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UNITED STATES
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 December 31, 1994
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
No. 1-9820
BIRMINGHAM STEEL CORPORATION
DELAWARE 13-3213634
(State of Incorporation) (I.R.S. Employer
Identification No.)
1000 Urban Center Parkway, Suite 300
Birmingham, Alabama 35242
(205) 970-1200
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 .
----- -----
Indicate the number of shares outstanding of each
of the issuer's classes of common stock, as of the
latest practicable date: 29,479,002 Shares of Common
Stock, Par Value $.01 Outstanding at February 3, 1995.
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<PAGE>
BIRMINGHAM STEEL CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
ASSETS December 31, 1994 June 30, 1994
(Unaudited) (Audited)
------------------ -----------------
Current Assets:
Cash and cash equivalents $ 18,681 $ 28,916
Accounts receivable, net of
allowance for doubtful accounts
of $1,456 at December 31, 1994;
$1,737 at June 30, 1994 95,872 108,834
Inventories 163,165 132,459
Prepaid expenses 1,209 1,208
Other 3,666 4,385
------- -------
Total current assets 282,593 275,802
Property, plant and equipment
(including property and equip-
ment, net, held for disposition
of $27,278 and $27,590 at
December 31, 1994 and June 30,
1994, respectively):
Land and buildings 113,487 109,490
Machinery and equipment 348,520 328,537
Construction in progress 39,482 35,235
------- -------
501,489 473,262
Less accumulated depreciation (111,192) (98,402)
------- -------
Net property, plant and equipment 390,297 374,860
Excess of cost over net
assets acquired 33,196 32,408
Other assets 9,450 6,808
------- -------
Total assets $ 715,536 $ 689,878
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 37,519 $ 36,438
Accrued operating expenses 4,238 3,857
Accrued payroll expenses 5,726 7,210
Income taxes payable 1,983 3,493
Other accrued liabilities 14,402 11,729
------- -------
Total current liabilities 63,868 62,727
Deferred income taxes 45,067 41,086
Deferred compensation 4,884 4,516
Long-term debt less current portion 142,500 142,500
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $.01,
authorized 5,000,000 shares - -
Common stock, par value $.01,
authorized 75,000,000 shares;
29,458,657 and 29,389,174 shares
issued at December 31, 1994 and
June 30, 1994, respectively 295 294
Additional paid-in capital 328,494 327,285
Unearned compensation (2,677) (2,947)
Retained earnings 133,105 114,417
------- -------
Total stockholders' equity 459,217 439,049
------- -------
Total liabilities and stockholders'
equity $ 715,536 $ 689,878
=========== =========
See accompanying notes
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BIRMINGHAM STEEL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA; UNAUDITED)
Three months ended Six months ended
December 31, December 31,
------------------ ----------------
1994 1993 1994 1993
-------- -------- -------- --------
Net Sales $203,238 $146,802 $423,839 $274,432
Cost of sales:
Other than depreciation
and amortization 163,267 125,398 343,589 235,395
Depreciation and
amortization 7,996 6,299 15,981 11,713
-------- -------- -------- --------
Gross profit 31,975 15,105 64,269 27,324
Provision for loss on
disposition of property,
plant and equipment 599 - 1,325 -
Selling, general and
administrative 9,283 7,103 18,452 13,345
Interest 2,174 2,698 4,530 3,809
-------- -------- -------- --------
19,919 5,304 39,962 10,170
Other income, net 1,134 1,126 1,864 1,814
Income before income taxes
and cumulative effect of
a change in the method
of accounting for income
taxes 21,053 6,430 41,826 11,984
Provision for income taxes 8,684 2,666 17,252 4,914
------- -------- -------- --------
Income before cumulative
effect of a change in
accounting principle 12,369 3,764 24,574 7,070
Cumulative effect, as of
June 30, 1993, of a
change in the method of
accounting for income
taxes (See Note 5) - - - 380
-------- -------- -------- --------
Net Income $ 12,369 $ 3,764 $ 24,574 $ 7,450
======== ======== ======== ========
Weighted average shares
outstanding 29,450 22,296 29,427 21,853
======== ======== ======== ========
Earnings per share:
Income before cumulative
effect of a change in
accounting principle $ 0.42 $ 0.17 $ 0.84 $ 0.32
Cumulative effect of a
change in the method of
accounting for income
taxes - - - 0.02
-------- -------- -------- --------
Net Income $ 0.42 $ 0.17 $ 0.84 $ 0.34
======== ======== ======== ========
Dividends declared per
share $ 0.10 $ 0.10 $ 0.20 $ 0.20
======== ======== ======== ========
See accompanying notes.
