-----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, MACpRKzKOt7D+8zUAVJSQrP/M+Qp6I1mXE1aoPsHD6R3CXbV13A9JBgPC8O3OVVk BtIhphSNDcUeH6nEH1kMkQ== 0000898431-97-000234.txt : 19970813 0000898431-97-000234.hdr.sgml : 19970813 ACCESSION NUMBER: 0000898431-97-000234 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIVERSAL STAINLESS & ALLOY PRODUCTS INC CENTRAL INDEX KEY: 0000931584 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 251724540 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-25032 FILM NUMBER: 97656959 BUSINESS ADDRESS: STREET 1: 600 MAYER ST CITY: BRIDGEVILLE STATE: PA ZIP: 15017 BUSINESS PHONE: 4122577600 MAIL ADDRESS: STREET 1: 600 MAYER ST CITY: BRIDGEVILLE STATE: PA ZIP: 15017 10-Q 1 FORM 10-Q QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q --------------- [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 1997 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 0-25032 --------------- UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC. (Exact name of Registrant as specified in its charter) DELAWARE 25-1724540 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 600 Mayer Street Bridgeville, PA 15017 (Address of principal executive offices, including zip code) (412) 257-7600 (Telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Title of Class Common Stock, par value $0.001 per share 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, 1997, there were 6,287,290 shares of the Registrant's Common Stock issued and outstanding. UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC. THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS HISTORICAL INFORMATION AND FORWARD-LOOKING STATEMENTS. STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN THIS FORM 10-Q PURSUANT TO THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THEY INVOLVE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES THAT MAY CAUSE THE COMPANY'S ACTUAL RESULTS IN FUTURE PERIODS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE PERFORMANCE SUGGESTED HEREIN. IN THE CONTEXT OF FORWARD-LOOKING INFORMATION PROVIDED IN THIS FORM 10-Q AND IN OTHER REPORTS, PLEASE REFER TO THE DISCUSSION OF RISK FACTORS DETAILED IN, AS WELL AS THE OTHER INFORMATION CONTAINED IN, THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION DURING THE PAST 12 MONTHS. INDEX PAGE NO. PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Statements of Operations 1 Condensed Consolidated Balance Sheets 2 Condensed Consolidated Statements of Cash Flows 3 Notes to Condensed Consolidated Financial 4 Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of 7 Securityholders Item 6. Exhibits and Reports on Form 8-K 7 SIGNATURES 8 Part I. Financial Information Item 1. Financial Statements UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Dollars in Thousands, except per share information) (Unaudited)
For the Three-Months Ended For the Six-Months Ended June 30 June 30 1997 1996 1997 1996 ---- ---- ---- ---- Net sales $20,809 $14,565 $39,580 $27,174 Cost of products sold 16,414 11,687 31,473 22,331 ------ ------ ------ ------ Gross profit 4,395 2,878 8,107 4,843 Selling and administrative expenses 1,301 1,371 2,442 2,374 ----- ----- ----- ----- Operating income 3,094 1,507 5,665 2,469 Other income (expenses), net (2) 23 (16) 104 -- -- --- --- Income before taxes 3,092 1,530 5,649 2,573 Income taxes 1,145 581 2,091 977 ----- --- ----- --- Net Income $ 1,947 $ 949 $ 3,558 $ 1,596 ======= ====== ======= ======= Net Income per share of Common Stock $ 0.31 $ 0.15 $ 0.57 $ 0.25 ======= ======= ====== ======= Weighted average number of shares of Common Stock outstanding 6,283,773 6,270,000 6,283,754 6,270,000 ========= ========= ======== =========
The accompanying notes are an integral part of these financial statements. -1- UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands)
