<PAGE> 1
FORM 1O-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 2O549
------------------------------------
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
-------------------------------------------
For quarter ended February 28, 1999
Commission File Number 1-4304
COMMERCIAL METALS COMPANY
----------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 75-0725338
- -------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7800 Stemmons Freeway
P. O. Box 1046 Dallas, Texas 75221
----------------------------------------
(Address of principal executive offices)
(Zip Code)
(214) 689-4300
-------------
(Registrant's telephone number, including area code)
-----------------------------------------
Former name, former address and former fiscal year,
if changed since last report
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 February 28, 1999 there were 14,626,676 shares of the Company's
common stock issued and outstanding excluding 1,505,907 shares held in the
Company's treasury.
<PAGE> 2
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
---------------------------------------------
INDEX
------
<TABLE>
<CAPTION>
Page No.
---------
<S> <C>
PART I - Financial Statements:
Consolidated Balance Sheets -
February 28, 1999 and August 31, 1998 2 - 3
Consolidated Statements of Earnings -
Three months and six months ended
February 28, 1999 and 1998 4
Consolidated Statements of Cash Flows -
Six months ended February 28, 1999 and 1998 5
Consolidated Statement of Stockholders' Equity
For the six months ended February 28, 1999 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of the
Consolidated Financial Statements 8 - 12
PART II - Other Information and Signatures 13 - 15
</TABLE>
Page 1
<PAGE> 3
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
---------------------------------------------
CONSOLIDATED BALANCE SHEETS
------------------------------
ASSETS
-----------
(In thousands except share data)
<TABLE>
<CAPTION>
February 28, August 31,
1999 1998
--------------- ----------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 17,548 $ 30,985
Accounts receivable (less allowance for
collection losses of $7,918 and $8,120) 310,783 318,655
Inventories 265,025 257,231
Other 55,832 66,629
--------------- ----------------
TOTAL CURRENT ASSETS 649,188 673,500
OTHER ASSETS 11,950 10,655
PROPERTY, PLANT, AND EQUIPMENT, at cost:
Land 24,872 24,967
Buildings 68,153 67,505
Equipment 507,001 499,899
Leasehold improvements 27,337 26,084
Construction in process 133,042 61,946
--------------- ----------------
760,405 680,401
Less accumulated depreciation
and amortization (381,230) (361,939)
--------------- ----------------
379,175 318,462
--------------- ----------------
$ 1,040,313 $ 1,002,617
=============== ================
</TABLE>
See notes to consolidated financial statements.
Page 2
<PAGE> 4
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
---------------------------------------------
CONSOLIDATED BALANCE SHEETS
------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
(In thousands except share data)
<TABLE>
<CAPTION>
February 28, August 31,
1999 1998
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Commercial paper $ 25,000 $ 40,000
Notes payable 25,003 60,809
Accounts payable 161,663 156,389
Other payables and accrued expenses 131,323 150,512
Income taxes payable 92 6,870
Current maturities of long-term debt 11,856 11,483
------------ ------------
TOTAL CURRENT LIABILITIES 354,937 426,063
DEFERRED INCOME TAXES 21,376 21,376
LONG-TERM DEBT 264,872 173,789
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Capital stock:
Preferred stock -- --
Common stock, par value $5.00 a share;
authorized 40,000,000 shares; issued
16,132,583 shares, outstanding
14,626,676 and 14,569,611 shares 80,663 80,663
Additional paid-in capital 14,326 14,285
Cumulative translation adjustment (985) (1,596)
Retained earnings 344,204 328,597
------------ ------------
438,208 421,949
Less treasury stock,
1,505,907 and 1,562,972 shares at cost (39,080) (40,560)
------------ ------------
399,128 381,389
------------ ------------
$ 1,040,313 $ 1,002,617
============ ============
</TABLE>
See notes to consolidated financial statements.
