-----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, TaGwc7auuTp1r60e4yMSC/W7axpwDIMnXmMy8uymjGknpL/J6O/5dVroQftu0qU9 OW7OT5s5p6SxqvWRC8QdAA== 0001157523-04-000063.txt : 20040107 0001157523-04-000063.hdr.sgml : 20040107 20040107134140 ACCESSION NUMBER: 0001157523-04-000063 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040107 ITEM INFORMATION: FILED AS OF DATE: 20040107 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: 04512580 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 a4544002.txt SCHNITZER STEEL INDUSTRIES, INC. 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): January 7, 2004 -------------------------- 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 January 7, 2004, Schnitzer Steel Industries, Inc. issued a press release announcing financial results for the quarter ended November 30, 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: January 7, 2004 By/s/Barry A. Rosen ------------------------- ------------------------------------ Barry A. Rosen Vice President, Finance and Chief Financial Officer EX-99 3 a4544002ex991.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Schnitzer Steel Reports 321% Rise in First Quarter Net Income PORTLAND, Ore.--(BUSINESS WIRE)--Jan. 7, 2004--Schnitzer Steel Industries, Inc. (Nasdaq:SCHN) today reported net income of $12.2 million or $0.59 per diluted share on revenues of $128.4 million for the first fiscal quarter ended Nov. 30, 2003. In comparison, the Company reported net income of $2.9 million or $0.15 per diluted share on revenues of $90.7 million for the quarter ended Nov. 30, 2002. "It's a pleasure to report another strong quarter for Schnitzer Steel," said Robert W. Philip, president and chief executive officer. "Net income was up 321% from the first quarter of fiscal 2003 on a 42% rise in revenues. Overall, the Company's first quarter results ended in the range we expected with average selling prices for both ferrous metals and finished steel rising above the levels reported in the first quarter of fiscal 2003 and the fourth quarter of last fiscal year. Operating profits in our various metals recycling businesses, as well as the Auto Parts Business, showed good improvement from the first quarter of last year. The Steel Manufacturing Business also showed improvement over last year's first quarter; however, the results were lower than we anticipated due primarily to a higher than expected rise in recycled metal costs." "In early December, China's Bureau of National Statistics announced that with one month to go before year-end, China had already become the first nation ever to produce more than 200 million tons of raw steel in a single year," said Philip. "Looking back just three years to 2000, China produced an estimated 129 million tons of steel representing 16% of the world's production. Today, it's anticipated that China will produce approximately 215 million tons of crude steel in all of 2003 representing nearly 23% of the world's total estimated production. This growing steel production is directly increasing demand and prices for recycled ferrous metal. Schnitzer Steel, together with its joint venture businesses, is the nation's largest exporter of ferrous recycled metal and is well positioned to continue to benefit from this growth in demand." Metals Recycling Business The Metals Recycling Business reported operating income of $9.9 million in the first quarter of fiscal 2004, an improvement of $6.8 million or 221% over the same quarter last year. The higher operating profit was primarily caused by improvements in both sales volumes and average selling prices, which rose by 39% and 37%, respectively, over the first quarter of fiscal 2003. First quarter sales volumes are normally lower than the other three fiscal quarters of each year due to seasonal variations in demand; however, last year's first quarter sales volume was unusually low due to an intentional delay in placing orders by certain Asian customers. Ultimately, the volume was sold in the second quarter of fiscal 2003. In comparison, first quarter 2004 quarterly sales volumes were more typical, considering normal seasonal variations in demand. Moreover, this quarter's sales volumes would have been higher except that one 30,000 ton export cargo that was anticipated for the first quarter of fiscal 2004 was delayed and shipped during the first week of December 2003. The higher first quarter 2004 selling prices were caused by increasing Asian demand, primarily from China. The higher selling prices and sales volumes were partially offset by increases in the cost of unprocessed metal coupled with rising ocean freight rates, which were 50% higher in the fiscal 2004 first quarter as compared to the prior year quarter. Joint Venture Businesses Income from Joint Ventures amounted to $5.9 million for the first quarter of fiscal 2004 compared to $3.2 million in last year's first quarter. The higher fiscal 2004 quarterly income