSTS 4.1 Fees. (a) Unused commitment fee. The Borrower agrees to pay a fee on any difference between the Facility No. 1 Commitment and the amount of credit it actually uses under Facility No. 1, determined by the weighted average credit outstanding during the specified period. The fee will be calculated at three sixteenths (3/16%) of one percent per year. This fee is due in arrears on September 30, 1996 and on the last day of each following quarter until the Expiration Date. (b) Waiver Fee. If the Bank, at its discretion, agrees to waive or amend any terms of this Agreement, then the Borrower will pay the Bank a Two Thousand Five Hundred Dollar ($2,500) fee for each waiver or amendment. Nothing in this paragraph shall imply that the Bank is obligated to agree to any waiver or amendment requested by the Borrower. The Bank may impose additional requirements as a condition to any waiver or amendment. 4.2 Expenses. The Borrower agrees to immediately repay the Bank for reasonable expenses that include, but are not limited to, filing, recording and search fees, appraisal fees, title report fees, documentation fees. 4.3 Reimbursement Costs. The Borrower agrees to reimburse the Bank for any reasonable expenses it incurs in the preparation of this Agreement and any agreement or instrument - 7 - 8 required by this Agreement in excess of those fees and costs listed above. Expenses include, but are not limited to, reasonable attorneys' fees, including any allocated costs of the Bank's in-house counsel. 5. DISBURSEMENTS, PAYMENTS AND COSTS 5.1 Requests for Credit. Each request for an extension of credit will be made in writing in a manner acceptable to the Bank, or by another means acceptable to the Bank. 5.2 Disbursements and Payments. Each disbursement by the Bank and each payment by the Borrower will be: (a) made at the Bank's branch (or other location) selected by the Bank from time to time; (b) made for the account of the Bank's branch selected by the Bank from time to time; (c) made in immediately available funds, or such other type of funds selected by the Bank; (d) evidenced by records kept by the Bank. In addition, the Bank may, at its discretion, require the Borrower to sign one or more promissory notes. 5.3 Telephone and Telefax Authorization. (a) The Bank may honor telephone or telefax instructions for advances or repayments or for the designation of optional interest rates and telefax requests for the issuance of letters of credit given by any one of the individuals authorized to sign loan agreements on behalf of the Borrower, or any other individual designated by any one of such authorized signers. (b) Advances will be deposited in and repayments will be withdrawn from the Borrower's account number 14594-06400 entitled "Reliance Consolidated", or such other of the Borrower's accounts with the Bank as designated in writing by the Borrower. (c) The Borrower will provide written confirmation to the Bank of any telephone or telefax instructions within 5 days. If there is a discrepancy and the Bank has already acted on the instructions, the telephone or telefax instructions will prevail over the written confirmation. (d) The Borrower indemnifies and excuses the Bank (including its officers, employees, and agents) from all liability, loss, and costs in connection with any act resulting from telephone or telefax instructions it - 8 - 9 reasonably believes are made by any individual authorized by the Borrower to give such instructions. This indemnity and excuse will survive this Agreement's termination. 5.4 Direct Debit (Pre-Billing). (a) The Borrower agrees that the Bank will debit the Borrower's deposit account number 14594-06400 entitled "Reliance Consolidated", or such other of the Borrower's accounts with the Bank as designated in writing by the Borrower (the "Designated Account") on the date each payment of principal and interest and any fees from the Borrower becomes due (the "Due Date"). If the Due Date is not a banking day, the Designated Account will be debited on the next banking day. (b) Approximately 5 days prior to each Due Date, the Bank will mail to the Borrower a statement of the amounts that will be due on that Due Date (the "Billed Amount"). The calculation will be made on the assumption that no new extensions of credit or payments will be made between the date of the billing statement and the Due Date, and that there will be no changes in the applicable interest rate. (c) The Bank will debit the Designated Account for the Billed Amount, regardless of the actual amount due on that date (the "Accrued Amount"). If the Billed Amount debited to the Designated Account differs from the Accrued Amount, the discrepancy will be treated as follows: (i) If the Billed Amount is less than the Accrued Amount, the Billed Amount for the following Due Date will be increased by the amount of the discrepancy. The Borrower will not be in default by reason of any such discrepancy. (ii) If the Billed Amount is more than the Accrued Amount, the Billed Amount for the following Due Date will be decreased by the amount of the discrepancy. Regardless of any such discrepancy, interest will continue to accrue based on the actual amount of principal outstanding without compounding. The Bank will not pay the Borrower interest on any overpayment. (d) The Borrower will maintain sufficient funds in the Designated Account to cover each debit. If there are insufficient funds in the Designated Account on the date the Bank enters any debit authorized by this Agreement, the debit will be reversed. 