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<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 QUARTER ENDED DECEMBER 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File
No. 1-5210
AMERISTEEL CORPORATION
Incorporated in
STATE OF FLORIDA
Employer Identification
NO. 59-0792436
5100 W. LEMON STREET
TAMPA, FLORIDA 33609
Mailing Address:
P. O. Box 31328
Tampa, Florida 33631-3328
Telephone No. 286-8383 - Area Code 813
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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
As of the date of this report, the registrant had 10,356,486 shares $.01
par value common stock outstanding.
<PAGE> 2
PART I -- FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
AMERISTEEL CORPORATION
CONDENSED STATEMENTS OF FINANCIAL POSITION
($ IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1996
(Unaudited)
-------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 200 $ 6,193
Accounts receivable 59,565 72,910
Inventories 97,897 112,753
Deferred tax assets 5,700 7,200
Other current assets 809 1,053
-------------- ------------
TOTAL CURRENT ASSETS 164,171 200,109
ASSETS HELD FOR SALE 14,865 14,411
PROPERTY, PLANT AND EQUIPMENT 308,831 289,688
Less allowances for depreciation (54,381) (42,679)
-------------- ------------
254,450 247,009
GOODWILL 86,805 89,903
DEFERRED FINANCING COSTS 2,756 3,457
OTHER ASSETS 7 7
------------- ------------
TOTAL ASSETS $ 523,054 $ 554,896
============= ============
</TABLE>
see notes to condensed financial statements
2
<PAGE> 3
AMERISTEEL CORPORATION
CONDENSED STATEMENTS OF FINANCIAL POSITION
($ IN THOUSANDS)
<TABLE>
<CAPTION>
December 31, March 31,
1996 1996
(Unaudited)
------------------ ---------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 37,116 $ 40,234
Salaries, wages and employee benefits 15,106 14,336
Environmental remediation 4,316 6,079
Other current liabilities 3,899 5,057
Interest payable 1,772 4,940
Current maturities of long-term borrowings 5,438 14,942
--------------- -------------
TOTAL CURRENT LIABILITIES 67,647 85,588
LONG-TERM BORROWINGS 234,374 252,525
OTHER LIABILITIES 18,324 20,336
DEFERRED INCOME TAXES 55,000 54,700
SHAREHOLDERS' EQUITY
Common stock, $.01 par value; 30,000,000 shares authorized
at December 31, and March 31, 1996, 10,079,751 and 10,095,741
shares outstanding at December 31, and March 31,1996, respectively. 101 101
Capital in excess of par 156,824 157,026
Accumulated deficit (6,957) (12,380)
Deferred compensation (2,259) (3,000)
--------------- -------------
TOTAL SHAREHOLDERS' EQUITY 147,709 141,747
--------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 523,054 $ 554,896
=============== =============
</TABLE>
See notes to condensed financial statements
3
<PAGE> 4
AMERISTEEL CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
December 31, December 31, December 31, December 31,
1996 1995 1996 1995
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------ ------------ ------------ ----------------
<S> <C> <C> <C> <C>
Net Sales $ 467,856 $ 474,127 $ 139,948 $ 147,898
Operating Expenses:
Cost of sales, excluding depreciation 404,777 399,886 119,602 126,618
Selling and administrative 21,441 22,050 7,184 7,920
Depreciation 12,284 10,804 4,193 3,518
Amortization of goodwill 3,098 3,097 1,032 1,032
Other operating expenses - 15,000 - -
------------ ------------ ------------ ------------
441,600 450,837 132,011 139,088
------------ ------------ ------------ ------------
INCOME FROM OPERATIONS 26,256 23,290 7,937 8,810
Other Expenses:
Interest 14,684 17,281 4,786 5,267
Amortization of deferred financing costs 701 1,437 233 228
------------ ------------ ------------ ------------
15,385 18,718 5,019 5,495
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 10,871 4,572 2,918 3,315
Income tax 5,448 2,991 1,541 1,695
------------ ------------ ------------ ------------
NET INCOME $ 5,423 $ 1,581 $ 1,377 $ 1,620
============ ============ ============ ============
Weighted average shares outstanding
(in thousands) 10,089 10,048 10,083 10,085
Earnings per common share $ 0.54 $ 0.16 $ 0.14 $ 0.16
============ ============ ============ ============
</TABLE>
See notes to condensed financial statements
4
<PAGE> 5
AMERISTEEL CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended
December 31, December 31,
1996 1995
(Unaudited) (Unaudited)
--------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 5,423 $ 1,581
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 12,284 10,804
Amortization 3,799 4,534
Deferred compensation 741 675
Deferred income taxes 1,800 542
(Gain) loss on disposition of property, plant and equipment (210) 13,557
Changes in operating assets and liabilities:
Accounts receivable 13,345 18,150
Inventories 14,856 7,520
Other current assets 244 (47)
Other assets (454) 18
Trade accounts payable (3,118) (9,152)
Salaries, wages and employee benefits 770 (720)
Environmental remediation (1,763) (3,952)
Other current liabilities (1,158) (1,024)
Interest payable (3,168) (3,162)
Other liabilities (2,012) (1,822)
------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 41,379 37,502
INVESTING ACTIVITIES
Additions to property, plant and equipment (31,252) (22,551)
Proceeds from sales of property, plant and equipment 614 1,540
Use of restricted IRB funds 11,123 -
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (19,515) (21,011)
FINANCING ACTIVITIES
Payments of short-term and long-term borrowings (27,655) (2,028)
Addition to deferred financing costs - (667)
Proceeds from sale (purchase) of common stock (202) 989
-------------- -------------
NET CASH (USED IN) FINANCING ACTIVITIES (27,857) (1,706)
------------- -------------
INCR(DECR) IN CASH AND CASH EQUIVALENTS (5,993) 14,785
Cash and cash equivalents at beginning of period 6,193 2,854
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 200 $ 17,639
============= =============
</TABLE>
See notes to condensed financial statements.