BIRMINGHAM STEEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
**MARGINS
Six months ended
December 31,
-----------------------
1994 1993
(unaudited) (unaudited)
----------- -----------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Income $ 24,574 $ 7,450
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Cumulative effect of
a change in account-
ing principle - (380)
Depreciation and
amortization 15,981 11,713
Provision for doubtful
accounts receivable 622 165
Deferred income taxes 3,707 (132)
Provision for loss on
disposition of
property, plant and
equipment 1,325 -
Other 1,467 1,223
Changes in operating assets
and liabilities, net
of effects from business
acquisitions:
Accounts receivable 16,882 1,520
Inventories (24,573) (14,465)
Prepaid expenses 67 142
Other current assets 719 320
Accounts payable (1,607) 3,155
Other accrued liabilities (899) (247)
Deferred compensation 368 220
--------- ---------
Net cash provided by
operating activities 38,633 10,684
CASH FLOWS FROM INVESTING
ACTIVITIES:
Additions to property,
plant and equipment (31,354) (18,724)
Payments for business
acquisitions (10,652) (5,699)
Proceeds from disposal
of property, plant
and equipment 5 -
Additions to other
non-current assets (1,416) (2,061)
Reductions in other
non-current assets 255 32
--------- ---------
Net cash used for
investing activities (43,162) (26,452)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net short-term borrowings
and repayments - (29,025)
Proceeds from issuance of
long-term debt - 130,000
Payments of long-term
debt - (80,716)
Proceeds from issuance
of common stock 180 50
Issuance of stock from
treasury - 427
Purchase of treasury
stock - (348)
Cash dividends paid (5,886) (4,286)
--------- ---------
Net cash (used in)
provided by
financing
activities (5,706) 16,102
--------- ---------
Net (decrease) increase
in cash and cash
equivalents (10,235) 334
Cash and cash equivalents
at:
Beginning of period 28,916 270
--------- ---------
End of period 18,681 604
========= =========
Supplemental cash flow
disclosures:
Cash paid during the
period for:
Interest (net of
amounts
capitalized) 4,414 5,329
Income Taxes 15,056 4,168
See accompanying notes
BIRMINGHAM STEEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
1. Significant Accounting Policies
Presentation
The accompanying unaudited quarterly financial
information reflects all normal and recurring
adjustments which are, in the opinion of the management
of Birmingham Steel Corporation (the Company), necessary
for a fair statement of the results for the interim
periods presented.
Income taxes
Deferred income taxes are provided for temporary
differences between taxable income and financial
reporting income. The Company adopted the liability
method of accounting for income taxes prescribed in FASB
Statement No. 109 as of July 1, 1993 and reported a
benefit of $380,000 ($.02 per share) in the first
quarter of fiscal 1994 to reflect the cumulative effect
of adoption. See Note 5 - Income Taxes.
Earnings per share
Earnings per share are computed using the weighted
average number of outstanding common shares and dilutive
equivalents (if any).
2. Business Acquisitions
On December 31, 1994, the Company acquired Port
Everglades Steel Corporation (PESCO), a steel
distribution company headquartered in Fort Lauderdale,
Florida for a total cash purchase price of $11,282,000.
The acquisition has been accounted for as a purchase.
The purchase price has been preliminary allocated,
pending final cash settlement after audit, to the assets
and liabilities of PESCO based upon their estimated fair
values, as follows (in thousands):
Current assets $10,743
Property, plant and equipment 218
Other non-current assets 1,802
Excess of costs over net assets
acquired 1,635
-------
Total assets acquired 14,398
Fair value of liabilities assumed 3,116
-------
Total purchase price $11,282
=======
Proforma results for prior year and current year
would not be materially different from the amounts
reported in the Company's consolidated income statements
if the acquisition had occurred as of the beginning of
either period.