5.5 Banking Days. Unless otherwise provided in this Agreement, a banking day is a day other than a Saturday or a Sunday on which the Bank is open for business in California. For - 9 - 10 amounts bearing interest at an offshore rate (if any), a banking day is a day other than a Saturday or a Sunday on which the Bank is open for business in California and dealing in offshore dollars. All payments and disbursements which would be due on a day which is not a banking day will be due on the next banking day. All payments received on a day which is not a banking day will be applied to the credit on the next banking day. 5.6 Taxes. If any payments to the Bank under this Agreement are made from outside the United States, the Borrower will not deduct any foreign taxes from any payments it makes to the Bank. If any such taxes are imposed on any payments made by the Borrower (including payments under this paragraph), the Borrower will pay the taxes and will also pay to the Bank, at the time interest is paid, any additional amount which the Bank specifies as necessary to preserve the after-tax yield the Bank would have received if such taxes had not been imposed. The Borrower will confirm that it has paid the taxes by giving the Bank official tax receipts (or notarized copies) within 30 days after the due date. 5.7 Additional Costs. The Borrower will pay the Bank, on demand, for the Bank's costs or losses arising from any statute or regulation, or any request or requirement of a regulatory agency which is applicable to all national banks or a class of all national banks. The costs and losses will be allocated to the loan in a manner determined by the Bank, using any reasonable method. The costs include the following: (a) any reserve or deposit requirements; and (b) any capital requirements relating to the Bank's assets and commitments for credit. 5.8 Interest Calculation. All interest at rates related to the LIBOR Rate or the Cayman Rate will be computed on the basis of a 360-day year and the actual number of days elapsed, which results in more interest than if a 365-day year is used. All interest at the rate related to the Reference Rate and all fees will be computed on the basis of a 365-day year and the actual number of days elapsed. 5.9 Default Rate. Upon the occurrence and during the continuation of any default under this Agreement, principal amounts outstanding under this Agreement will at the option of the Bank bear interest at a rate which is one (1.0) percentage point higher than the rate of interest otherwise provided under this Agreement. This will not constitute a waiver of any default. Installments of principal which are not paid when due under this Agreement shall continue to bear interest until paid. Any interest, fees or costs which are not paid when due shall bear interest at the Bank's Reference Rate plus one (1.0) percentage point. This may result in compounding of interest. - 10 - 11 6. CONDITIONS The Bank must receive the following items, in form and content acceptable to the Bank, before it is required to extend any credit to the Borrower under this Agreement: 6.1 Authorizations. Evidence that the execution, delivery and performance by the Borrower (and any guarantor) of this Agreement and any instrument or agreement required under this Agreement have been duly authorized. 6.2 Governing Documents. A copy of the Borrower's articles of incorporation. 6.3 Insurance. Evidence of insurance coverage, as required in the "Covenants" section of this Agreement. 6.4 Guaranties. Guaranties signed by Valex Corp., CCC Steel, Inc., and MetalCenter, Inc., each in the amount of One Hundred Fifteen Million Dollars ($115,000,000). 6.5 Good Standing. Certificates of good standing for the Borrower from its state of formation and from any other state in which the Borrower is required to qualify to conduct its business. 6.6 Payment of Fees. Payment of all accrued and unpaid expenses incurred by the Bank as required by the paragraph entitled "Reimbursement Costs." 6.7 Other Items. Any other items that the Bank reasonably requires. 7. REPRESENTATIONS AND WARRANTIES When the Borrower signs this Agreement, and until the Bank is repaid in full, the Borrower makes the following representations and warranties. Each request for an extension of credit constitutes a renewed representation: 7.1 Organization of Borrower. The Borrower is a corporation duly formed and existing under the laws of the state where organized. 7.2 Authorization. This Agreement, and any instrument or agreement required hereunder, are within the Borrower's powers, have been duly authorized, and do not conflict with any of its organizational papers. 