<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
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 SEPTEMBER 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 No. 1-5210
AMERISTEEL CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA 59-0792436
------- ----------
State or other jurisdiction of I.R.S. Employer Identification No.
incorporation or organization
5100 W. LEMON STREET
TAMPA, FLORIDA 33609
(Address of principal executive offices)
Registrant's telephone number, including area code (813)286-8383
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 October 31, 1997 the registrant had 10,114,385 shares $.01 par value
common stock outstanding.
<PAGE> 2
PART I -- FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
AMERISTEEL CORPORATION
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
September 30, March 31,
1997 1997
------------- ---------
(Unaudited)
($ in thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,848 $ 1,645
Accounts receivable 77,573 68,563
Inventories 106,830 106,173
Deferred tax assets 5,000 5,000
Other current assets 1,442 1,138
--------- ---------
TOTAL CURRENT ASSETS 192,693 182,519
ASSETS HELD FOR SALE 14,967 14,838
PROPERTY, PLANT AND EQUIPMENT 317,496 308,159
Less accumulated depreciation 67,679 58,138
--------- ---------
249,817 250,021
GOODWILL 83,708 85,773
DEFERRED FINANCING COSTS 2,208 2,523
OTHER ASSETS 7 11
--------- ---------
TOTAL ASSETS $ 543,400 $ 535,685
========= =========
</TABLE>
See notes to financial statements
<PAGE> 3
AMERISTEEL CORPORATION
STATEMENTS OF FINANCIAL POSITION -- continued
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1997
------------- ---------
(Unaudited)
($ in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
<S> <C> <C>
Trade accounts payable $ 39,779 $ 44,666
Salaries, wages and employee benefits 14,926 14,598
Environmental remediation 5,875 5,079
Other current liabilities 9,594 4,355
Interest payable 4,980 4,659
Current maturities of long-term borrowings 5,687 435
-------- --------
TOTAL CURRENT LIABILITIES 80,841 73,792
LONG-TERM BORROWINGS, LESS CURRENT PORTION 216,835 237,474
OTHER LIABILITIES 24,014 21,555
DEFERRED TAX LIABILITIES 52,300 52,300
SHAREHOLDERS' EQUITY
Common stock, $.01 par value; 30,000,000 shares authorized
at September 30, and March 31, 1997, 10,114,603 and 10,079,028
shares outstanding at September 30, and March 31, 1997, respectively. 101 101
Capital in excess of par 157,297 156,816
Retained earnings (accumulated deficit) 14,108 (4,328)
Deferred compensation (2,096) (2,025)
--------- ----------
TOTAL SHAREHOLDERS' EQUITY $ 169,410 $ 150,564
--------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 543,400 $ 535,685
========= ==========
</TABLE>
See notes to financial statements
<PAGE> 4
AMERISTEEL CORPORATION
STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
-------- -------- -------- --------
($ IN THOUSANDS EXCEPT PER COMMON SHARE)
<S> <C> <C> <C> <C>
NET SALES $343,805 $327,908 $175,446 $158,086
Operating Expenses:
Cost of sales 227,251 285,173 142,214 136,261
Selling and administrative 12,834 14,261 5,262 7,328
Depreciation 9,643 8,091 4,816 4,096
Amortization of goodwill 2,065 2,065 1,032 1,032
-------- -------- -------- --------
301,793 309,590 153,324 148,717
-------- -------- -------- --------
INCOME FROM OPERATIONS 42,012 18,318 22,122 9,369
Other Expenses:
Interest 10,115 9,898 4,927 5,043
Amortization of deferred financing costs 353 467 119 233
-------- -------- -------- --------
10,468 10,365 5,046 5,276
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 31,544 7,953 17,076 4,093
Income taxes 13,108 3,907 7,063 1,999
-------- -------- -------- --------
NET INCOME $ 18,436 $ 4,046 $ 10,013 $ 2,094
======== ======== ======== ========
Weighted average common shares outstanding (in
thousands) 10,096 10,093 10,095 10,093
EARNINGS PER COMMON SHARE $ 1.83 $ 0.40 $ 1.00 $ 0.21
======== ======== ======== ========
</TABLE>
See notes to financial statements
<PAGE> 5
AMERISTEEL CORPORATION
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
------------- -------------
($ IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 18,436 $ 4,046
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 12,061 10,623
Deferred income taxes -- 1,300
Other(loss on asset disposals and deferred compensation) 2,313 492
Changes in operating assets and liabilities:
Accounts receivable (9,010) 761
Inventories (657) 16,758
Other assets (429) 270
Accounts payable, income taxes and other liabilities 4,256 (4,898)
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 26,970 29,352
INVESTING ACTIVITIES
Additions to property, plant and equipment (9,121) (24,211)
Proceeds from sales of property, plant and equipment 90 519
Restricted IRB funds (2,252) 8,109
----------- ----------
NET CASH USED IN INVESTING ACTIVITIES (11,283) (15,583)
FINANCING ACTIVITIES
Payments to short-term and long-term borrowings, net (20,387) (19,782)
Proceeds from IRB (Bonds) 5,000 -
Addition to deferred financing costs (38) -
Purchase of common stock (59) (107)
----------- ----------
NET CASH USED IN FINANCING ACTIVITIES (15,484) (19,889)
----------- ----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 203 (6,120)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,645 6,193
----------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 1,848 $ 73
=========== ==========
</TABLE>
See notes to financial statements
<PAGE> 6
AMERISTEEL CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE A -- BASIS OF PRESENTATION
The condensed financial statements include the accounts of AmeriSteel
Corporation, a Florida corporation, (the "Company"). As of April 1, 1996, the
Company changed its name from Florida Steel Corporation (which it had used since
1956) to AmeriSteel Corporation. The predecessor of the Company was formed in
1937.
