10-Q 1 e10-q.txt FORM 10-Q 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, 2000 ------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 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 (323) 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, 2000, 27,803,455 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 .................................. 8 PART II -- OTHER INFORMATION .................................................... 12 SIGNATURES ...................................................................... 13
3 PART I -- FINANCIAL INFORMATION RELIANCE STEEL & ALUMINUM CO. Consolidated Balance Sheets (In thousands except share amounts)
JUNE 30, DECEMBER 31, 2000 1999 ------------- ------------- (unaudited) (Note) ASSETS Current assets: Cash and cash equivalents $ 1,784 $ 9,862 Accounts receivable, less allowance for doubtful accounts of $7,783 at June 2000 and $6,351 at December 1999 209,440 167,674 Inventories 266,863 232,911 Prepaid expenses and other current assets 6,749 5,472 Deferred income taxes 12,999 12,999 ------------------------------- Total current assets 497,835 428,918 Property, plant and equipment, at cost: Land 33,136 31,583 Buildings 142,016 132,165 Machinery and equipment 169,811 159,390 Allowances for depreciation (103,903) (95,756) ------------------------------- 241,060 227,382 Investment in 50%-owned company 18,511 19,306 Goodwill, net of accumulated amortization of $15,944 at June 2000 and $12,957 at December 1999 224,514 215,247 Other assets 9,044 9,152 ------------------------------- Total assets $ 990,964 $ 900,005 =============================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 103,652 $ 103,968 Accrued expenses 29,925 27,820 Wages and related accruals 12,864 16,191 Deferred income taxes 7,749 7,749 Current maturities of long-term debt 150 150 ------------------------------- Total current liabilities 154,340 155,878 Long-term debt 380,050 318,050 Deferred income taxes 26,586 25,749 Shareholders' equity: Preferred stock, no par value: Authorized shares - 5,000,000 None issued or outstanding -- -- Common stock, no par value: Authorized shares - 100,000,000 Issued and outstanding shares - 27,798,805 at June 2000 and 27,798,151 at December 1999, stated capital 153,425 153,120 Retained earnings 276,563 247,208 ------------------------------- Total shareholders' equity 429,988 400,328 ------------------------------- Total liabilities and shareholders' equity $ 990,964 $ 900,005 ===============================
See Notes to Consolidated Financial Statements. NOTE: The Balance Sheet at December 31, 1999 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, ---------------------------- 2000 1999 ---------------------------- Net sales $ 440,903 $ 384,714 Other income 889 950 ---------------------------- 441,792 385,664 Costs and expenses: Cost of sales 321,738 282,496 Warehouse, delivery, selling, administrative and general 80,002 69,185 Depreciation and amortization 6,994 6,474 Interest 6,054 6,071 ---------------------------- 414,788 364,226 Income before equity in earnings of 50%-owned company and income taxes 27,004 21,438 Equity in earnings of 50%-owned company 824 1,137 ---------------------------- Income before income taxes 27,828 22,575 Income taxes: Federal 9,740 7,653 State 1,392 1,264 ---------------------------- 11,132 8,917 ---------------------------- Net income $ 16,696 $ 13,658 ============================ Earnings per share - diluted $ .60 $ .49 ============================ Weighted average shares outstanding - diluted 27,931,000 27,927,000 ============================ Earnings per share - basic $ .60 $ .49 ============================ Weighted average shares outstanding - basic 27,793,000 27,732,000 ============================ Cash dividends per share $ .055 $ .04 ============================
2. 5 RELIANCE STEEL & ALUMINUM CO. Consolidated Statements of Income (Unaudited) (In thousands except share and per share amounts)
SIX MONTHS ENDED JUNE 30, ---------------------------- 2000 1999 ---------------------------- Net sales $ 871,744 $ 756,598 Gain from SERP benefit -- 2,341 Other income 1,616 1,817 ---------------------------- 873,360 760,756 Costs and expenses: Cost of sales 635,591 560,985 Warehouse, delivery, selling, administrative and general 159,298 131,646 Depreciation and amortization 13,873 12,441 Interest 11,677 11,910 ---------------------------- 820,439 716,982 Income before equity in earnings of 50%-owned company and income taxes 52,921 43,774 Equity in earnings of 50%-owned company 1,791 2,035 ---------------------------- Income before income taxes 54,712 45,809 Income taxes: Federal 19,149 15,529 State 2,736 2,565 ---------------------------- 21,885 18,094 ---------------------------- Net income $ 32,827 $ 27,715 ============================ Earnings per share - diluted $ 1.18 $ 1.00 ============================ Per share gain from SERP benefit - diluted $ -- $ .05 ============================ Weighted average shares outstanding - diluted 27,913,000 27,845,000 ============================ Earnings per share - basic $ 1.18 $ 1.00 ============================ Weighted average shares outstanding - basic 27,789,000 27,710,000 ============================ Cash dividends per share $ .11 $ .09 ============================
