<PAGE>
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 fiscal quarter ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 5-10065
-------
EARLE M. JORGENSEN COMPANY
(Exact name of registrant as specified in its charter)
Delaware 95-0886610
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3050 East Birch Street, Brea, California 92822
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (714) 579-8823
--------------
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 registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
----- -----
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. None
----
Number of shares outstanding of each of the registrant's classes of common
stock, as of the latest practicable date. AS OF JANUARY 31, 1997, 128 SHARES
OF COMMON STOCK, PAR VALUE $.01 PER SHARE, WERE OUTSTANDING.
- ----------
<PAGE>
EARLE M. JORGENSEN COMPANY
TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets at December 31, 1996 (unaudited)
and March 31, 1996 2
Consolidated Statements of Operations for the Three Months
and Nine Months Ended December 31, 1996 and January 3, 1996
(unaudited) 3
Consolidated Statements of Cash Flows for the Nine Months
Ended December 31, 1996 and January 3, 1996 (unaudited) 4
Notes to Consolidated Financial Statements 5
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 6
PART II - OTHER INFORMATION 9
SIGNATURES 10
Page 1
<PAGE>
PART I - FINANCIAL INFORMATION
EARLE M. JORGENSEN COMPANY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1996
------------ ------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 16,219 $ 22,823
Accounts receivable, less allowance for doubtful
accounts of $1,854 and $1,017 at December 31, 1996
and March 31, 1996, respectively. 101,548 113,664
Inventories 198,545 188,452
Other current assets 6,357 4,513
------------ ------------
Total current assets 322,669 329,452
------------ ------------
Property, plant and equipment, net of accumulated
depreciation of $56,693 and $54,826 at
December 31, 1996 and March 31, 1996, respectively 125,747 134,259
Net cash surrender value of life insurance policies 11,831 11,599
Debt issue costs, net of accumulated amortization 4,412 5,996
Other assets 4,243 3,605
------------ ------------
Total assets $ 468,902 $ 484,911
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 86,958 $ 112,551
Accrued liabilities 31,660 31,002
Deferred income taxes 18,362 18,362
Current portion of long-term debt 950 950
------------ ------------
Total current liabilities 137,930 162,865
------------ ------------
Long term debt 288,037 279,002
Deferred income taxes 14,648 14,448
Other long-term liabilities 3,587 3,455
Stockholder's equity:
Preferred stock, $.01 par value; 200 shares
authorized and unissued - -
Common stock, $.01 par value; 2,800 shares
authorized; 128 shares issued and outstanding - -
Additional paid in capital 173,523 173,523
Foreign currency translation adjustment (4,993) (5,748)
Accumulated deficit (143,830) (142,634)
------------ ------------
Total stockholder's equity 24,700 25,141
------------ ------------
Total liabilities and stockholder's equity $ 468,902 $ 484,911
------------ ------------
------------ ------------
</TABLE>
See accompanying notes.
Page 2
<PAGE>
PART I - FINANCIAL INFORMATION (CONTINUED)
EARLE M. JORGENSEN COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------- ---------------------------
DECEMBER 31, JANUARY 3, DECEMBER 31, JANUARY 3,
1996 1996 1996 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 250,667 $ 254,743 $ 756,070 $ 764,030
Cost of sales 182,063 183,012 545,285 545,490
------------ ------------ ------------ ------------
Gross profit 68,604 71,731 210,785 218,540
Expenses
Warehouse and delivery 34,393 31,926 99,179 96,331
Selling 10,242 10,108 31,130 32,938
General and administrative 17,940 16,376 50,955 55,910
Workforce realignment and
asset write-downs - - - 12,776
------------ ------------ ------------ ------------
Total expenses 62,575 58,410 181,264 197,955
------------ ------------ ------------ ------------
Income from operations 6,029 13,321 29,521 20,585
Net interest expense 10,764 10,738 30,492 30,736
------------ ------------ ------------ ------------
Income (loss) before income taxes (4,735) 2,583 (971) (10,151)
Income tax expense (benefit) 18 3,058 225 (1,569)
------------ ------------ ------------ ------------
Net loss $ (4,753) $ (475) $ (1,196) $ (8,582)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes.