The accompanying unaudited condensed financial statements do not include all the
information or footnotes necessary for a complete presentation of financial
condition, results of operations and cash flows in conformity with generally
accepted accounting principles. However all adjustments which, in the opinion of
management are necessary for a fair presentation, have been included. Such
adjustments consist only of normally recurring items.
It is suggested that these condensed financial statements be read in conjunction
with the financial statements and the notes thereto included in the Company's
latest annual report on Form 10-K. The results of the six months ended September
30, 1997 are not necessarily indicative of the results to be expected for the
fiscal year ending March 31, 1998.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Recent Accounting Pronouncements: In February 1997, the Financial Accounting
Standards Board issued Statement No. 128, "Earnings per Share" which establishes
standards for computing and presenting earnings per share. The statement
replaces the presentation of primary earnings per share with a presentation of
basic earnings per share. It also requires dual presentation of basic and
diluted earnings per share on the income statement and provides for certain
disclosures. The Company will adopt Statement No. 128 in the third quarter of
fiscal 1998 and does not believe the effect of adoption will be material.
In June 1997, the Financial Accounting Standards Board issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information" which
establishes standards for reporting information about operating segments of a
business. The statement, which is based on the management approach to segment
reporting, includes requirements to report selected segment information and
entity-wide disclosures about products and services, major customers, and the
countries in which the Company holds assets and reports revenues. This statement
becomes effective for the Company for reporting beginning in fiscal 1999.
Management has not yet evaluated the effects of this change on the Company's
financial statements.
Reclassifications: Certain amounts in the prior period financial statements have
been reclassified to conform to the current fiscal financial statement
presentation.
<PAGE> 7
AMERISTEEL CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE C -- INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1997
------------ --------
(UNAUDITED)
($ IN THOUSANDS)
<S> <C> <C>
Finished goods $ 64,056 $ 59,299
Work in-process 10,022 14,175
Raw materials and operating supplies 32,752 32,699
-------- --------
$106,830 $106,173
======== ========
</TABLE>
NOTE D -- BORROWINGS
Long-term borrowings consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1997 1997
-------- --------
(UNAUDITED)
($ IN THOUSANDS)
<S> <C> <C>
Revolving Credit Agreement $ 30,960 $ 51,340
First Mortgage Notes 100,000 100,000
Subordinated Intercompany Note 50,000 50,000
Industrial Revenue Bonds 35,875 30,875
Trade Loan Agreement 5,259 5,259
Note to Parent 428 435
-------- --------
222,522 237,909
Less Current Maturities 5,687 435
-------- --------
$216,835 $237,474
======== ========
</TABLE>
NOTE E -- ENVIRONMENTAL MATTERS
The Company is involved in the manufacture of steel, in connection with which
it produces and uses certain substances that may pose environmental hazards. The
principal hazardous waste generated by current and past operations is emission
control dust ("EC dust"), a residual from the production of steel in electric
arc furnaces. Environmental legislation and regulation at both the federal and
state level over EC dust is subject to change, which may change the cost of
compliance. While EC dust is generated in current production processes, such EC
dust is being collected, handled and disposed of in a manner which management
believes meets all current federal and state environmental regulations. The
costs of such collection and disposal are being expensed and paid currently from
operations. In addition, the Company has handled and disposed of EC dust in
other manners in previous years, and is responsible for the remediation of
certain sites where such EC dust was generated and/or disposed. In general,
the Company's estimate of the remediation costs is based on its review of each
site and the nature of the anticipated remediation activities to be undertaken.