3. 6 RELIANCE STEEL & ALUMINUM CO. Consolidated Statements of Cash Flows (Unaudited) (In thousands)
SIX MONTHS ENDED JUNE 30, ------------------------ 2000 1999 ------------------------ OPERATING ACTIVITIES Net income $ 32,827 $ 27,715 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 13,873 12,441 Gain from SERP benefit -- (2,341) Deferred income taxes 837 (22) (Gain) loss on sales of machinery and equipment (44) 22 Equity in earnings of 50%-owned company (1,791) (2,035) Changes in operating assets and liabilities: Accounts receivable (35,305) 441 Inventories (25,944) 40,470 Prepaid expenses and other assets (2,036) (4,066) Accounts payable and accrued expenses (4,195) (10,654) ------------------------ Net cash (used in) provided by operating activities (21,778) 61,971 ------------------------ INVESTMENT ACTIVITIES Purchases of property, plant and equipment (15,504) (9,393) Proceeds from sales of property and equipment 201 227 Acquisitions of metals service centers and asset purchases of metals service centers (28,068) (70,508) Dividends received from 50%-owned company 2,586 8,154 ------------------------ Net cash used in investing activities (40,785) (71,520) ------------------------ FINANCING ACTIVITIES Proceeds from borrowings 110,000 50,500 Principal payments on long-term debt and short-term borrowings (52,348) (43,681) Dividends paid (3,105) (2,402) Issuance of common stock 654 1,285 Repurchase of Common Stock (716) -- ------------------------ Net cash provided by financing activities 54,485 5,702 ------------------------ Decrease in cash (8,078) (3,847) Cash and cash equivalents at beginning of period 9,862 6,496 ------------------------ Cash and cash equivalents at end of period $ 1,784 $ 2,649 ======================== SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING ACTIVITIES: Interest paid during the period $ 11,493 $ 11,540 Income taxes paid during the period 27,563 18,672
4. 7 RELIANCE STEEL & ALUMINUM CO. Notes to Consolidated Financial Statements (Unaudited) June 30, 2000 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States 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 accounting principles generally accepted in the United States 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, 2000 are not necessarily indicative of the results for the full year ending December 31, 2000. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 1999, included in the Reliance Steel & Aluminum Co. Form 10-K. 2. ACQUISITIONS On June 1, 2000, the Company acquired 100% of the outstanding stock of Toma Metals, Inc. ("Toma"), a privately-held metals service center based in Johnstown, Pennsylvania. Toma processes and distributes primarily stainless steel flat-rolled products and had sales of approximately $9,800,000 for the six months ended March 31, 2000. The acquisition of Toma was funded with borrowings under the Company's line of credit. The Toma transaction has been accounted for under the purchase method of accounting. Accordingly, the accompanying consolidated statements of income include the revenues and expenses of Toma since its acquisition date. The financial statements reflect the preliminary allocation of the purchase price. The allocation of purchase price was based upon the preliminary fair values of the net assets purchased. Through its newly-formed company, Hagerty Steel & Aluminum Company ("Hagerty"), the Company purchased the assets and business of the metals service center division of Hagerty Brothers Company, located in Peoria, Illinois, on February 5, 2000. Hagerty processes and distributes primarily carbon steel products, and operates as a wholly-owned subsidiary of Liebovich Bros., Inc., a wholly-owned subsidiary of the Company. Net sales of the metals service center business of Hagerty Brothers Company were approximately $30,000,000 for the year ended December 31, 1999. The Hagerty assets were acquired with funds from borrowings under the Company's line of credit. 5. 8 3. LONG-TERM DEBT Long-term debt consists of the following:
JUNE 30, DECEMBER 31, 2000 1999 ------------- ------------- (IN THOUSANDS) Revolving line of credit ($200,000,000 limit) due October 22, 2002, interest at variable rates, weighted average rate of 6.6% during the six months ended June 30, 2000 ............................ $ 87,000 $ 25,000 Senior unsecured notes due January 2, 2004 to January 2, 2009, average fixed interest rate 7.22% ................................... 75,000 75,000 Senior unsecured notes due January 2, 2002 to January 2, 2008, average fixed interest rate 7.02% ................................... 65,000 65,000 Senior unsecured notes due October 15, 2005 to October 15, 2010, average fixed interest rate 6.55% ................................... 150,000 150,000 Variable Rate Demand Industrial Development Revenue Bonds, Series 1989 A, due July 1, 2014, with interest Payable quarterly, average interest rate of 4.2% during the six months ended June 30, 2000 ........... 3,200 3,200 ------------- ------------- 380,200 318,200 Less amounts due within one year .......................................... (150) (150) ------------- ------------- $ 380,050 $ 318,050 ============= =============
The Company has a syndicated credit agreement with five banks for a revolving line of credit with a borrowing limit of $200,000,000. The syndicated credit agreement allows the Company to use up to $175,000,000 of the revolving line of credit for acquisitions. The Company has $290,000,000 of outstanding senior unsecured notes issued in private placements of debt. These notes bear interest at an average fixed rate of 6.83% and have an average life of 9.1 years, maturing from 2002 to 2010. The Company also entered into a credit agreement that allows the Company to issue and have outstanding up to a maximum of $10,000,000 of letters of credit. The Company's long-term loan agreements require the maintenance of a minimum net worth and include certain restrictions on the amount of cash dividends payable, among other things, which are measured quarterly. 4. SHAREHOLDERS' EQUITY The Board of Directors authorized a 3-for-2 common stock split effected in the form of a 50% stock dividend distributed on September 24, 1999, to shareholders of record on September 2, 1999. All references in the financial statements to number of shares and per share amounts have been retroactively adjusted to reflect this stock split. In August 1998, the Board of Directors approved the purchase of up to an additional 3,750,000 shares of the Company's outstanding Common Stock through its Stock Repurchase Plan, for a total of up to 6,000,000 shares. The Stock Repurchase Plan was initially established in December 1994 and authorizes the Company to purchase 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. As of June 30, 2000, the Company had repurchased a total of 2,711,775 shares of its Common Stock under the Stock Repurchase Plan, at an average cost of $10.03 per share. During the six month period ended June 30, 2000, the Company repurchased 39,450 shares of its Common Stock under this plan at an average cost of $18.14 per share. In March 2000, 10,854 shares of Common Stock were issued to division managers and officers of the Company under the 1999 Key-Man Incentive Plan. 6. 9 5. SUBSEQUENT EVENTS On August 9, 2000, through its newly-formed company, United Alloys Aircraft Metals, Inc. ("United"), the Company purchased the assets and business of the Aircraft Division of United Alloys, Inc. United will operate as a wholly-owned subsidiary of Service Steel Aerospace Corp., a wholly-owned subsidiary of the Company. United is located in Vernon, California, and provides its customers with value-added processed titanium products. The Aircraft Division of United Alloys, Inc. had 1999 annual sales of approximately $18,000,000. The purchase of United was funded with borrowings under the Company's line of credit 7. 10 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 three month and six month periods ended June 30, 2000 and June 30, 1999 (dollars are shown in thousands and certain amounts may not calculate due to rounding):
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ---------------------------------------------- ---------------------------------------------- 2000 1999 2000 1999 ---------------------------------------------- ---------------------------------------------- % OF % OF % OF % OF $ NET SALES $ NET SALES $ NET SALES $ NET SALES ------------------------------------------------------------------------------------------------ NET sales ................. $440,903 100.0% $384,714 100.0% $871,744 100.0% $756,598 100.0% GROSS PROFIT .............. 119,165 27.0 102,217 26.6 236,153 27.1 195,612 25.9 OPERATING EXPENSES ........ 80,002 18.1 69,185 18.0 159,298 18.3 131,646 17.4 DEPRECIATION expense ...... 5,206 1.2 4,769 1.2 10,352 1.2 9,154 1.2 -------- -------- -------- -------- -------- -------- -------- -------- INCOME FROM OPERATIONS .... $ 33,957 7.7% $ 28,263 7.4% $ 66,503 7.6% $ 54,812 7.2% ======== ======== ======== ======== ======== ======== ======== ========