7.3 Enforceable Agreement. This Agreement is a legal, valid and binding agreement of the Borrower, enforceable against the Borrower in accordance with its terms, and any instrument or agreement required hereunder, when executed and delivered, will be similarly legal, valid, binding and enforceable. - 11 - 12 7.4 Good Standing. In each state in which the Borrower does business, it is properly licensed, in good standing, and, where required, in compliance with fictitious name statutes. 7.5 No Conflicts. This Agreement does not conflict with any law, agreement, or obligation by which the Borrower is bound. 7.6 Financial Information. All financial and other information that has been or will be supplied to the Bank, including the Borrower's financial statement dated as of March 31, 1996, is: (a) sufficiently complete to give the Bank accurate knowledge of the Borrower's (and any guarantor's) financial condition. (b) in compliance with all government regulations that apply. Since the date of the financial statement specified above, there has been no material adverse change in the assets or financial condition of the Borrower (or any guarantor). 7.7 Lawsuits. There is no lawsuit, tax claim or other dispute pending or threatened against the Borrower which, if lost, would impair the Borrower's financial condition or ability to repay the loan, except as have been disclosed in writing to the Bank. 7.8 Permits, Franchises. The Borrower possesses all permits, memberships, franchises, contracts and licenses required and all trademark rights, trade name rights, patent rights and fictitious name rights necessary to enable it to conduct the business in which it is now engaged. 7.9 Other Obligations. The Borrower is not in default on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation, except as have been disclosed in writing to the Bank. 7.10 Income Tax Returns. The Borrower has no knowledge of any pending assessments or adjustments of its income tax for any year, except as have been disclosed in writing to the Bank. 7.11 No Event of Default. There is no event which is, or with notice or lapse of time or both would be, a default under this Agreement. 7.12 ERISA Plans. (a) The Borrower has fulfilled its obligations, if any, under the minimum funding standards of ERISA and the - 12 - 13 Code with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Code, and has not incurred any liability with respect to any Plan under Title IV of ERISA. (b) No reportable event has occurred under Section 4043(b) of ERISA for which the PBGC requires 30 day notice. (c) No action by the Borrower to terminate or withdraw from any Plan has been taken and no notice of intent to terminate a Plan has been filed under Section 4041 of ERISA. (d) No proceeding has been commenced with respect to a Plan under Section 4042 of ERISA, and no event has occurred or condition exists which might constitute grounds for the commencement of such a proceeding. (e) The following terms have the meanings indicated for purposes of this Agreement: (i) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (ii) "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. (iii) "PBGC" means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA. (iv) "Plan" means any employee pension benefit plan maintained or contributed to by the Borrower and insured by the Pension Benefit Guaranty Corporation under Title IV of ERISA. 7.13 Location of Borrower. The Borrower's place of business (or, if the Borrower has more than one place of business, its chief executive office) is located at the address listed under the Borrower's signature on this Agreement. 8. COVENANTS The Borrower agrees, so long as credit is available under this Agreement and until the Bank is repaid in full: 8.1 Use of Proceeds. To use the proceeds of the credit only for working capital purposes and acquisitions. 8.2 Financial Information. To provide the following financial information and statements in form and content acceptable to the Bank, and such additional information as requested by the Bank from time to time: - 13 - 14 (a) Within 100 days of the Borrower's fiscal year end, the Borrower's annual financial statements. These financial statements must be audited (with an unqualified opinion except as to changes in accounting principles in which the auditors concur) by a certified public accountant acceptable to the Bank. The statements shall be prepared on a consolidated basis. (b) Within 60 days of the period's end, the Borrower's quarterly financial statements. These financial statements may be Borrower prepared. The statements shall be prepared on a consolidated basis. (c) Copies of the Borrower's federal income tax return, within 30 days of filing, and, if requested by the Bank, copies of any extensions of the filing date. (d) Within the period(s) provided in (a) and (b) above, a compliance certificate of the Borrower signed by an authorized financial officer of the Borrower setting forth (i) the information and computations (in sufficient detail) to establish that the Borrower is in compliance with all financial covenants at the end of the period covered by the financial statements then being furnished and (ii) whether there existed as of the date of such financial statements and whether there exists as of the date of the certificate, any default under this Agreement and, if any such default exists, specifying the nature thereof and the action the Borrower is taking and proposes to take with respect thereto. (e) Within sixty (60) days of the date of this Agreement, a completed Bank form Environmental Questionnaire and Disclosure Statement. 