Page 3
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION (CONTINUED)
EARLE M. JORGENSEN COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
NINE MONTHS ENDED
---------------------------------
DECEMBER 31, JANUARY 3,
1996 1996
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (1,196) $ (8,582)
Adjustments to reconcile net income to net cash provided
by (used in) operations:
Depreciation and amortization 7,949 9,410
Asset write-down to fair market value - 9,205
Amortization of debt issue costs and discount 1,709 1,754
Gain on sale of property, plant and equipment (1,080) (459)
ESOP expense 5,109 6,075
Provision for bad debts 1,844 1,547
Changes in assets and liabilities:
Accounts receivable 10,272 44,974
Inventories (10,093) (27,218)
Increase in cash surrender value of life insurance (13,104) (5,378)
Accounts payable and accrued liabilities (25,851) (10,518)
Accrued postretirement benefits 270 (716)
Current and deferred income taxes 200 (2,641)
Other (2,055) (1,235)
------------- -------------
Net cash provided by (used in) operating activities (26,026) 16,218
------------- -------------
INVESTING ACTIVITIES
Additions to property, plant and equipment (2,900) (14,800)
Proceeds from the sale of property, plant and equipment 4,708 312
Proceeds from redemption of life insurance policies 1,457 -
------------- -------------
Net cash provided by (used in) investing activities 3,265 (14,488)
------------- -------------
FINANCING ACTIVITIES
Borrowings on cash surrender value of life insurance policies 11,415 10,337
Borrowings (payments) under revolving loan agreements 9,646 (2,095)
Other borrowings (payments), net (712) 3,456
Cash dividend to parent (4,192) (15,891)
------------- -------------
Net cash provided by (used in) financing activities 16,157 (4,193)
------------- -------------
Net decrease in cash (6,604) (2,463)
Cash at beginning of period 22,823 10,615
------------- -------------
Cash at end of period $ 16,219 $ 8,152
------------- -------------
------------- -------------
</TABLE>
See accompanying notes.
Page 4
<PAGE>
PART I - FINANCIAL INFORMATION (CONTINUED)
EARLE M. JORGENSEN COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. BASIS OF PRESENTATION
The Earle M. Jorgensen Company (the "Company") is a wholly owned subsidiary
of Earle M. Jorgensen Holding Company, Inc. ("Holding").
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries including Earle M. Jorgensen
Company (UK) Ltd. (EMJ (UK)), Kilsby Jorgensen S.A. de C.V. (EMJ (Mexico)),
Earle M. Jorgensen (Canada) Inc. (EMJ (Canada)) and Stainless Insurance
Ltd., a captive insurance subsidiary (EMJ (Bermuda)). All significant
intercompany accounts and transactions have been eliminated.
In the opinion of management, the accompanying unaudited consolidated
financial statements have been prepared in accordance with the instructions
to Form 10-Q and include all adjustments (consisting of normally recurring
accruals) and disclosures considered necessary for a fair presentation of
the consolidated financial position of the Earle M. Jorgensen Company at
December 31, 1996 and its consolidated results of operations for the three
months and nine months ended December 31, 1996 and January 3, 1996 and
consolidated cash flows for the nine months ended December 31, 1996 and
January 3, 1996. The consolidated results of operations for the three
months and nine months ended December 31, 1996 are not necessarily
indicative of the results to be expected for the full year. For further
information, refer to the consolidated financial statements and footnotes
included in the Company's Annual Report on Form 10-K for the year ended
March 31, 1996.
Page 5
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PART I - FINANCIAL INFORMATION (CONTINUED)
EARLE M. JORGENSEN COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS: NINE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO NINE
MONTHS ENDED JANUARY 3, 1996.