Page 3
<PAGE> 5
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
---------------------------------------------
CONSOLIDATED STATEMENTS OF EARNINGS
---------------------------------------
(In thousands except share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
February 28, February 28,
------------------------------ ------------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Net sales $ 550,537 $ 568,178 $ 1,099,913 $ 1,118,679
COSTS AND EXPENSES:
Cost of goods sold 480,374 501,894 955,630 988,594
Selling, general and
administrative expenses 48,103 44,215 94,966 86,372
Interest expense 4,633 4,218 9,544 8,397
Employees retirement plans 4,063 4,663 8,861 9,406
------------- ------------- ------------- -------------
537,173 554,990 1,069,001 1,092,769
EARNINGS BEFORE INCOME TAXES 13,364 13,188 30,912 25,910
INCOME TAXES 4,978 4,840 11,515 9,509
------------- ------------- ------------- -------------
NET EARNINGS $ 8,386 $ 8,348 $ 19,397 $ 16,401
============= ============= ============= =============
Net basic earnings per share $ 0.57 $ 0.57 $ 1.33 $ 1.11
Net diluted earnings per share $ 0.57 $ 0.56 $ 1.32 $ 1.09
Cash dividends per share $ 0.13 $ 0.13 $ 0.26 $ 0.26
Average basic shares outstanding 14,607,065 14,774,164 14,592,565 14,744,931
Average diluted shares outstanding 14,768,862 15,019,864 14,714,856 15,013,918
</TABLE>
See notes to consolidated financial statements.
Page 4
<PAGE> 6
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
---------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------
(In thousands)
<TABLE>
<CAPTION>
Six months ended
February 28,
-------------------------
1999 1998
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 19,397 $ 16,401
Adjustments to earnings not requiring cash:
Depreciation and amortization 23,485 22,961
Provision for losses on receivables 1,087 1,011
Other (100) (33)
---------- ----------
Cash flows from operations before changes in
current assets and liabilities 43,869 40,340
Changes in current assets and liabilities:
Decrease (increase) in receivables 6,784 (13,837)
Decrease (increase) in inventories (7,794) (19,865)
Decrease (increase) in other assets 10,113 (6,177)
Increase (decrease) in accounts payable,
accrued expenses and income taxes (20,692) (21,837)
---------- ----------
Net Cash Provided (Used) by Operating Activities 32,280 (21,376)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (84,198) (46,597)
Sales of property, plant and equipment 100 33
---------- ----------
Net Cash Used by Investing Activities (84,098) (46,564)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Commercial paper - net change (15,000) 30,000
Notes payable - net change (35,806) 40,900
New long-term debt 100,000 --
Payments on long-term debt (8,544) (9,261)
Stock issued under stock option/purchase plans 1,521 5,868
Treasury stock acquired -- (2,857)
Dividends paid (3,790) (3,852)
---------- ----------
Net Cash Provided by Financing Activities 38,381 60,798
---------- ----------
Decrease in Cash and Cash Equivalents (13,437) (7,142)
Cash and Cash Equivalents at Beginning of Year 30,985 32,998
---------- ----------
Cash and Cash Equivalents at End of Period $ 17,548 $ 25,856
========== ==========
</TABLE>
See notes to consolidated financial statements.
Page 5
<PAGE> 7
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
--------------------------------------------
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
------------------------------------------------
(In thousands except share data)
<TABLE>
<CAPTION>
Common Stock Treasury Stock
------------------------ Cumulative Add'l -------------------------
Number of Translation Paid-In Retained Number of
Shares Amount Adjustment Capital Earnings Shares Amount
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance September 1, 1998 16,132,583 $ 80,663 $ (1,596) $ 14,285 $ 328,597 (1,562,972) $ (40,560)
Net earnings for six months
ended February 28, 1999 19,397
Cash dividends - $.26 a share (3,790)
Translation adjustment 611
Stock issued under stock option,
purchase and bonus plans 41 57,065 1,480
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance, February 28, 1999 16,132,583 $ 80,663 $ (985) $ 14,326 $ 344,204 (1,505,907) $ (39,080)
========== ========== ========== ========== ========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
Page 6
<PAGE> 8
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
--------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------
NOTE A - LONG-TERM DEBT AND EQUITY (in thousands):
<TABLE>
<CAPTION>
Total
Long-Term Current Amount
Debt Maturities Outstanding
-----------------------------------------------------
<S> <C> <C> <C>
6.75% notes due 2009 $ 100,000 $ -- $ 100,000
7.20% notes due 2005 100,000 -- 100,000
6.80% notes due 2007 50,000 -- 50,000
8.49% notes due 2001 14,285 7,143 21,428
8.75% note due 1999 4,284 4,284
Other 587 429 1,016
---------- ---------- ----------
$ 264,872 $ 11,856 $ 276,728
========== ========== ==========
</TABLE>
On February 18, 1999, the Company sold $100 million of investment grade,
unsecured notes with a coupon rate of 6.75%. The proceeds from the notes were
used to retire short-term borrowings. The note agreements contain similar
restrictive covenants to the 7.20% and 6.80% notes. The shelf registration for
the $100 million notes provides for an additional $100 million of debt
securities which may be issued in the future.
