-----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, MyMqgGcpOYAjeaMj31Od8t0Q4Ld5iwY52T2zA5XMFMOvesYo6JoyZcPZw5F+vaxM DIVfPMNNgpXGucXE+E7f/Q== 0001157523-03-005185.txt : 20031003 0001157523-03-005185.hdr.sgml : 20031003 20031003110427 ACCESSION NUMBER: 0001157523-03-005185 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031002 ITEM INFORMATION: FILED AS OF DATE: 20031003 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCHNITZER STEEL INDUSTRIES INC CENTRAL INDEX KEY: 0000912603 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MISC DURABLE GOODS [5090] IRS NUMBER: 930341923 STATE OF INCORPORATION: OR FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-22496 FILM NUMBER: 03926626 BUSINESS ADDRESS: STREET 1: 3200 NW YEON AVE STREET 2: P O BOX 10047 CITY: PORTLAND STATE: OR ZIP: 97210-0047 BUSINESS PHONE: 5032249900 MAIL ADDRESS: STREET 1: P O BOX 10047 CITY: PORTLAND STATE: OR ZIP: 97210 8-K 1 a4485409.txt SCHNITZER STEEL 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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): October 2, 2003 --------------- SCHNITZER STEEL INDUSTRIES, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) OREGON 0-22496 93-0341923 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 3200 N.W. Yeon Ave. P.O. Box 10047 Portland, OR 97296-0047 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code: (503) 224-9900 ---------------------------- NO CHANGE - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) Item 12. Results of Operations and Financial Condition On October 2, 2003, Schnitzer Steel Industries, Inc. issued a press release announcing financial results for the quarter and year ended August 31, 2003. A copy of this press release is being furnished as Exhibit 99.1 to this report on Form 8-K. SIGNATURE 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. SCHNITZER STEEL INDUSTRIES, INC. (Registrant) Date: October 2, 2003 By: /s/Barry A. Rosen ---------------- ----------------------------- Barry A. Rosen Vice President, Finance and Chief Financial Officer EX-99 3 a4485409_ex991.txt SCHNITZER STEEL EXHIBIT 99.1 Exhibit 99.1 Schnitzer Steel Reports Record Revenues and Profits PORTLAND, Ore.--(BUSINESS WIRE)--Oct. 2, 2003--Schnitzer Steel Industries, Inc. (Nasdaq:SCHN) today reported net income of $16.9 million or $0.84 per diluted share on revenues of $153.6 million for the fourth quarter ended August 31, 2003. During the fourth quarter of 2002, the Company reported net income of $2.2 million or $0.12 per diluted share on revenues of $100.1 million. For the fiscal year ended August 31, 2003, the Company reported net income of $43.2 million or $2.20 per diluted share on revenues of $496.9 million. During fiscal 2002, Schnitzer Steel reported net income of $6.6 million or $0.35 per diluted share on revenues of $350.6 million. "Fiscal 2003 was a record year for Schnitzer Steel," said Robert W. Philip, President and Chief Executive Officer. "It was also the first year since the 1997 Asian financial crisis in which we experienced an extended period of improving prices for ferrous recycled metal. It is truly gratifying to see all of our business segments showing significant gains over fiscal 2002, most of which were driven by improving market conditions. Both our wholly-owned Metals Recycling Business and our joint ventures in the metals recycling business produced record profits in fiscal 2003, enabled in part by our strategic deep water export terminals that have the size, scope and capability to efficiently service the strong demand from our Asian customer base. Also, our recently acquired Auto Parts Business provided us with significant earnings gains in fiscal 2003 and gives us a strong base to grow this business segment that fits within our core metals recycling strategy. Finally, our Steel Manufacturing business made significant improvement in its operating results during fiscal 2003, which came primarily from modest increases in domestic demand coupled with a rising price environment." Mr. Philip continued, "Our record fiscal 2003 operating performance was clearly driven by improved market conditions; however, much of the credit goes directly to our partners, managers and employees of our many businesses who executed our strategies and allowed us to capture the market opportunities." Metals Recycling Business The Metals Recycling Business reported operating income of $14.2 million in the fourth quarter of fiscal 2003, an improvement of $8.1 million or 131% over the same quarter last year. In the fourth quarter 2003, this business segment shipped 530,000 tons of ferrous metal, which was near record levels, and was 28% ahead of the volume reported in the same period a year ago. The higher sales volumes came from the combination of increased tonnage of lower margin brokerage material coupled with a larger than average number of export shipments. The average ferrous selling price increased 27% from last year's fourth quarter and was up 3% over the third quarter of fiscal 2003. The higher selling prices were driven by strong demand from China and other Asian countries. The cost of unprocessed metal also