resulted from improved operating profits for the joint ventures in the metals recycling business, which were affected by many of the same factors impacting the Company's own wholly owned Metals Recycling Business. The Joint Ventures recent quarterly results were also affected by shipping delays that deferred export cargoes into the second quarter of fiscal 2004. Auto Parts Business The Auto Parts Business reported operating income of $5.9 million in the first quarter of fiscal 2004, which was a $0.7 million or 13% improvement over the fiscal 2003 quarter. The profit improvement principally came from the wholesale side of the business, which experienced increasing prices for recycled metal and higher wholesale parts sales volume. Steel Manufacturing Business The Steel Manufacturing Business reported an operating loss of $0.1 million for the first quarter of 2004, which was a $1.1 million improvement from last year's first quarter. The improved operating margin was driven principally by higher selling prices and increased sales volumes. First quarter 2004 selling price averaged $310 per ton, which was slightly less than anticipated, but was a $26 per ton (9%) improvement over the first quarter of last year. The higher selling prices were primarily caused by market price increases implemented to offset the sharp rise in raw material and energy costs. Sales volumes amounted to 163,000 tons in the first quarter of 2004, an increase of 14% from the 2003 first quarter. The higher sales volume was primarily caused by industry consolidation, modest increases in end user demand and lower steel imports resulting from the weakness in the U.S. dollar coupled with the rising cost of ocean freight. Partially offsetting the higher selling prices and volumes was an unexpectedly sharp increase in the spot market purchase prices for ferrous recycled metals sold and brokered to the Company's steel mill. Outlook The Metals Recycling Business normally accepts orders 60 to 90 days before shipment. Based upon the Metals Recycling Businesses' second quarter 2004 order backlog, contracted selling prices are, on average, higher than the amount realized in the first quarter of fiscal 2004, and significantly higher than the amount reported during last year's second quarter. The higher selling prices are expected to be tempered by rising ocean freight rates as well as upward pressure on the cost to purchase metal from suppliers. Sales volumes are anticipated to be in the range of 520,000 to 550,000 tons. Similar market factors are expected to affect our joint ventures in the metals recycling business. On Dec. 4, 2003, President Bush terminated the steel import tariffs that were enacted in March 2002. The tariffs affected two of the Steel Manufacturing Business's three major production lines, namely rebar and merchant bar products. It has been management's belief that the tariffs, when enacted, did not significantly benefit the pricing of the Company's products. Thus, the President's decision to rescind the tariffs is not expected to significantly affect the prices of these products going forward. Management anticipates the domestic economy will continue to improve, which should benefit the Company's Steel Manufacturing Business. However, second quarter demand and sales volumes are traditionally the lowest of the four fiscal quarters due to seasonal and weather factors. Over the last few months, the Steel Manufacturing Business and its competitors announced a number of price increases, which led to higher selling prices. Two additional announced price increases totaling $40 per ton on rebar and merchant bar are expected to take effect in the second quarter of 2004 and should result in higher average selling prices. The higher selling prices should mitigate the rise in recycled metal and energy costs. The Steel Manufacturing Business also received $1.8 million during the second quarter as a final payment regarding an electrode price fixing settlement that was settled in favor of a number of steel mills, including the Company. This amount will be recognized as income from operations during the second quarter of fiscal 2004. Due to adverse weather conditions, the second quarter of each fiscal year is seasonably slow for the Auto Parts Business in terms of retail sales. The slower retail sales are expected to be partially offset by stronger wholesale revenues. Overall, the Company estimates its second quarter 2004 income from operations to be in the $19 million to $22 million range. This amount compares to income from operations of $13.1 million reported for the second 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 annual report on Form 10-K. 