The Company's process for estimating such remediation costs includes
determining for each site the expected remediation methods, and the estimated
cost for each step of the remediation. In all such determinations, the Company
employs outside consultants, and providers of such remedial services where
necessary, to assist in making such determinations. Although the ultimate costs
associated
<PAGE> 8
AMERISTEEL CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE E -- ENVIRONMENTAL MATTERS (CONTINUED)
with the remediation are not presently known, the Company has estimated the
total cost to be approximately $14.9 million and has recorded these costs as
accrued liabilities as of September 30, 1997. The majority of this amount is
associated with four sites.
The Tampa mill site contains slag and soil that is contaminated with EC dust
generated by past operations. The volume and mass estimates of the contamination
were based on analytical data from approximately 600 soil borings, 700 soil
samples and 91 groundwater-monitoring wells. The remediation approach selected
by the Company, excavation and on-site treatment and disposal, was approved, and
a permit issued, by the U.S. Environmental Protection Agency during fiscal 1996
and by the Florida Department of Environmental Protection during fiscal 1998.
The Company is currently awaiting a signed Consent Order to begin the
remediation process. The remediation cost estimates are based on the Company's
previous experience with comparable projects as well as estimates provided by
outside environmental consultants. The Company is responsible for the total
remediation costs and currently estimates those costs to be approximately $8
million for this site. The Company expects cleanup at this site to be
substantially completed during 2001.
At the Jackson, Tennessee mill site, EC dust contaminated with Cesium 137, a
man-made, radioactive material (incident-related material) has been stored in
containers awaiting remediation. The remediation volumes and masses are based on
actual measurements made by the outside contractor during the now complete
cleanup, consolidation and containerization phase of the remediation. The
approach for the remaining treatment, transport and disposal phase is based on
the final Nuclear Regulatory Commission "Technical Position," dated March 20,
1997. The remediation cost estimate is based on a signed contract for the
treatment and transportation and on a written price quotation for the disposal.
The detailed workplan has been submitted to the regulatory agencies and approval
is expected within 90 days. The Company is responsible for the total remediation
cost and currently estimates those costs to be approximately $3 million for this
site. The Company expects cleanup at this site to be substantially completed
during 1998.
The Sogreen site, a third party site, contains EC dust from the Company that was
improperly stored at this recycling location. The estimate includes the cost of
soil remediation and groundwater remediation based on an approach approved by
the Georgia Environmental Protection Division. The Company has been named as a
potentially responsible party ("PRP") for this site, and thus its estimated
share of the remediation costs is approximately 43% (based on analytical data
from soil borings and samples) of the total estimated remediation cost of $4.3
million; therefore, the Company currently estimates its obligation to be
approximately $2 million. The Company's management has asserted that the impact
of additional future costs on the Company's results of operations, financial
condition and liquidity from the Sogreen site, based on the other PRPs not
fulfilling their obligations, would not be significant. The Company expects
cleanup at this site to be substantially completed during 1998.
The Stoller site, a third party site, contains EC dust from the Company that
was improperly stored at this recycling location. The Company has been named as
a PRP for this site. The estimate includes soil remediation and groundwater
remediation. Outside contractors have measured the remediation volumes and
masses during the now complete cleanup and consolidation phase of the
remediation. The remainder of the remediation approach selected by the Company,
on-site treatment and disposal, has been approved, and contract negotiations
for construction of the on-site vault are underway. The Company's cost
estimates are based on its previous experience with comparable projects as well
as estimates confirmed by the State of South Carolina. An Allocation Agreement
was published by the State of South Carolina during fiscal 1997 that
essentially shifted some of the payment burden from the Company to other PRPs,
leaving the Company with approximately a 2% share of the remaining estimated
$8 million remediation cost; therefore, the Company currently estimates its
obligation to be approximately $.2 million. The non-participating PRPs have
intervened in the proceedings for approval by the federal court in order to
contest the agreement. The Company's management believes that the agreement
will be finalized between February and May 1998. The Company's management
believes that the impact of additional future costs on the Company's results of
operations, financial condition and liquidity from this
<PAGE> 9
AMERISTEEL CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE E -- ENVIRONMENTAL MATTERS (CONTINUED)
site could possibly cause its overall obligation to increase to approximately
50% of the total estimated remediation cost, assuming that only one other PRP
actually participates in the cleanup efforts with the Company. The Company
expects cleanup at this site to be substantially completed during 1998.
