-----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, FEO/ZjYGQUDjs8pnrLZ8F6NNUjIDSlSjd41Lz6wCl+Lsnk0Q67ObrAd4b8oeBoUT GtVFqIFSf2MB9VZkg7Nj/A== 0000905722-98-000001.txt : 19980205 0000905722-98-000001.hdr.sgml : 19980205 ACCESSION NUMBER: 0000905722-98-000001 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 ITEM INFORMATION: FILED AS OF DATE: 19980204 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: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13600 FILM NUMBER: 98521697 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) February 4, 1998 ------------------------- 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) Item 5. Other Events Huntco Inc. (the "Company") issued a news release on February 4, 1998, with respect to its release of earnings for its eight-month transition period ended December 31, 1997. This news release is incorporated herein by reference to Exhibit 99 attached hereto. This Current Report on Form 8-K 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 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. 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 include: Impact of changing steel prices on the Company's results of operations: As evidenced by the unfavorable impact on net income in the years ended April 30, 1996 and 1997, as well as the eight month transition period ended December 31, 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 hot rolled steel coils, both domestic and foreign, have been extremely volatile over the previous three years, and conditions exist which could cause this volatility to continue during 1998. No assurance can be given that volatility in steel prices will not again negatively impact the Company's results of operations and net income. Continued internal expansion involving new processes and markets: Notwithstanding the fact that the growth in the Company's net sales 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 continued development and expansion of its pickling, cold rolling, stamping 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 continued ramp up of the Company's stamping plant in Blytheville, and the continued maturation of the Company's pickling, cold rolling and tempering operations in Blytheville and of its South Carolina facility will cause the Company to face new competition. 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 that it has realized through the period ended December 31, 1997. 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. 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. Further, new competition is expected in the sale of cold rolled products over the next few years as new pickling and/or cold rolling capacity is added by Nucor in Hickman, Arkansas and by Worthington Industries, Steel Technologies (through its Mi-Tech joint venture)and Trico in Decatur, Alabama. 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. 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: February 4, 1998 - ------------------------------------------------------------------------------ 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 February 4, 1998 EX-99 2 PRESS RELEASE 1 HUNTCO INC. 14323 SOUTH OUTER FORTY - SUITE 600N TOWN & COUNTRY, MISSOURI 63017 NEWS RELEASE FOR IMMEDIATE RELEASE: HUNTCO REPORTS RESULTS FOR EIGHT MONTH TRANSITION PERIOD ENDED DECEMBER 31, 1997. TOWN & COUNTRY, MISSOURI, February 4, 1998. . . . . Huntco Inc. (NYSE: HCO) today announced results of operations for the eight month transition period ended December 31, 1997. As previously announced, the Company has adopted a calendar year for financial reporting purposes and, accordingly, will be reporting an eight month transition period ended December 31, 1997 on Form 10-K. The Company will now report on a calendar quarter basis commencing with the quarter ending March 31, 1998, which will represent the first quarter of its new fiscal year. Accompanying this news release is an unaudited quarterly summary of certain financial and operating statistics for calendar 1997 and 1996. The Company reported that net sales were $246.3 million and net income available for common shareholders was $.9 million, or $.10 per common share, both basic and fully diluted, for the eight month transition period ended December 31, 1997. The Company processed 744,468 tons of steel in the eight month period ended December 31, 1997, of which approximately 24.5% represented customer owned material processed on a per ton, fee basis. Also included in tons sold were 142,953 tons of cold rolled products. Gross profit, expressed as a percentage of net sales, was 7.5% during the eight month period ended December 31, 1997. This depressed level of gross profit margins reflects the effects of price competition as the Company continues to expand its sales of cold rolled steel products, as well as lower margins on hot rolled steel products due to declining steel prices charged by producers of hot rolled steel coils. Also negatively impacting gross profit margins was a slower than expected ramp-up of sales at the Company's expanded cold rolling mill and at its metal stamping facility, both in Blytheville, Arkansas, along with related operating inefficiencies. The Company recently commenced production on a new coil pickling line at its Blytheville facility. This new pickling line is expected to provide a better quality feed stock for the Company's cold rolling mill, in addition to expanding the Company's pickling capacity. The Company has been operating its other pickling line in Blytheville at full capacity levels for well over a year. As of December 31, 1997, the Company was in technical non-compliance with a covenant of its revolving credit facility. The Company is currently negotiating amendments to its revolving credit agreement which are expected to eliminate this non-compliance and believes that it will have this process completed on or around March 15, 1998. LOOKING FORWARD TO 1998, in addition to its expanded pickling capacity, the Company plans to 1) replace a cut-to-length line at its Pasadena facility; 