NOTE B - TAXES ON INCOME:
Provision for taxes on income includes estimated United States taxes on
undistributed earnings of subsidiaries outside the United States.
NOTE C - QUARTERLY FINANCIAL DATA:
In the opinion of Management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position as of
February 28, 1999, the results of operations for the three months and six
months then ended and the cash flows for the six months. The results of
operations for the six month periods are not necessarily indicative of the
results to be expected for a full year.
NOTE D - EARNINGS PER SHARE:
There were no adjustments to net earnings to arrive at net income for
either the three months or six months ended February 28, 1998. The
reconciliation of the denominators of the earnings per share calculations are
as follows:
<TABLE>
<CAPTION>
Three months Six months
ended February 28, ended February 28,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Shares outstanding for basic earnings per share 14,607,065 14,774,164 14,592,565 14,744,931
Effect of dilutive securities:
Stock options/purchase plans 161,797 245,700 122,291 268,987
Shares outstanding for dilutive earnings per share 14,768,862 15,019,864 14,714,856 15,013,918
</TABLE>
Stock options with total share commitments of 1,365,962 at February 28,
1999 were anti-dilutive based on an average share price of $25.13 for the
quarter and exercise prices between $26.25 and $29.81. The options expire at
various dates between 2003 and 2006.
NOTE E - OTHER COMPREHENSIVE INCOME:
The Company's required disclosure is limited to foreign currency translation
adjustments. Such adjustments totaled $(111,000) and $611,000 in the quarter and
six months ended February 28, 1999, respectively.
Page 7
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED RESULTS OF OPERATIONS
(in millions)
<TABLE>
<CAPTION>
2ND QTR 2nd Qtr SIX MONTHS Six Months
FY 1999 FY 1998 FY 1999 FY 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $ 551 $ 568 $ 1,100 $ 1,119
Net earnings 8.4 8.3 19.4 16.4
Cash flow 20.7 20.5 43.9 40.3
EBITDA 29.6 29.1 63.9 57.3
LIFO reserve 17.6 28.9
</TABLE>
SIGNIFICANT EVENTS AFFECTING THE COMPANY THIS QUARTER
- - Net earnings comparable with the prior year period.
- - Fabrication operations propel Steel Group earnings above last year.
- - A second litigation settlement received, $1.5 million, after tax.
- - Recycling segment recorded a modest loss in poor markets.
- - Marketing and Trading segment remains profitable in a chaotic market.
CONSOLIDATED DATA
The LIFO method of inventory valuation increased net earnings for the quarter
$1.2 million (8 cents per share diluted) compared to an increase of $270
thousand (2 cents per share diluted) last year. For the six months net earnings
were $3.2 million higher (22 cents per share diluted) compared to an increase
of $792 thousand (5 cents per share diluted) last year.
Page 8
<PAGE> 10
SEGMENT OPERATING DATA
Revenues and operating profit by business segment are shown in the
following table:
<TABLE>
<CAPTION>
Three months ended Six months ended
----------------------------- -----------------------------
Feb 28 Feb 28 Feb 28 Feb 28
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Manufacturing $ 289,165 $ 279,120 $ 593,251 $ 570,038
Recycling 76,561 104,894 155,136 209,020
Marketing and
Trading 202,824 198,113 386,988 370,889
Corporate and
Eliminations (18,013) (13,949) (35,462) (31,268)
------------ ------------ ------------ ------------
$ 550,537 $ 568,178 $ 1,099,913 $ 1,118,679
OPERATING PROFIT:
Manufacturing $ 16,716 $ 13,986 $ 40,309 $ 28,656
Recycling (1,731) 500 (5,854) 10
Marketing and
Trading 4,693 4,288 9,342 7,676
Corporate and
Eliminations (1,681) (1,368) (3,341) (2,035)
------------ ------------ ------------ ------------
$ 17,997 $ 17,406 $ 40,456 $ 34,307
</TABLE>
MANUFACTURING -
Operating profit for the segment was 20% ahead of last year's comparable
quarter on 4% higher revenues. Steel mill results were level with last year,
but the steel fabrication businesses had a strong quarter. Copper Tube Division
operating results were well ahead of last year.