The Company paid approximately $5.2 million in remediation costs in fiscal 1997,
and $.7 million during the first six months of fiscal 1998. Of the $14.9 million
accrued at September 30, 1997, the Company expects to pay approximately $3.7
million during the remainder of fiscal 1998. The timing of the remaining future
payments for each future year is uncertain due to the various remediation
alternatives being considered. However, the Company's management has estimated
that all significant remediation should be completed by 2002. The Company
expensed approximately $3.3 million during the six months ended September 30,
1997, and approximately $2 million in each of the past two fiscal years for
environmental remediation costs.
Based on past use of certain technologies and remediation methods by third
parties, evaluation of those technologies and methods by the Company's
consultants and quotations and third-party estimates of costs of
remediation-related services provided to the Company or which the Company and is
consultants are aware, the Company and its consultants believe that the
Company's cost estimates are reasonable. In light of the uncertainties inherent
in determining the costs associated with the clean-up of such contamination,
including the time periods over which such costs must be paid, the extent of
contribution by parties which are jointly and severally liable, and the nature
and timing of payments to be made under cost sharing arrangements, there can be
no assurance the ultimate costs of remediation may not be greater or less than
the estimated remediation costs.
NOTE F - SUBSEQUENT EVENTS
The Company proposes to sell shares of common stock to the public pursuant to a
Registration Statement on Form S-1 filed with the Securities and Exchange
Commission on October 10, 1997 (the "Offering"). In connection with the
Offering, the Board of Directors approved on October 16, 1997, subject to
stockholder approval, amendments to the Company's Articles of Incorporation. The
Company expects the amendments to the Articles of Incorporation to become
effective on or about December 7, 1997. The amendment authorizes 100,000,000
shares of $.01 par value Class A common stock and 22,000,000 shares of $.01 par
value Class B common stock. The rights of the holders of both Class A and Class
B common stock will be substantially the same except that the holders of Class A
common stock and Class B common stock will be entitled to one vote per share and
two votes per share, respectively. Only shares of Class A common stock will be
sold in the Offering.
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
FACTORS THAT MAY AFFECT OPERATING RESULTS
This report contains certain forward-looking statements that are based on the
beliefs of the Company's management, as well as assumptions made by, and
information currently available to, the Company's management. Such statements
include, among others, (i) the highly cyclical nature and seasonality of the
steel industry, (ii) the fluctuations in the cost and availability of raw
materials, (iii) the possibility of excess production capacity, (iv) the
potential costs of environmental compliance, (v) the risks associated with
potential acquisitions, (vi) further opportunities for industry consolidation,
(vii) the impact of inflation and (viii) the fluctuations in the cost of
electricity. Because such statements involve risks and uncertainties, actual
actions and strategies and the timing and expected results thereof may differ
materially from those expressed or implied by such forward-looking statements.
The following presentation of management's discussion and analysis of the
Company's financial condition and results of operations should be read in
conjunction with the Company's Annual Report on Form 10-K as filed with the
Securities and Exchange Commission.
GENERAL
The results of operations of the Company are largely dependent on the level of
construction and general economic activity in the U.S. The Company's sales are
seasonal with sales in the Company's fiscal first and second quarters generally
stronger than the rest of the year. The Company's cost of sales includes the
cost of its primary raw material, steel scrap, the cost of converting scrap to
finished steel products, the cost of warehousing and handling finished steel
products and freight costs. The following table sets forth information regarding
recent results of operations.
