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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 March 31, 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
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: 28,532,452 Shares of Common
Stock, Par Value $.01 Outstanding at May 2, 1995.
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<PAGE>
BIRMINGHAM STEEL CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
ASSETS March 31, 1995 June 30, 1994
(Unaudited) (Audited)
------------------ -----------------
Current Assets:
Cash and cash equivalents $ 6,268 $ 28,916
Accounts receivable, net of
allowance for doubtful accounts
of $1,844 at March 31, 1995;
$1,737 at June 30, 1994 118,755 108,834
Inventories 160,119 132,459
Prepaid expenses 3,739 1,208
Other 4,406 4,385
------- -------
Total current assets 293,287 275,802
Property, plant and equipment
(including property and equip-
ment, net, held for disposition
of $27,267 and $27,590 at
March 31, 1995 and June 30,
1994, respectively):
Land and buildings 111,808 109,490
Machinery and equipment 334,728 328,537
Construction in progress 47,221 35,235
------- -------
493,757 473,262
Less accumulated depreciation (104,017) (98,402)
------- -------
Net property, plant and equipment 389,740 374,860
Excess of cost over net
assets acquired 32,872 32,408
Other assets 11,448 6,808
------- -------
Total assets $ 727,347 $ 689,878
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 52,991 $ 36,438
Accrued operating expenses 3,821 3,857
Accrued payroll expenses 6,463 7,210
Income taxes payable 3,058 3,493
Other accrued liabilities 13,989 11,729
------- -------
Total current liabilities 80,322 62,727
Deferred income taxes 47,130 41,086
Deferred compensation 5,098 4,516
Long-term debt less current portion 142,500 142,500
Commitments and contingencies
(Note 6)
Stockholders' equity:
Preferred stock, par value $.01;
authorized 5,000,000 shares - -
Common stock, par value $.01;
authorized 75,000,000 shares;
28,608,112 and 29,389,174 shares
issued at March 31, 1995 and
June 30, 1994, respectively 295 294
Additional paid-in capital 328,945 327,285
Treasury stock, 881,300 shares
at March 31, 1995 (17,608) -
Unearned compensation (2,757) (2,947)
Retained earnings 143,422 114,417
------- -------
Total stockholders' equity 452,297 439,049
------- -------
Total liabilities and stockholders'
equity $ 727,347 $ 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 Nine months ended
March 31, March 31,
------------------ ----------------
1995 1994 1995 1994
-------- -------- -------- --------
Net Sales $236,900 $204,192 $660,739 $478,624
Cost of sales:
Other than depreciation
and amortization 194,186 175,113 537,775 410,508
Depreciation and
amortization 8,205 7,878 24,186 19,591
-------- -------- -------- --------
Gross profit 34,509 21,201 98,778 48,525
Provision for loss on
disposition of property,
plant and equipment - - 1,325 -
Selling, general and
administrative 10,857 9,652 29,309 22,997
Interest 2,342 4,089 6,872 7,898
-------- -------- -------- --------
21,310 7,460 61,272 17,630
Other income, net 1,270 1,336 3,134 3,150
Income before income taxes
and cumulative effect of
a change in the method
of accounting for income
taxes 22,580 8,796 64,406 20,780
Provision for income taxes 9,316 3,678 26,568 8,592
------- -------- -------- --------
Income before cumulative
effect of a change in
accounting principle 13,264 5,118 37,838 12,188
Cumulative effect, as of
June 30, 1993, of a
change in the method of
accounting for income
taxes (See Note 1) - - - 380
-------- -------- -------- --------
Net Income $ 13,264 $ 5,118 $ 37,838 $ 12,568
======== ======== ======== ========
Weighted average shares
outstanding 29,283 25,399 29,380 23,018
======== ======== ======== ========
Earnings per share:
Income before cumulative
effect of a change in
accounting principle $ 0.45 $ 0.20 $ 1.29 $ 0.53
Cumulative effect of a
change in the method of
accounting for income
taxes - - - 0.02
-------- -------- -------- --------
Net Income $ 0.45 $ 0.20 $ 1.29 $ 0.55
======== ======== ======== ========
Dividends declared per
share $ 0.10 $ 0.10 $ 0.30 $ 0.30
======== ======== ======== ========
See accompanying notes.