5
<PAGE> 6
AMERISTEEL CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE A--BASIS OF PRESENTATION
These financial statements include the accounts of AMERISTEEL CORPORATION (the
"Company").
The accompanying unaudited condensed financial statements have been prepared in
accordance with the instructions for Form 10-Q and, therefore, 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 consisted of only 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 nine months ended December
31, 1996 are not necessarily indicative of the results to be expected for the
fiscal year ending March 31, 1997.
NOTE B--INVENTORIES
Inventories consist of the following:
($ in thousands)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1996
(UNAUDITED)
------------------ ------------
<S> <C> <C>
Finished goods $ 55,894 $ 73,196
Work in-process 11,430 16,291
Raw materials and operating supplies 30,573 23,266
------------ ------------
$ 97,897 $ 112,753
============ ============
</TABLE>
NOTE C--BORROWINGS
Long-term borrowings consist of the following:
($ in thousands)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1996
------------ -----------
<S> <C> <C>
Revolving Credit Agreement $ 48,240 $ 71,650
First Mortgage Notes 100,000 100,000
Subordinated Intercompany Note 50,000 50,000
Industrial Revenue Bonds 30,875 30,875
Bank of Tokyo Loan 5,000 10,000
Trade Loan Agreement 5,259 4,498
Note to Parent 438 444
------------ -----------
239,812 267,467
Less Current Maturities 5,438 14,942
------------ -----------
$ 234,374 $ 252,525
============ ===========
</TABLE>
6
<PAGE> 7
AMERISTEEL CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE D--ENVIRONMENTAL MATTERS
Environmental legislation and regulation at both the federal and state level is
subject to change, which may change the cost of compliance. Various possible
methods of remediation are presently being studied for approval; however, it is
expected that the investigation and remediation process will take a number of
years. Although the ultimate costs associated with the remediation are not
presently known, the Company has estimated the cost to be approximately $12.3
million. Approximately $10.1 million of these costs is recorded in accrued
liabilities as of December 31, 1996. The remaining amounts consist of site
restoration and environmental exit costs to ready idle facilities for sale, and
have been considered in determining whether the carrying amounts of the
properties exceed their net realizable values. The Company's estimate of the
remediation costs is based on its review of each site and the nature of such
problems. The Company then determines for each site the expected remediation
methods, and the estimated cost for each step of remediation. In all such
determinations, the Company employs outside consultants, and providers of such
remediation services where necessary, to assist in making such determinations.
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 of which the Company and
its 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 joint 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 E--OTHER ITEMS
Other Operating Expenses
In July 1995, the Company announced the closing of the Tampa, Florida rolling
mill, resulting in a $15.0 million charge of which $12.0 million was to reduce
fixed assets to realizable value and $3.0 million for severance and benefit
costs for affected employees and other costs associated with the closure of the
facility.
Litigation
The Company is defending various claims and legal actions which are common to
its operations. While it is not feasible to predict or determine the ultimate
outcome of these matters, none of them, in the opinion of management, will have
a material effect on the Company's financial position or results of operations.
7
<PAGE> 8
AMERISTEEL CORPORATION
ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
The Revolving Credit Agreement effective June 9, 1995, provides up to $140
million borrowings subject to a "borrowing base" amount which substantially
provides the Company's liquidity. The unused borrowing at December 31, 1996 was
$18.7 million.
Net cash provided by operating activities totaled $41.4 million for the nine
months ended December 31, 1996. Inventories were reduced $14.9 million for the
nine months ended December 31, 1996, due to lower finished goods production as a
result of capital project startups at the Charlotte, North Carolina and Jackson,
Tennessee mills.
