<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 JUNE 30, 1997
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. (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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
As of July 31, 1997 the registrant had 10,074,885 shares $.01 par
value common stock outstanding.
<PAGE> 2
PART I -- FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
AMERISTEEL CORPORATION
STATEMENTS OF FINANCIAL POSITION
($ in thousands)
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1997 1997
(UNAUDITED)
------------ ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,306 $ 1,645
Accounts receivable 77,973 68,563
Inventories 104,905 106,173
Deferred tax assets 5,000 5,000
Other current assets 1,122 1,138
-------- --------
TOTAL CURRENT ASSETS 192,306 182,519
ASSETS HELD FOR SALE 14,967 14,838
PROPERTY, PLANT AND EQUIPMENT 310,507 308,159
Less accumulated depreciation 62,924 58,138
-------- --------
247,583 250,021
GOODWILL 84,740 85,773
DEFERRED FINANCING COSTS 2,289 2,523
OTHER ASSETS 7 11
-------- --------
TOTAL ASSETS $541,892 $535,685
======== ========
</TABLE>
See notes to financial statements
2
<PAGE> 3
AMERISTEEL CORPORATION
STATEMENTS OF FINANCIAL POSITION -- continued
($ in thousands)
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1997 1997
(UNAUDITED)
---------- ----------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 40,482 $ 44,666
Salaries, wages and employee benefits 14,470 14,598
Environmental remediation 5,633 5,079
Other current liabilities 9,615 4,355
Interest payable 1,745 4,659
Current maturities of long-term borrowings 5,687 435
--------- ---------
TOTAL CURRENT LIABILITIES 77,632 73,792
LONG -TERM BORROWINGS, LESS CURRENT PORTION 231,745 237,474
OTHER LIABILITIES 21,045 21,555
DEFERRED TAX LIABILITIES 52,300 52,300
SHAREHOLDERS' EQUITY
Common stock, $.01 par value; 30,000,000 shares authorized at June 30, and
March 31, 1997, 10,075,174 and 10,079,028 shares outstanding at June 30,
and March 31, 1997, respectively 101 101
Capital in excess of par 156,765 156,816
Retained earnings (accumulated deficit) 4,095 (4,328)
Deferred compensation (1,791) (2,025)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 159,170 150,564
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 541,892 $ 535,685
========= =========
</TABLE>
See notes to financial statements
3
<PAGE> 4
AMERISTEEL CORPORATION
STATEMENTS OF INCOME
($ in thousands except per common share)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996
(UNAUDITED) (UNAUDITED)
-------- --------
<S> <C> <C>
NET SALES $168,359 $169,822
Operating Expenses:
Cost of sales, excluding depreciation 135,037 148,912
Selling and administrative 7,572 6,933
Depreciation 4,827 3,995
Amortization of goodwill 1,033 1,033
-------- --------
148,469 160,873
-------- --------
INCOME FROM OPERATIONS 19,890 8,949
Other Expenses:
Interest 5,188 4,855
Amortization of deferred financing costs 234 234
-------- --------
5,422 5,089
-------- --------
INCOME BEFORE INCOME TAXES 14,468 3,860
Income taxes 6,045 1,908
-------- --------
NET INCOME $ 8,423 $ 1,952
======== ========
Weighted average common shares outstanding
(in thousands) 10,098 10,094
EARNINGS PER COMMON SHARE $ 0.83 $ 0.19
======== ========
</TABLE>
See notes to financial statements
4
<PAGE> 5
AMERISTEEL CORPORATION
STATEMENTS OF CASH FLOWS
($ in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996
(UNAUDITED) (UNAUDITED)
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 8,423 $ 1,952
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,094 5,262
Deferred income taxes -- 500
Other (loss on asset disposals and deferred compensation) 740 295
Changes in operating assets and liabilities:
Accounts receivable (9,410) (4,156)
Inventories 1,268 14,942
Other assets (109) 268
Accounts payable, income taxes and other liabilities (1,923) (666)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,083 18,397
INVESTING ACTIVITIES
Additions to property, plant and equipment (2,895) (13,514)
Proceeds from sales of property, plant and equipment 1 127
Use of restricted IRB funds -- 4,017
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (2,894) (9,370)
FINANCING ACTIVITIES
Payments to short-term and long-term borrowings, net (477) (9,375)
Redemption of common stock (51) (44)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES (528) (9,419)
-------- --------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,661 (392)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,645 6,193
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 3,306 $ 5,801
======== ========
</TABLE>
See note to financial statements
5
<PAGE> 6
AMERISTEEL CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE A -- BASIS OF PRESENTATION
The financial statements include the accounts of AmeriSteel, 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. All significant
intercompany accounts and transactions have been eliminated.