REVENUE. Revenues for the nine months ended December 31, 1996 were $756.1
million, compared to $764.0 million for the same period in fiscal 1996.
Revenues from U.S. and foreign operations for the first nine months of fiscal
1997 were $708.9 million and $47.2 million, compared to $714.5 million and
$49.5 million, respectively, for the comparable period in fiscal 1996.
For the nine months of fiscal 1997, revenues from U.S. operations were
generally impacted by lower demand and competitive pricing. Foreign revenues
were adversely impacted by general weaknesses in the local economies.
GROSS PROFIT. Gross profit for the nine months ended December 31, 1996 was
$210.8 million, compared to $218.5 million for the same period in fiscal 1996.
Consolidated gross margin for the fiscal 1997 and 1996 periods was 27.9% and
28.6%, respectively. The first nine months of fiscal 1997 included a LIFO
credit of $1.2 million compared to a charge of $5.2 million in the same period
of fiscal 1996. Foreign gross profits were $10.3 million and gross margin was
21.8%, compared to $11.4 million and 23.0%, respectively, for the comparable
period in fiscal 1996. Exclusive of foreign operations and LIFO adjustments,
the U.S. gross margin was 28.1% for the first nine months of fiscal 1997
compared to 29.7% for the comparable period in fiscal 1996. The 1.6% decrease
primarily resulted from competitive pricing pressures and decreasing stainless
and aluminum commodity costs.
EXPENSES. Total operating expenses for the first nine months of fiscal 1997
were $181.3 million, compared to $185.2 million (after excluding a one-time
charge of $12.8 million for workforce realignment and asset write-downs) for
the same period in fiscal 1996. As a percentage of revenues, these expenses
were 24.0% in the fiscal 1997 period and 24.2% in the fiscal 1996 period.
Warehouse and delivery expenses for the first nine months of fiscal 1997 were
$99.2 million (13.1% of revenues), compared to $96.3 million (12.6% of revenues)
for the same period in fiscal 1996. The fiscal 1997 period included higher
expenses for employee benefits, and for freight and contracted shipping
management services resulting primarily from the establishment of additional
regional inventory depots.
Selling expenses for the first nine months of fiscal 1997 were $31.1 million
(4.1% of revenues), compared to $32.9 million (4.3% of revenues) for the same
period in fiscal 1996. The improvements were primarily the result of a
reduction in compensation expenses.
General and administrative expenses were $51.0 million (6.7% of revenues) during
the first nine months of fiscal 1997 compared to $55.9 million (7.3% of
revenues) for the same period in fiscal 1996. The fiscal 1997 period benefited
from lower amortization expense, a reduction in compensation expenses, higher
purchase discounts, and gains from sale of surplus facilities.
NET INTEREST EXPENSE. Net interest expense was $30.5 million during the
first nine months of fiscal 1997 compared to $30.7 million for the same
period in fiscal 1996. The fiscal 1997 period was impacted primarily by
lower interest expense related to the Company's Revolving Credit Facility as
compared to the fiscal 1996 period, offset by higher interest expense
associated with increased levels of borrowings against the cash surrender
value of certain life insurance policies maintained by the Company in the
fiscal 1997 period. The average outstanding indebtedness during the first
nine months of fiscal 1997 was $305.3 million, compared to $306.0 million for
the same period in fiscal 1996, and the weighted average interest rate on
such indebtedness was 9.6% and 9.9%, respectively. The Company's Revolving
Credit Facility borrowings, representing $115.5 million and $123.5 million in
principal amount of total indebtedness as of the end of December 1996 and
1995, respectively, is at a floating interest rate (8.4% at December 31,
1996). The average interest rate on such indebtedness for the first nine
months of fiscal 1997 was 8.5% as compared to 9.3% in fiscal 1996. The
interest rates on the 10-3/4% Senior Notes and on the borrowings under the
life insurance policies (11.8%) are fixed.
