SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
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 0-14061
STEEL TECHNOLOGIES INC.
-----------------------
(Exact name of registrant as specified in its charter)
Kentucky 61-0712014
-------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15415 Shelbyville Road, Louisville, KY 40245
-------------------------------------- --------
(Address of principal executive offices) (Zip Code)
(502) 245-2110
--------------------------------------------------
(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 Sections 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
There were 11,127,969 shares outstanding of the Registrant's common stock as of
April 30, 1999.
1
<PAGE>
STEEL TECHNOLOGIES INC.
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets March 31, 1999
(Unaudited) and September 30, 1998(Audited) ....................3
Condensed Consolidated Statements of Income Three months
and Six months ended March 31, 1999 and 1998 (Unaudited)........4
Condensed Consolidated Statements of Cash Flows Six months
ended March 31, 1999 and 1998(Unaudited) ...................... 5
Notes to Condensed Consolidated Financial Statements
(Unaudited) ..................................................6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .........................8-10
Item 3. Quantitative and Qualitative Disclosures About
Market Risk....................................................11
PART II. OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K..........................11
SIGNATURE ..........................................................12
2
<PAGE>
Part I. - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
STEEL TECHNOLOGIES INC.
Condensed Consolidated Balance Sheets
(Amounts in thousands) March 31 September 30
- --------------------------------------------------------------------------------
1999 1998
(Unaudited) (Audited)
------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ....................... $ 3,257 $ 4,778
Trade accounts receivable, net ................ 60,286 47,907
Inventories ................................... 73,024 76,523
Deferred income taxes ......................... 1,665 1,621
Prepaid expenses and other assets ............. 1,042 748
---------- ----------
Total current assets ....................... 139,274 131,577
---------- ----------
Property, plant and equipment, net ............... 106,919 106,631
Investments in corporate joint ventures .......... 19,035 18,163
Goodwill, net of amortization .................... 9,348 9,060
Other assets ..................................... 2,057 1,050
--------- ---------
$ 276,633 $ 266,481
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable .............................. $ 33,538 $ 35,925
Accrued liabilities ........................... 7,976 6,231
Long-term debt due within one year ............ 6,690 9,102
--------- ---------
Total current liabilities .................. 48,204 51,258
Long-term debt ................................... 97,345 88,300
Other liabilities ................................ 1,139 --
Deferred income taxes ............................ 13,904 13,247
--------- ---------
Total liabilities ........................... 160,592 152,805
--------- ---------
Commitments and contingencies .................... -- --
Shareholders' equity:
Preferred stock ............................... -- --
Common stock .................................. 17,018 16,928
Treasury stock ................................ (7,067) (3,792)
Additional paid-in capital .................... 4,909 4,909
Retained earnings ............................. 103,382 97,071
Foreign currency translation adjustment ....... (2,201) (1,440)
--------- ---------
116,041 113,676
--------- --------
$ 276,633 $ 266,481
========= =========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
</TABLE>
3
<PAGE>
STEEL TECHNOLOGIES INC.
Condensed Consolidated Statements of Income
<TABLE>
<CAPTION>
(Amounts in thousands, Three Months Ended Six Months Ended
except per share data, unaudited) March 31 March 31
- --------------------------------------------------------------------------------
1999 1998 1999 1998
-------------------------------------------
<S> <C> <C> <C> <C>
Sales .............................. $106,891 $101,287 $205,093 $197,736
Cost of goods sold ................. 92,366 89,179 177,615 175,230
-------- -------- -------- --------
Gross profit .................. 14,525 12,108 27,478 22,506
Selling, general and administrative
expenses ......................... 6,422 5,568 12,780 10,918
Equity in net income of
unconsolidated corporate joint
venture ............................ 157 258 272 760
-------- -------- -------- --------
Operating income ................ 8,260 6,798 14,970 12,348
Interest expense ................... 1,823 1,488 3,528 3,050
-------- -------- -------- --------
Income before income
taxes ......................... 6,437 5,310 11,442 9,298
Provision for income taxes ......... 2,544 2,076 4,558 3,573
------- -------- -------- --------
Net income ...................... $ 3,893 $ 3,234 $ 6,884 $ 5,725
======== ======== ======== ========
Diluted weighted average
number of common shares
outstanding ...................... 11,248 12,050 11,344 12,048
======== ======== ======== ========
Diluted earnings per common
share ............................ $ 0.35 $ 0.27 $ 0.61 $ 0.48
======== ======== ======== ========
Basic weighted average number
of common shares outstanding ..... 11,230 11,997 11,330 11,997
======= ======== ======== ========
Basic earnings per common
share ............................ $ 0.35 $ 0.27 $ 0.61 $ 0.48
======== ======== ======== ========
Cash dividends per common
share ............................ $ -- $ -- $ 0.05 $ 0.05
======= ======= ======== ========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
</TABLE>
4
<PAGE>
STEEL TECHNOLOGIES INC.
Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Six months ended
(Amounts in thousands, unaudited) March 31
- --------------------------------------------------------------------------------
1999 1998
---------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ..................................... $ 6,884 $ 5,725
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation ................................ 6,079 5,636
Amortization ................................ 178 121
Deferred income taxes ....................... 613 621
Equity in net income of unconsolidated
corporate joint venture.................... (272) (760)
Loss on sale of assets ...................... 21 5
Increase (decrease) in cash resulting
from changes in:
Trade accounts receivable ............. (11,513) (7,951)
Inventories ........................... 2,872 9,997
Prepaids expenses and other assets .... (2,181) 5,741
Accounts payable ...................... (2,689) 2,270
Accrued liabilities and income
taxes .............................. 3,544 462
-------- --------
Net cash provided by operating activities .......... 3,536 21,867
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment ...... (8,570) (5,813)
Proceeds from sale of property, plant and
equipment...................................... 1,357 --
Investment in unconsolidated joint venture....... (600) --
-------- --------
Net cash used in investing activities .............. (7,813) (5,813)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt .................... 15,000 --
Principal payments on long-term debt ............ (8,368) (9,547)
Cash dividends on common stock .................. (573) (600)
Repurchase of common stock ...................... (3,277) (259)
Net issuance of common stock under incentive
stock option plans ............................ 92 7
-------- --------
Net cash provided by (used in) financing activities 2,874 (10,399)
-------- --------
Effect of exchange rate changes on cash ............ (118) (124)
-------- --------
Net (decrease) increase in cash and cash
equivalents ...................................... (1,521) 5,531
Cash and cash equivalents, beginning of year ....... 4,778 3,467
-------- --------
Cash and cash equivalents, end of period ........... $ 3,257 $ 8,998
======== ========
Supplemental Cash Flow Disclosures:
Cash payment for interest .......................... $ 4,904 $ 3,231
======== ========
Cash payment for income taxes ...................... $ 2,041 $ 2,043
======== ========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
</TABLE>
5
<PAGE>
STEEL TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION:
The condensed consolidated balance sheet as of March 31, 1999 and the condensed
consolidated statements of income for the three and six months ended March 31,
1999 and 1998, and condensed consolidated cash flows for the six months ended
March 31, 1999 and 1998 have been prepared by the Company without audit. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows at March, 1999 and for all periods presented have been
made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's annual report to shareholders for the year
ended September 30, 1998. The results of operations for the six months ended
March 31, 1999 are not necessarily indicative of the operating results for the
full year.
2. INVENTORIES:
<TABLE>
<CAPTION>
Inventory consists of:
(Amounts in thousands) March 31 September 30
- --------------------------------------------------------------------------------
1999 1998
(Unaudited) (Audited)
-----------------------------
<S> <C> <C>
Raw materials .................................... $58,439 $66,033
Finished goods and work in process ............... 14,585 10,490
------- -------
$73,024 $76,523
======= =======
</TABLE>
3. FOREIGN CURRENCY TRANSLATION:
The Mexican economy was considered hyper-inflationary for financial reporting
until January 1, 1999. Accordingly, the Company used monetary/non-monetary
method of accounting. As of January 1, 1999, the Mexican subsidiary uses the
peso as the functional currency. The Company uses the current rate method of
translation and reports translation adjustments as part of comprehensive income.
