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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
BIRMINGHAM STEEL CORPORATION
401 (k) PLAN
(Full Title of the Plan)
BIRMINGHAM STEEL CORPORATION
1000 URBAN CENTER DRIVE SUITE 300
BIRMINGHAM, AL 35242
Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office)
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Birmingham Steel Corporation 401(k) Plan
Audited Financial Statements and Supplemental Schedules
December 31, 1999
with Report of Independent Auditors
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Birmingham Steel Corporation 401(k) Plan
Financial Statements and Supplemental Schedules
December 31, 1999
Contents
Report of Independent Auditors............................... ...............F-1
Audited Financial Statements
Statements of Net Assets Available for Benefits..............................F-2
Statement of Changes in Net Assets Available for Benefits....................F-3
Notes to Financial Statements................................................F-4
Supplemental Schedules
Schedule H, Line 4i - Schedule of Assets Held for Investment Purposes
at End of Year....................................................F-10
Schedule H, Line 4j - Schedule of Reportable Transactions...................F-11
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F-10
Report of Independent Auditors
The Employee Benefits Committee
Birmingham Steel Corporation 401(k) Plan
We have audited the accompanying statements of net assets available for benefits
of Birmingham Steel Corporation 401(k) Plan as of December 31, 1999 and 1998,
and the related statement of changes in net assets available for benefits for
the year ended December 31, 1999. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1999 and 1998, and the changes in its net assets available for
benefits for the year ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes at end of year as of December 31, 1999, and
reportable transactions for the year then ended, are presented for purpose of
additional analysis and are not a required part of the financial statements but
are supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in our audits of the 1999 basic financial statements
and, in our opinion, are fairly stated in all material respects in relation to
the 1999 basic financial statements taken as a whole.
Birmingham, Alabama
May 26, 2000
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Birmingham Steel Corporation 401(k) Plan
Statements of Net Assets Available for Benefits
December 31
1999 1998
------------------- -------------------
Assets
Investments, at fair value $ 81,279,847 $ 66,995,476
Cash 138,552 107,313
Receivables:
Employer contributions 2,766,920 2,201,987
Participant contributions 702,574 576,434
Accrued interest 22,384 17,170
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3,491,878 2,795,591
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Net assets available for benefits $ 84,910,277 $ 69,898,380
=================== ===================
See accompanying notes.
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Birmingham Steel Corporation 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 1999
Additions
Investment income:
Net appreciation in fair value of investments $ 1,861,984
Interest and dividends 5,641,207
---------------------
7,503,191
Contributions:
Employer match 2,897,657
Employer profit sharing 2,451,650
Participants 7,944,956
---------------------
13,294,263
Deductions
Payments to participants (5,644,677)
Miscellaneous expenses (140,880)
---------------------
Net increase 15,011,897
Net assets available for benefits:
Beginning of year 69,898,380
---------------------
End of year $ 84,910,277
=====================
See accompanying notes.
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Birmingham Steel Corporation 401(k) Plan
Notes to Financial Statements
December 31, 1999
1. Description of the Plan
The following description of Birmingham Steel Corporation 401(k) Plan (the Plan)
provides only general information. Participants should refer to the Summary Plan
Description for a more complete description of the Plan's provisions.
General
The Plan is a defined contribution plan that covers substantially all employees
of Birmingham Steel Corporation and an affiliated company (collectively, the
Company). The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA).
Company Contributions
The Company contributes 100% of the first 3 percent of eligible compensation
that a participant contributes to the Plan. Each eligible participant also
receives an annual profit sharing contribution from the Company. Additional
profit sharing amounts may be contributed at the option of the Company's board
of directors and are in the form of the Company's stock. The Company may, from
time to time, change the method of determining its contributions.
Participant Contributions
Each year, participants may contribute up to 15% of pretax annual compensation,
as defined in the Plan. Participants may also contribute amounts representing
distributions from other qualified defined benefit or defined contribution
plans. Forfeited balances of terminated participants' nonvested accounts are
used to reduce future Company contributions.