Page 6
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PART I - FINANCIAL INFORMATION (CONTINUED)
EARLE M. JORGENSEN COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS: NINE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO NINE
MONTHS ENDED JANUARY 3, 1996. (continued)
INCOME TAXES. The income tax provision of $0.2 million for the first nine
months of fiscal 1997 represents primarily a provision for state franchise
and alternative minimum taxes. The income tax benefit of $1.6 million for the
same period in fiscal 1996 represents a U.S. tax benefit of $1.8 million
offset by an income tax provision of $0.2 million (at an effective rate of
41.5%) on earnings from the Company's Canadian operations.
RESULTS OF OPERATIONS: THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THREE
MONTHS ENDED JANUARY 3, 1996.
REVENUE. Revenues for the third quarter of fiscal 1997 were $250.7 million,
compared to $254.7 million for the same period in fiscal 1996. Revenues from
U.S. and foreign operations for the third quarter of fiscal 1997 were $234.5
million and $16.2 million, compared to $237.8 million and $16.9 million,
respectively, for the same period in fiscal 1996. For the third quarter of
fiscal 1997, revenues from U.S. operations were generally impacted by lower
demand and competitive pricing. Foreign revenues were adversely impacted by
general weaknesses in the local economies.
GROSS PROFIT. Gross profit for the third quarter of fiscal 1997 was
$68.6 million, compared to $71.7 million for the same period in fiscal 1996.
Consolidated gross margin for the fiscal 1997 and 1996 periods was 27.4% and
28.2%, respectively. The third quarter of fiscal 1997 included a LIFO credit of
$0.5 million compared to a charge of $1.9 million in the same period of fiscal
1996. Foreign gross profits were $3.5 million and gross margin was 21.6%,
compared to $4.3 million and 25.2%, respectively, for the comparable period in
fiscal 1996. Exclusive of foreign operations and LIFO charges, the U.S. gross
margin was 27.5% for the third quarter of fiscal 1997 compared to 29.2% for the
comparable period in fiscal 1996. The 1.7% decrease primarily resulted from
competitive pricing pressures and decreasing stainless and aluminum commodity
costs, and disposals of obsolete or slow moving inventory items.
EXPENSES. Total operating expenses for the third quarter of fiscal 1997 were
$62.6 million, compared to $58.4 million for the same period in fiscal 1996. As
a percentage of revenues, these expenses were 25.0% in the fiscal 1997 period
and 22.9% in the fiscal 1996 period.
Warehouse and delivery expenses for the third quarter of fiscal 1997 were
$34.4 million (13.7% of revenues), compared to $31.9 million (12.5% of revenues)
for the same period in fiscal 1996. The fiscal 1997 period included higher
expenses related to compensation, freight and contracted shipping management
services resulting primarily from the establishment of additional regional
inventory depots, and lease payments for new equipment.
Selling expenses for the third quarter of fiscal 1997 were $10.2 million (4.1%
of revenues), compared to $10.1 million (4.0% of revenues) for the same period
in fiscal 1996.
General and administrative expenses were $17.9 million (7.2% of revenues) during
the third quarter of 1997 compared to $16.4 million (6.4% of revenues) for the
same period in fiscal 1996. The fiscal 1997 period included an additional
provision for Mexican bad debts, and higher general marketing expenses,
partially offset by increased discounts earned on payments to suppliers.
Page 7
<PAGE>
PART I - FINANCIAL INFORMATION (CONTINUED)
EARLE M. JORGENSEN COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS: THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THREE
MONTHS ENDED JANUARY 3, 1996. (continued)
NET INTEREST EXPENSE. Net interest expense was $10.8 million and $10.7 million
for the third quarter in fiscal 1997 and fiscal 1996, respectively. The fiscal
1997 period was impacted primarily by higher interest expense associated with
increased levels of borrowings against the cash surrender value of certain life
insurance policies maintained by the Company in the fiscal 1997 period, offset
by lower interest expense related to the Company's Revolving Credit Facility as
compared to the fiscal 1996 period. The average outstanding indebtedness during
the third quarter of fiscal 1997 was $309.9 million, compared to $315.7 million
for the same period in fiscal 1996, and the weighted average interest rate on
such indebtedness was 9.6% and 9.7%, respectively.