June 30, 1997 December 31, 1996 ------------------- ------------------- (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 571 $ 4,219 Accounts receivable (less allowance for doubtful accounts of $268 and $238) 15,037 9,409 Inventory (Note 2) 15,598 9,784 Prepaid Expenses 638 629 --- --- Total current assets 31,844 24,041 ------ ------- Property, plant and equipment 21,430 18,545 Accumulated depreciation (1,205) (735) ------ ------ Net property, plant and equipment 20,225 17,810 ------ ------- Other assets 227 247 ---- ---- Total assets $52,296 $42,098 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Trade accounts payable $ 8,784 $ 5,415 Bank overdrafts 1,381 442 Current portion of long-term debt 328 260 Accrued employment costs 1,653 1,403 Other current liabilities 1,527 540 ------ --- Total current liabilities 13,673 8,060 Long-term debt 3,374 2,534 Deferred taxes 1,168 1,007 ------ ------ Total liabilities 18,215 11,601 ------ ------ Commitments and contingencies (Note 5) -- -- Stockholders' equity Senior Preferred Stock, par value $.001 per share; liquidation value $100 per share; 2,000,000 shares authorized and 0 shares issued and outstanding -- -- Common Stock, par value $.001 per share; 10,000,000 shares authorized; 6,287,290 and 6,283,734 shares issued and outstanding 6 6 Additional paid-in capital 25,477 25,451 Retained earnings 8,598 5,040 ----- ----- Total stockholders' equity 34,081 30,497 ------ ------ Total liabilities and stockholders' equity $52,296 $42,098 ====== ======
The accompanying notes are an integral part of these financial statements. -2- UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited)
For the Six Months Ended June 30, 1997 1996 ---- ---- Cash flow from operating activities: Net income $3,558 $1,596 Adjustments to reconcile to net cash used by operating activities: Depreciation and amortization 498 217 Deferred taxes 161 -- Changes in assets and liabilities: Accounts receivable, net (5,628) (4,717) Inventory (5,814) (3,319) Accounts payable and bank overdrafts 4,308 3,293 Accrued employment costs 250 375 Other, net 984 159 ------ ------ Net cash used by operating activities (1,683) (2,396) ------ ------ Cash flow from investing activities: Capital expenditures (2,887) (5,105) ------ ------ Net cash used by investing activities (2,887) (5,105) ------ ------ Cash flow from financing activities: Proceeds from issuance of long-term debt 500 600 Proceeds from issuance of Common Stock 26 -- Net borrowing under revolving line of credit 546 -- Long-term debt payments (138) (55) Deferred financing costs (12) (25) ---- --- Net cash provided by financing activities 922 520 ------ ------ Net decrease in cash and cash equivalents (3,648) (6,981) Cash and cash equivalents at beginning of period 4,219 10,038 ------ ------ Cash and cash equivalents at end of period $571 $3,057 ==== ===== Supplemental disclosure of cash flow information: Interest paid $94 $32 Income taxes paid $1,749 $938
The accompanying notes are an integral part of these financial statements -3- UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC. NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1) Universal Stainless & Alloy Products, Inc. (the "Company"), was incorporated in 1994 for the principal purpose of acquiring substantially all of the idled equipment and related assets located at the Bridgeville, Pennsylvania, production facility of Armco, Inc. in August 1994. The accompanying unaudited, condensed consolidated financial statements of operations for the three- and six- month periods ended June 30, 1997 and 1996, balance sheets at June 30, 1997 and December 31, 1996, and statements of cash flows for the six-month periods ended June 30, 1997 and 1996 have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, these statements should be read in conjunction with the audited financial statements as of and for the period ended December 31, 1996. In the opinion of management, the accompanying unaudited, condensed consolidated financial statements contain all adjustments, all of which were of a normal recurring nature, necessary to present fairly, in all material respects, the consolidated results of operations and of cash flows for the periods ended June 30, 1997 and 1996, and are not necessarily indicative of the results to be expected for the full year. 2) The major classes of inventory are as follows (dollars in thousands): June 30, 1997 December 31, 1996 ------------- ----------------- Raw materials and supplies 2,929 1,715 Semi-finished steel products 10,836 6,205 Operating materials 1,833 1,864 ------ ----- Total inventory 15,598 9,784 ====== ===== 3) The Company has reviewed the status of its environmental contingencies and believed there are no significant changes from that disclosed in Form 10-K for the year ended December 31, 1996. -4- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net sales by product line and cost of products sold for the three- and six-month periods ended June 30, 1997 and 1996 were as follows (dollars in thousands):