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999 (DOLLAR AMOUNTS IN THOUSANDS OTHER THAN SHARE AND PER SHARE AMOUNTS) In the three months ended June 30, 2000, consolidated net sales increased 14.6% to $440,903, from $384,714 in the same period of 1999, which reflects an increase of 7.7% in tons sold and an increase in the average sales price per ton of 6.5%. The increase in tons sold was primarily due to the inclusion of a full three months of the sales of Allegheny Steel Distributors, Inc. ("Allegheny"), acquired September 1, 1999; Arrow Metals, acquired October 1, 1999; and Hagerty Steel & Aluminum Company ("Hagerty"), formed February 5, 2000; along with one month of sales from Toma Metals, Inc. ("Toma"), acquired June 1, 2000 (collectively, along with Liebovich Bros., Inc. ("Liebovich") acquired March 1, 1999, the "Acquisitions") during the period ended June 30, 2000. The increase also reflects improvements in sales of the Company's products to the semiconductor and electronics industries, which was somewhat offset by a slight overall reduction in sales of its other products late in the second quarter. The average selling prices increased for the 2000 period due mainly to increased selling prices for most products sold by the Company, related to generally higher material costs as compared to the 1999 period. In addition, increased sales to the semiconductor and related industries increased the average selling price, as the products sold to these industries are typically among the highest priced products sold by the Company. Excluding the Acquisitions, the Company reported an increase in same store sales of $33,935, on flat tons sold, with the average selling price per ton increasing 10.1%. The increase in the average selling price is primarily due to increased selling prices of most of the Company's products related to increased metal costs during the 2000 period, as compared to the 1999 period. Improved sales to the semiconductor and related industries also contributed to the increase in the average selling price, due to the materials sold to these industries being among the most high priced products sold by the Company. Total gross profit increased to $119,165 for the quarter ended June 30, 2000, an increase of 16.6% over the same period of 1999. The increase in gross profit was primarily due to the inclusion of the gross profit of the Acquisitions and increased selling prices. Expressed as a percentage of sales, gross profit increased to 27.0% in 2000 from 26.6% in 1999. The improvement was primarily due to certain of the Acquisitions operating at higher 8. 11 gross margin percentages than the Company has historically operated at on a consolidated basis. Also, the Company's sales force has been successful in increasing selling prices at a rate ahead of the receipt of higher cost material for most products sold by the Company, which contributed to increased gross margins beginning in the latter half of 1999. These higher gross margin levels have contracted somewhat during 2000 as compared to the second half of 1999, but remain improved over the year ago periods. Significant improvements in demand in the semiconductor and related electronics industries resulted in increased gross margins for products sold to these industries. Warehouse, delivery, selling and general and administrative ("G&A") expenses increased $10,817, or 15.6%, in the second quarter of 2000 compared to the corresponding period of 1999. The dollar increase in expenses reflects the increase in sales volume for the 2000 period, which includes the sales and related expenses of the Acquisitions. As a percent of sales, these expenses were consistent at about 18% in both periods. Depreciation and amortization expense increased 8.0% during the three months ended June 30, 2000 compared to the corresponding period of 1999. This increase is primarily due to the inclusion of depreciation expense related to the assets of the Acquisitions, and the amortization of goodwill resulting from the Acquisitions. The effective income tax rate was 40.0% for the three months ended June 30, 2000, compared to 39.5% for the 1999 period. The 1999 period reflected the estimated benefit of the tax free life insurance proceeds received under the Company's Supplemental Executive Retirement Plan ("SERP"). SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999 (DOLLAR AMOUNTS IN THOUSANDS OTHER THAN SHARE AND PER SHARE AMOUNTS) Consolidated net sales increased 15.2% to $871,744, for the six months ended June 30, 2000, compared to the first six months of 1999. The 2000 period includes an increase of 13.3% in tons sold and an increase in the average selling price per ton of 1.7%. The increase in tons sold was primarily due to the inclusion of the sales of the Acquisitions during the six months ended June 30, 2000. The increase also reflects improvements in sales to the semiconductor and electronics industries. The increase was somewhat offset by a reduction in tons sold to the aerospace industry of 2.4%, with most of this reduction occurring in the 2000 first