INCOME TAXES. The income tax provision of $18,000 for the third quarter of
fiscal 1997 represents a provision for Canadian taxes. The income tax provision
of $3.1 million for the same period in fiscal 1996 represents a U.S. tax
provision at a projected effective tax rate of 15.5%.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity are internally generated funds from
operations, borrowings available under its Revolving Credit Facility and
borrowings against certain life insurance policies. At December 31, 1996, the
Company had available borrowings of $57.9 million under the Revolving Credit
Facility and approximately $1.9 million of available borrowings against the cash
surrender value of life insurance policies. The indebtedness under the
Revolving Credit Facility is secured by the Company's inventory and accounts
receivable, and future availability under the Revolving Credit Facility is
determined by prevailing levels of the Company's eligible accounts receivable
and inventory offset by outstanding letters of credit, certain guarantees and
other obligations. The Company is seeking an extension of its Revolving
Credit Facility into fiscal year 2000.
The Company's cash requirements for debt service and related obligations through
the end of fiscal 1997 will consist primarily of interest payments under its
Revolving Credit Facility, interest payments on the Senior Notes, dividends to
Holding to provide for the repurchase of capital stock from departing
stockholders pursuant to Holding's Stockholder Agreement and the Company's
employee stock ownership plan ("ESOP"), and principal and interest payments on
the Company's industrial revenue bond and purchase money indebtedness. As of
December 31, 1996, principal payments required by the Company's currently
outstanding industrial revenue bond and purchase money indebtedness amount to
$0.2 million in fiscal 1997, $1.0 million in fiscal 1998, $1.5 million in fiscal
1999, and $16.1 million in the aggregate thereafter through 2010. The Company
will not be required to make any principal payments against the Senior Notes or
the Revolving Credit Facility until 2000 and 1998, respectively. The Company is
in compliance with the covenants contained in the Revolving Credit Facility, and
the Company is not in default under the indenture governing the Senior Notes and
the Company does not anticipate any default thereunder for the foreseeable
future.
In fiscal 1997, approximately $4.8 million has been budgeted for capital
expenditures. Approximately $3.2 million is for routine replacement of
machinery and equipment and $1.6 million is for completing the implementation of
the Company's information technology system. The Company expects to finance
such expenditures from internal cash flows.
Page 8
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PART I - FINANCIAL INFORMATION (CONTINUED)
EARLE M. JORGENSEN COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Company's working capital at December 31, 1996 increased $18.2 million to
$184.7 million when compared to $166.6 million at March 31, 1996. The increase
was primarily attributable to lower accounts payable resulting from the
increased discounting of supplier invoices and higher inventory levels resulting
from the establishment of additional regional depots, partially offset by lower
accounts receivables.
Net cash used in operating activities during the first nine months of fiscal
1997 was $26.0 million, compared to net cash generated of $16.2 million in
the same period of fiscal 1996. The cash flows for the fiscal 1997 period
were decreased by the reduction of accounts payable resulting from
discounting supplier invoices, and lower levels of collections of accounts
receivable resulting from lower sales during the first nine months of fiscal
1997 when compared to the same period in fiscal 1996. Net cash used in
operating activities during the fiscal 1997 period was reduced by lower
inventory growth when compared to the fiscal 1996 period.