2) install a new filtration system on its cold rolling mill and an electrostatic oiler on its temper mill, both at its Blytheville facility; and 3) add certain yield enhancing ancillary equipment to its slitting lines at its Chattanooga, Madison and Blytheville facilities. These and other projects currently planned for 1998 are anticipated to result in capital expenditures of approximately $3.0 to $4.0 million. The Company enters calendar 1998 with strong forward sales momentum and expects that its net sales could increase by approximately 15% over calendar 1997 net sales of $366.6 million. The anticipated increase in net sales is expected to reflect higher levels of tons sold which are expected to increase to approximately 1.3 million tons (up from 1.1 million tons in calendar 1997). While the Company expects that 1998 will likely begin with gross profit margins at levels similar to those experienced during the transition period ended December 31, 1997, as the year progresses, it expects that its operating results should benefit from 1) a broader supplier base and increased inventory turnover; 2) greater operating efficiencies at its stamping and cold rolling complex in Blytheville, at its South Carolina facility and at its other facilities that have been expanded in recent years, with such efficiencies resulting from equipment enhancements, higher volume levels, improved product quality and more consistent on-time deliveries; and 3) a more focused sales and marketing effort as the Company will not be challenged with the start-up of any further significant new operations during 1998, beyond the start-up of its expanded pickling capacity in Blytheville. This press release contains certain statements that are forward-looking and involve risks and uncertainties. Words such as "expects," "believes," and "anticipates," 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 operations, the steel processing industry in general, and on 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. 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 news release include: 1) the impact of changing steel prices; 2) the risk of continuing delays in the ramp-up of the Company's pickling, cold rolling, tempering and stamping complex in Blytheville and resultant operating inefficiencies; 3) cyclicality of demand for the Company's products; and 4) changes in market fundamentals caused by increased competition from current competitors, as well as the entrance of new competitors. The Company encourages those who make use of this forward-looking data to make reference to a more complete discussion of the factors which may cause the forward- looking data to differ materially from actual results which is contained in Form 8-K, which is being filed simultaneously with this news 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 HUNTCO INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts)
Eight months ended December 31, 1997 1996 (audited) (unaudited) -------- -------- Net sales $246,324 $206,334 Cost of sales 227,871 184,751 ------- ------- Gross profit 18,453 21,583 Selling, general and administrative expenses 11,757 10,082 ------- ------- Income from operations 6,696 11,501 Interest, net (5,194) (3,883) ------- ------- Income before income taxes 1,502 7,618 Provision for income taxes 486 2,904 ------- ------- Net income $ 1,016 $ 4,714 Preferred dividends 133 - ------- ------- Net income available for common shareholders $ 883 $ 4,714 ======= ======= Earnings per common share (basic and fully diluted) $ .10 $ .53 ===== ===== Weighted average common shares outstanding 8,942 8,942 ===== =====
HUNTCO INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
December 31, April 30, 1997 1997 ----------- -------- ASSETS Current assets: Cash $ 27 $ 1,124 Accounts receivable, net 41,643 46,452 Inventories 81,612 105,569 Other current assets 5,015 3,983 ------- ------- 128,297 157,128 Property, plant and equipment, net 145,777 141,436 Other assets 11,191 8,754 ------- ------- $285,265 $307,318 ======= ======= LIABILITIES & SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 40,027 $ 72,569 Accrued expenses 3,879 4,868 Current maturities of long-term debt 209 189 ------- ------- 44,115 77,626 ------- ------- Long-term debt 110,730 100,877 Deferred income taxes 9,415 7,754 ------- ------- 120,145 108,631 ------- ------- Shareholders' equity: Series A preferred stock (stated at liquidation value) 4,500 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 86,530 Retained earnings 29,885 29,941 ------- ------- 121,005 121,061 ------- ------- $285,265 $307,318 ======= =======
COMPARATIVE CALENDAR 1997 VERSUS 1996 QUARTERLY DATA: Summarized unaudited quarterly financial data for the calendar years ended December 31, 1997 and 1996 appears below (dollars in thousands, except per share amounts):
First Second Third Fourth quarter quarter quarter quarter Year ------- ------- ------- ------- ---------- Net sales: December 1997 $85,501 $93,657 $93,903 $93,492 $366,553 December 1996 78,345 79,960 82,102 72,081 312,488 Gross profit: December 1997 7,349 9,056 8,167 4,407 28,979 December 1996 8,380 9,259 8,338 7,283 33,260 Net income (loss): December 1997 1,224 1,572 1,197 (1,203) 2,790 December 1996 2,370 2,815 2,043 1,067 8,295 Earnings (loss) per common share (basic and fully diluted): December 1997 .13 .17 .13 (.14) .29 December 1996 .27 .31 .23 .12 .93
Summarized unaudited quarterly sales volume data for the Company for the calendar years ended December 31, 1997 and 1996 appears below:
First Second Third Fourth quarter quarter quarter quarter Year ------- ------- ------- ------- ---------- Tons sold: December 1997 193,010 212,776 219,447 209,547 834,780 December 1996 182,398 183,015 187,250 163,247 715,910 Tons toll processed: December 1997 55,297 58,639 76,088 66,508 256,532 December 1996 50,728 48,653 55,810 43,062 198,253 Total tons sold and processed: December 1997 248,307 271,415 295,535 276,055 1,091,312 December 1996 233,126 231,668 243,060 206,309 914,163
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