<PAGE> 11
AMERISTEEL CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION - Continued
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS (UNAUDITED) SIX MONTHS ENDED QUARTER ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C>
Net sales $343,805 $327,908 $175,446 $158,086
Cost of sales 277,251 285,173 142,214 136,261
Cost of sales as percent of net sales 80.6% 87.0% 81.1% 86.2%
Selling and administrative 12,834 14,261 5,262 7,328
Depreciation 9,643 8,091 4,816 4,096
Amortization of goodwill 2,065 2,065 1,032 1,032
-------- -------- -------- --------
Income from operations $ 42,012 $ 18,318 $ 22,122 $ 9,369
Interest expense 10,115 9,898 4,927 5,043
Amortization of deferred financing costs 353 467 119 233
Income taxes 13,108 3,907 7,063 1,999
-------- -------- -------- --------
Net income $ 18,436 $ 4,046 $ 10,013 $ 2,094
======== ======== ======== ========
TONS SHIPPED (THOUSANDS)
Mill Finished Goods
Stock Rebar 291 242 151 108
Merchant Bar 283 253 147 133
Rods 48 62 19 26
-------- -------- -------- --------
622 557 317 267
Fabricated rebar 174 170 89 86
Billets 106 188 50 79
-------- -------- -------- --------
Total 902 915 456 432
======== ======== ======== ========
AVERAGE SELLING PRICES (PER TON)
Mill Finished Goods
Stock Rebar $ 334 $ 313 $ 336 $ 319
Merchant Bar 367 354 371 350
Rods 344 322 352 326
-------- -------- -------- --------
349 332 352 334
Fabricated rebar 457 453 457 452
Billets 232 225 232 230
Average mill finished goods prices (per ton) $ 349 $ 332 $ 352 $ 334
Average scrap cost (per ton) 131 133 134 134
Average metal spread (per ton) 218 199 218 200
Average mill conversion costs (per ton) 128 140 130 134
</TABLE>
<PAGE> 12
AMERISTEEL CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION - Continued
NET SALES. Net sales in the six months ended September 30, 1997 increased
approximately 5% from the same period last year as both prices and volumes of
mill finished goods increased. Average mill finished goods prices increased over
5%. Overall shipped tonnage was down over 1% due to a decline in semi-finished
billet tons shipped, however shipments of higher margin mill finished goods
increased over 11%. Net sales in the quarter ended September 30, 1997 increased
by 11% from the same period last year as both prices and volumes of mill
finished goods increased. Average mill finished goods sales prices increased
over 5% while overall tons shipped increased 5%. Mill finished goods shipments
increased over 18%. The volume shift towards higher margin finished goods and
away from semi-finished billets is a direct result of higher rolling mill
production levels from completion of mill modernization projects at the
Charlotte and Jackson mills.
COST OF SALES. Increased production levels, lower average unit costs and the
shift towards higher margin finished steel products resulted in higher margins
for the six months ended September 30, 1997. Increased production levels lower
the Company's steel cost per ton by spreading fixed costs over a greater number
of tons produced. Cost of sales declined from 87% to 81% of net sales in the six
months ended September 30, 1997 and from 86% to 81% of net sales in the quarter
ended September 30, 1997.
SELLING AND ADMINISTRATIVE. Selling and administrative expenses for the quarter
and six months ended September 30, 1997 include a $3.0 million, and $3.3
million charge, respectively, for the disposition of environmental waste,
offset by $6.8 million received in the current quarter in connection with an
insurance settlement related to cleanup of the 1995 melting of radioactive
scrap at the Jackson mill. The Company also incurred $1.4 million in the
current quarter in startup expenses associated with its facility at the Jackson
mill that utilizes a technology developed to recycle the Company's electric
arc furnace dust that is currently regulated as a hazardous waste.
DEPRECIATION. Depreciation expense of $9.6 million for the six months ended
September 30, 1997 increased 19% over the same period last year due to capital
improvement spending of $19.3 million since September 30, 1996. The same capital
spending resulted in an 18% increase in depreciation expense for the quarter
ended September 30, 1997 over the same period last year.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the six months ended September 30,
1997 was $27.0 million compared with $29.4 million for the same period last
year. Cash flow from net income increased by $14.4 million but was offset
principally because finished product inventories during the six months ended
September 30, 1996 were drawn down to minimum operating levels during production
disruptions caused by mill modernization projects at the Charlotte and Jackson
mills. The Company used $20.4 million in cash to repay debt and $11.3 million to
invest in capital projects, mostly for mill modernization. In September 1997,
the Company incurred additional indebtedness of $5 million through an industrial
revenue bond for the construction of a facility at the Jackson mill to recycle
EC dust.
The Company proposes to sell shares of common stock to the public pursuant to a
Registration Statement on Form S-1 filed with the Securities and Exchange
Commission on October 10, 1997 (the "Offering"). In connection with the
Offering, the Board of Directors approved on October 16, 1997, subject to
stockholder approval, amendments to the Company's Articles of Incorporation. The
Company expects the amendments to the Articles of Incorporation to become
effective on or about December 7, 1997. The amendment authorizes 100,000,000
shares of $.01 par value Class A common stock and 22,000,000 shares of $.01 par
value Class B common stock. The rights of the holders of both Class A and Class
B common stock will be substantially the same except that the holders of Class A
common stock and Class B common stock will be entitled to one vote per share and
two votes per share, respectively. Only shares of Class A common stock will be
sold in the Offering.