Three-Month Period Six-Month Period Ended Ended June 30 Ended June 30 1997 1996 1997 1996 ----------- ----------- ---------- ----------- Net sales Stainless steel 15,644 11,038 30,367 20,509 Tool steel 2,334 2,379 4,375 4,360 Conversion services 1,148 997 2,290 1,730 Other 1,683 151 2,548 575 ----- --- ----- --- Total net sales $20,809 $14,565 $39,580 $27,174 ------- ------- ------- ------- Cost of products sold Raw materials 8,505 5,693 16,188 10,980 Other 7,909 5,994 15,285 11,351 ----- ----- ------ ------ Total cost of products sold 16,414 11,687 31,473 22,331 ------ ------ ------ ------ Gross profit $ 4,395 $ 2,878 $ 8,107 $ 4,843 ======= ======= ======= =======
THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 1997 COMPARED TO THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 1996 The increase in net sales for the three- and six-month periods ended June 30, 1997 as compared to the similar periods in 1996 reflects increased shipments to all of the Company's market segments. This increase was partially offset by lower selling prices in the stainless steel area due to foreign imports. Cost of products sold, as a percentage of net sales, was 78.9% and 80.2% for the three-month periods ended June 30, 1997 and 1996, respectively, and was 79.5% and 82.2% for the six-month periods ended June 30, 1997 and 1996, respectively. The decreases in the cost of products sold as a percentage of net sales are primarily due to an improved sales mix and cost savings achieved through capital improvements completed in 1996. Selling and administrative expenses of $1,301,000 in the three-month period ended June 30, 1997 decreased from $1,371,000 for the three-month period ended June 30, 1996 primarily due to lower insurance costs. Selling and administrative expenses for the six-month periods ended June 30, 1997 and 1996 were $2,442,000 and $2,374,000, respectively. The increase primarily relates to the addition of personnel as a result of the continued growth of the Company's business, partially offset by lower insurance costs. Other income (expense), net decreased by $25,000 and $120,000, respectively, for the three- and six-month periods ended June 30, 1997, as compared to the three-and six-month periods ended June 30, 1996. The decrease is primarily related to a decrease in interest income earned on cash available for investment and an increase in interest expense on borrowings. The Company used available cash and the issuance of government loans to fund capital expenditures incurred during 1996 and 1997. In addition, the Company utilized a portion of its $6.5 million revolving line of credit during the three-month period ended June 30, 1997 to fund working capital needs. The effective income tax rate utilized in the three- and six-month periods ended June 30, 1997 and 1996 was 37.0% and 38.0%, respectively. The lower effective income tax rate in the 1997 period reflects a lower effective state tax rate, net of the federal benefit, and is consistent with the ultimate effective income tax rate utilized for the year ended December 31, 1996. -5- Financial Condition The Company has financed its 1997 activities to date primarily through cash flows from operations, borrowings and cash on hand at the beginning of the period. The ratio of current assets to current liabilities decreased from 3.0:1 at December 31, 1996 to 2.3:1 at June 30, 1997, primarily due to continued growth of the Company's business and the funding of capital expenditures during 1997. Accounts receivable, net increased by $5.6 million for the six-month period ended June 30, 1997 as compared to an increase of $4.7 million for the six-month period ended June 30, 1996. Inventory increased by $5.8 million for the six-month period ended June 30, 1997 as compared to an increase of $3.3 million for the six-month period ended June 30, 1996. Accounts payable and bank overdrafts increased by $4.3 million for the six-month period ended June 30, 1997 as compared to an increase of $3.3 million for the six-month period ended June 30, 1996. Each of these increases can be primarily