Upon enrollment, a participant may direct employee and employer contributions to
any of the Plan's fund options. Participants may change their investment options
at any time.
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Birmingham Steel Corporation 401(k) Plan
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
Participant Accounts
Each participant's account is credited with the participant's contributions and
allocations of the Company's contributions and Plan earnings. Generally,
employer contributions are allocated to participants' accounts at the time of
payment, rather than at the time such contributions are recorded in the Plan's
financial statements. Allocations of Company contributions are based on eligible
annual compensation as defined in the Plan agreement. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's account.
Vesting
Participants are immediately vested in their contributions plus actual earnings
thereon. Vesting in the Company contribution portion of their accounts, plus
actual earnings thereon, is based on years of continuous service. A participant
is 100 percent vested after five years of credited service.
Participant Loans
Participants may borrow from their fund accounts a minimum of $1,000 up to a
maximum equal to the lesser of $50,000 or 50% of their vested account balances.
Loan terms range from 1-5 years or up to 15 years for the purchase of a primary
residence. The loans are secured by the balance in the participant's account and
bear interest at a rate commensurate with local prevailing rates as determined
by Merrill Lynch Trust Company (the trustee). Principal and interest are paid
ratably through monthly payroll deductions.
Payment of Benefits
Upon termination of service, death, disability or retirement, participants may
receive either (a) a lump-sum amount equal to the vested value of his or her
account, or (b) annual or more frequent periodic installments over a period of
the lesser of thirty years or the joint life expectancy of the participant and
his beneficiary (where applicable), as determined by the Employee Benefits
Committee (the Committee).
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1. Description of the Plan (continued)
Plan Termination
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100 percent vested in their accounts.
2. Summary of Significant Accounting Policies
Basis of Presentation
The financial statements of the Plan have been prepared on the accrual basis of
accounting.
Investment Valuation
The Plan's investments are stated at fair value. Shares of mutual funds and
common stock are valued at quoted market prices which represent the net asset
values of shares held by the Plan at year-end. The participant loans are valued
at their outstanding balances, which approximate fair value.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates that affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
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2. Summary of Significant Accounting Policies (continued)
Concentration of Credit Risk
At December 31, 1999, approximately 9.5% of the Plan's assets are invested in
the common stock of the Company and approximately 80% of the Plan's assets are
comprised of investments in mutual funds and collective trusts managed by the
trustee. The investment options are designed to provide participants with
opportunities to diversify their investments. Although the Committee has no
involvement in the investment transactions of the mutual funds, the Committee
periodically monitors the investment performance of the funds and may, pursuant
to the provisions of the Plan agreement, elect to change the Plan's investment
programs and/or the trustee at any time. At December 31, 1999, approximately 2%
of the Company's labor force is employed under a collective bargaining
agreement.
3. Investments
During 1999, the Plan's investments (including investments bought, sold, as well
as held during the year) appreciated in fair value as follows:
Fair value as determined by quoted market price:
Mutual funds $ 398,266
Common stock 1,463,718
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$ 1,861,984
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The fair value of individual investments that represent 5% or more of the Plan's
net assets are as follows:
December 31
1999 1998
---------------- ----------------
Merrill Lynch Retirement Presentation Trust $ 30,391,725 $ 27,094,154
Merrill Lynch Basic Value Fund 16,433,989 15,386,528
Merrill Lynch Capital Fund 11,472,098 11,770,841
Birmingham Steel Corp. Common Stock* 8,088,486 2,940,377
Participant loans 5,255,508 4,832,955
*Nonparticipant-directed
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4. Nonparticipant-Directed Investments
Information about the net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed investments in Company
common stock is as follows:
December 31
1999 1998
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Investments, at fair value:
Birmingham Steel Corp. common stock $ 8,088,486 $ 2,940,377
================ ================
Changes in net assets:
Net appreciation in fair value of
investment $ 1,463,718
Dividends and interest 157,180
Contributions 816,437
Payments to participants (304,861)
Miscellaneous expenses (65,540)
Transfers from participant-directed
investments 1,081,721
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$ 3,148,655
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5. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
dated May 15, 1996, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (the Code) and therefore, the related trust is exempt
from taxation. The Plan has been amended since receiving the determination
letter. The Plan is required to operate in conformity with the Code to maintain
its qualification. The Plan Administrator believes the Plan is being operated in
compliance with the applicable requirements of the Code and, therefore, believes
that the Plan is qualified and the related trust is tax exempt.