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 three months ended June
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.
6
<PAGE> 7
AMERISTEEL CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE C -- INVENTORIES
Inventories consist of the following:
($ in thousands)
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1997 1997
(UNAUDITED)
---------- --------
<S> <C> <C>
Finished goods $ 61,230 $ 59,299
Work in-process 12,753 14,175
Raw materials and operating supplies 30,922 32,699
-------- --------
$104,905 $106,173
======== ========
</TABLE>
NOTE D -- BORROWINGS
Long-term borrowings consist of the following:
($ in thousands)
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1997 1997
--------- --------
<S> <C> <C>
Revolving Credit Agreement $ 50,870 $ 51,340
First Mortgage Notes 100,000 100,000
Subordinated Intercompany Note 50,000 50,000
Industrial Revenue Bonds 30,875 30,875
Trade Loan Agreement 5,259 5,259
Note to Parent 428 435
-------- --------
237,432 237,909
Less Current Maturities 5,687 435
-------- --------
$231,745 $237,474
======== ========
</TABLE>
NOTE E -- 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 $12.2
million with these costs recorded in accrued liabilities as of June 30, 1997.
The Company paid approximately $5.2 million in remediation costs in fiscal 1997.
Of the amount accrued at March 31, 1997, the Company expects to pay
approximately $5.1 million in fiscal 1998. The timing of future payments are
uncertain due to the various remediation alternatives being considered. 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 remedial services where necessary, to assist
in making such determinations.
7
<PAGE> 8
AMERISTEEL CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE E -- ENVIRONMENTAL MATTERS - continued
The Company expensed approximately $2 million in each of the past two fiscal
years, and $6 million in fiscal 1995 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 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 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
FACTORS THAT MAY AFFECT OPERATING RESULTS
The statements in this report that are not purely historical are forward looking
statements within the meaning of section 27A of the Securities Act of 1933 and
section 21E of the Securities Exchange Act of 1934, including statements
regarding the Company's expectations, hopes, intentions, or strategies regarding
the future. All forward looking statements made by the Company involve a number
of inherent risks and uncertainties which could cause actual results to differ
materially. These risks and uncertainties include economic and general business
conditions, most notably construction levels in the Company's market area;
competitive factors including pricing decisions; raw material availability and
price fluctuations; and other significant activities, to name a few.
LIQUIDITY AND CAPITAL RESOURCES
The Company recently extended the maturity of its Revolving Credit Agreement by
one year to June 9, 1999. The Revolving Credit Agreement provides up to $140
million in borrowings subject to a "borrowing base" amount which substantially
provides the Company's liquidity. Available funding under the Revolver was $33.2
million at June 30, 1997.
Net cash provided by operating activities for the quarter ended June 30, 1997
was $5.1 million compared to $18.4 million for the same period last year, due
primarily to increased working capital levels as a result of improved production
and sales activities. Accounts receivables increased $9.4 million during the
quarter ended June 30, 1997 while inventories declined by $1.3 million. Finished
goods inventory increased by $1.9 million but was offset by a $3.2 million
reduction in work-in-process and raw material inventories.
The Company believes that the amounts available from operating cash flows and
funds available through its Revolving Credit Agreement are sufficient to meet
its expected cash needs and planned capital expenditures for the foreseeable
future.