rose during the fourth quarter of fiscal 2003, which tempered the margin benefit from the higher selling prices and sales volumes. Joint Venture Businesses As previously reported, on February 14, 2003, a wholly-owned subsidiary of the Company completed the acquisition of the interest of its 50% partner in the Pick-N-Pull Auto Dismantlers joint venture (the "Pick-N-Pull Joint Venture"). Prior to fiscal 2003, the Pick-N-Pull Joint Venture was accounted for under the equity method and was included in "Joint Ventures" in the Company's financial statements. However, as a result of the recent acquisition, the Company elected, under generally accepted accounting principles, to consolidate the results of the acquired businesses retroactively to the beginning of the fiscal year, September 1, 2002. Thus, fiscal 2003 revenues and expenses of the Pick-N-Pull Joint Venture and other acquired assets have been included in a separate reporting segment termed the "Auto Parts Business", which is described below. The financial results of the Pick-N-Pull Joint Venture for periods prior to fiscal 2003 continue to be reported under Joint Ventures. Income from Joint Ventures, excluding the Pick-N-Pull Joint Venture, amounted to $6.2 million for the fourth quarter of 2003. This amount compares to $5.6 million, including $2.0 million from the Pick-N-Pull Joint Venture, in the fourth quarter of last year. The higher fiscal 2003 quarterly income was largely driven by improved results for the joint ventures in the metals recycling business, which benefited from many of the same business fundamentals as the Company's wholly-owned Metals Recycling Business. However, these businesses did not report the same relative increase in ferrous sales volumes during the fourth quarter of fiscal 2003 as did the Company's wholly-owned Metals Recycling Business. Auto Parts Business The Auto Parts Business reported operating income of $5.7 million in the fourth quarter of fiscal 2003. On a comparable pro-forma basis, this business segment earned $5.8 million of operating income during the fiscal 2002 quarter. Revenues and gross margins showed modest gains over the pro-forma results for the year earlier period; however, higher operating expense, primarily insurance costs, offset the improved gross margins. Steel Manufacturing Business The Steel Manufacturing Business reported its first quarterly operating profit in two years during the most recent quarter. Operating income amounted to $0.4 million in the fourth quarter of fiscal 2003, which compares to an operating loss of $2.0 million in the fiscal 2002 quarter. The operating margin improvement was driven by the combination of higher sales prices and volumes, offset in part by higher recycled metal and energy costs. Fourth quarter 2003 finished steel prices averaged $300 per ton, which was 8% higher than the year ago level and was also the highest quarterly average since the second quarter of fiscal 1999. Sales volumes amounted to 178,000 tons in the fourth quarter of fiscal 2003, which was 12% above last year's fourth quarter and was the third highest quarterly volume ever shipped by this business segment. Both sales volumes and prices benefited from modest improvements in domestic demand as well as from lower volumes of steel imports, which is partially attributed to the recent weakness of the U.S. dollar as well as the continuing impact of the import duties. Selling prices also increased as domestic steel manufacturers raised prices in an attempt to pass through the rise in raw material and energy costs. Outlook In early calendar 2002, certain countries of the former Soviet Union, primarily the Ukraine and Russia, enacted export tariffs and bans to restrict the export of recycled metal and retain the valuable resource to grow and redevelop their domestic economies. These restrictions in tandem with other market factors resulted in the international ferrous recycled metal market rebounding to price levels that had not existed since before the 1997 Asian financial crisis. Based upon the Metals Recycling Businesses' first quarter 2004 order backlog, contracted selling prices are on average, modestly higher than the amount recognized in the most recent quarter, and significantly higher than the amount reported during last year's first fiscal quarter. Tempering the higher selling prices is an expected increase in ocean freight costs due principally to strong demand from Asian countries for bulk cargos, as well as upward pressure on the cost to purchase metal from suppliers. First quarter 2004 ferrous sales volumes are anticipated to be lower than the near record fourth quarter 2003 sales volumes, due to lower year-end inventories and typical quarterly variations, but are expected to be approximately 50% above last year's first quarter levels. Similar market factors are expected to affect our joint ventures in the metals recycling business. We anticipate the domestic economy will continue to improve during the first quarter of fiscal 2004, which should further benefit the Company's Steel Manufacturing Business. The Steel Manufacturing Business announced a