8.3 Current Ratio. To maintain on a consolidated basis a ratio of current assets to current liabilities of at least 1.9:1.0. 8.4 Total Liabilities to Net Worth. To maintain on a consolidated basis a ratio of total liabilities not subordinated to net worth not exceeding 1.25:1.0. "Total liabilities not subordinated" means the sum of current liabilities plus long term liabilities, excluding liabilities subordinated to the Borrower's obligations to the Bank in a manner acceptable to the Bank, using the Bank's standard form. 8.5 Fixed Charge Coverage Ratio. To maintain on a consolidated basis a Fixed Charge Coverage Ratio of at least 1.75:1.0. "Fixed Charge Coverage Ratio" means the ratio of the sum of net income plus income taxes, plus interest expense, lease expense, and rent expense plus depreciation and amortization to the sum of interest expense, lease expense, rent expense, and the greater of - 14 - 15 the current portion of long term debt or Five Million Dollars ($5,000,000). This ratio will be calculated at the end of each fiscal quarter, using the results of that quarter and each of the 3 immediately preceding quarters. The current portion of long term liabilities will be measured as of the last day of the preceding fiscal year. 8.6 Positive Liquidity Formula. To maintain at all times total liquidity in an amount greater than Zero Dollars ($0), calculated as follows: (a) The sum of (i) eighty percent (80%) of the Borrower's accounts receivable that have not been outstanding more than 90 days from their due dates, (ii) sixty percent (60%) of the sum of Borrower's inventory plus fifty percent (50%) of LIFO or FIFO reserves minus accounts payable, and (iii) thirty-five percent (35%) of the Borrower's net fixed assets; minus (b) The Borrower's total interest bearing debt. 8.7 Other Debts. Not to have outstanding or incur any direct or contingent liabilities (other than those to the Bank), or become liable for the liabilities of others without the Bank's written consent. This does not prohibit: (a) Acquiring goods, supplies, or merchandise on normal trade credit. (b) Endorsing negotiable instruments received in the usual course of business. (c) Obtaining surety bonds in the usual course of business. (d) Liabilities and lines of credit and leases in existence on the date of this Agreement disclosed in writing to the Bank in the Borrower's financial statement dated March 31, 1996. (e) Additional operating lease obligations for the acquisition of fixed or capital assets. 8.8 Other Liens. Not to create, assume, or allow any security interest or lien (including judicial liens) on property the Borrower now or later owns, except: (a) Deeds of trust and security agreements in favor of the Bank. (b) Liens for taxes not yet due. - 15 - 16 (c) Liens outstanding on the date of this Agreement disclosed in writing to the Bank. (d) Liens in connection with workers' compensation, unemployment insurance or social security obligations. (e) Mechanics', workmen's, materialmen's landlords', carriers', or other like liens arising in the ordinary and normal course of business with respect to obligations which are not due or which are being contested in good faith. (f) Conditional sale or other title retention agreements or liens to secure all or any portion of the purchase price of any fixed assets acquired for use in the ordinary course of business, provided that the aggregate obligations of such nature immediately following the imposition of any such purchase money lien shall not exceed 10% of the Borrower's Tangible Net Worth. "Tangible Net Worth" means the gross book value of the Borrower's assets (excluding goodwill, patents, trademarks, trade names, organization expense, treasury stock, unamortized debt discount and expense, deferred research and development costs, deferred marketing expenses, and other like intangibles, less total liabilities, including but not limited to accrued and deferred income taxes, and any reserves against assets. 8.9 Dividends. Not to declare or pay any dividends on any of its shares, except: (a) dividends payable in its capital stock; (b) from earnings available for dividends and earned during the immediately preceding fiscal year, and in any event, not in excess of One Million Five Hundred Thousand Dollars ($1,500,000) plus twenty-five percent (25%) of net income accrued since December 31, 1990 in any one fiscal year; 8.10 Notices to Bank. To promptly notify the Bank in writing of: (a) any lawsuit over One Million Dollars ($1,000,000) against the Borrower (or any guarantor). (b) any substantial dispute between the Borrower (or any guarantor) and any government authority. (c) any failure to comply with this Agreement. (d) any material adverse change in the Borrower's (or any guarantor's) financial condition or operations. - 16 - 17 (e) any change in the Borrower's name, legal structure, place of business, or chief executive office if the Borrower has more than one place of business. 