BIRMINGHAM STEEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Nine months ended
March 31,
-----------------------
1995 1994
(unaudited) (unaudited)
----------- -----------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Income $ 37,838 $ 12,568
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 24,186 19,591
Provision for doubtful
accounts receivable 1,023 445
Deferred income taxes 5,770 1,971
Provision for loss on
disposition of
property, plant and
equipment 1,325 -
Other 1,929 1,743
Changes in operating assets
and liabilities, net
of effects from business
acquisitions and
dispositions:
Accounts receivable (3,955) (15,369)
Inventories (34,874) (21,178)
Prepaid expenses (2,538) 1,476
Other current assets (1) (3,003)
Accounts payable 15,116 7,088
Other accrued liabilities 2,046 5,328
Deferred compensation 582 497
-------- ---------
Net cash provided by
operating activities 48,447 10,777
CASH FLOWS FROM INVESTING
ACTIVITIES:
Additions to property,
plant and equipment (47,589) (27,414)
Payments for business
acquisitions (11,374) (5,699)
Net proceeds from sale
of mine roof business
unit 15,802
Proceeds from disposal
of property, plant
and equipment 90 -
Additions to other
non-current assets (2,056) (4,850)
Reductions in other
non-current assets 260 791
--------- ---------
Net cash used for
investing activities (45,867) (37,172)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net short-term borrowings
and repayments - (73,332)
Proceeds from issuance of
long-term debt - 130,000
Payments of long-term
debt - (80,716)
Proceeds from issuance
of common stock 214 154,406
Issuance of stock from
treasury - 942
Purchase of treasury
stock (17,608) (348)
Cash dividends paid (8,834) (6,633)
--------- ---------
Net cash (used in)
provided by
financing
activities (26,228) 124,319
--------- ---------
Net (decrease) increase
in cash and cash
equivalents (22,648) 97,924
Cash and cash equivalents
at:
Beginning of period 28,916 270
-------- ---------
End of period 6,268 98,194
======== =========
Supplemental cash flow
disclosures:
Cash paid during the
period for:
Interest (net of
amounts
capitalized) 4,321 5,329
Income taxes 21,874 4,168
See accompanying notes
BIRMINGHAM STEEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995 AND 1994
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.
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 $11,374,000.
The acquisition has been accounted for as a purchase.
The purchase price has been allocated to the assets and
liabilities of PESCO based upon their estimated fair
values, as follows (in thousands):
Current assets $10,712
Property, plant and equipment 225
Other non-current assets 1,797
Excess of costs over net assets
acquired 1,674
-------
Total assets acquired 14,408
Fair value of liabilities assumed 3,034
-------
Total purchase price $11,374
=======
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 nine months ended
March 31, 1995 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 nine months ended March 31, 1994 would
have been $586,091,000. Proforma net income and
earnings per share would have been $14,140,000 and $.58,
respectively.
3. Business Disposition
On March 12, 1995, the Company sold its mine roof
bolt business unit to Excel Mining Systems, Inc., a mine
roof bolt manufacturer headquartered in Cadiz, Ohio.
The purchase price is subject to adjustment based on the
results of an audit of inventories at the date of sale.
The Company expects to realize gain of at least $3
million on the sale. For accounting purposes, the
Company has deferred the estimated gain on sale until
the purchase price is finalized and the proceeds of a
$9.5 million note receivable from the Purchaser are
collected. In connection with the sale, the Company
entered into a five year supply agreement to provide
Excel the majority of its steel requirements. Because
of the expectation of continued steel shipments to
Excel, the Company does not believe that the sale of its
mine roof bolt business will have a material effect on
its continuing operations.
4. Inventories
Inventories were valued as summarized in the
following table (in thousands):
March 31 June 30
1995 1994
----------- ---------
(unaudited) (audited)
At lower of cost (first-in,
first-out) or market:
Raw materials and mill
supplies $ 47,241 $ 51,233
Work-in-progress 49,912 37,298
Finished goods 62,966 44,327
-------- --------
160,119 132,858
Allowance to adjust bolt
inventories to cost on
last-in, first-out method
(approximately 8% of
total inventory at
June 30, 1994) 0 ( 399)
-------- --------
$160,119 $132,459
======== ========
5. Short-Term Borrowing Arrangements
Under line of credit arrangements for short-term
borrowings with four banks, the Company may borrow up to
$185,000,000 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 March
31, 1995.
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 by 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
$1,829,000 of these costs is recorded in accrued
liabilities at March 31, 1995. 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
In the second 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.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the third quarter of fiscal 1995, the Company
reported record earnings of $13,264,000, an increase of
159 percent compared with $5,118,000 in the third period
of fiscal 1994. Earnings per share for the quarter were
$.45, up from $.20 reported last year. Third quarter
steel shipments of 595,000 tons increased 4 percent
compared with 572,000 tons shipped a year ago. Net
sales for the third quarter increased 16 percent to
$236,900,000, compared with $204,192,000 last year.
For the nine months ended March 31, 1995 the Company
reported earnings of $37,838,000, compared with
$12,568,000 last year. Earnings per share for the
period were $1.29, up from $.55 reported last year.
Steel shipments increased 17 percent to 1,755,000 tons,
compared with 1,498,000 tons last year. Net sales
increased 38 percent to $660,739,000, compared with
$478,624,000 in the same period a year ago. Results for
the prior year nine month period included only four
months of sales and earnings from the Company's American
Steel & Wire subsidiary ("ASW").