6
<PAGE>
4. NET INCOME PER SHARE COMPUTATIONS:
The following is a reconciliation of the numerator and the denominator of the
basic and diluted per share computations:
<TABLE>
<CAPTION>
(Amounts in thousands, except Three Months Ended Six Months Ended
per share data, unaudited) March 31 March 31
- --------------------------------------------------------------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net income ............................. $ 3,893 $ 3,234 $ 6,884 $ 5,725
------- ------- ------- -------
Shares (denominator) used for
diluted per share computations:
Weighted average shares of common
stock outstanding................. 11,230 11,997 11,330 11,997
Plus: dilutive effect of stock
options .......................... 18 53 15 51
------- ------- ------- -------
Dituted weighted average
shares .................... 11,248 12,050 11,345 12,048
------- ------- ------- -------
Shares (denominator) used for basic per
share computations:
Weighted average shares of common stock
outstanding ...................... 11,230 11,997 11,330 11,997
Net income per share data:
Diluted ............................ $ 0.35 $ 0.27 $ 0.61 $ 0.48
------- ------- ------- -------
Basic .............................. $ 0.35 $ 0.27 $ 0.61 $ 0.48
------- ------- ------- -------
</TABLE>
Options to purchase 528,000 and 185,000 shares were outstanding at March 31,
1999, and 1998, respectively and were excluded from the calculation above
because the exercise prices on the options were greater than the average market
price of the Company's stock for the periods.
5. COMPREHENSIVE INCOME:
Effective October 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" issued by the Financial
Accounting Standards Board in June 1997. Comprehensive income is defined as all
changes in equity during the period except those resulting from shareholder
equity contributions and distributions. Comprehensive income comprises of net
income and unrealized gains and losses on foreign currency translations.
Comprehensive income is summarized as follows:
<TABLE>
<CAPTION>
(Amounts in thousands, except per Three Months Ended Six Months Ended
share data, unaudited) March 31 March 31
- --------------------------------------------------------------------------------
1999 1998 1999 1998
-----------------------------------------------
<S> <C> <C> <C> <C>
Net income ..................... $ 3,893 $ 3,234 $ 6,884 $ 5,725
Foreign currency translation
adjustment ............. 761 -- 761 --
-------- -------- -------- --------
Comprehensive income ....... $ 4,654 $ 3,234 $ 7,645 $ 5,725
======== ======== ======== ========
</TABLE>
The Company does not provide for U.S. income taxes on foreign currency
translation adjustments because it does not provide for such taxes on
undistributed earnings of foreign subsidiaries
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
When used in the following discussion, the word "expects" and other similar
expressions are intended to identify forward-looking statements, which are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements are subject to certain risks
and uncertainties that could cause actual results to differ materially from
those projected. Specific risks and uncertainties include, but are not limited
to, general business and economic conditions; cyclicality of demand in the steel
industry, specifically in the automotive market; work stoppages; risks of year
2000 noncompliance or other business interruptions affecting automotive
manufacturers; competitive factors such as pricing and availability of steel;
reliance on key customers; and potential equipment malfunctions. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof. The Company undertakes no obligation to
republish revised forward-looking statements to reflect the occurrence of
unanticipated events or circumstances after the date hereof.
Results of Operations
Steel Technologies posted record second quarter sales of $106,891,000 for the
fiscal quarter ended March 31, 1999, an increase of 6% from sales of
$101,287,000 for the second quarter ended March 31, 1998. The Roberts Steel
Company (now a wholly owned subsidiary of Steel Technologies Ohio) acquired on
July 1, 1998 added $6,145,000 of revenues for the second quarter of fiscal 1999.
Sales of existing Steel Technologies steel processing operations decreased by
approximately $541,000 or 1% from a year ago.
Sales for the six months ended March 31, 1999 increased by 4%, to $205,093,000
compared to $197,736,000 for the six months ended March 31, 1998. Steel
Technologies Ohio contributed $10,745,000 in revenues for the six months ended
March 31, 1999. Sales of existing Steel Technologies steel processing operations
decreased by approximately $3,388,000 or 2% from the previous year's first six
months.
