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 March 31, 1996
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 April 30, 1996 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)
First Quarter Ended
March 31,
1996 1995
Net sales 80,975 87,327
Costs and expenses:
Cost of products sold 76,058 76,115
Selling, general and administrative 3,452 3,629
Depreciation 1,991 1,916
Interest expense, net 2,765 2,177
Total costs and expenses 84,266 83,837
Earnings (loss) before income taxes (3,291) 3,490
Provision (credit) for income taxes (1,260) 1,396
Net earnings (loss) (2,031) 2,094
Retained earnings (deficit) at beginning (2,315) 7,822
Retained earnings (deficit) at end of per (4,346) 9,916
Net earnings (loss) per share (0.50) 0.52
- 1 -
LACLEDE STEEL COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In Thousands)
Mar. 31, Dec. 31,
1996 1995
Current Assets:
Cash and cash equivalents 151 161
Accounts receivable, less allowances 41,861 37,287
Prepaid expenses 327 744
Income taxes recoverable -- 1,479
Inventories:
Finished 56,938 56,377
Semi-finished 32,303 28,683
Raw materials 9,345 8,415
Supplies 13,673 13,807
Total inventories 112,259 107,282
Total Current Assets 154,598 146,953
Non-Current Assets:
Intangible pension asset 16,909 17,409
Other intangible assets 2,371 2,407
Bond funds in trust 2,385 2,385
Prepaid pension contributions 8,095 6,586
Deferred income taxes 45,243 44,062
Other 3,808 3,785
Total Non-Current Assets 78,811 76,634
Plant and Equipment, at cost 247,234 243,573
Less - accumulated depreciation 119,239 117,382
Net Plant and Equipment 127,995 126,191
Total Assets 361,404 349,778
- 2 -
LIABILITIES AND STOCKHOLDERS' EQUITY
Mar. 31, Dec. 31,
1996 1995
Current Liabilities:
Accounts payable 39,283 31,617
Accrued compensation 6,924 7,667
Current portion of long-term debt 2,459 2,459
Accrued costs of pension plans 15,449 15,449
Other 2,413 2,002
Total Current Liabilities 66,528 59,194
Non-Current Liabilities:
Accrued costs of pension plans 67,038 67,123
Accrued postretirement medical benefits 81,556 81,431
Other 6,610 6,721
Total Non-Current Liabilities 155,204 155,275
Long-Term Debt:
Bank revolving credit 91,293 84,541
Bank term loan 6,422 6,780
Revenue bonds 25,470 25,470
Other 2,000 2,000
Total Long-Term Debt 125,185 118,791
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 (deficit) (4,346) (2,315)
Minimum pension liability adjustment (35,495) (35,495)
Total Stockholders' Equity 14,487 16,518
Total Liabilities and Stockholders' Equity 361,404 349,778
- 3 -
LACLEDE STEEL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Three Months Ended
March 31,
1996 1995
Cash flows from operating activities:
Net earnings (loss) (2,031) 2,094
Adjustments to reconcile net earnings (loss) to
net cash used in operating activities:
Depreciation 1,991 1,916
Change in deferred income taxes (1,181) 825
Accrued pension cost 2,655 1,949
Pension cash funding (3,749) (2,701)
Undistributed minority interest 19 --
Changes in assets and liabilities that
provided (used) cash:
Accounts receivable (4,574) 305
Inventories (4,977) (6,158)
Accounts payable and accrued expenses 9,100 (5,541)
Accrued postretirement medical benefits 125 (103)
Other assets and liabilities 13 199
Net cash used in operating activities (2,609) (7,215)
Cash flows used in investing activities:
Capital expenditures (3,795) (2,391)
Cash flows from financing activities:
Net borrowings under revolving credit 6,752 10,124
Payments on long-term debt (358) (403)
Payment of financing costs -- (115)
Net cash provided by financing activities 6,394 9,606
Cash and cash equivalents:
Net increase (decrease) during the period (10) --
At beginning of year 161 159
At end of period 151 159
- - 4 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 - EARNINGS PER SHARE
Earnings per share have been calculated based on weighted
average shares outstanding of 4,056,140.
NOTE 3 - INCOME TAXES
The provision for income taxes represents effective combined
federal and state tax rates of 38% and 40% for the three months
ended March 31, 1996 and 1995, respectively.
The financial results for 1996 are subject to annual audit.
- 5 -
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
In the first quarter of 1996 operating activities used $2.6
million in cash. Capital expenditures were $3.8 million, and
contributions to Company pension plans totaled $3.7 million.
Increases in accounts receivable and inventory during the period,
which totaled $9.6 million, were largely offset by increases in
accounts payable and accrued expenses. Net working capital
increased slightly in the quarter to $88.1 million, and the ratio
of current assets to current liabilities was 2.3 to 1.0 at March
31, 1996.
At March 31, 1996, $91.3 million in borrowings were outstanding
under the Company's Revolving Credit Facility. Approximately $3.4
million was available under this Agreement at March 31, 1996, after
deducting $2.7 million in outstanding letters of credit.
The Company is negotiating with its principal lenders an
extension of $5.0 million in availability under its Revolving
Credit Facility due to expire by September 30, 1996, and a
modification to certain financial covenants in its Loan and
Security Agreement relating to operating losses and net worth.
During the last nine months of 1996 the Company anticipates
capital expenditures of $6.2 million, and contributions to pension
plans of $12.2 million. Based on current projections, normal
operating activities will not generate sufficient cash flow to
finance these expenditures. Therefore, the Company expects to
supplement funds available under the Loan and Security Agreement
with certain equipment financing arrangements, and to significantly
improve cash flow from operating activities through reductions in
inventory over the balance of the year.
If modifications to the Loan and Security Agreement mentioned
above are agreed to by the Lenders, Management projections indicate
that internally generated funds, including the effect of inventory
reductions, together with planned financing arrangements should be
adequate to finance planned capital expenditures and maintain
liquidity. Actual results can differ materially from projections,
depending upon levels of demand, sales prices and levels of
productivity.
Results of Operations
Net sales decreased by $6.4 million or 7.3% in the first quarter
of 1996 compared to the first quarter of 1995, reflecting a 13%
decrease in the average selling price for steel products. Total
steel shipments increased 4% and shipments of Laclede Chain
Manufacturing Co. increased 25%.
Cost of products sold did not increase in the 1996 quarter,
despite higher steel and chain shipments, primarily as a result of
changes in product mix. Sales of lower cost semi-finished steel,
which were relatively minor in the first quarter of 1995,
represented about 14% of 1996 steel shipments.
- 6 -
The increase in interest expense in the first quarter of 1996 is
the result of an increase in bank borrowings and an increase in the
average interest rate of 60 basis points.
PART II - OTHER INFORMATION
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 September 30, 1995.)
(4)(d) Third Amendment dated June 1, 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 September 30, 1995.)
(4)(e) Fourth Amendment dated December 7, 1995 to Registrant's
Loan and Security Agreement. (Incorporated by reference
to Exhibit (4)(e) in Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1995.)
(4)(f) Fifth Amendment dated January 26, 1996 to Registrant's
Loan and Security Agreement. (Incorporated by reference
to Exhibit (4)(f) in Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 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.
- 7 -
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: May 15, 1996
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