Net Sales
Compared with the prior year, the rise in third
quarter net sales reflected a significant increase in
average steel selling prices, coupled with a rise in
steel shipment levels. Third quarter average
rebar/merchant selling prices rose to $324 per ton,
compared with $312 in the immediately preceding quarter
and $282 in the third quarter last year. Demand for
rebar/merchant products remained steady through the
third quarter, with the expectation of strong demand in
the seasonally stronger fourth quarter.
Third quarter shipments of the Company's rod & wire
products (ASW) increased 25 percent from the prior year
to 182,000 tons, while average selling prices rose $6
per ton during the same period. In March, ASW recorded
its highest monthly shipment total at 67,000 tons. ASW
is currently negotiating model year pricing contracts
with its automotive related customer base and expects to
realize pricing gains to reflect current market
conditions. Continued strength in demand for rod & wire
products is expected through the remainder of fiscal
1995 and into fiscal 1996.
In mid-March, the Company completed the sale of its
Mine Roof Support Business to Excel Mining Systems, Inc.
headquartered in Cadiz, Ohio. 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 Excel.
Cost of Sales
As a percentage of net sales, cost of sales (other
than depreciation and amortization) declined to 82.0% in
the third quarter of fiscal 1995, compared with 85.8% in
the third quarter last year. This substantial
improvement resulted primarily from the increases in
overall steel selling prices mentioned above and
productivity increases at ASW.
For the nine months ended March 31, 1995, cost of
sales declined to 81.4% compared with 85.8% in the same
period last year primarily due to the reasons stated
above.
The Company's third quarter scrap raw material cost
of $142 per ton rose $5 from the second quarter level
and $7 above the prior year. Scrap market prices have
indicated a rising trend heading into the late spring.
In the third quarter, steel conversion cost at the
Company's mini-mills increased approximately $4 per ton
compared with last year primarily due to a temporary
equipment outage at the Birmingham mill and scheduled
maintenance at the Seattle melt shop. During March, the
Birmingham facility suffered a transformer failure which
disrupted melt shop production for 13 days, though
normal operations were restored upon installation of a
backup unit. Operations at the Kankakee mill improved
significantly during the quarter, as increased
production tonnage and efficient operations led to a $5
per ton decline in conversion cost compared with the
prior year.
Raw material billet cost at ASW was $327 per ton in
the third quarter, an increase of approximately 1
percent from 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 fourth 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 has signed a
technical assistance agreement with Sumitomo Metal
Industries for design and engineering assistance in the
development of this proposed facility. Design criteria
are expected to be completed in June 1995.
For the third quarter, steel conversion cost at ASW
fell approximately 9 percent compared with last year, as
significant productivity gains led to a 15 percent
increase in finished goods production. Overall
production tons-per-hour at ASW in the third quarter
improved 12 percent from the prior year level. This
productivity gain was primarily attributable to the
introduction of the Company's incentive wage system
subsequent to the November 1993 acquisition. Conversion
cost at ASW may rise modestly in the fourth quarter due
to an April equipment outage at Cuyahoga which resulted
in 7 days of lost production.
Depreciation and amortization expense increased to
$8,205,000 from $7,878,000 in the third quarter of
fiscal 1994, primarily due to the recognition of
depreciation on fixed asset additions during fiscal 1994
and fiscal 1995.
For the nine months ended March 31, 1995,
depreciation and amortization expense increased to
$24,186,000 from $19,591,000 in the same period of
fiscal 1994, primarily due to the reason stated above
and the November 1993 acquisition of ASW.
Selling, General and Administrative Expenses ("SG&A")
Third quarter SG&A increased to $10,857,000 from
$9,652,000 reported in the same period last year
primarily due to general expense increases. As a
percent of net sales, third quarter SG&A were 4.6
percent, compared with 4.7 percent last year.
For the nine months ended March 31, 1995, SG&A
increased to $29,309,000 from $22,997,000 reported in
the same period last year primarily due to the full nine
month inclusion of ASW's SG&A expenses which were only
present for 4 months last year. As a percent of net
sales, year-to-date SG&A were 4.4 percent, compared with
4.8 percent last year.
Interest Expense
Interest expense declined modestly in the third
quarter of fiscal 1995 to $2,342,000, compared with
$4,089,000 reported last year, primarily due to a 44
percent reduction in the average quarterly debt level
since last year, partially offset by higher average
interest rates. During the third quarter, the Company
capitalized approximately $557,000 in interest related
to construction projects, compared with approximately
$534,000 in the same period last year.