Steel prices were mixed as reflected in the table below:
<TABLE>
<CAPTION>
2nd Qtr 1999 2nd Qtr 1998
------------ ------------
<S> <C> <C>
Average mill selling price $ 302 $ 322
Average fab selling price 687 672
Average scrap purchase price 74 119
</TABLE>
With continued strong performances in downstream fabrication businesses,
lower material costs, and a second graphite electrode litigation settlement
($1.5 million net after tax), the Steel Group operating profit was 20% ahead of
last year. The flood of steel imports into the United States depressed mill
selling prices and was the principal cause of a decline in mill shipments to
391,000 tons from 466,000 in the comparable period last year. The mills
absorbed an after-tax charge of $1.5 million relating to construction
interference with operations and start-up costs associated with major mill
construction projects at SMI South Carolina and SMI Alabama. Steel mill margins
were aided by the continuing descent of scrap prices with resulting mill
operating profits being equal to last year.
Page 9
<PAGE> 11
At quarter end, hot commissioning was underway at the new rolling mill and
ancillary equipment at SMI South Carolina. The new finishing line at SMI
Alabama is scheduled to be completed by the end of April. Start-up costs should
be incurred through the end of April with depreciation of the projects to begin
in May.
Operating profits in the steel fabrication businesses continued strong
with a 33% increase over last year's second quarter. All areas reported
excellent results except for some large structural steel projects. Fabricated
steel shipments totaled 199,000 tons and were a record for a second quarter;
this compared with 185,000 tons in the prior year. The average fab selling
price rose $15 per ton, partially because of product mix, while the cost of
steel purchased declined.
The Copper Tube Division operating profit rose 32% above the same period
last year due to better metal spreads on flat revenues. Demand for plumbing
tube was buoyed by the strong housing sector. Shipments increased 5% versus the
second quarter last year and production also was higher.
RECYCLING -
The Recycling segment reported a moderate loss compared with a modest
profit in the year ago quarter. Market conditions remained poor as pricing
continued downward resulting in a 27% reduction in sales dollars. However,
profitability for the quarter was better than the first quarter of this year as
operating cost reduction efforts took effect. Cash flow from operations was
positive. Ferrous scrap tonnage shipped was down 11% and ferrous sales prices
were an average $41 per ton or 32% below last year. Nonferrous prices weakened
further, over 20% lower than a year ago, and the intake of scrap remained
depressed; yet, nonferrous margins were slightly higher. Total volume of scrap
processed including the Steel Group processing plants was 474,000 tons against
480,000 tons last year.
MARKETING AND TRADING -
International metal markets continued in tremendous oversupply coupled
with extraordinary price declines. Steel prices were lower by $55 to $75 per
metric ton compared with the second quarter of fiscal 1998, which also led to
more extensive claims than is normal. Gross margins in steel marketing and
distribution as well as steel trading remained under pressure because of the
difficult market conditions. In this environment the segment's 9% operating
profit improvement over the prior year's second quarter on revenue increases of
only 2% was a remarkable continuing accomplishment. The segment achieved
further market penetration in tough markets for nonferrous metal products and
maintained profitability. It was another profitable quarter in other product
lines including ores, minerals, ferrous raw materials, primary metals and
industrial products.
YEAR 2000
As described in its Form 10K report for the year ended August 31,1998, the
Company has a comprehensive program to meet anticipated Year 2000 concerns. It
continues on schedule with this program. Steel Group computer migration
after-tax expense this quarter was $2.0 million, compared with $1.3 million
last year. The Recycling segment's cost was minimal; Marketing and Trading and
the Corporate office continued to capitalize their project costs.