The results of operations for the six months ended
December 31, 1994 include the operations of the
Company's American Steel & Wire subsidiary, which was
acquired on November 23, 1993. Assuming the acquisition
had occurred at the beginning of fiscal 1993, proforma
net sales for the six months ended December 31, 1993
would have been $381,899,000. Proforma net income and
earnings per share would have been $9,022,000 and $.38,
respectively.
3. Inventories
Inventories were valued as summarized in the
following table (in thousands):
December 31 June 30
1994 1994
----------- ---------
(unaudited) (audited)
At lower of cost (first-in,
first-out) or market:
Raw materials and mill
supplies $ 58,385 $ 51,233
Work-in-progress 43,863 37,298
Finished goods 61,316 44,327
-------- --------
163,564 132,858
Allowance to adjust bolt
inventories to cost on
last-in, first-out method
(approximately 9% and 8%
of total inventory at
December 31, 1994 and
June 30, 1994, respectively) ( 399) ( 399)
-------- --------
$163,165 $132,459
4. Short-Term Borrowing Arrangements
Under line of credit arrangements for short-term
borrowings with four banks, the Company may borrow up to
$170,000,000 with interest at market rates mutually
agreed upon by the Company and the banks. One of these
lines of credit supports an $80,000,000 bankers'
acceptance and commercial paper program. The full line
of credit was available under these facilities at
December 31, 1994.
5. Income Taxes
Effective July 1, 1993, the Company adopted FASB
Statement No. 109, "Accounting for Income Taxes." Under
Statement 109, the liability method is used in
accounting for income taxes. Under this method,
deferred tax assets and liabilities are measured using
the enacted tax rates and laws that will be in effect
when the differences are expected to reverse. The
cumulative effect of the change increased net income for
the six months ended December 31, 1993 by $380,000 or
$0.02 per share.
6. Contingencies
Environmental
The Company is subject to federal, state and local
environmental laws and regulations concerning, among
other matters, waste water effluents, air emissions and
furnace dust disposal.
The Company has been advised by the Virginia
Department of Waste Management of certain conditions
involving the disposal of hazardous materials at the
Company's Norfolk, Virginia property which existed prior
to the Company's acquisition of the facility. The
Company has also been notified by the department of
Toxic Substances Control of the Environmental Protection
Agency of the State of California of certain
environmental conditions regarding its property in
Emeryville, California. The Company is performing
environmental assessments of these sites and developing
work plans for remediation of the properties for
approval of the applicable regulatory agencies.
As part of its ongoing environmental compliance and
monitoring programs, the Company is voluntarily
developing work plans for environmental conditions
involving certain of its operating facilities and other
properties which are held for sale. Based upon the
Company's study of the known conditions and its prior
experience in investigating and correcting environmental
conditions, the Company estimates that the potential
costs of these site restoration and remediation efforts
may range from $3,972,000 to $5,767,000. Approximately
$1,735,000 of these costs is recorded in accrued
liabilities at December 31, 1994. The remaining costs
principally consist of site restoration and
environmental exit costs to ready the idle facilities
for sale, and have been considered in determining
whether the carrying amounts of the properties exceed
their net realizable values. These expenditures are
expected to be made in the next two to three years, if
the necessary regulatory agency approvals of the
Company's work plans are obtained. Though the Company
believes it has adequately provided for the cost of all
known environmental conditions, the applicable
regulatory agencies could insist upon different and more
costly remediative measures than those the Company
believes are adequate or required by existing law.
Otherwise, the Company believes that it is currently in
compliance with all known material and applicable
environmental regulations.
Legal Proceedings
The Company is involved in litigation relating to
claims arising out of its operations in the normal
course of business. Such claims are generally covered
by various forms of insurance. In the opinion of
management, any uninsured or unindemnified liability
resulting from existing litigation would not have a
material effect on the Company's business, its financial
position, liquidity or results of operations.
7. Sale of Idle Facilities
During the quarter, the Company entered into an
agreement to sell its idle facility in Ballard,
Washington. The Company also entered into a memorandum
of understanding with the Port of Seattle to exchange
the idle Kent, Washington facility and approximately
22.5 acres of property adjacent to the Seattle,
Washington steel-making facility for the Port's Terminal
105 and other property adjacent to the steel-making
facility.
