SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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 Number 0-3855
LACLEDE STEEL COMPANY
(Exact name of Registrant as specified in its charter)
Delaware 43-0368310
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.
One Metropolitan Square, St. Louis, Missouri 63102
(Address of principal executive offices)
(Zip code)
314-425-1400
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
As of October 27, 1995 there were 4,056,140 shares of
$13.33 par value common stock outstanding.
LACLEDE STEEL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
(In Thousands Except Per Share Data)
Third Quarter EndedYear to Date
September 30, September 30,
1995 1994 1995 1994
Net sales 76,561 85,308 244,746 250,564
Costs and expenses:
Cost of products sold 70,569 77,153 217,491 227,224
Selling, general and administrative 3,516 3,241 10,647 9,791
Depreciation 2,118 1,918 6,121 5,771
Interest expense, net 2,607 1,724 7,308 4,858
Gain on sale of stock of subsidiary -- -- (728) --
Total costs and expenses 78,810 84,036 240,839 247,644
Earnings (loss) before income taxes (2,249) 1,272 3,907 2,920
Provision (credit) for income taxes (900) 509 1,378 1,168
Net earnings (loss) before minority inter (1,349) 763 2,529 1,752
Minority interest 1 -- (1) --
Net earnings (loss) (1,348) 763 2,528 1,752
Retained earnings at beginning of period 11,698 4,349 7,822 3,360
Retained earnings at end of period 10,350 5,112 10,350 5,112
Net earnings (loss) per share (0.34) 0.19 0.62 0.43
- 1 -
LACLEDE STEEL COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In Thousands)
Sep. 30, Dec. 31,
1995 1994
Current Assets:
Cash and cash equivalents 162 159
Accounts receivable, less allowances 40,615 45,587
Prepaid expenses 643 1,202
Income taxes recoverable -- 546
Inventories:
Finished 53,562 45,407
Semi-finished 32,665 26,193
Raw materials 12,337 15,853
Supplies 15,595 15,013
Total inventories 114,159 102,466
Total Current Assets 155,579 149,960
Non-Current Assets:
Intangible assets 19,493 21,101
Bond funds in trust 2,385 2,385
Prepaid pension contributions 18,871 17,795
Deferred income taxes 21,535 21,726
Other 3,611 3,522
Total Non-Current Assets 65,895 66,529
Plant and Equipment, at cost 264,699 256,237
Less - accumulated depreciation 135,091 129,475
Net Plant and Equipment 129,608 126,762
Total Assets 351,082 343,251
- 2 -
LIABILITIES AND STOCKHOLDERS' EQUITY
Sep. 30, Dec. 31,
1995 1994
Current Liabilities:
Accounts payable 30,163 36,462
Accrued compensation 5,503 9,798
Current portion of long-term debt 2,459 2,484
Accrued costs of pension plans 12,852 9,830
Other 1,203 2,480
Total Current Liabilities 52,180 61,054
Non-Current Liabilities:
Accrued costs of pension plans 35,756 41,413
Accrued postretirement medical benefits 79,500 79,180
Other 6,621 7,060
Total Non-Current Liabilities 121,877 127,653
Long-Term Debt:
Bank agreement 93,011 74,301
Revenue bonds 25,470 26,500
Other long 2,000 --
Total Long-Term Debt 120,481 100,801
Minority Interest 273 --
Stockholders' Equity:
Preferred stock, without par value, authorized
2,000,000 shares with none issued -- --
Common stock, $13.33 par value, authorized
5,000,000 shares with 4,056,140 shares issued 54,081 54,081
Capital in excess of par value 247 247
Retained earnings 10,350 7,822
Minimum pension liability adjustment (8,407) (8,407)
Total Stockholders' Equity 56,271 53,743
Total Liabilities and Stockholders' Equity 351,082 343,251
3
LACLEDE STEEL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Nine Months Ended
September 30,
1995 1994
Cash flows from operating activities:
Net earnings 2,528 1,752
Adjustments to reconcile net earnings to
net cash provided by (used in) operating activities:
Depreciation 6,121 5,771
Change in deferred income taxes 191 599
Gain on sale of stock of subsidiary (728) --
Undistributed minority interest 1 --
Changes in assets and liabilities that
provided (used) cash:
Accounts receivable 4,972 4,880
Inventories (11,693) 523
Accounts payable and accrued expenses (11,205) (1,663)
Pension cost less than funding (2,211) (2,722)
Accrued postretirement medical benefits 320 1,200
Other assets and liabilities 180 (2,453)
Net cash provided by (used in) operating activities (11,524) 7,887
Cash flows from investing activities:
Capital expenditures (8,947) (10,813)
Net cash used in investing activities (8,947) (10,813)
Cash flows from financing activities:
Net borrowings under revolving credit 19,785 110
Payments on long-term debt (2,130) (9,276)
Proceeds from long term debt 2,000 --
Proceeds from sale of stock of subsidiary 1,000 --
Proceeds from bond funds in trust -- 11,355
Payment of financing costs (181) --
Net cash provided by financing activities 20,474 2,189
Cash and cash equivalents:
Net increase (decrease) during the period 3 (737)
At beginning of year 159 894
At end of period 162 157
- - 4 -
NOTE 1 - GENERAL
The accompanying unaudited consolidated financial statements
include the accounts of Laclede Steel Company and its wholly-
owned subsidiaries. All intercompany accounts and transactions
have been eliminated. The consolidated financial statements
reflect all adjustments (such adjustments are of a normal
recurring nature unless otherwise disclosed in these interim
financial statements) which are in the opinion of Management
necessary for a fair statement of the results for the interim
periods.