The Company continues to focus significant resources on the automotive
industry and generates a major portion of business from selling to customers who
are manufacturing component parts to the automotive industry.
Tons shipped in the second quarter and six months of fiscal 1999 increased
approximately 14% and 11%, respectively compared to the second quarter and six
months of fiscal 1998. Average selling prices of steel for the second quarter
and six months of fiscal 1999 decreased approximately 8% and 6%, respectively
from the previous year. The sales outlook is solid based on order activity and
backlogs.
The gross profit margin was 13.6% and 13.4% in the second quarter and six months
of fiscal 1999, respectively compared to 12.0% and 11.4% in the second quarter
and six months of fiscal 1998, respectively. The improvements are primarily a
result of customer and product mix improvements, productivity increases,
a reduction in raw materials prices and other operating cost reductions.The
Company expects stable and, in some cases, a slight increase in the price of raw
materials, especially in hot rolled steel. Strong demand for steel products and
reduction in the amount of foreign steel imports have resulted in firmer raw
material prices. As a result of trade suits initiated by U.S. producers against
Japan, Russia and Brazil, the supply of steel from foreign producers should
decline in 1999 as compared to 1998, and most likely will result in domestic
producers increasing raw material prices. Should raw material prices increase,
margins would be negatively impacted in the event that corresponding sales price
increases are not passed on to customers. The production cost efficiencies
associated with anticipated higher sales volumes is expected to positively
impact gross margins. Additionally, the Company's pickling facility and blanking
lines are expected to increase the amount of higher margin toll processing
revenue. Toll processing, primarily of customer-owned steel, generates higher
gross margin percentages than the traditional processing of Company-owned steel.
Steel Technologies continues to actively manage the level at which selling,
general and administrative costs are added to its cost structure. Selling,
general and administrative costs increased approximately 15% and 17%,
respectively from the comparable second quarter and first half of fiscal 1998
period. Selling, general and administrative expenses as a percentage of sales
were 6.0% for the second quarter of fiscal 1999 as compared to 5.5% for the
second quarter of fiscal 1998. Selling, general and administrative expenses as a
percentage of sales were 6.2% for the six months ended March 31, 1999,
compared to 5.5% for the six months ended March 31, 1998. The increase was
primarily attributable to the additional expenses from the addition of Steel
Technologies Ohio, and additional marketing expenses to support sales growth of
Steel Technologies Carolinas and Mexico.
The Company's share of the income of Mi-Tech Steel, Inc., (Mi-Tech) an
unconsolidated corporate joint venture, was $157,000 and $272,000, respectively
for the second quarter and six months of fiscal 1999 compared to $258,000 and
$760,000, respectively for the second quarter and six months ended March 31,
1998. The slower than expected start up of the Decatur, Alabama operation
impacted Mi-Tech's profitability for the second quarter and first six months of
fiscal 1999 as compared to the comparable periods of fiscal 1998. The Company
expects similar income contributions from Mi-Tech for the remaining quarters of
the current fiscal year.
8
<PAGE>
Interest expense was $1,823,000 and $3,528,000 for the second quarter and
six months of fiscal 1999 compared to $1,488,000 and $3,050,000 for the second
quarter and six months of fiscal 1998. The increase is the result of higher
average borrowings used to finance the acquisition of Roberts Steel Company and
the charges from an interest rate swap valuation.
The Company's effective income tax rate was approximately 39.5% and 39.8%,
respectively for the second quarter and six months of fiscal 1999 compared to
39.2% and 38.4% for the comparable periods of fiscal 1998. The increase is
attributable to a lower percentage of overall earnings from the Mi-Tech joint
venture, which are not fully taxable to the Company.
Liquidity and Capital Resources
At March 31, 1999, Steel Technologies had $91,071,000 of working capital,
maintained a current ratio of 2.9:1 and had total debt at 47% of total
capitalization. The Company continues to manage the levels of accounts
receivable, inventories and other working capital items in relation to the
trends in sales and the overall market. For the first six months of fiscal 1999,
increased profit levels contributed to the generation of $3,536,000 of cash
flows from operations. Cash flows from operations and available borrowing
capabilities are expected to meet the needs of the Company throughout the
balance of fiscal 1999.