8. Subsequent Events
On December 21, 1994, the Company announced that it
had signed a letter of intent to sell its mine roof bolt
business unit to Excel Mining Systems, Inc., a mine roof
bolt manufacturer headquartered in Cadiz, Ohio. The
transaction is subject to various terms and conditions,
including the signing of a definitive agreement. The
Company does not expect to recognize any significant
gain or loss on the sale and the sale is not expected to
have a material impact on earnings in fiscal 1995.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For the second quarter of fiscal 1995, the Company
reported record earnings of $12,369,000, an increase of
229 percent compared with $3,764,000 in the second
period of fiscal 1994. Earnings per share for the
quarter were $.42, up from $.17 reported last year.
Second quarter steel shipments of 541,000 tons increased
13 percent compared with 478,000 tons shipped a year
ago. Net sales for the second quarter increased 38
percent to $203,238,000, compared with $146,802,000 last
year.
For the six months ended December 31, 1994 the Company
also reported a six-month earnings record of
$24,574,000, compared with $7,450,000 last year.
Earnings per share for the period were $.84, up from
$.32 reported last year. Steel shipments increased 25
percent to 1,161,000 tons, compared with 926,000 tons
last year. Net sales increased 54 percent to
$423,839,000, compared with $274,432,000 in the same
period a year ago. Results for the prior year second
quarter and six month period include only one month
sales and earnings from the Company's American Steel &
Wire subsidiary ("ASW").
Net Sales
Second quarter net sales rose substantially over the
prior year with the full quarter inclusion of ASW's net
sales and a continued rise in market prices for the
Company's rebar and merchant products. Second quarter
average rebar/merchant selling prices rose to $312 per
ton, compared with $295 in the immediately preceding
quarter and $269 in the second quarter last year. Steel
demand remained strong through the second quarter,
though overall steel shipment levels declined slightly
from the first quarter level due to the typical winter
slowdown in construction activity. The Company has
announced additional rebar/merchant selling price
increases which will be implemented during the third
quarter.
Second quarter shipments of the Company's rod & wire
products (ASW) increased 9 percent from the prior year
(full quarter) to 149,000 tons, though average selling
prices declined $5 per ton during the same period due to
a shift in product mix. ASW implemented price increases
for certain products January 1, though these increases
will impact only modest tonnage due to contract pricing
on the majority of shipments. Continued strength in
demand for rod & wire products is expected through the
remainder of fiscal 1995.
Sales of the Company's mine roof support products
increased modestly during the quarter from the prior
year level primarily due to increased selling prices.
During December, the Company announced its intention to
sell the assets of its mine roof bolt business to Excel
Mining Systems, Inc. (see "Other Comments"). The
Company's overall sales volume is not expected to
decline as a result of this sale, as the Company will be
the primary steel supplier to the sold facilities.
Cost of Sales
As a percentage of net sales, cost of sales (other than
depreciation and amortization) declined to 80.3%
compared with 85.4% in the second quarter last year.
This substantial improvement resulted primarily from the
increases in rebar/merchant steel selling prices
mentioned above, a 3 percent improvement in steel
conversion costs at the Company's mini-mills and
productivity increases at ASW. Prior year cost of sales
also included a $1.7 million charge associated with the
acquisition of ASW.
For the six months ended December 31, 1994, cost of
sales declined to 81.1% compared with 85.8% in the
second quarter last year primarily due to the reasons
stated above.
The Company's second quarter scrap raw material cost of
$137 per ton rose $14 from the first quarter level and
$12 above the prior year. Scrap market prices have
steadily risen through fiscal 1995; however, some
regional scrap markets indicate that pricing may level
or decline slightly during the latter part of the third
quarter. As in the first quarter, scrap costs were
higher than the prior year, yet operating margins
continued to increase as the result of the steady rise
in rebar/merchant selling prices.
In the second quarter, steel conversion cost at the
Company's mini-mills improved 3 percent compared with
last year. Operating efficiencies were enhanced during
the quarter as raw steel and finished goods production
levels increased 5 percent and 13 percent, respectively
over the prior year. Operations at Seattle's new
rolling mill continued to improve during the second
quarter, as finished goods production rose 25 percent
from the prior year level.