The Company continues to comply with all of the covenants of its loan
agreements.
8
<PAGE> 9
AMERISTEEL CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION - Continued
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS THREE MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
Shipments (Tons)
- ----------------
Stock Rebar 140,261 134,635
Merchant Bar 136,093 120,784
Rods 29,029 35,398
-------- --------
Mill Finished Products 305,383 290,817
Fabricated Rebar 85,327 84,019
Billets 55,335 108,564
-------- --------
Total Shipments 446,045 483,400
======== ========
Selling Price ($ Per Ton)
- -------------------------
Stock Rebar $ 331 $ 308
Merchant Bar 364 357
Rods 339 319
-------- --------
Mill Finished Products 346 329
Fabricated Rebar (plain) 457 453
Billets 231 222
Metal Margin Spread ($ Per Ton)
- -------------------------------
Mill Selling Price $ 346 $ 329
Ferrous Scrap Price 129 131
-------- --------
Metal Margin Spread $ 217 $ 198
======== ========
</TABLE>
Revenues: Improved market conditions resulted in a 4.2% increase in shipments of
finished goods coupled with a 5.2% increase in average mill selling prices for
the first fiscal quarter ended June 30, 1997 compared with the same period last
year. While overall revenues declined 1%, the ratio of higher margin finished
product sales to semi-finished billet shipments improved. Full utilization of
the Company's Charlotte, North Carolina and Jackson, West Tennessee rolling
mills, where production of finished goods was curtailed by major projects last
year, improved inventory availability.
Cost of Sales: Higher and more efficient production levels, lower scrap costs
and improved ratio of finished goods to billet sales resulted in cost of sales
declining from 88% of net sales in the quarter ended June 30, 1996 to 80% of
sales in the quarter ended June 30, 1997.
Selling and Administrative: Selling and administrative expenses for the quarter
ended June 30, 1997 increased 9.2% over the same period last year due primarily
to increased incentive pay as a result of improved performance.
Depreciation: Depreciation expense of $4.8 million for the quarter ended June
30, 1997 increased 20.8% over the same period last year due to capital
improvement spending of $23.8 million since June 30, 1996.
9
<PAGE> 10
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: August 4, 1997 /s/ Phillip E. Casey
--------------------------------------------
Phillip E. Casey, Chairman of the Board and
Chief Executive Officer
Date: August 4, 1997 /s/ Tom J. Landa
--------------------------------------------
Tom J. Landa, Vice President, Chief
Financial Officer and Secretary (Principal
Financial Officer and Principal Accounting
Officer); Director
10
<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>
THREE MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
NET INCOME ($000S) $ 8,423 $ 1,952
----------- -----------
Weighted average shares outstanding 10,077,973 10,094,497
Dilutive effect of stock option plan 19,610 -
----------- -----------
Shares used in calculating Primary EPS 10,097,583 10,094,497
----------- -----------
Primary EPS $ 0.83 $ 0.19
=========== ===========
</TABLE>
* Fully diluted earnings per share are identical to primary earnings per
share.
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AMERISTEEL FOR THE QUARTER ENDED JUNE 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,306
<SECURITIES> 0
<RECEIVABLES> 77,973
<ALLOWANCES> 0
<INVENTORY> 104,905
<CURRENT-ASSETS> 192,306
<PP&E> 310,507
<DEPRECIATION> 62,924
<TOTAL-ASSETS> 541,892
<CURRENT-LIABILITIES> 77,632
<BONDS> 231,745
0
0
<COMMON> 101
<OTHER-SE> 159,069
<TOTAL-LIABILITY-AND-EQUITY> 541,892
<SALES> 168,359
<TOTAL-REVENUES> 168,359
<CGS> 135,037
<TOTAL-COSTS> 135,037
<OTHER-EXPENSES> 13,432
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,422
<INCOME-PRETAX> 14,468
<INCOME-TAX> 6,045
<INCOME-CONTINUING> 8,423
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,423
<EPS-PRIMARY> .83
<EPS-DILUTED> .83
</TABLE>