8.11 Books and Records. To maintain adequate books and records. 8.12 Audits. To allow the Bank and its agents to inspect the Borrower's properties and examine, audit and make copies of books and records at any reasonable time. If any of the Borrower's properties, books or records are in the possession of a third party, the Borrower authorizes that third party to permit the Bank or its agents to have access to perform inspections or audits and to respond to the Bank's requests for information concerning such properties, books and records. 8.13 Compliance with Laws. To comply with the laws (including any fictitious name statute), regulations, and orders of any government body with authority over the Borrower's business. 8.14 Preservation of Rights. To maintain and preserve all rights, privileges, and franchises the Borrower now has. 8.15 Maintenance of Properties. To make any repairs, renewals, or replacements to keep the Borrower's properties in good working condition. 8.16 Cooperation. To take any action reasonably requested by the Bank to carry out the intent of this Agreement. 8.17 Insurance. (a) General Business Insurance. To maintain insurance as is usual for the business it is in. (b) Evidence of Insurance. Upon the request of the Bank, to deliver to the Bank a copy of each insurance policy, or, if permitted by the Bank, a certificate of insurance listing all insurance in force. 8.18 Additional Negative Covenants. Not to, without the Bank's written consent: (a) engage in any business activities substantially different from the Borrower's present business. (b) liquidate or dissolve the Borrower's business. (c) enter into any consolidation, merger, or other combination, or become a partner in a partnership, a member of a joint venture, or a member of a limited liability company. - 17 - 18 (d) sell, lease, transfer or dispose of all or a substantial part of the Borrower's business or the Borrower's assets except in the ordinary course of the Borrower's business. (e) sell, assign, lease, transfer or otherwise dispose of any assets for less than fair market value, or enter into any agreement to do so. (f) sell, lease or otherwise dispose of any assets or enter into any sale and leaseback agreement covering any of its fixed or capital assets in excess of an aggregate for all such sales, leases, and sales and leasebacks in any one year equal to ten percent (10%) of the Borrower's then current Tangible Net Worth as defined in Paragraph 8.8(f) herein. (g) voluntarily suspend its business for more than 2 days in any 365 day period. 8.19 Acquisitions. Without the Bank's prior written consent, not acquire or purchase all or substantially all of the assets or business of any other person, firm, corporation, or any division thereof, or acquire or purchase securities; provided, however, that this Paragraph shall not prohibit: (a) the acquisition or purchase of obligations issued or guarantied by the United States; (b) the acquisition or purchase of short term marketable securities that do not constitute more than five percent (5%) of the capital stock, partnership interests, membership interests, or equity of any person, firm, or corporation; (c) the acquisition or purchase of assets, business, or securities of a person, firm, or corporation if (i) such acquisition or purchase has been approved by the board of directors or similar governing body of the person, firm, or corporation whose assets, business, or securities are to be acquired or purchased, (ii) the total consideration to be paid for any such acquisition or purchase does not, when added to the total consideration previously paid for any other such acquisitions or purchases in any fiscal year (excluding the acquisition of CCC Steel, Inc.), exceed twenty-five percent (25%) of the Borrower's Tangible Net Worth as defined in Paragraph 8.8(f), and (iii) immediately after such acquisition or purchase, the Borrower would be in compliance with the terms and conditions of this Agreement. 8.20 ERISA Plans. To give prompt written notice to the Bank of: - 18 - 19 (a) The occurrence of any reportable event under Section 4043(b) of ERISA for which the PBGC requires 30 day notice. (b) Any action by the Borrower to terminate or withdraw from a Plan or the filing of any notice of intent to terminate under Section 4041 of ERISA. (c) Any notice of noncompliance made with respect to a Plan under Section 4041(b) of ERISA. (d) The commencement of any proceeding with respect to a Plan under Section 4042 of ERISA. 