Raw material billet cost at ASW was $321 per ton in the
second quarter, essentially unchanged from $322 last
year. Upward pressure on billet pricing has emerged
recently, as high quality billet producers seek to
increase margins on sales of both finished and semi-
finished products. Billet cost at ASW is expected to
rise modestly during the third quarter. The Company
continues to focus on the construction of a state-of-
the-art melt shop for ASW that would manufacture a
substantial portion of the high quality billets required
by ASW. The Company recently signed a technical
assistance agreement with Sumitomo Metal Industries for
design and engineering assistance in the development of
this proposed facility. Finalized design criteria is
expected to be completed in June 1995.
At ASW, record productivity gains were achieved during
the second quarter, as production tons-per-hour
increased 4 percent at the Joliet facility and 15
percent at the Cuyahoga plant from the prior year
levels. These productivity gains were primarily
attributed to the introduction of the Company's
incentive wage system subsequent to the November 1993
acquisition.
Depreciation and amortization expense increased to
$7,996,000 from $6,299,000 in the second quarter of
fiscal 1994, primarily due to the acquisition of ASW and
the recognition of depreciation on fixed asset additions
during fiscal 1994 and the first half of fiscal 1995.
For the six months ended December 31, 1994, depreciation
and amortization expense increased to $15,981,000 from
$11,713,000 in the same period of fiscal 1994, primarily
due to the reasons stated above.
Selling, General and Administrative Expenses ("SG&A")
SG&A increased to $9,283,000 from $7,103,000 reported in
the second quarter last year primarily due to the full
quarter inclusion of ASW's SG&A expenses which were
present for only one month in the prior year. As a
percent of net sales, second quarter SG&A were 4.6
percent, compared with 4.8 percent last year.
For the six months ended December 31, 1994, SG&A
increased to $18,452,000 from $13,345,000 reported in
the same period last year also due to the inclusion of
ASW's SG&A expenses as noted above. As a percent of net
sales, year-to-date SG&A were 4.4 percent, compared with
4.9 percent last year.
Interest Expense
Interest expense declined modestly in the second quarter
of fiscal 1995 to $2,174,000, compared with $2,698,000
reported last year, primarily due to a 38 percent
reduction in the average quarterly debt level since last
year, partially offset by higher average interest rates.
During the second quarter, the Company capitalized
approximately $476,000 in interest related to
construction projects, compared with approximately
$355,000 in the same period last year.
For the six months ended December 31, 1994, interest
expense increased to $4,530,000, compared with
$3,809,000 in the prior year essentially due to an
increased amount of capitalized interest during the
previous year first quarter, as compared with the fiscal
1995 first quarter. The Company capitalized
approximately $296,000 in interest related to assets
under construction in the current year first quarter,
compared with approximately $1,473,000 in the first
quarter last year.
Income Taxes
Effective income tax rates for the first quarters of
fiscal 1995 and fiscal 1994 were 41.2% and 41.5%,
respectively.
For the six months ended December 31, 1994 and 1993, the
effective income tax rates were 41.2% and 41.0%,
respectively.
During the first quarter of fiscal 1994, the Company
recorded an increase to net income of $380,000, or $.02
per share, related to the cumulative effect of the
adoption of SFAS No.109 "Accounting for Income Taxes."
Liquidity and Capital Resources
Operating Activities:
For the first six months of fiscal 1995, cash provided
by operating activities rose to $38.6 million, compared
with $10.7 million reported last year. The substantial
rise in cash flow was essentially due to a significant
increase in net income combined with a decline in
accounts receivable, partially offset by an increase in
operating inventory levels. The decline in accounts
receivable primarily resulted from a seasonal (winter)
decline in sales volume. Inventory levels rose during
the period as the result of Company efforts to restore
finished goods inventories to a more desirable level and
the planned increase to the Seattle facility's billet
inventory in anticipation of the installation of a new
melt shop furnace scheduled for July 1995.
Investing Activities:
Net cash used in investing activities was $43.2 million,
compared with $26.5 million last year. Fiscal 1995
year-to-date capital expenditures increased to $31
million, compared with $19 million last year, as the
Company financed several ongoing projects including the
initial funding of ASW's new $110 million bar & rod mill
project. This state-of-the-art facility, which is
expected to begin production in March 1996, will
effectively double ASW's productive and shipment
capacity to approximately 1.1 million tons of high
quality steel products.