NOTE 2 - SALE OF STOCK OF SUBSIDIARY
In the second quarter of 1995 the Company completed the sale of
approximately 3% of the common stock of its subsidiary, Laclede
Mid America, Inc. Accordingly a non-taxable gain of $728,000
representing the excess of the sales price over the net book
value of the stock sold, is included in results for the nine
months of 1995.
NOTE 3 - EARNINGS PER SHARE
Earnings per share amounts have been calculated based on
weighted average shares outstanding of 4,056,140.
NOTE 4 - INCOME TAXES
The provision for income taxes represents an effective combined
federal and state tax rate of 35% for the nine months ended
September 30, 1995 and 40% for the nine months ended September
30, 1994. The lower effective rate in 1995 reflects the non-
taxable gain on sale of subsidiary stock.
- 5 -
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Earnings of $2.5 million plus $6.1 million in depreciation
charges and deferred income taxes of $.2 million generated cash
flow of $8.8 million in the first nine months of 1995. However,
operating activities used $11.5 million in cash during the period,
reflecting an $11.7 million increase in inventories and $11.2
million reduction in accounts payable and accrued expenses. Net
borrowings increased by $17.7 million. Working capital increased
by $14.5 million in the first nine months of 1995 and the ratio of
current assets to current liabilities was 3.0 to 1.0 at September
30, 1995. Capital expenditures totaled $8.9 million in the first
nine months of 1995.
Cash flows from financing activities in the first nine months of
1995 reflect transactions of the Company's subsidiary, Laclede Mid-
America, Inc. including $1.0 million from the sale of approximately
3% of the stock of the subsidiary and a $2 million term loan.
These funds are being used for modifications at the Fremont,
Indiana Plant in connection with the new venture to produce oil
tempered wire for suspension springs for the automotive market.
See Note 2 to the Consolidated Financial Statements.
At September 30, 1995, $94.4 million in borrowings were
outstanding under the Company's Loan and Security Agreement.
Approximately $5.3 million was available under this Agreement at
September 30, 1995, after deducting $2.6 million in outstanding
letters of credit. Higher shipments in October increased accounts
receivable balances which affect revolving credit availability
under terms of the Agreement. At October 31, 1995 $6.7 million was
available after deducting outstanding letters of credit.
Management believes that if sales continue at the more normal
levels experienced in October, internally generated funds and
existing banking arrangements should be adequate to finance planned
capital expenditures, which will total approximately $15.0 million
in 1995. In the event that current sales volume is not maintained
in the short-term, certain capital expenditures could be delayed.
Results of Operations
Net sales decreased $8.7 million or 10.2% in the third quarter of
1995 compared to the third quarter of 1994, reflecting a 10.3%
decline in shipments. Cost of products sold in the third quarter
of 1995 was $6.6 million or 8.5% lower than the third quarter of
1994.
- 6 -
The decrease in cost of products sold in the third quarter of
1995 was proportionally less than the decline in shipments,
primarily due to higher costs per ton related to lower production
levels in the majority of the Company's operations. In addition
productivity at the Alton Plant was affected by a number of power
curtailments caused by severe summer heat, and a transformer
failure which forced reduced steelmaking operations for an extended
period in August. The Company anticipates an improvement in
production costs in the fourth quarter as operations return to more
normal levels.
For the first nine months of 1995 net sales decreased by $5.8
million or 2.3% from the first nine months of 1994, reflecting a
6.4% decrease in shipping volume, partially offset by a 3.9%
increase in average selling prices. The cost of products sold
decreased by $9.7 million or 4.3% in the first nine months of 1995.
The decrease in cost of products sold in 1995 was proportionately
less than the reduction in shipments, reflecting higher costs
associated with low production volume in the third quarter and
higher average ferrous scrap prices in the first nine months of
1995.
The increase in interest expense in the first nine months of 1995
is the result of a 20% increase in bank borrowings and an increase
in the average interest rate of approximately 230 basis points.
See Note 2 to the Consolidated Financial Statements for
explanation of the gain on sale of stock of subsidiary.
- 7 -
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(4)(a) Registrant's Loan and Security Agreement dated as of
September 7, 1994. (Incorporated by reference to
Exhibit (4)(a) in Registrant's quarterly report on Form
10-Q for September 30, 1994.)
(4)(b) First Amendment dated February 15, 1995 to Registrant's
Loan and Security Agreement. (Incorporated by
reference to Exhibit (4)(b) in Registrant's Annual
Report on Form 10-K for the fiscal year ended December
31, 1994.)
(4)(c) Second Amendment dated May 10, 1995 to Registrant's
Loan and Security Agreement. (Incorporated by
reference to Exhibit (4)(c) in Registrant's Quarterly
Report on Form 10-Q for the period ended June 30,
1995.)
(4)(d) Third Amendment dated June 1, 1995 to Registrant's
Loan and Security Agreement. (Incorporated by
reference to Exhibit (4)(d) in Registrant's Quarterly
Report on Form 10-Q for the period ended June 30,
1995.)
Instruments with respect to long-term debt issues have
been omitted where the amount of securities authorized
under such instruments does not exceed 10% of the total
consolidated assets of the Registrant. Registrant
hereby agrees to furnish a copy of any such instrument
to the Commission upon its request.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the
quarter.
- 8 -
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
LACLEDE STEEL COMPANY
(Registrant)
/s/ Michael H. Lane
Michael H. Lane
Vice President - Finance
Treasurer and Secretary
Duly Authorized Officer and
Principal Financial Officer
Date: November 9, 1995
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