attributed to the continued growth of the business. The Company's capital expenditures approximated $2.9 million for the six-month period ended June 30, 1997, which primarily related to the completion of the 1995-96 capital expenditures program. At June 30, 1997, the Company has outstanding purchase commitments in addition to the expenditures incurred to date of approximately $2.4 million. In April 1997, the Company executed loan documents in connection with the issuance of a $500,000 loan from the Commonwealth of Pennsylvania's Machinery and Equipment Loan Fund. On May 1, 1997, the Company extended its $6.5 million Working Capital Agreement with PNC Bank to April 2000. In addition, the amendment reduced the annual interest rate charged on the unpaid principal balance from PNC Bank's prime rate plus 0.25% to PNC Bank's prime rate. The annual interest rate may be further reduced based on the Company maintaining certain financial ratios. The Company anticipates that it will be able to fund its 1997 working capital requirements and its capital expenditures primarily from funds generated by operations and borrowings. The Company's long-term liquidity requirements, including capital expenditures, are expected to be financed by a combination of internally generated funds, borrowings and other sources of external financing if needed. 1997 Outlook Increased shipments in the six-month period ended June 30, 1997 are primarily attributed to increased demand from the aerospace sector and new product introductions. The cost savings associated with the Company's capital expenditure program has met and, in certain areas, exceeded management's expectations to date. These trends are expected to continue throughout 1997. New Accounting Pronouncements In February 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 128, "Earnings per Share", which establishes standards for computing and presenting earnings per share information for periods ending after December 15, 1997. The Company does not believe that the adoption of this statement will materially effect its earnings per share disclosures except for the required presentation of diluted earnings per share. -6- Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders The Annual Meeting of Stockholders of Universal Stainless & Alloy Products, Inc. was held on May 22, 1997, for the purpose of electing a board of directors and approving the appointment of auditors. Proxies for the meeting were solicited purusant to Section 14(a) of the Securities Exchange Act of 1934 and there was no solicitation in opposition to management's solicitation. All of the management's nominees for directors as listed in the proxy statement were elected by the following vote: Shares Voted Shares Shares Not "For" "Withheld" Voted B. Bowman 4,297,193 5,000 1,981,541 D. Dunn 4,297,793 4,400 1,981,541 G. Keane 4,297,793 4,400 1,981,541 C. McAninch 4,298,093 4,100 1,981,541 U. Toledano 4,298,093 4,100 1,981,541 D. Wise 4,298,093 4,100 1,981,541 The appointment of Price Waterhouse LLP as independent auditor was approved by the following vote: Shares Voted Shares Voted Shares Shares "For" "Against" "Abstaining" Not Voted 4,296,193 3,300 2,700 1,981,541 Item 6. Exhibits and Reports on Form 8-K a. Exhibits 27.1 Financial Data Schedule b. Reports on Form 8-K The following reports on Form 8-K were filed during the second quarter of 1997: None -7- 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. UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC. Date: August 12, 1997 /s/ Clarence M. McAninch ------------------ -------------------------------------- Clarence M. McAninch President and Chief Executive Officer Date: August 12, 1997 /s/ Richard M. Ubinger ------------------ -------------------------------------- Richard M. Ubinger Chief Financial Officer, Principal Accounting Officer and Treasurer -8- EX-27 2 FDS -- BALANCE AT 06/30/97
5 UNIVERSAL STAINLESS ALLOY PRODUCTS, INC. FINANCIAL DATA SCHEDULE 0000931584 UNIVERSAL STAINLESS ALLOY PRODUCTS, INC. 1 U.S. DOLLARS 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 1.000 571 0 15,305 (268) 15,598 31,844 21,430 (1,205) 52,296 13,673 3,374 0 0 6 34,075 52,296 39,580 39,580 31,473 31,473 2,412 30 (16) 5,649 2,091 3,558 0 0 0 3,558 0.57 0.57
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