During the second quarter, the Company also acquired
Port Everglades Steel Corporation ("PESCO"), a rebar
distributor located in Ft. Lauderdale, Florida for
approximately $11.3 million. PESCO will continue to
market the Company's products to steel fabricators.
Funding for the above mentioned projects is expected to
be derived from available cash reserves, net cash flow
and/or negotiated short-term or long-term financing
arrangements.
Financing Activities:
Net cash used in financing activities was $5.7 million
in the first quarter, compared with cash flow provided
by financing activities of $16.1 million last year.
During the first six months of fiscal 1995, the Company
paid cash dividends of approximately $5.9 million.
During the second quarter last year, the Company
completed a $130 million private debt placement which
was used to fund the cash and debt refinance portions of
the ASW acquisition and to pay down the Company's
existing short-term debt.
Working Capital:
Working capital at the end of the second quarter
increased to $218.7 million, compared with $213.1
million at the end of fiscal 1994. The increase in
working capital was essentially due to the substantial
increase in inventory, partially offset by the decline
in accounts receivable as mentioned above.
Outlook:
From a long-term perspective, the Company's broad access
to capital markets and internal cash flows are expected
to provide the capital resources necessary to support
increased operating needs and to finance continued
growth.
Other Comments
During the second quarter, the Company entered into an
agreement to sell its idled facility in Ballard,
Washington. The Company also entered into a memorandum
of understanding with the Port of Seattle to exchange
its idled Kent, Washington facility and approximately
22.5 acres of property adjacent to the Company's
Seattle, Washington mini-mill for the Port's Terminal
105 and other property adjacent to the mini-mill. No
loss is expected to occur as the result of either of
these transactions.
On December 21, 1994, the Company announced that it had
signed a letter of intent to sell its mine roof bolt
business to Excel Mining Systems, Inc., a mine roof bolt
manufacturer located in Cadiz, Ohio. The transaction is
subject to various terms and conditions, including the
signing of a definitive agreement. The transaction is
expected to be completed in the third quarter.
On January 24, 1995, the Company announced the Company's
Board of Directors had authorized the repurchase of up
to 2,950,000 shares, or approximately 10%, of the
Company's outstanding stock. The purchases may be made
in the open market from time to time over the next three
years.
Also on January 24, 1995, the Company declared a regular
quarterly cash dividend of $.10 (ten cents) per share
which will be paid February 14, 1995 to shareholders of
record on February 3, 1995.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in litigation relating to claims
arising out of its operations in the normal course of
business. Such claims against the Company are generally
covered by insurance. It is the opinion of management
that any uninsured or unindemnified liability resulting
from existing litigation would not have a material
adverse effect on the Company's business or financial
position. There can be no assurance that insurance,
including product liability insurance, will be
available in the future at reasonable rates.
By letter dated October 20, 1992, the Department of
Toxic Substances Control of the Environmental Protection
Agency of the State of California ("DTSC") submitted to
Barbary Coast Steel Corporation ("BCSC"), a wholly owned
subsidiary of the Company, for its review and comment a
proposed Consent Order relating to BCSC's closed steel
facility at Emeryville, California. BCSC and DTSC
executed the terms of a Consent Order on March 22, 1993
and, pursuant to that Consent Order, BCSC is performing
an environmental assessment of the site and developing
a work plan for remediation of the property. The
Company believes that, in connection with the January
1991 closure of the Emeryville mill, it made adequate
provisions in its financial statements for the cost of
remediating the site. However, DTSC could insist upon
different and possibly more costly remediative measures
than those believed by the Company to be adequate and in
accordance with existing law.
