-----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, WVqWY3Yd4/DZxAHabYliNSuJNSttjrLvr2VNlJuhTf3bSaDRqKGvtKqqBHLzebwI MhatSqMw510kWE2QI1V4pw== 0000905722-97-000005.txt : 19970523 0000905722-97-000005.hdr.sgml : 19970523 ACCESSION NUMBER: 0000905722-97-000005 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970430 ITEM INFORMATION: Other events FILED AS OF DATE: 19970522 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HUNTCO INC CENTRAL INDEX KEY: 0000905722 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 431643751 STATE OF INCORPORATION: MO FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13600 FILM NUMBER: 97613118 BUSINESS ADDRESS: STREET 1: 14323 SOUTH OUTER FORTY STREET 2: STE 600 N CITY: TOWN & COUNTRY STATE: MO ZIP: 63017 BUSINESS PHONE: 3148780155 MAIL ADDRESS: STREET 1: 14323 S OUTER FORTY STREET 2: STE 600N CITY: TOWN & COUNTRY STATE: MO ZIP: 63017 8-K 1 1 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) May 22, 1997 ------------------------- HUNTCO INC. ---------------- (Exact name of registrant as specified in its charter) Missouri 1-13600 43-1643751 - ----------------- ---------------------- -------------- (State or other (Commission File Number) (IRS Employer jurisdiction of Identification No.) incorporation) 14323 S. Outer Forty, Suite 600N, Town & Country, Missouri 63017 - ---------------------------------------------------------- --------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (314) 878-0155 --------------------------- Not applicable ------------------------------------------------------------ (Former name or former address, if changed since last report) 2 Item 5. Other Events Huntco Inc. (the "Company") issued a news release on May 22, 1997, with respect to its release of earnings for its fourth quarter and year ended April 30, 1997, which news release includes forward-looking data. This news release is incorporated herein by reference to Exhibit 99 attached hereto. Achievement of the projections contained in the news release is dependent upon numerous factors, circumstances and contingencies, certain of which are beyond the control of the Company. Set forth herein is a further elaboration of the principal factors and risks which the Company considers to be the most likely to cause actual results to differ materially from the projections included in the above-mentioned news release: Impact of changing steel prices on the Company's results of operations - ---------------------------------------------------------------------- As evidenced by the unfavorable impact on net income in fiscal 1996 and fiscal 1997, the Company's financial results can be significantly impacted by changing steel prices. The Company's principal raw material is flat rolled carbon steel coils. The steel industry is highly cyclical in nature and prices for the Company's raw materials are influenced by numerous factors beyond the control of the Company, including general economic conditions, competition, labor costs, import duties and other trade restrictions and currency exchange rates. Changing steel prices may cause the Company's results of operations to fluctuate significantly. To respond promptly to customer orders for its products, the Company maintains a substantial inventory of steel coils in stock and on order. The Company's commitments for steel purchases are generally at prevailing market prices in effect at the time the Company places its orders. The Company has no long-term, fixed-price steel purchase contracts. The Company generally does not enter into fixed-price sales contracts with its steel processing customers with terms longer than three months. As steel producers change the effective selling price for the Company's raw materials, competitive conditions may influence the amount of the change, if any, in the Company's selling prices to its customers. Changing steel prices could therefore affect the Company's net sales and net income, particularly as it liquidates its inventory position. The Company believes that a major portion of the effect of a steel price change on net income is likely to be experienced within three months of the effective date of the change. When a series of changes in steel prices occurs, the period in which net income may be affected can extend beyond a three month period of time. Accordingly, the Company believes that comparisons of its quarterly results of operations are not necessarily meaningful in periods of changing steel prices. Steel prices charged by the primary producers of steel coils, both domestic and foreign, have been extremely volatile over the previous two years, and conditions exist which could cause this volatility to continue throughout the Company's 1998 fiscal year. No assurance can be given that volatility in steel prices will not again negatively impact the Company's results of operations and net income. 