Prior to the Completion of the Offering, the Company intends to declare and pay
a special dividend of approximately $6.0 million to its then current
stockholders. The dividend will be paid from current fiscal year earnings. The
Company has generated approximately $27 million of cash from operations during
the six months ended September 30, 1997, the majority of which has been used to
pay down its borrowings under its Revolving Credit Agreement. The Company plans
to use available cash provided from operating activities, and if necessary,
additional borrowings under its Revolving Credit Agreement (under which there
was $51.0 million available as of September 30, 1997) to fund the payment of
this $6 million cash dividend.
Concurrent with the Offering, the Company is planning to offer $100,000,000
aggregate principal amount of its Notes by a separate prospectus (the "Notes
Offering"). The consummation of the Offering and the Notes Offering are not
conditioned upon each other. It is expected that the Notes Offering would be
consummated shortly after the consummation of the Offerings. The net proceeds
to the Company from the Notes Offering (after deduction of the underwriting
discount and the Company's estimated offering expenses), if consummated, are
estimated to be $97,600,000. The Company will use such proceeds to redeem the
Company's First Mortgage Notes.
Because the Offering and the Notes Offering are subject to a variety of
market, economic and other factors, there can be no assurance that either
offering, or the proposed dividend described above, will be consummated.
The Company believes that the amounts available from operating cash flows and
funds available through its Revolving Credit Agreement will be sufficient to
meet its expected operational cash needs and planned capital expenditures for
the foreseeable future.
The Company is aware of the year 2000 issue and the effects it may have on its
business systems. In response, the Company has developed a detailed plan to
address this issue. This plan includes a two year campaign, which began in
April 1997 and includes approved spending of approximately $2.6 million for
upgrading hardware and software, including training, prior to 2000. The
Company believes that it will be Year 2000 compliant without a material
impact on its operations or financial results.
<PAGE> 13
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are filed as exhibits to this
Quarterly Report on Form 10-Q:
Exhibit 11 Statement re: computation of per share earnings
Exhibit 27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K:
None
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.
AMERISTEEL CORPORATION
Date: November 14, 1997 /s/ Phillip E. Casey
---------------------------------------------
Phillip E. Casey, Chairman of the Board
and Chief Executive Officer
Date: November 14, 1997 /s/ Tom J. Landa
---------------------------------------------
Tom J. Landa, Vice President, Chief Financial
Officer and Secretary (Principal Financial
Officer and Principal Accounting Officer);
Director
<PAGE> 1
AMERISTEEL CORPORATION
Exhibit 11 - Statement re: computation of per share earnings
CALCULATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE (EPS) *
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET INCOME ($000S) $ 18,436 $ 4,046 $ 10,013 $ 2,094
----------- ----------- ----------- -----------
Weighted average shares outstanding (in thousands) 10,077 10,093 10,075 10,093
Dilutive effect of stock option plan (in thousands) 19 - 19 -
----------- ----------- ----------- -----------
Shares used in calculating Primary EPS (in thousands) 10,096 10,093 10,095 10,093
----------- ----------- ----------- -----------
Primary EPS $ 1.83 $ 0.40 $ 1.00 $ 0.21
=========== =========== =========== ===========
</TABLE>
* Fully diluted earnings per share are identical to primary earnings per share.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AMERISTEEL CORPORATION FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,848
<SECURITIES> 0
<RECEIVABLES> 77,573
<ALLOWANCES> 0
<INVENTORY> 106,830
<CURRENT-ASSETS> 192,693
<PP&E> 317,496
<DEPRECIATION> 67,679
<TOTAL-ASSETS> 543,400
<CURRENT-LIABILITIES> 80,841
<BONDS> 216,835
0
0
<COMMON> 101
<OTHER-SE> 169,309
<TOTAL-LIABILITY-AND-EQUITY> 543,400
<SALES> 343,805
<TOTAL-REVENUES> 343,805
<CGS> 277,251
<TOTAL-COSTS> 277,251
<OTHER-EXPENSES> 24,542
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,468
<INCOME-PRETAX> 31,544
<INCOME-TAX> 13,108
<INCOME-CONTINUING> 18,436
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,436
<EPS-PRIMARY> 1.83
<EPS-DILUTED> 1.83
</TABLE>