9. HAZARDOUS WASTE INDEMNIFICATION The Borrower will indemnify and hold harmless the Bank from any loss or liability directly or indirectly arising out of the use, generation, manufacture, production, storage, release, threatened release, discharge, disposal or presence of a hazardous substance. This indemnity will apply whether the hazardous substance is on, under or about the Borrower's property or operations or property leased to the Borrower. The indemnity includes but is not limited to attorneys' fees (including the reasonable estimate of the allocated cost of in-house counsel and staff). The indemnity extends to the Bank, its parent, subsidiaries and all of their directors, officers, employees, agents, successors, attorneys and assigns. For these purposes, the term "hazardous substances" means any substance which is or becomes designated as "hazardous" or "toxic" under any federal, state or local law. This indemnity will survive repayment of the Borrower's obligations to the Bank. 10. DEFAULT If any of the following events occurs, the Bank may do one or more of the following: declare the Borrower in default, stop making any additional credit available to the Borrower, and require the Borrower to repay its entire debt immediately and without prior notice. If an event of default occurs under the paragraph entitled "Bankruptcy," below, with respect to the Borrower, then the entire debt outstanding under this Agreement will automatically be due immediately. 10.1 Failure to Pay. The Borrower fails to make a payment under this Agreement when due. 10.2 False Information. The Borrower (or any guarantor) has given the Bank false or misleading information or representations. 10.3 Bankruptcy. The Borrower (or any guarantor) files a bankruptcy petition, a bankruptcy petition is filed against the Borrower (or any guarantor) or the Borrower (or any - 19 - 20 guarantor) makes a general assignment for the benefit of creditors. 10.4 Receivers. A receiver or similar official is appointed for the Borrower's (or any guarantor's) business, or the business is terminated. 10.5 Judgments. Any judgments or arbitration awards are entered against the Borrower (or any guarantor), or the Borrower (or any guarantor) enters into any settlement agreements with respect to any litigation or arbitration, in an aggregate amount of One Million Dollars ($1,000,000) or more in excess of any insurance coverage. 10.6 Government Action. Any government authority takes action that the Bank believes materially adversely affects the Borrower's (or any guarantor's) financial condition or ability to repay. 10.7 Cross-default. Any default occurs under any agreement in connection with any credit the Borrower (or any guarantor) has obtained from anyone else or which the Borrower (or any guarantor) has guaranteed if the default consists of failing to make a payment when due or gives the other lender the right to accelerate the obligation. 10.8 Default under Related Documents. Any guaranty, subordination agreement, security agreement, deed of trust, or other document required by this Agreement is violated or no longer in effect. 10.9 Other Bank Agreements. The Borrower (or any guarantor) fails to meet the conditions of, or fails to perform any obligation under any other agreement the Borrower (or any guarantor) has with the Bank or any affiliate of the Bank. If, in the Bank's opinion, the breach is capable of being remedied, the breach will not be considered an event of default under this Agreement for a period of thirty (30) days after the date on which the Bank gives written notice of the breach to the Borrower; provided, however, that the Bank will not be obligated to extend any additional credit to the Borrower during that period. 10.10 ERISA Plans. The occurrence of any one or more of the following events with respect to the Borrower, provided such event or events could reasonably be expected, in the judgment of the Bank, to subject the Borrower to any tax, penalty or liability (or any combination of the foregoing) which, in the aggregate, could have a material adverse effect on the financial condition of the Borrower with respect to a Plan: (a) A reportable event shall occur with respect to a Plan which is, in the reasonable judgment of the Bank likely to result in the termination of such Plan for purposes of Title IV of ERISA. - 20 - 21 (b) Any Plan termination (or commencement of proceedings to terminate a Plan) or the Borrower's full or partial withdrawal from a Plan. 10.11 Other Breach Under Agreement. The Borrower fails to meet the conditions of, or fails to perform any obligation under, any term of this Agreement not specifically referred to in this Article. If, in the Bank's opinion, the breach is capable of being remedied, the breach will not be considered an event of default under this Agreement for a period of thirty (30) days after the date on which the Bank gives written notice of the breach to the Borrower; provided, however, that the Bank will not be obligated to extend any additional credit to the Borrower during that period. 11. ENFORCING THIS AGREEMENT; MISCELLANEOUS 11.1 GAAP. Except as otherwise stated in this Agreement, all financial information provided to the Bank and all financial covenants will be made under generally accepted accounting principles, consistently applied. 