3 Cyclicality of demand for Company products - ------------------------------------------ Many of the Company's steel processing products are sold to industries that experience significant fluctuations in demand based on economic conditions, energy prices or other matters beyond the control of the Company. The Company has increased the level of tons of steel sold and processed in each of its last five fiscal years. However, no assurance can be given that the Company will be able to increase or maintain its level of tons shipped, especially in periods of economic stagnation or downturn. The expected increase in tons processed and shipped assumes that the Company is able to maintain the base volume of tons processed and shipped in the 1997 fiscal year. This assumption is based upon the Company's experience, the most relevant experience being over the previous five years, and an assumption that economic conditions in the Company's primary market areas will reflect a stable, slow-growth environment. There can be no assurance, however, that economic conditions will continue to reflect a stable, slow-growth environment or that other circumstances will not occur leading to an economic stagnation or downturn. Continued internal expansion involving new processes and markets - ---------------------------------------------------------------- Notwithstanding the fact that the growth in the Company's net sales over the previous five fiscal years has resulted from increasing levels of tons processed and sold, with such increases in tonnage primarily occurring at newly constructed facilities, there can be no assurance that the Company will be successful in the start-up of its new facility in South Carolina, or in the continued development and expansion of its cold rolling and hot roll tempering operations at its Blytheville, Arkansas facility, or that these expansions will proceed as quickly as the Company anticipates. Successful development of these projects requires the Company to develop new customers, in new market territories and absolute assurance cannot be given that this will occur on the timetable which the Company expects, if ever. In addition, the market areas covered by the new South Carolina facility, the continued ramp up of the new stamping plant in Blytheville, and the continued maturation of the Company's cold rolling and tempering operations will cause the Company to face new competition. Competition - ----------- The principal markets served by the Company are highly competitive. The Company has different competitors within each of its product lines. Competition is based principally on price, service, production and delivery scheduling. Interest rates - -------------- Borrowings under the Company's revolving credit agreement are at interest rates which float generally with the prime rate or with LIBOR. The level of interest expense incurred by the Company under the revolving credit agreement will therefore fluctuate in line with changes in these rates of interest and based upon outstanding borrowings under the revolving credit agreement. 4 Income taxes - ------------ The Company has estimated its effective federal income tax rate based upon statutory rates in effect in the United States at the beginning of the 1998 fiscal year. State income taxes are estimated based upon the statutory rates in effect in the states in which the Company conducts its operations and earns taxable income. - ------------------------------------------------------------------------------ SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. HUNTCO INC. By: /s/ Robert J. Marischen ------------------------------------- Robert J. Marischen, Vice Chairman & Chief Financial Officer Date: May 22, 1997 - ------------------------------------------------------------------------------ EXHIBIT INDEX These Exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K: Exhibit No. Description ----------- --------------------------------- 99 News release of May 22, 1997 EX-99 2 PRESS RELEASE 1 HUNTCO INC. 14323 SOUTH OUTER FORTY - SUITE 600N TOWN & COUNTRY, MISSOURI 63017 FOR IMMEDIATE RELEASE: HUNTCO REPORTS RESULTS FOR THE FOURTH QUARTER AND YEAR ENDED APRIL 30, 1997. PROVIDES FORWARD-LOOKING DATA FOR FISCAL 1998. $.035 DIVIDEND DECLARED. TOWN & COUNTRY, MISSOURI, May 22, 1997 . . . . . Huntco Inc. (NYSE:"HCO"), an intermediate steel processor, today announced results of operations for its fourth quarter and for its fiscal year, both of which ended April 30, 1997. Net sales for the quarter were $90.8 million, an increase of 15.7% in comparison to the prior year's fourth quarter net sales of $78.4 million. Net income available for common shareholders for the quarter was $1.3 million, or $.15 per common share, which compares to $2.7 million, or $.30 per common share, in the prior year's fourth quarter. Net sales for the year ended April 30, 1997 were $326.6 million, an increase of 23.7% in comparison to net sales for the year ended April 30, 1996 of $264.1 million. Net income available for common shareholders for the year ended April 30, 1997 was $6.4 million, up from $1.1 million for the year ended April 30, 1996, while earnings per common share increased to $.72 per share, up from $.12 per share for the prior year. The Company declared a dividend of $.035 per common share for shareholders of record on June 9, 1997, payable on June 23, 1997. The Company also declared a dividend on its preferred stock of $.22 per preferred share, or $50,000.00 in the aggregate, for its preferred shareholders of record on May 30, 1997, which dividend is payable on June 2, 1997. The Company processed and sold 260,643 tons of steel in the quarter ended April 30, 1997, an increase of 17.4% in comparison to the quarter ended April 30, 1996. For the year ended April 30, 1997, the Company processed and sold 941,545 tons of steel, an increase of 22.0% over the level of tons processed in the prior year. Both the fourth quarter and full year tonnage amounts for 1997 established new shipment records for the Company. Included in the fourth quarter and full year tonnage amounts for fiscal 1997 were 56,087 and 181,313 tons of cold rolled steel products, respectively, which amounts represent increases over prior fourth quarter and full year cold rolled shipments of 33.3% and 98.4%, respectively. Approximately 22.2% of the tons processed in the fourth quarter and for the year ended April 30, 1997 represented customer- owned material processed on a per ton, fee basis. Gross profit, expressed as a percentage of net sales, averaged 9.0% during the fourth quarter and 9.8% for the year ended April 30, 1997. These percentages compare to gross profit of 11.4% in the prior year's fourth quarter and 6.9% for the year ended April 30, 1996. Gross profit margins began to slowly recover over the course of the fourth quarter of fiscal 1997 in comparison to the third quarter of fiscal 1997 when the gross profit percentage was 7.9%, as the Company lowered its average raw material costs by importing more of its raw material requirements. 