On March 26, 1993, an action entitled IMACC Corporation
v. Warburton, et al. was filed in U.S. District Court
for the Northern District of California, Case No. C93-
1114-VRW. This action was brought by IMACC Corporation
("IMACC"), the parent of Myers Container Corporation,
the lessee of property immediately adjacent to the BCSC
property in Emeryville, California. IMACC has sued
BCSC, Judson Steel Corporation (from whom BCSC purchased
the property) and several of the individual owners of
the property leased by IMACC, under the Comprehensive
Environmental Response, Compensation and Liability Act
of 1980 ("CERCLA"), 42 U.S.C. SS9601-9675 and various
state law causes of action, alleging that the defendants
contributed to environmental contamination on the IMACC
property. IMACC has formally notified BCSC and the
other defendants of its intent to add a citizens' suit
claim under RCRA, 42 U.S.C. SS6972 to the complaint.
BCSC has interposed numerous affirmative defenses to
IMACC's claims, and additionally has counterclaimed
against IMACC alleging that IMACC has contaminated the
BCSC property, and cross-claimed against Judson Steel
Corporation and its corporate parent, alleging that they
must indemnify BCSC for any monies due to IMACC. Other
parties in the case have brought additional
counterclaims and cross-claims against each other, BCSC,
and third parties, including Kaiser Steel Resources.
The parties have exchanged numerous documents and lists
of potential witnesses pursuant to the District Court's
Case Management Program.
IMACC has alleged current and prospective damages,
including attorneys fees, of between $1,000,000 and
$11,000,000. Recently, BCSC and several co-defendants
successfully moved for dismissal of IMACC's RCRA claims,
effectively eliminating liability for IMACC's attorneys
fees. The Company believes that there is little, if
any, factual basis for IMACC's claims; the Company
further believes that most, if not all, of any liability
imposed upon it may be recovered from other parties to
the litigation through its claims of indemnity.
Item 4. Submission of Matters to a Vote of Security
Holders
The Annual Meeting of Shareholders of the Company was
held on October 18, 1994, at which the following matters
were brought before and voted upon by the shareholders
1. The election of the following to the Board of
Directors, each to serve until the next Annual
Meeting of Stockholders:
Director For Withhold
James A. Todd, Jr. 23,167,279 25,640
E. Mandell de Windt 23,166,100 26,819
C. Stephen Clegg 23,160,664 32,255
George A. Stinson 23,166,100 26,819
John M. Harbert III 23,169,560 23,359
Thomas N. Tyrrell 23,175,465 17,454
E. Bradley Jones 23,175,531 17,388
Harry Holiday, Jr. 23,174,681 18,238
Reginald H. Jones 23,173,002 19,917
Paul H. Ekberg 23,176,141 16,778
William J. Cabaniss, Jr. 23,175,606 17,313
T. Evans Wyckoff 23,174,406 18,513
2. Proposal to ratify the selection of Ernst & Young,
LLP as the independent auditors for the fiscal year
ended June 30, 1994.
Voted for: 23,162,299
Voted against: 3,026
Abstained: 27,594
Item 6. Exhibits and Reports on Form 8-K
No exhibits are required to be filed with this report.
No reports on Form 8-K are required to be filed with
this report.
<PAGE>
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.
Birmingham Steel
Corporation
February 14, 1994 James A. Todd, Jr.
-------------------
James A. Todd, Jr.
Chairman, Chief
Executive Officer
February 14, 1994 John M. Casey
--------------------
John M. Casey
Vice President,
Chief Financial
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the December
31, 1994 Consolidated Balance Sheets and Consolidated Statements of Income of
Birmingham Steel Corporation and is qualified in its entirety by reference to
such.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-31-1994
<CASH> 18681
<SECURITIES> 0
<RECEIVABLES> 95872
<ALLOWANCES> 1456
<INVENTORY> 163165
<CURRENT-ASSETS> 282593
<PP&E> 501489
<DEPRECIATION> 111192
<TOTAL-ASSETS> 715536
<CURRENT-LIABILITIES> 63868
<BONDS> 142500
<COMMON> 295
0
0
<OTHER-SE> 458922
<TOTAL-LIABILITY-AND-EQUITY> 715536
<SALES> 423839
<TOTAL-REVENUES> 423839
<CGS> 359570
<TOTAL-COSTS> 359570
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1325
<INTEREST-EXPENSE> 4530
<INCOME-PRETAX> 41826
<INCOME-TAX> 17252
<INCOME-CONTINUING> 24574
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24574
<EPS-PRIMARY> .84
<EPS-DILUTED> .84
</TABLE>