11.2 California Law. This Agreement is governed by California law. 11.3 Successors and Assigns. This Agreement is binding on the Borrower's and the Bank's successors and assignees. The Borrower agrees that it may not assign this Agreement without the Bank's prior consent. The Bank may sell participations in or assign this loan, and may exchange financial information about the Borrower with actual or potential participants or assignees; provided that such actual or potential participants or assignees shall agree to treat all financial information exchanged as confidential. If a participation is sold or the loan is assigned, the purchaser will have the right of set-off against the Borrower. 11.4 Arbitration. (a) This paragraph concerns the resolution of any controversies or claims between the Borrower and the Bank, including but not limited to those that arise from: (i) This Agreement (including any renewals, extensions or modifications of this Agreement); (ii) Any document, agreement or procedure related to or delivered in connection with this Agreement; (iii) Any violation of this Agreement; or (iv) Any claims for damages resulting from any business conducted between the Borrower and the - 21 - 22 Bank, including claims for injury to persons, property or business interests (torts). (b) At the request of the Borrower or the Bank, any such controversies or claims will be settled by arbitration in accordance with the United States Arbitration Act. The United States Arbitration Act will apply even though this Agreement provides that it is governed by California law. (c) Arbitration proceedings will be administered by the American Arbitration Association and will be subject to its commercial rules of arbitration. (d) For purposes of the application of the statute of limitations, the filing of an arbitration pursuant to this paragraph is the equivalent of the filing of a lawsuit, and any claim or controversy which may be arbitrated under this paragraph is subject to any applicable statute of limitations. The arbitrators will have the authority to decide whether any such claim or controversy is barred by the statute of limitations and, if so, to dismiss the arbitration on that basis. (e) If there is a dispute as to whether an issue is arbitrable, the arbitrators will have the authority to resolve any such dispute. (f) The decision that results from an arbitration proceeding may be submitted to any authorized court of law to be confirmed and enforced. (g) The procedure described above will not apply if the controversy or claim, at the time of the proposed submission to arbitration, arises from or relates to an obligation to the Bank secured by real property located in California. In this case, both the Borrower and the Bank must consent to submission of the claim or controversy to arbitration. If both parties do not consent to arbitration, the controversy or claim will be settled as follows: (i) The Borrower and the Bank will designate a referee (or a panel of referees) selected under the auspices of the American Arbitration Association in the same manner as arbitrators are selected in Association-sponsored proceedings; (ii) The designated referee (or the panel of referees) will be appointed by a court as provided in California Code of Civil Procedure Section 638 and the following related sections; (iii) The referee (or the presiding referee of the panel) will be an active attorney or a retired judge; and - 22 - 23 (iv) The award that results from the decision of the referee (or the panel) will be entered as a judgment in the court that appointed the referee, in accordance with the provisions of California Code of Civil Procedure Sections 644 and 645. (h) This provision does not limit the right of the Borrower or the Bank to: (i) exercise self-help remedies such as setoff; (ii) foreclose against or sell any real or personal property collateral; or (iii) act in a court of law, before, during or after the arbitration proceeding to obtain: (A) an interim remedy; and/or (B) additional or supplementary remedies. (i) The pursuit of or a successful action for interim, additional or supplementary remedies, or the filing of a court action, does not constitute a waiver of the right of the Borrower or the Bank, including the suing party, to submit the controversy or claim to arbitration if the other party contests the lawsuit. However, if the controversy or claim arises from or relates to an obligation to the Bank which is secured by real property located in California at the time of the proposed submission to arbitration, this right is limited according to the provision above requiring the consent of both the Borrower and the Bank to seek resolution through arbitration. (j) If the Bank forecloses against any real property securing this Agreement, the Bank has the option to exercise the power of sale under the deed of trust or mortgage, or to proceed by judicial foreclosure. 