Capital expenditures for the six months of fiscal 1999 totaled $8,570,000.
The major expenditures were for the construction of the new Berkeley, South
Carolina plant and the purchase of the building for the Ohio operation. Steel
Technologies continues to expand production capacity and processing facilities
to serve the growing needs of customers. The capital additions for all
facilities are expected to approximate $12,000,000 for fiscal 1999.
Steel Technologies maintains an equity investment of approximately $8,739,000 in
its 90% owned Mexican subsidiary. The Mexican economy was considered
hyper-inflationary for financial reporting until January 1, 1999. Accordingly,
the Company used the monetary/non-monetary method of accounting. As of January
1, 1999, the Mexican subsidiary uses the peso as the functional currency. The
Company started using the current rate method of translating the peso
denominated financial information in U.S. dollar and reports translation
adjustments in comprehensive income. Due to the costs of hedging currency risks,
the Company has not entered into any hedging arrangements
Steel Technologies maintains an equity investment, principally in the preferred
stock of Processing Technology, Inc., a corporate joint venture. The Company
periodically evaluates the possible conversion of the preferred stock investment
into common stock of Processing Technology, Inc. The decision to convert the
investment to common stock will be based upon the joint venture attaining
certain financial criteria established by Steel Technologies. Upon conversion,
the Company would be obligated to guarantee a proportionate share, currently
approximating $8,700,000 of the joint venture's loan and lease commitments. The
conversion is not expected to occur in the near term.
In December 1998, the Company increased the limit on the unsecured bank line of
credit from $80,000,000 to $100,000,000. As of March 31, 1999, there was
$64,000,000 outstanding on the credit facility. At this time the Company has no
known material obligations, commitments or demands which must be met beyond the
next twelve months other than the ten-year private placement notes and the
unsecured bank line of credit. Any additional funds will be used for growth,
including strategic acquisitions, investment in joint ventures, construction of
new plant capacity, and investment in production and processing capabilities.
The form of such financing may vary depending upon the prevailing market and
related conditions, and may include short or long-term borrowings or the
issuance of debt or equity securities.
At March 31, 1999, Steel Technologies had $97,345,000 of debt long-term debt
outstanding. Under various debt agreements, the Company agrees to maintain
specified levels of working capital and net worth, maintain certain ratios and
limit the addition of substantial debt. The Company is in compliance with all
loan covenants, and none of these covenants would restrict the completion of
currently planned capital expenditures.
During 1998, Steel Technologies entered into a long-term interest rate swap
agreement to reduce the risk of interest rate variability. Under the contract,
the Company agrees with another party to exchange quarterly the difference
between variable-rate and fixed-rate amounts calculated on a notional principal
amount of $30,000,000.
9
<PAGE>
Pursuant to a joint venture agreement, Steel Technologies has guaranteed
$8,250,000 of the bank financing required for the working capital purposes of
Mi-Tech. In October 1998, Steel Technologies contributed $600,000 in equity to
Mi-Tech for the start-up of a steel processing facility in San Diego,
California. Additional equity contributions to the joint venture are not
expected for the foreseeable future, but if required would be financed with
available funds from the Company's bank line of credit.
During 1998, the Board of Directors approved a plan under which Steel
Technologies may repurchase up to 1,500,000 shares of its common stock. Shares
may be purchased from time to time at prevailing prices in open market
transactions, subject to market conditions, share price and other
considerations. During the second quarter of fiscal 1999, the Company
repurchased 159,000 shares of its common stock at prevailing market prices. As
of March 31, 1999, the Company had repurchased a total of approximately 873,000
shares of common stock at prevailing market prices.
Steel Technologies believes all manufacturing facilities are in compliance with
applicable federal and state environmental regulations. The Company is not
presently aware of any fact or circumstance, which would require the expenditure
of material amounts for environmental compliance.
Year 2000 Compliance
Steel Technologies' Year 2000 project (Project) addresses the issue of using two
digits, rather than four, to define the century. Any programs with a time
sensitive software may recognize a date using "00" as the year 1900 rather than
the year 2000, which could result in miscalculations or systems failures.