number of price increases over the last few months, two of which take effect during the first quarter of fiscal 2004, which are expected to increase the Company's average selling price for finished steel. The higher selling prices are expected to offset the rise in recycled metal costs and further improve the businesses' profitability during the first quarter of fiscal 2004. The Auto Parts Business is anticipated to report a quarterly operating profit that is modestly above last year's first quarter level of $5.2 million. Overall, the Company estimates its first quarter 2004 income from operations to be in the $18 million to $20 million range. This amount compares to income from operations of $8.7 million that was reported for the first quarter of fiscal 2003. The Company anticipates that its effective tax rate will continue to benefit from net operating loss carryforwards that were acquired as part of a 1996 acquisition as well as from Extraterritorial Income Exclusion benefits associated with certain export sales. These, as well as other factors should result in an effective fiscal 2004 tax rate in the high twenty percent range. Schnitzer Steel Industries, Inc. is one of the nation's largest recyclers of ferrous metals, a manufacturer of finished steel products and a leading self-service auto parts and dismantling company. The Company, with its joint venture partners, processes approximately 4.9 million tons of recycled ferrous metals per year. In addition, the Company's steel mill has an annual production capacity of approximately 700,000 tons of finished steel products. The Company and its joint venture partners operate primarily along the West Coast and Northeastern seaboard of the United States. This news release, particularly the "Outlook" section, contains forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. One can generally identify these forward-looking statements because they contain "expect", "believe", "anticipate", "estimate" and other words that convey a similar meaning. One can also identify these statements, as they do not relate strictly to historical or current facts. Examples of factors affecting both Schnitzer Steel Industries, Inc.'s consolidated operations and its joint ventures (the Company) that could cause actual results to differ materially from current expectations are the following: volatile supply and demand conditions affecting prices and volumes in the markets for both the Company's products and raw materials it purchases; world economic conditions; world political conditions; changes in federal and state income tax laws; foreign currency fluctuations; competition; seasonality, including weather; energy supplies; freight rates; the predictability of joint venture operating results; and the inability to complete expected large scrap export shipments in the current quarter, all as discussed in more detail under the heading "Factors That Could Affect Future Results" in the Company's most recent quarterly report on Form 10-Q. One should understand that it is not possible to predict or identify all factors that could cause actual results to differ from the Company's forward-looking statements. Consequently, the reader should not consider any such list to be a complete statement of all potential risks or uncertainties. The Company does not assume any obligation to update any forward-looking statement. For more information about Schnitzer Steel Industries, Inc. go to www.schnitzersteel.com. SCHNITZER STEEL INDUSTRIES, INC. FINANCIAL HIGHLIGHTS (in thousands, except per share amounts) (Unaudited) For the Three Months Ended For the Year Ended August 31, August 31, 2003 2002 2003 2002 REVENUES: Metals Recycling Business: Ferrous sales $ 83,501 $ 51,061 $255,232 $173,473 Nonferrous sales 13,240 11,460 47,788 41,708 Other sales 1,204 1,337 5,533 6,631 ------------- ------------- ------------- ------------- Total sales 97,945 63,858 308,553 221,812 Auto Parts Business 17,020 - 65,225 - Steel Manufacturing Business 56,684 47,197 191,861 166,586 Intercompany sales eliminations (18,053) (10,966) (68,773) (37,750) ------------- ------------- ------------- ------------- Total $153,596 $100,089 $496,866 $350,648 ============= ============= ============= ============= INCOME (LOSS) FROM OPERATIONS: Metals Recycling Business $ 14,213 $ 6,154 $ 35,781 $ 11,541 Auto Parts Business 5,732 - 21,968 - Steel Manufacturing Business 376 (1,986) (2,522) (5,649) Joint ventures 6,212 5,597 24,421 19,390 Corporate expense (2,968) (2,066) (9,966) (8,020) Intercompany eliminations 1,247 (178) 1,203 (253) Impairment and other nonrecurring charges - (4,840) (2,100) (7,100) ------------- ------------- ------------- ------------- Total $ 24,812 $ 2,681 $ 68,785 $ 9,909 ============= ============= ============= ============= NET INCOME $ 16,873 $ 2,196 $ 43,201 $ 6,553 ============= ============= ============= ============= BASIC EARNINGS PER SHARE $ 0.88 $ 0.12 $ 2.32 $ 0.36 ============= ============= ============= ============= DILUTED EARNINGS PER SHARE $ 0.84 $ 0.12 $ 2.20 $ 0.35 ============= ============= ============= ============= SHARE INFORMATION (THOUSANDS): Basic shares outstanding 19,221 18,370 18,650 18,296 ============= ============= ============= ============= Diluted shares outstanding 20,188 18,930 19,653 18,566 ============= ============= ============= ============= SCHNITZER STEEL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF INCOME (in thousands, except per share amounts) For the Three Months Ended For the Year Ended August 31, August 31, 2003 2002 2003 2002 (Unaudited) (Audited) Revenues $153,596 $100,089 $496,866 $350,648 -------- -------- -------- -------- Costs and expenses: Cost of goods sold and other operating expenses 124,932 90,636 413,043 324,360 Impairment and other nonrecurring charges - 4,840 2,100 7,100 Selling and commission expenses 1,500 774 5,311 2,863 General and administrative expenses 8,564 6,755 32,048 25,806 ----- ----- ------ ------ Income (loss) from consolidated operations 18,600 (2,916) 44,364 (9,481) Income from joint ventures 6,212 5,597 24,421 19,390 ----- ----- ------ ------ Income from operations 24,812 2,681 68,785 9,909 Other income (expense): Interest expense (644) (452) (1,778) (2,314) Other income (expense), net (371) (27) (540) 52 ----- ---- ----- --- (1,015) (479) (2,318) (2,262) ------- ----- ------- ------- Income before income taxes 23,797 2,202 66,467 7,647 Income tax provision (6,484) (6) (17,946) (1,094) ------- ------ -------- ------- Income before minority interests, pre-acquisition interests and cumulative effect of accounting change 17,313 2,196 48,521 6,553 Minority interests, net of income taxes (474) - (1,824) - Pre-acquisition interests, net of income taxes 34 - (2,513) - ---- --- ------ --- Income before cumulative effect of change in accounting principle 16,873 2,196 44,184 6,553 Cumulative effect of change in accounting principle - - (983) - ------- ----- ------ ----- Net income $ 16,873 $ 2,196 $ 43,201 $ 6,553 ======== ======= ======== ======== Basic earnings per share $ 0.88 $ 0.12 $ 2.32 $ 0.36 ======== ======= ======== ======== Diluted earnings per share $ 0.84 $ 0.12 $ 2.20 $ 0.35 ======== ======= ======== ======== Schnitzer Steel Industries, Inc. Selected Operating Statistics (Unaudited) Q1 FY03 Q2 FY03 Q3 FY03 Q4 FY03 FY03 ------- ------- ------- ------- ---- Metals Recycling Business Ferrous Recycled Metal Sales Prices ($/LT) Domestic $100 $108 $125 $119 $114 Export $104 $113 $140 $144 $127 Average $102 $111 $133 $137 $122 Ferrous Sales Volume (LT) Domestic Processed/a 113,439 95,277 132,217 82,087 423,020 Domestic Brokered/a 38,890 57,462 60,322 75,376 232,050 Export 142,199 402,437 239,801 372,658 1,157,095 -------------------------------------------- Total/a 294,528 555,176 432,340 530,121 1,812,165 ============================================ (a) Includes sales to the Steel Manufacturing Business 114,988 140,823 144,274 134,787 534,872 ============================================ Steel Manufacturing Business Sales Prices ($/NT) Rebar $273 $269 $282 $298 $282 Other $293 $299 $305 $303 $300 Average $284 $283 $293 $300 $291 Sales Volume (NT) Rebar 64,652 74,160 88,323 99,829 326,964 Wire Rod 50,216 37,790 47,469 51,016 186,491 Other 27,470 25,099 28,418 27,170 108,157 -------------------------------------------- Total 142,338 137,049 164,210 178,015 621,612 ============================================ Joint Ventures JV Ferrous Recycled Metal Sales Volume (LT) 637,354 940,138 880,065 865,254 3,322,811 ============================================ Note: Price information is shown after a reduction for the cost of freight incurred to deliver the product to the customer Q1 FY02 Q2 FY02 Q3 FY02 Q4 FY02 FY02 ------- ------- ------- ------- ---- Metals Recycling Business Ferrous Recycled Metal Sales Prices ($/LT) Domestic $84 $82 $95 $109 $93 Export $88 $89 $97 $108 $95 Average $87 $87 $96 $108 $94 Ferrous Sales Volume (LT) Domestic Processed/a 74,794 95,805 95,612 129,049 395,260 Domestic Brokered/a 24,238 19,668 29,484 20,210 93,600 Export 248,594 286,210 267,500 265,589 1,067,893 ---------------------------------------------- Total/a 347,626 401,683 392,596 414,848 1,556,753 ============================================== (a) Includes sales to the Steel Manufacturing Business 93,392 97,999 111,811 103,369 406,571 ============================================== Steel Manufacturing Business Sales Prices ($/NT) Rebar $272 $266 $265 $270 $267 Other $293 $285 $284 $287 $287 Average $280 $275 $274 $279 $276 Sales Volume (NT) Rebar 73,901 64,241 92,123 77,157 307,422 Wire Rod 20,120 24,573 44,826 53,966 143,485 Other 30,051 28,019 31,820 28,486 118,376 ---------------------------------------------- Total 124,072 116,833 168,769 159,609 569,283 ============================================== Joint Ventures JV Ferrous Recycled Metal Sales Volume (LT) 893,671 891,612 896,831 796,450 3,478,564 ============================================== Note: Price information is shown after a reduction for the cost of freight incurred to deliver the product to the customer CONTACT: Schnitzer Steel Industries, Inc. Financial Contact: Barry Rosen, 503/323-2720 Press Contact: Tom Zelenka, 503/323-2821 www.schnitzersteel.com -----END PRIVACY-ENHANCED MESSAGE-----