quarter. The average selling price increase of 1.7% for the 2000 period resulted mainly from the increased sales to the semiconductor and related markets and generally higher selling prices for most products. Sales excluding the Acquisitions ("same store sales") of $773,654 reflect an increase of 7.3%, which includes an increase of 1.0% in tons sold, with the average selling price per ton increasing 6.4%. The increase in the average selling price is primarily due to increased selling prices of most of the Company's products during the 2000 period, as compared to the 1999 period. The selling price increases were related to increased metal costs. Increased sales to the semiconductor and related industries also contributed to the increase in average selling price, due to the products sold being among the highest priced products sold by the Company. During the six months ended June 30, 1999, the Company recorded a one-time gain of $2,341 from a life insurance policy, which was not taxable to the Company, in connection with the Company's Supplemental Executive Retirement Plan ("SERP"). In the six months ended June 30, 2000, total gross profit increased $40,541, or 20.7%, compared to the first six months of 1999, primarily due to the inclusion of the gross profit of the Acquisitions and overall increased selling prices. Gross profit increased to 27.1% in 2000 from 25.9% in 1999 as a percentage of sales. The improvement was primarily due to increasing selling prices in advance of increased metal costs. The Company's sales force has 9. 12 been successful in increasing selling prices at a rate ahead of the receipt of higher cost material for most products sold by the Company. In addition, most of the Acquisitions operate at higher gross margin percentages than the Company has historically operated at on a consolidated basis. Warehouse, delivery, selling and general and administrative ("G&A") expenses increased $27,652, or 21.0%, in the 2000 period, as compared to the corresponding period of 1999. The dollar increase in expenses reflects the increase in sales volume for the 2000 period, which includes the sales and related expenses of the Acquisitions. As a percentage of sales, these operating expenses amounted to 18.3% in 2000 and 17.4% in 1999. As a percent of sales, the 2000 period is consistent with recent periods and has increased over the 1999 period primarily due to certain of the Acquisitions operating at higher expense levels than those historically experienced by the Company on a consolidated basis. As discussed above, these same companies also achieve higher gross margin levels than those historically achieved by the Company. Depreciation and amortization expense increased $1,432, or 11.5%, during the six months ended June 30, 2000, compared to the corresponding period of 1999. This increase resulted from the inclusion of depreciation expense related to the assets of the Acquisitions, and the amortization of goodwill resulting from the Acquisitions. Interest expense decreased by 2.0% in the six months ended June 30, 2000, due to the average borrowings outstanding during the first six months of 1999 being higher than the average 2000 level. The 1999 borrowings increased early in 1999 due to the purchase of Liebovich. The Company was then able to reduce its outstanding borrowings during the remaining portion of the six month period ended June 30, 1999. The effective income tax rate was 40.0% for the six months ended June 30, 2000, compared to 39.5% for the 1999 period. The 1999 period included the benefit of the tax free life insurance proceeds discussed above. Earnings per diluted share of $1.00 for the six month period ended June 30, 1999 included $.05 related to the tax free gain on the life insurance policy discussed above. LIQUIDITY AND CAPITAL RESOURCES (DOLLAR AMOUNTS IN THOUSANDS OTHER THAN SHARE AND PER SHARE AMOUNTS) At June 30, 2000, working capital amounted to $343,495 compared to $273,040 at December 31, 1999. The increase was primarily due to increases in receivables and inventory resulting from the increased sales activity. 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 generally from internally generated funds from operations and the Company's revolving line of credit. The unsecured syndicated credit facility has a borrowing limit of $200,000. As of June 30, 2000, $87,000 was outstanding under this credit facility. The Company also has agreements with insurance companies for private placements of senior unsecured notes in the aggregate amount of $290,000. The senior notes that were issued in the private placements have maturity dates ranging from 2002 to 2010, with an average life of 9.1 years, and bear interest at an average fixed rate of 6.83% per annum. Cash was used in operations during the six month period ended June 30, 2000, as compared to cash provided by operations during the corresponding 1999 period, primarily due to increased working capital needs during the 2000 period necessary to support the increased sales activity. Capital expenditures, excluding acquisitions, were $15,504 for the six months ended June 30, 2000. The Company had no material commitments for capital expenditures as of June 30, 2000. The Company anticipates that funds generated from operations and funds available under its line of credit will be sufficient to meet its working capital needs for the foreseeable future. The purchases of Hagerty and Toma were funded with borrowings on the Company's line of credit. 