For the nine months ended March 31, 1995, interest
expense declined to $6,872,000, compared with $7,898,000
in the prior year essentially due to the reason stated
above, partially offset by an increased amount of
capitalized interest during the previous year. The
Company capitalized approximately $2,361,000 in interest
related to assets under construction in the prior year
nine months, compared with approximately $1,329,000 in
the current year period.
Income Taxes
Effective income tax rates for the third quarters of
fiscal 1995 and fiscal 1994 were 41.3 percent and 41.8
percent, respectively. For the nine month periods ended
March 31, 1995 and 1994, the effective income tax rate
was 41.3 percent.
Liquidity and Capital Resources
Operating Activities:
For the first nine months of fiscal 1995, cash
provided by operating activities rose to $48.4 million,
compared with $10.8 million reported last year. The
substantial rise in cash flow was essentially due to a
three-fold increase in net income combined with an
increase in accounts payable, partially offset by
increases in operating inventories and other assets.
The increase in accounts payable occurred due to
seasonal purchasing factors. Inventory levels rose
during the period as the result of (1) Company efforts
to restore finished goods inventories to a more
desirable level, (2) a rise in overall production
tonnage in excess of shipment levels, (3) the
acquisition of Port Everglades Steel ("PESCO") and (4)
the planned increase to the Seattle mill's billet
inventory to facilitate installation of a new melt shop
furnace in July 1995.
Investing Activities:
Net cash used for investing activities in the first
nine months of fiscal 1995 was $44.9 million, compared
with $37.2 million last year. Fiscal 1995 year-to-date
capital expenditures increased to $47.6 million,
compared with $27.4 million last year. During March,
the Company formally announced its 5-year, $648 million
capital development plan to outline the next phase of
the Company's growth strategy. Included as a primary
project of this plan is ASW's new $112 million bar & rod
mill. This state-of-the-art facility, which is
scheduled to begin operations in March 1996, will
effectively double ASW's productive and shipment
capacity to approximately 1.1 million tons of high
quality steel products. Also outlined as part of the
Company's new capital plan is the construction of a new
1.5 million ton capacity high quality melt shop ($150
million), a baghouse dust recycling project ($10
million), a new merchant rolling mill at Kankakee ($85
million), a new melt shop furnace at Seattle ($20
million) and the upgrade to several of the Company's
existing facilities (approximately $125 million).
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.
During the second quarter, the Company acquired
PESCO, a rebar distributor located in Ft. Lauderdale,
Florida for approximately $11.4 million. PESCO will
continue to market the Company's products to steel
fabricators.
In March 1995, the Company sold substantially all the
assets of its Mine Roof Support Business to Excel Mining
Systems, Inc for net cash proceeds of approximately
$15.8 million. In addition, the Company received
consideration from Excel in the form of a note
receivable, which primarily represents the Company's
gain on the transaction. The Company will not
recognized the gain associated with this transaction
until final valuation of the note has been determined
and the proceeds are collected. The Company is also
evaluating the potential sale of this note to interested
buyers.
Financing Activities:
Net cash used in financing activities was $26.2
million through the third quarter of fiscal 1995,
compared with cash flow provided by financing activities
of $124.3 million last year. Pursuant to its authorized
stock repurchase, the Company purchased approximately
$17.6 million (881,000 shares) of its common shares in
the open market. Also during the first nine months of
fiscal 1995, the Company paid cash dividends of
approximately $8.8 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 third quarter
increased to $213.0 million, compared with $213.1
million at the end of fiscal 1994.
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
On April 18, 1995, the Company announced that it had
signed a ten-year agreement with Electronic Data
Systems, Inc. (EDS) under which EDS will assume
responsibility for managing, developing and integrating
all information technology systems for the Company.
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 subsequently
amended its complaint several times, including the
addition of a citizens' suit claim under RCRA, 42 U.S.C.
SS6972.
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. 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
None.
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.
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
May 15, 1995 James A. Todd, Jr.
-------------------
James A. Todd, Jr.
Chairman, Chief
Executive Officer
May 15, 1995 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 March
31, 1995 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> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 6268
<SECURITIES> 0
<RECEIVABLES> 118755
<ALLOWANCES> 1887
<INVENTORY> 160119
<CURRENT-ASSETS> 293287
<PP&E> 493757
<DEPRECIATION> 104017
<TOTAL-ASSETS> 727347
<CURRENT-LIABILITIES> 80322
<BONDS> 142500
<COMMON> 295
0
0
<OTHER-SE> 452001
<TOTAL-LIABILITY-AND-EQUITY> 727347
<SALES> 660739
<TOTAL-REVENUES> 660739
<CGS> 561961
<TOTAL-COSTS> 561961
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1325
<INTEREST-EXPENSE> 6872
<INCOME-PRETAX> 64406
<INCOME-TAX> 26568
<INCOME-CONTINUING> 37838
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37838
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.29
</TABLE>