2 The Company commenced operations at its new facility in Berkeley County, South Carolina during late January, 1997, when it began operating a new, heavy gauge, cut-to-length line, and also installed a slitting line at this facility during April, 1997. The Company completed the capacity and quality enhancements to its cold rolling mill at its Blytheville facility during the fourth quarter of fiscal 1997, and enters fiscal 1998 with capacity for fully annealed cold rolled products of approximately 35,000 tons per month. During the Company's fourth quarter of fiscal 1997, the Company also successfully restarted the hot rolled steel tempering facility which was acquired from Coil-Tec on January 30, 1997, which is now being operated as a part of the Company's Blytheville facility, with production levels approaching 10,000 tons per month in April, 1997. The Company presented certain forward-looking data regarding its outlook for its 1998 fiscal year, as well as a summary of the principal factors or risks which the Company considers to be the most likely to cause actual results to differ materially from this projected, forward-looking data. The Company anticipates that its net sales in fiscal 1998 could increase by approximately 20% over fiscal 1997 levels. The planned increase in net sales is expected to reflect higher levels of tons sold which are expected to increase to approximately 1,100,000 tons, with increased cold rolled and tempered sales from the Blytheville facility and shipments from the new South Carolina facility being the major contributors to this estimated growth in sales volume. Because the expanded cold rolling and tempering capacity at the Blytheville facility and the new South Carolina facility are expected to produce and sell at increasingly higher levels of volume during the year, the Company believes that it will ship approximately 10% more tonnage in the second half of fiscal 1998 than in the first half of fiscal 1998, with the fourth quarter of fiscal 1998 being the strongest in terms of tons expected to be shipped. Net sales are expected to increase by a higher percentage than tons sold because of higher average unit selling prices for cold rolled and tempered steel, when compared to the average unit selling values for the Company's traditional hot rolled steel sales, and due to a lower tolling percentage which is expected to decline over the course of the full fiscal year to around 20% of total tons sold for fiscal 1998. As it enters fiscal 1998, the Company estimates that its gross profit margins for the first quarter, expressed as a percentage of net sales, could range from 9.5% to 11%. The Company also projects that it will spend approximately $9,000,000 on capital expenditures, primarily during the first half of fiscal 1998, as it completes the second coil pickling line at its Blytheville facility, which represents the last of the projects previously announced by the Company in the current phase of its internal expansion program. This press release contains certain statements that are forward-looking and involve risks and uncertainties. Words such as "expects," "anticipates," "projects," "estimates," "plans," "believes," and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are based on current expectations and projections concerning the Company's plans for fiscal 1998 and about the steel processing industry in general, as well as assumptions made by Company management and are not guarantees of future performance. Therefore, actual events, outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. 3 Achievement of these forward-looking results is dependent upon numerous factors, circumstances and contingencies, certain of which are beyond the control of the Company. Certain of the more important factors which the Company believes could cause actual results to differ materially from the forward-looking data presented in this press release follow: 1) As evidenced by the unfavorable impact on net income in fiscal 1996 and 1997, the Company's financial results can be significantly impacted by changing steel prices. The Company's principal raw material is flat rolled carbon steel coils. The steel industry is highly cyclical in nature and prices for the Company's raw materials are influenced by numerous factors beyond the control of the Company. As steel producers change the effective selling price for the Company's raw materials, competitive conditions will influence the amount of change, if any, in the Company's prices to its customers. Steel prices charged by the primary producers of steel coils have been extremely volatile over the previous two years and conditions exist which could cause this volatility to continue throughout the Company's 1998 fiscal year. No assurance can be given that volatility in steel prices will not again negatively impact the Company's results of operations and net income. 