Page 10
<PAGE> 12
ENVIRONMENTAL ACTIVITIES
The Company is subject to federal, state and local pollution control laws
and regulations in all locations where it has operating facilities. It
anticipates that compliance with these laws and regulations will involve
continuing capital expenditures and operating costs.
In the ordinary course of conducting its business, the Company becomes
involved in environmental litigation, administrative proceedings, and
governmental investigations. Certain of these environmental matters or other
proceedings may result in fines, penalties or judgments against the Company
which may have a material impact on earnings for a particular quarter. While
the Company is unable to estimate precisely the ultimate dollar amount of
exposure to losses in connection with such matters, it makes timely accruals as
warranted. It is the opinion of the Company's management that the outcome of
such proceedings, individually or in the aggregate, will not have a material
adverse effect on the business or consolidated financial position of the
Company.
OUTLOOK
The outlook is mixed. Construction markets are strong and there is
evidence of a pickup in the manufacturing sector of the U.S. economy. Customer
inventories of steel and nonferrous metal products have been reduced. Japan
might finally be hitting bottom. Overall, though, global markets likely will
continue in the doldrums for the next few quarters.
Steel mill prices appear to be stabilizing and manufacturing margins
should hold at satisfactory levels, primarily because the costs of raw material
and supplies will remain depressed. Steel shipments should pick up. The level
of steel imports continues to be a critical matter. Another key issue is how
quickly the two mill start ups progress. These two major projects will affect
profitability this year through start-up costs, higher depreciation, and
increased interest expense. Cash flow from operations will gain from the
increase in depreciation.
The outlook for steel fabrication is positive, and downstream operations
should benefit from the lower mill prices coupled with firm fab prices. The
Company's strong presence in fabrication is providing price and margin
stability. Residential construction is very firm; consequently, good demand for
copper tube is expected to continue. Indications are that the Federal
transportation bill is leading to greater spending for highways and bridges. In
general, steel bar and structural steel consumption should shift toward the
public sector during the next few years.
At quarter's close ferrous scrap prices again were weakening and
nonferrous scrap prices were touching recent lows; accordingly, the third
quarter of fiscal 1999 will be at least as difficult as the second quarter for
the Recycling segment.
In Marketing and Trading, some firming of steel prices in world markets is
anticipated, but it may be several more quarters before there is a sustained
recovery in those markets. Steel imports into the U.S.A. are forecast to
decline. The relatively weak worldwide demand and prices for nonferrous metals
will persist for several quarters and it appears that any recovery abroad will
be slow. More stable prices, though, should enhance unit margins. Meanwhile,
the Company will continue to capitalize on supply opportunities which have
resulted from the financial and market dislocations throughout the world.
Page 11
<PAGE> 13
The Company's capital projects should increase earnings power and
sustainable growth, more notably beginning fiscal year 2000. The Company's
vertical integration and unique business mix will continue to benefit
operations. The production cutbacks, plant closures and cancellation of new
projects by metals companies around the world, albeit insufficient thus far,
coupled with the stimulus from various economic packages, are setting the stage
for the elimination of excess capacity and a recovery in pricing.
This outlook section and fifth paragraph under the Manufacturing
commentary above contain forward-looking statements regarding the outlook for
the Company's short-term financial results including shipments, pricing,
demand, general market conditions, and anticipated construction project
completion and start-up. There is inherent risk and uncertainty in any
forward-looking statements. Variances will occur and some could be materially
different from management's current opinion. Developments that could impact the
Company's expectations include interest rate changes, construction activity,
unanticipated start-up expenses and delays, metals pricing over which the
Company exerts little influence, new capacity and product availability from
competing steel minimills and other steel suppliers including import quantities
and pricing, global factors including credit availability, currency
fluctuations, timing of litigation settlements and decisions by governments
impacting the level and pace of overall economic growth.
LIQUIDITY
Cash flow from operations before changes in operating assets and
liabilities for the six months was $44 million compared to $40 million last
year, the increase coming by way of higher net earnings. Accounts receivable
decreased $7 million due to decreases in the manufacturing segment offset by
increases in marketing and trading. Inventories increased in the Company's
domestic trading operations. Other assets decreased due to repayment of
advances for materials. Accounts payable and accrued expenses decreased $21
million, about the same as the comparable period last year.