Net cash provided by investing activities was $3.3 million during the first
nine months of fiscal 1997, compared to net cash used of $14.5 million in the
same period of fiscal 1996. The cash flows for the fiscal 1997 period
included lower levels of capital expenditures, and proceeds received from the
sale of surplus facilities in Bristol, Pennsylvania and Oakland, California,
and from the redemption of life insurance policies. Capital expenditures in
the first nine months of the prior year included the acquisition of the
Company's Tulsa, Oklahoma facility and expansions or enhancements to the
Charlotte, Indianapolis and Cincinnati facilities.
Net cash provided by financing activities during the first nine months of fiscal
1997 was $16.2 million, compared to net cash used of $4.2 million in the same
period of fiscal 1996. The cash flows for the fiscal 1997 period were impacted
by higher borrowings under the Company's Revolving Credit Facility resulting
primarily from increased discounting of supplier invoices, and higher working
capital requirements related primarily to the establishment of additional
regional inventory depots. Borrowings from the cash surrender value of life
insurance policies totaled $11.4 million during the fiscal 1997 period, compared
to $10.3 million during the fiscal 1996 period. Cash dividends to Holding for
the redemption of Holding's capital stock from departing stockholders, as
discussed above, totaled $4.2 million during the nine months of fiscal 1997,
compared to $15.9 million in the same period of fiscal 1996.
As of December 31, 1996, the Company believes that its sources of liquidity and
capital resources are sufficient to meet all current and foreseeable working
capital and capital expenditures requirements.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS
Exhibit 27. Financial Data Schedule
Exhibit 99. News Release dated January 30, 1997 (EMJ Management
Transition)
(b) REPORTS
The Registrant was not required to file a Form 8-K during the
quarter ended December 31, 1996.
Effective February 1, 1997, Mr. Maurice S. Nelson, Jr. became
the Company's President, Chief Executive Officer and Chief
Operating Officer. Mr. Neven C. Hulsey became the Chairman of
the Company's Board of Directors, and Mr. David M. Roderick
became the Chairman of the Executive Committee of the Board of
Directors. See Exhibit 99 to this filing.
Page 9
<PAGE>
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 hereunto duly authorized.
EARLE M. JORGENSEN COMPANY
/s/ Maurice S. Nelson, Jr.
--------------------------
Date: February 4, 1997 Maurice S. Nelson, Jr.
President, Chief Executive Officer
and Chief Operating Officer
/s/ Charles P. Gallopo
----------------------
Date: February 4, 1997 Charles P. Gallopo
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Page 10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1996 AND THE
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
AND NINE MONTHS ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<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> 16,219
<SECURITIES> 0
<RECEIVABLES> 103,402
<ALLOWANCES> 1,854
<INVENTORY> 198,545
<CURRENT-ASSETS> 322,669
<PP&E> 182,440
<DEPRECIATION> 56,693
<TOTAL-ASSETS> 468,902
<CURRENT-LIABILITIES> 137,930
<BONDS> 288,037
0
0
<COMMON> 0
<OTHER-SE> 24,700
<TOTAL-LIABILITY-AND-EQUITY> 468,902
<SALES> 756,070
<TOTAL-REVENUES> 756,070
<CGS> 545,285
<TOTAL-COSTS> 545,285
<OTHER-EXPENSES> 99,179
<LOSS-PROVISION> 1,844
<INTEREST-EXPENSE> 30,492
<INCOME-PRETAX> (971)
<INCOME-TAX> 225
<INCOME-CONTINUING> (1,196)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,196)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE>
EXHIBIT 99
[LETTERHEAD]
NEWS RELEASE
[LOGO]
FOR IMMEDIATE RELEASE
EMJ MANAGEMENT TRANSITION
Brea, CA, January 30, 1997 -- Neven Hulsey, President and Chief Executive
Officer of EMJ (the Earle M. Jorgensen Company), announced today a transition in
executive management with the election of Maurice Sandy Nelson as President,
Chief Executive Officer and Chief Operating Officer of the Company.
The realignment, effective February 1, 1997, was triggered at the request of
Mr. Hulsey who will become the Chairman of the Company effective February 1,
1997. Mr. Hulsey is one of the Steel Service Centers' most respected and
innovative executives with a career of over 35 years of outstanding
accomplishments in the Industry.