2) Notwithstanding the fact that the growth in the Company's net sales over the previous five fiscal years has resulted from increasing levels of tons processed and sold, with such increases in tonnage primarily occurring at newly-constructed facilities and on newly-acquired equipment, there can be no assurance that the Company will be successful in the start-up of its new facility in South Carolina, or in the continued development and expansion of its cold rolling, tempering and pickling operations at its Blytheville facility, or that these expansions will proceed as quickly as the Company currently anticipates. Successful development of these projects requires the Company to develop new customers, in new market territories and absolute assurance cannot be given that this will occur on the timetable which the Company expects, if ever. 3) The expected increase in tons processed and shipped assumes that the Company is able to maintain the base volume of tons processed and shipped in the 1997 fiscal year. This assumption is based upon the Company's experience, the most relevant experience being over the previous five years, and an assumption that economic conditions in the Company's primary market areas will reflect a stable, slow-growth environment. Many of the Company's products are sold to industries that experience significant fluctuations in demand based on economic conditions beyond the control of the Company. No assurance can be given that the Company will be able to increase or maintain its level of tons shipped, especially in periods of economic stagnation or downturn, or during periods of rapidly changing steel prices. The Company plans to file a Form 8-K with the Securities and Exchange Commission and the New York Stock Exchange concurrently with this news release, which Form 8-K contains a more complete discussion of these and other factors which may cause the forward-looking data to differ materially from actual results. The Company encourages those who make use of this forward-looking data to make reference to the aforementioned Form 8-K . The Company undertakes no obligation to update any forward-looking statements in this press release. Huntco Inc. is an intermediate steel processor, specializing in the processing of flat rolled carbon steel. * * * * * for further information contact: Robert J. Marischen, Vice Chairman (314) 878-0155 4 HUNTCO INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share amounts)
Year Ended Three Months April 30 Ended April 30 1997 1996 1997 1996 ------- ------- ------ ------ (audited) (unaudited) Net sales $326,563 $264,087 $90,759 $78,423 Cost of sales 294,455 245,863 82,626 69,521 ------- ------- ------ ------ Gross profit 32,108 18,224 8,133 8,902 Selling, general and administrative expenses 15,383 13,147 4,178 3,518 ------- ------- ------ ------ Income from operations 16,725 5,077 3,955 5,384 Interest, net (6,239) (3,268) (1,757) (1,080) ------- ------- ------ ------ Income before income taxes 10,486 1,809 2,198 4,304 Provision for income taxes 3,997 701 836 1,602 ------- ------- ------ ------ Net income $ 6,489 $ 1,108 1,362 $ 2,702 Preferred dividends 50 - 50 - ------- ------- ------ ------ Net income available for common shareholders $ 6,439 $ 1,108 $ 1,312 $ 2,702 ======= ======= ====== ====== Earnings per common share $ .72 $ .12 $ .15 $ .30 ===== ===== ===== ===== Weighted average common shares outstanding 8,942 8,948 8,942 8,972 ===== ===== ===== =====
5 HUNTCO INC. CONDENSED CONSOLIDATED BALANCE SHEETS (audited, amounts in thousands)
April 30, 1997 1996 ---------- ---------- ASSETS Current assets: Cash $ 1,124 $ 2,737 Accounts receivable, net 46,452 36,804 Inventories 105,569 53,964 Other current assets 3,983 1,926 ------- ------- 157,128 95,431 Property, plant and equipment, net 141,436 120,338 Other assets 8,754 6,668 ------- ------- $307,318 $222,437 ======= ======= LIABILITIES & SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 72,569 $ 29,003 Accrued expenses 4,868 3,934 Current maturities of long-term debt 189 189 ------- ------- 77,626 33,126 ------- ------- Long-term debt 100,877 73,066 Deferred income taxes 7,754 4,879 ------- ------- 108,631 77,945 ------- ------- Shareholders' equity: Series A preferred stock (issued and outstanding, 225 and none, stated at liquidation value) 4,500 - Common stock: Class A (issued and outstanding, 5,292) 53 53 Class B (issued and outstanding, 3,650) 37 37 Additional paid-in-capital 86,530 86,567 Retained earnings 29,941 24,709 ------- ------- 121,061 111,366 ------- ------- $307,318 $222,437 ======= =======
6 HUNTCO INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (audited, dollars in thousands)
Year Ended April 30, 1997 1996 ------- ------- Cash flows from operating activities: Net income $ 6,489 $ 1,108 ------- ------- Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 8,225 6,561 Other (675) (5) Decrease (increase) in: accounts receivable (9,648) (7,662) inventories (51,605) 23,762 other current assets (2,057) (961) other assets (2,632) (910) Increase (decrease) in: accounts payable 43,566 3,485 accrued expenses 934 2,470 non-current deferred taxes 2,875 2,091 ------- ------- Total adjustments (11,017) 28,831 ------- ------- Net cash provided (used) by operations (4,528) 29,939 ------- ------- Cash flows from investing activities: Acquisition of property, plant and equipment, net (28,102) (34,153) ------- ------- Net cash used by investing activities (28,102) (34,153) ------- ------- Cash flows from financing activities: Issuance of Series A preferred stock 4,500 - Net proceeds from newly-issued debt 28,000 50,000 Net payments on long-term debt (189) (45,621) Common stock dividends (1,207) (1,028) Other (87) 34 ------- ------- Net cash provided by financing activities 31,017 3,385 ------- ------- Net (decrease) in cash (1,613) (829) Cash, beginning of year 2,737 3,566 ------- ------- Cash, end of year $ 1,124 $ 2,737 ======= =======
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