The Company financed working capital, capital expenditure requirements,
and paid down short term debt with a second quarter public offering of $100
million investment grade, unsecured 6.75% ten year notes. The offering also
included a shelf registration of $100 million. Short term borrowings were
reduced $50 million and long-term debt was reduced $9 million. The Company
invested $84 million in capital expenditures as part of its anticipated $150
million annual capital program.
At February 28,1999, there were 14,626,676 common shares issued and
outstanding with 1,505,907 held in the Company's treasury. Stockholders' equity
was $399 million or $27.29 per share.
Net working capital was $294 million at February 28,1999 compared to $247
million at August 31,1998. The current ratio was 1.8 compared to 1.6 at August
31,1998. The Company's effective tax rate for the six months was 37.3%,
compared to 36.7% last year.
Long-term debt as a percent of total capitalization was 38.6% at February
28,1999 compared to 30.1% at August 31,1998. The ratio of total debt to total
capitalization plus short-term debt stood at 43.7%, lower than the first
quarter but an increase from year end due to capital expenditure and working
capital requirements.
Page 12
<PAGE> 14
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the information incorporated by reference from Item
3. Legal Proceedings in the Company's Annual Report on Form 10-K for the year
ending August 31, 1998 filed November 24, 1998, with the Securities and
Exchange Commission.
During the quarter ended February 28, 1999, the Company received a
settlement payment of $2.3 million before taxes from one of several defendants
in litigation brought by the Company and other purchasers of graphite
electrodes. The lawsuit alleges illegal price-fixing and other anti-competition
acts by manufacturers of graphite electrodes.
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the registrant's annual meeting of stockholders held January 28, 1999,
a total of 13,236,250 shares of common stock or approximately 90% percent of
those outstanding and entitled to vote were present in person or by proxy.
There was no solicitation in opposition to management's nominees and all such
nominees were elected as set forth in the following tabulation:
<TABLE>
<CAPTION>
Nominee Votes For Votes Withheld
------- --------- --------------
<S> <C> <C>
A. Leo Howell 12,500,814 735,436
Dorothy G. Owen 12,530,563 705,687
</TABLE>
Page 13
<PAGE> 15
Stockholders approved the proposed amendment to the Company's 1996
Long-Term Incentive Plan by the following vote:
<TABLE>
<CAPTION>
For Against Abstain
---------- --------- -------
<S> <C> <C>
11,889,339 1,293,088 53,823
</TABLE>
Stockholders also approved the ratification of the appointment of Deloitte
& Touche LLP as auditors of the registrant for the fiscal year ending August
31, 1999, by the following vote:
<TABLE>
<CAPTION>
For Against Abstain
---------- --------- -------
<S> <C> <C>
13,159,340 63,238 13,672
</TABLE>
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits required by Item 601 of Regulation S-K.
27. Financial Data Schedule
Page 14
<PAGE> 16
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.
COMMERCIAL METALS COMPANY
April 8, 1999 /s/ WILLIAM B. LARSON
-------------------------
William B. Larson
Vice President
& Chief Financial Officer
April 8, 1999 /s/ MALINDA G. SULLIVAN
-------------------------
Malinda G. Sullivan
Controller
Page 15
<PAGE> 17
INDEX TO EXHIBIT
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-START> SEP-01-1999
<PERIOD-END> FEB-28-1999
<CASH> 17,548
<SECURITIES> 0
<RECEIVABLES> 318,701
<ALLOWANCES> 7,918
<INVENTORY> 265,025
<CURRENT-ASSETS> 649,188
<PP&E> 760,405
<DEPRECIATION> (381,230)
<TOTAL-ASSETS> 1,040,313
<CURRENT-LIABILITIES> 354,937
<BONDS> 264,872
0
0
<COMMON> 80,663
<OTHER-SE> 318,465
<TOTAL-LIABILITY-AND-EQUITY> 1,040,313
<SALES> 1,099,913
<TOTAL-REVENUES> 1,099,913
<CGS> 955,630
<TOTAL-COSTS> 955,630
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,087
<INTEREST-EXPENSE> 9,544
<INCOME-PRETAX> 30,912
<INCOME-TAX> 11,515
<INCOME-CONTINUING> 19,397
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,397
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 1.32
</TABLE>