11.5 Severability; Waivers. If any part of this Agreement is not enforceable, the rest of the Agreement may be enforced. The Bank retains all rights, even if it makes a loan after default. If the Bank waives a default, it may enforce a later default. Any consent or waiver under this Agreement must be in writing. 11.6 Administration Costs. The Borrower shall pay the Bank for all reasonable costs incurred by the Bank in connection with administering this Agreement. 11.7 Attorneys' Fees. The Borrower shall reimburse the Bank for any reasonable costs and attorneys' fees incurred by the Bank in connection with the enforcement or preservation of any rights or remedies under this Agreement and any other - 23 - 24 documents executed in connection with this Agreement, and including any amendment, waiver, "workout" or restructuring under this Agreement. In the event of a lawsuit or arbitration proceeding, the prevailing party is entitled to recover costs and reasonable attorneys' fees incurred in connection with the lawsuit or arbitration proceeding, as determined by the court or arbitrator. In the event that any case is commenced by or against the Borrower under the Bankruptcy Code (Title 11, United States Code) or any similar or successor statute, the Bank is entitled to recover costs and reasonable attorneys' fees incurred by the Bank related to the preservation, protection, or enforcement of any rights of the Bank in such a case. As used in this paragraph, "attorneys' fees" includes the allocated costs of the Bank's in-house counsel. 11.8 One Agreement. This Agreement and any related security or other agreements required by this Agreement, collectively: (a) represent the sum of the understandings and agreements between the Bank and the Borrower concerning this credit; (b) replace any prior oral or written agreements between the Bank and the Borrower concerning this credit; and (c) are intended by the Bank and the Borrower as the final, complete and exclusive statement of the terms agreed to by them. In the event of any conflict between this Agreement and any other agreements required by this Agreement, this Agreement will prevail. 11.9 Indemnification. The Borrower will indemnify and hold the Bank harmless from any loss, liability, damages, judgments, and costs of any kind relating to or arising directly or indirectly out of (a) this Agreement or any document required hereunder, (b) any credit extended or committed by the Bank to the Borrower hereunder, and (c) any litigation or proceeding related to or arising out of this Agreement, any such document, or any such credit. This indemnity includes but is not limited to attorneys' fees (including the allocated cost of in-house counsel). This indemnity extends to the Bank, its parent, subsidiaries and all of their directors, officers, employees, agents, successors, attorneys, and assigns. This indemnity will survive repayment of the Borrower's obligations to the Bank. All sums due to the Bank hereunder shall be obligations of the Borrower, due and payable immediately without demand. 11.10 Notices. All notices required under this Agreement shall be personally delivered or sent by first class mail, postage prepaid, to the addresses on the signature page of this Agreement, or to such other addresses as the Bank and the Borrower may specify from time to time in writing. - 24 - 25 11.11 Headings. Article and paragraph headings are for reference only and shall not affect the interpretation or meaning of any provisions of this Agreement. 11.12 Counterparts. This Agreement may be executed in as many counterparts as necessary or convenient, and by the different parties on separate counterparts each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same agreement. 11.13 Prior Agreement Superseded. This Agreement supersedes the Business Loan Agreement entered into as of June 30, 1993 between the Bank and the Borrower, and any credit outstanding thereunder shall be deemed to be outstanding under this Agreement. This Agreement is executed as of the date stated at the top of the first page. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION RELIANCE STEEL & ALUMINUM CO. By /s/ Donald G. Farris By /s/ David H. Hannah - ------------------------ --------------------------- Title Vice President Title President - ------------------------ ------------------------- By /s/ Steven S. Weis --------------------------- Title Chief Financial Officer ------------------------ Address where notices to Address where notices to the Bank are to be sent: the Borrower are to be sent: Bank of America National Trust Reliance Steel & Aluminum Co. and Savings Association 2550 E. 25th Street Los Angeles Regional Commercial Los Angeles, California 90058 Banking Office #1459 525 South Flower Street, Mezzanine Los Angeles, California 90071 - 25 - EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 6,197 0 76,688 (3,182) 76,569 161,692 137,547 (53,262) 284,732 59,830 45,950 0 0 61,001 117,951 284,732 322,262 325,676 246,091 246,091 54,298 0 1,308 26,459 10,849 15,610 0 0 0 15,610 1.49 0
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