The closure of the Tampa rolling mill, effective September 1995, resulted in a
$15 million charge for the June 1995 quarter. Of that amount $12 million was a
non-cash write down of fixed assets and the balance was for severance pay.
The Company expects to spend an additional $4 million for capital expenditures
during the balance of fiscal 1997. Cash flow generated from operations,
available financing and $2.6 million cash balance remaining from IRB proceeds is
expected to be sufficient to fund the contemplated expenditures, and maintain
adequate liquidity.
The Company continues to comply with all of the covenants of its loan
agreements.
8
<PAGE> 9
AMERISTEEL CORPORATION
ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION - Continued
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shipments (Tons)
Stock Rebar 346,420 364,776 104,207 116,767
Merchant Bar 376,287 410,616 122,832 130,615
Rods 81,176 94,175 19,391 30,113
------------ ------------- ------------ -------------
Mill Finished Products 803,883 869,567 246,430 277,495
Fabricated Rebar 252,084 243,079 81,869 72,426
Billets 234,747 132,537 47,042 62,695
------------ ------------- ------------ --------------
Total Shipments 1,290,714 1,245,183 375,341 412,616
============ ============= ============ ==============
Selling Price ($ Per Ton)
Stock Rebar $ 314 $ 316 $ 318 $ 301
Merchant Bar 353 367 350 358
Rods 322 345 322 331
------------ ------------- ------------ --------------
Mill Finished Products 332 343 334 331
Fabricated Rebar (plain) 452 462 451 462
Billets 226 232 232 231
Metal Margin Spread ($ Per Ton)
Mill Selling Price $ 332 $ 343 $ 334 $ 331
Ferrous Scrap Price 131 130 129 128
------------ ------------ ------------ --------------
Metal Margin Spread $ 201 $ 213 $ 205 $ 203
------------ ------------ ------------ --------------
</TABLE>
9
<PAGE> 10
AMERISTEEL CORPORATION
ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION - Continued
Revenues: Revenue for the current quarter was down 5.4% primarily due to lower
sales volumes. Year to date revenue is down 1.3% due to both lower prices and
volumes on finished goods and a product mix more heavily weighted by lower
priced semi-finished steel products. During the current quarter and year to
date, production and shipments of finished products at the Charlotte, North
Carolina mill was limited by the start-up of a major capital improvement project
in the rolling mill. Compared to the prior year quarter, average mill selling
prices rebounded modestly from $331 per ton to $334. Year to date, average mill
selling prices of finished products were down from $343 per ton to $332.
Cost of Sales: Ferrous scrap costs have averaged about $1 more per ton from last
year's third quarter and year to date levels. For the nine months ended December
31, 1996, cost of sales excluding depreciation increased from 84.3% of sales to
86.5% from last year due to the project startups at the Charlotte mill and major
renovations at the Jackson, Tennessee mill.
Depreciation: Depreciation for both the quarter ended and nine months ended
December 31, 1996 was higher than the same periods last year as a result of
capital expenditures incurred to upgrade mill facilities, primarily at the
Charlotte and Jackson mills.
Interest Expense: Interest expense for the quarter and year to date has declined
by 9.1% and 15.0%, respectively, from the same periods last year due to lower
average debt outstanding and lower effective interest rates. Capitalized
interest in the quarter ended December 31, 1996 was $579 thousand ($1,637
thousand year to date) versus $805 thousand for the same quarter last year (and
versus $1,323 thousand for the same nine month period last year.)
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following document is filed as an exhibit to this
Quarterly Report on Form 10-Q:
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: February 10, 1997 /s/ Phillip E. Casey
-----------------------------------------
Phillip E. Casey, Chairman of the Board
and Chief Executive Officer
Date: February 10, 1997 /s/ Tom J. Landa
-----------------------------------------
Tom J. Landa, Vice President and
Chief Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 200
<SECURITIES> 0
<RECEIVABLES> 59,565
<ALLOWANCES> 0
<INVENTORY> 97,897
<CURRENT-ASSETS> 164,171
<PP&E> 308,831
<DEPRECIATION> 54,381
<TOTAL-ASSETS> 523,054
<CURRENT-LIABILITIES> 67,647
<BONDS> 234,374
0
0
<COMMON> 101
<OTHER-SE> 147,608
<TOTAL-LIABILITY-AND-EQUITY> 523,054
<SALES> 467,856
<TOTAL-REVENUES> 467,856
<CGS> 404,777
<TOTAL-COSTS> 404,777
<OTHER-EXPENSES> 36,823
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,385
<INCOME-PRETAX> 10,871
<INCOME-TAX> 5,448
<INCOME-CONTINUING> 5,423
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,423
<EPS-PRIMARY> .54
<EPS-DILUTED> .54
</TABLE>
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