The Project focuses primarily in the following areas: infrastructure,
applications, manufacturing, third-party suppliers and customers. Steel
Technologies has contracted Electronic Data Systems (EDS) to manage the Project
and make the necessary remediations.
The Project addresses six phases: inventorying of Year 2000 compliance items;
assessing priorities to identified items; determining the materiality of the
Year 2000 compliance items; repairing or replacing material items not Year 2000
compliant; testing material items; and implementing contingency and business
continuation plans for each Company location.
The infrastructure section consists of hardware and systems software other than
application software. The Company completed all of the testing, remediating,
upgrading or replacing of hardware and systems software as of March 31, 1999.
The application software section includes both the conversion of application
software that is not Year 2000 compliant and, where applicable, the replacement
of software. As of March 31, 1999, all of the application software was tested
and remedied.
The manufacturing section of the Project relates to the hardware, software and
associated embedded computer chips that are used in the operation of all
facilities. The Company estimates that 10 percent of the manufacturing equipment
is dependent on date sensitive software and that all of the manufacturing
equipment is Year 2000 compliant at March 31, 1999.
The third party suppliers and customers section includes the process of
identifying and prioritizing critical suppliers and customers and communicating
with them about their plans and progress in addressing the Year 2000 problem.
Detailed evaluations of the most critical third parties were completed as of
December 31, 1998.
Contingency planning for all areas started in January 1999 is completed as of
March 31, 1999.
The total cost related to becoming Year 2000 compliant is not expected to be
material to the Company's financial position. The acquisition of a mid-range
computer in 1995 minimized the exposure to Year 2000 problems. The estimated
cost of the Year 2000 Project is approximately $200,000 of which approximately
$100,000 was expensed in the first six months of fiscal 1999 and $50,000 was
expensed as of the end of the Company's fiscal year ended September 30, 1998.
The failure to correct a material Year 2000 problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Year 2000 problem, resulting mostly from the
uncertainty of the Year 2000 readiness of third-party suppliers and customers,
the Company is unable to determine at this time whether the consequences of Year
2000 failures will have a material impact on the Company's results of
operations, liquidity or financial condition. The Year 2000 Project is expected
to significantly reduce the Company's level of uncertainty about the Year 2000
problem and, in particular, about the Year 2000 compliance and readiness of its
material external agents. The Company believes that, with the completion of the
Project as scheduled, the possibility of significant interruptions of normal
operations should be reduced.
10
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There has been no material change during the first six months ended March 31,
1999, from the disclosures about market risk provided in the Company's Annual
Report 10-K for the year ended September 30, 1998.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K (a) The following
exhibit is filed as a part of this report:
EXHIBIT 27 -- FINANCIAL DATA SCHEDULE
11
<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 thereunto duly authorized.
STEEL TECHNOLOGIES INC.
(Registrant)
By ________________
Joseph P. Bellino
Chief Financial Officer
(Principal Financial and
Chief Accounting Officer)
Dated May 12, 1999
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated balance sheet at March 31, 1999 and condensed
consolidated statement of income for the six months ended March 31, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000771790
<NAME> STEEL TECHNOLOGIES INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 3,257
<SECURITIES> 0
<RECEIVABLES> 61,324
<ALLOWANCES> (1,038)
<INVENTORY> 73,024
<CURRENT-ASSETS> 139,274
<PP&E> 173,414
<DEPRECIATION> (66,495)
<TOTAL-ASSETS> 276,633
<CURRENT-LIABILITIES> 48,204
<BONDS> 97,345
0
0
<COMMON> 17,018
<OTHER-SE> 116,041
<TOTAL-LIABILITY-AND-EQUITY> 276,633
<SALES> 106,891
<TOTAL-REVENUES> 106,891
<CGS> 92,366
<TOTAL-COSTS> 92,366
<OTHER-EXPENSES> 6,265
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,823
<INCOME-PRETAX> 6,437
<INCOME-TAX> 2,544
<INCOME-CONTINUING> 3,893
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,893
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