10. 13 The Board of Directors declared a 3-for-2 common stock split, in the form of a 50% stock dividend, effective September 24, 1999, to shareholders of record September 2, 1999. On August 31, 1998, the Board of Directors of the Company approved the purchase of up to an additional 3,750,000 shares of the Company's outstanding Common Stock through its Stock Repurchase Plan, for a total of 6,000,000 shares. During the six months ended June 30, 2000, the Company repurchased 39,450 shares of its Common Stock at an average purchase price of $18.14 per share. The Company has purchased a total of 2,711,775 shares of its Common Stock, at an average purchase price of $10.03 per share, as of June 30, 2000, all of which were treated as authorized but unissued shares. The Company believes such purchases enhance shareholder value and reflect its confidence in the long-term growth potential of the Company. 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. Revenues in the months of November and December traditionally have been lower than in other months because of a reduced number of working days for shipments of the Company's products and holiday closures for some of its customers. There can be no assurance that period-to-period fluctuations will not occur in the future. Results of any one or more quarters are therefore not necessarily indicative of annual results. IMPACT OF YEAR 2000 In prior years, the Company discussed the nature and progress of its plans to become Year 2000 ready. In 1999, the Company completed its conversions, testing and modifications of systems. As a result of those planning and implementation efforts, the Company experienced no significant disruptions in mission critical information technology and non-information technology systems and believes those systems successfully responded to the Year 2000 date change. The Company is not aware of any material problems resulting from Year 2000 issues, either with its products, its internal systems, or the products and services of third parties. The Company will continue to monitor its mission critical computer applications and those of its suppliers throughout the Year 2000 to ensure that any latent Year 2000 matters that may arise are addressed promptly. THIS FORM 10-Q MAY CONTAIN FORWARD-LOOKING STATEMENTS RELATING TO FUTURE FINANCIAL RESULTS. ACTUAL RESULTS MAY DIFFER MATERIALLY AS A RESULT OF FACTORS OVER WHICH RELIANCE STEEL & ALUMINUM CO. HAS NO CONTROL. THESE RISK FACTORS AND ADDITIONAL INFORMATION ARE INCLUDED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K. 11. 14 PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. Not applicable. ITEM 2. CHANGES IN SECURITIES. (a) Not applicable. (b) Not applicable. (c) Not applicable. (d) 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 17, 2000. (b) [Need not be answered because (1) proxies for the meeting were solicited pursuant to Regulation 14 under the Securities 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: Five directors were elected at the annual meeting. Joe D. Crider: 25,783,727 shares were voted for election and 75,628 shares were withheld. Thomas W. Gimbel: 25,789,457 shares were voted for election and 69,898 shares were withheld. David H. Hannah: 23,935,572 shares were voted for election and 1,923,783 shares were withheld. Gregg J. Mollins: 23,931,045 shares were voted for election and 1,928,310 shares were withheld. William I. Rumer: 25,789,277 shares were voted for election and 70,078 shares were withheld. The Board of Directors selected Ernst & Young LLP as independent auditors to audit the financial statements of the Company and its subsidiaries for 2000, subject to ratification by the shareholders. The selection was approved: 25,855,491 shares were voted for the proposal, 3,501 shares were voted against it, and 363 shares abstained. ITEM 5. OTHER INFORMATION. Not applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (b) Reports on Form 8-K None 12. 15 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 14, 2000 By: /s/ David H. Hannah --------------------- David H. Hannah President and Chief Executive Officer By: /s/ Karla R. McDowell ----------------------- Karla R. McDowell Senior Vice President and Chief Financial Officer 13.