"We are delighted that Mr. Hulsey has agreed to remain available to us as
Chairman during the time ahead, as his experience and commitment to EMJ is
highly valued", said David Roderick, present Chairman of EMJ.
Mr. Roderick will become Chairman of the Executive Committee of the Company also
effective February 1, 1997.
Mr. M. Sandy Nelson, Jr. was elected President and Chief Executive Officer
effective February 1, 1997. Mr. Nelson's most recent position from 1992 until
April 1996 was President, Chief Executive Officer and Chief Operating Officer of
Inland Steel Company located in Chicago. Prior to that, Mr. Nelson was with the
Aluminum Company of America (Alcoa), and from 1987 to 1992 was President of the
Aerospace and Commercial division of Alcoa.
-more-
<PAGE>
"This orderly executive transition of EMJ and EMJ's commitment to excellence in
service and quality will continue our strong position in the Industry", said
Hulsey. "Mr. Nelson has had extensive experience in both the Steel and Aluminum
Industry and is thoroughly knowledgeable with the technology of our Industry as
well as the importance of maintaining our service and quality excellence. We
are confident this orderly transition will work equally well for our customers
as well as for the shareholders and employees of EMJ".
Mr. Nelson has over 30 years of experience in the Steel and Aluminum Industry.
He is a graduate of the Georgia Institute of Technology with an Industrial
Engineering degree, and the University of Tennessee with a Master's degree in
Industrial Engineering.
Mr. Nelson's career began with the Aluminum Company of America where he held
various positions such as Plate Mill Superintendent and Hot Rolling
Superintendent at Alcoa's Davenport plant. He joined Consolidated Aluminum
Company in 1973 and held various positions as General Manager of Wire, Rod and
Bar, and Vice President of Flat Rolled Products prior to leaving to rejoin Alcoa
in 1983. At Alcoa, he held the position of Vice President of Manufacturing,
Vice President of Flat Rolled Products, and from 1987 to 1992 was President of
the Aerospace and Commercial division.
He joined Inland Steel in 1992. He led the transition of Inland Steel Company
from a series of annual losses returning that Company to profitability in 1994
and 1996. Mr. Nelson was President, Chief Executive Officer and Chief Operating
Officer of Inland Steel when he resigned in the Spring of 1996.
Mr. Nelson has a reputation as a technological innovator as well as an executive
dedicated to customer service and product excellence.
Mr. Hulsey has been actively involved in the Steel and Aluminum Industry for 35
years. He is on the Board of Directors and is a National Chapter Director for
the Steel Service Center Institute (SSCI) as well as serving on the Board of
Directors of the National Association of Aluminum Distributors (NAAD), both of
which are trade associations. Mr. Hulsey is on the Board of Regents of the
University of the Pacific where he played and coached football. He is a 1957
graduate of that University with a Bachelor of Arts degree in Business
Administration. Mr. Hulsey directed and completed the merger of the Kilsby-
Roberts Company and the Earle M. Jorgensen Company. He was President and Chief
Executive Officer of Kilsby-Roberts at the time of the merger and became the
first Chief Executive Officer of the merged entity, EMJ.
Earle M. Jorgensen, the founder of the Company will remain a Director and
Chairman Emeritus.
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<PAGE>
Lonnie Terry, Executive Vice President of EMJ will continue in his executive
role directing the merchandising and other critical staff functions.
EMJ is the largest independently-owned distributor of metals in the United
States. The Company has approximately 2,500 employees and annual sales of
$1 Billion. The Company maintains 29 service centers and six processing
centers at various locations throughout the United States and is headquartered
in Brea, California. The Company also maintains five international service
center facilities through its subsidiaries in Canada, Mexico and the United
Kingdom.
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CONTACT: Fred Parker
EMJ
(714) 579-8823 FAX: (714) 577-3754
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