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 November 30, --------------------------- 2003 2002 ------------- ------------- REVENUES: Metals Recycling Business: Ferrous sales $ 65,894 $ 33,930 Nonferrous sales 12,409 10,115 Other sales 1,299 1,529 ------------- ------------- Total sales 79,602 45,574 Auto Parts Business 17,660 16,139 Steel Manufacturing Business 53,219 42,830 Intercompany sales eliminations (22,105) (13,876) ------------- ------------- Total $128,376 $ 90,667 ============= ============= INCOME (LOSS) FROM OPERATIONS: Metals Recycling Business $ 9,923 $ 3,096 Auto Parts Business 5,889 5,208 Steel Manufacturing Business (142) (1,257) Joint ventures 5,937 3,175 Corporate expense (2,646) (2,024) Intercompany eliminations (856) 573 ------------- ------------- Total $ 18,105 $ 8,771 ============= ============= NET INCOME $ 12,177 $ 2,891 ============= ============= BASIC EARNINGS PER SHARE $ 0.62 $ 0.16 ============= ============= DILUTED EARNINGS PER SHARE $ 0.59 $ 0.15 ============= ============= SHARE INFORMATION (THOUSANDS): Basic shares outstanding 19,721 18,410 ============= ============= Diluted shares outstanding 20,631 18,710 ============= ============= SCHNITZER STEEL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF INCOME (in thousands, except per share amounts) For the Three Months Ended November 30, -------------------------- 2003 2002 ------------- ------------ (Unaudited) Revenues $128,376 $90,667 ------------- ------------ Costs and expenses: Cost of goods sold and other operating expenses 106,698 76,780 Selling and commission expenses 1,278 1,185 General and administrative expenses 8,232 7,106 ------------- ------------ Income from consolidated operations 12,168 5,596 Income from joint ventures 5,937 3,175 ------------- ------------ Income from operations 18,105 8,771 Other income (expense): Interest expense (440) (380) Other income (expense), net 204 (203) ------------- ------------ (236) (583) ------------- ------------ Income before income taxes 17,869 8,188 Income tax provision (5,182) (2,015) ------------- ------------ Income before minority interests, pre- acquisition interests and cumulative effect of accounting change 12,687 6,173 Minority interests, net of income taxes (510) (447) Pre-acquisition interests, net of income taxes - (1,852) ------------- ------------ Income before cumulative effect of change in accounting principle 12,177 3,874 Cumulative effect of change in accounting principle - (983) ------------- ------------ Net income $ 12,177 $ 2,891 ============= ============ Basic earnings per share $ 0.62 $ 0.16 ============= ============ Diluted earnings per share $ 0.59 $ 0.15 ============= ============ Schnitzer Steel Industries, Inc. Selected Operating Statistics (Unaudited) Q1 FY04 Q1 FY03 Q2 FY03 ----------- ----------- ----------- Metals Recycling Business Ferrous Recycled Metal Sales Prices ($/LT) Domestic $ 135 $ 100 $ 108 Export $ 144 $ 104 $ 113 Average $ 140 $ 102 $ 111 Ferrous Sales Volume (LT) Domestic Processed(a) 99,781 113,439 95,277 Domestic Brokered(a) 73,366 38,890 57,462 Export 235,481 142,199 402,437 ---------- ---------- ---------- Total (a) 408,628 294,528 555,176 ========== ========== ========== (a) Includes sales to the Steel Manufacturing Business 157,989 114,988 140,823 ========== ========== ========== Steel Manufacturing Business Sales Prices ($/NT) Rebar $ 308 $ 273 $ 269 Other $ 313 $ 293 $ 299 Average $ 310 $ 284 $ 283 Sales Volume (NT) Rebar 91,204 64,652 74,160 Wire Rod 43,020 50,216 37,790 Other 28,370 27,470 25,099 ---------- ---------- ---------- Total 162,594 142,338 137,049 ========== ========== ========== Joint Ventures Ferrous Recycled Metal Sales Volume Processed (LT) 674,622 635,899 941,220 Brokered (LT) 677,395 470,304 304,068 ---------- ---------- ---------- 1,352,017 1,106,203 1,245,288 ========== ========== ========== Q3 FY03 Q4 FY03 FY03 ----------- ----------- ----------- Metals Recycling Business Ferrous Recycled Metal Sales Prices ($/LT) Domestic $ 125 $ 119 $ 114 Export $ 140 $ 144 $ 127 Average $ 133 $ 137 $ 122 Ferrous Sales Volume (LT) Domestic Processed(a) 132,217 82,087 423,020 Domestic Brokered(a) 60,322 75,376 232,050 Export 239,801 372,658 1,157,095 ---------- ---------- ---------- Total (a) 432,340 530,121 1,812,165 ========== ========== ========== (a) Includes sales to the Steel Manufacturing Business 144,274 134,787 534,872 ========== ========== ========== Steel Manufacturing Business Sales Prices ($/NT) Rebar $ 282 $ 298 $ 282 Other $ 305 $ 303 $ 300 Average $ 293 $ 300 $ 291 Sales Volume (NT) Rebar 88,323 99,829 326,964 Wire Rod 47,469 51,016 186,491 Other 28,418 27,170 108,157 ---------- ---------- ---------- Total 164,210 178,015 621,612 ========== ========== ========== Joint Ventures Ferrous Recycled Metal Sales Volume Processed (LT) 880,173 865,255 3,322,547 Brokered (LT) 387,336 674,753 1,836,461 ---------- ---------- ---------- 1,267,509 1,540,008 5,159,008 ========== ========== ========== 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. Barry Rosen, 503-323-2720 (Financial Contact) Tom Zelenka, 503-323-2821 (Press Contact) www.schnitzersteel.com -----END PRIVACY-ENHANCED MESSAGE-----