6. Transactions with Parties-In-Interest
During the year ended December 31, 1999, the Plan received $135,271 in cash
dividends on common stock of the Company held by the Plan. The trustee executed
all investment transactions for the year ended December 31, 1999. The Company
has paid all legal and accounting fees of the Plan. All administrative expenses
were paid by the Plan. Such expenses were $7,980 for the year ended December 31,
1999.
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7. Differences Between Financial Statements and Form 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
December 31
1999 1998
---------------- -----------------
Net assets available for benefits per the
financial statements $ 84,910,277 $ 69,898,380
Amounts allocated to withdrawn participants 128,308 62,597
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Net assets available for benefits per the
Form 5500 $ 84,781,969 $ 69,835,783
================ =================
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
Year Ended
December 31,
1999
-----------------
Benefits paid to participants per the financial statements $ 5,644,677
Add: Amounts allocated on Form 5500 to withdrawn participants
at December 31, 1999 128,308
Less: Amounts allocated on Form 5500 to withdrawn
participants at December 31, 1998 (62,597)
-----------------
Benefits paid to participants per the Form 5500 $ 5,710,388
=================
Amounts allocated to withdrawn participants are recorded as liabilities on the
Form 5500 for benefit claims that have been processed and approved for payment
prior to year-end but not yet paid.
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<TABLE>
Birmingham Steel Corporation 401(k) Plan
(Plan No. 001)
(EIN 13-3213634)
Schedule H, Line 4i
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 1999
<CAPTION>
(c) Description of Investment,
(b) Identity of Issue, including maturity date, rate of
Borrower, Lessor, or Similar interest, collateral, par or
(a) Party maturity value (d) Cost (e) Current Value
--------- ------------------------------ -------------------------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
* Birmingham Steel Corp. Common stock $ 11,086,255 $ 8,088,486
* Merrill Lynch Retirement Preservation Trust ** 30,391,725
Basic Value Fund ** 16,433,989
Capital Fund ** 11,472,098
Special Value Fund ** 2,634,054
Equity Index Trust ** 4,013,667
Global Allocation Fund ** 2,195,575
Pimco Total Return Fund ** 535,431
Ivy International Fund ** 259,314
Participant loans Interest rates range from 7.75 % to
8.5% ** 5,255,508
---------------------
---------------------
$ 81,279,847
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* Indicates party-in-interest
** Information has not been presented as it is not applicable.
</TABLE>
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<TABLE>
Birmingham Steel Corporation 401(k) Plan
(Plan No. 001)
(EIN 13-3213634)
Schedule H, Line 4j
Schedule of Reportable Transactions
Year ended December 31, 1999
<CAPTION>
F-11
(h) Current
a) Identity of (b) Description of Asset Value of Asset
Party Involved Including Interest Rate and (c) Purchase (d) Selling (g) Cost of on Transcation (i) Net Gain
Involved Maturity in Case of a Loan Price Price Asset Date (Loss)
------------------ -------------------------------- ------------- ------------- ---------- ------------------- ----------------
Category (iii) - Series of transactions in excess of 5% of plan assets
<S> <C> <C> <C> <C> <C> <C>
Merrill Lynch Birmingham Steel Corp. Stock $ 5,575,292 $ - $ 5,575,292 $ 5,575,292 $ -
- 1,890,901 2,211,178 1,890,901 (320,277)
There were no category (i), (ii), or (iv) reportable transactions for the year
ended December 31, 1999.
Columns (e) and (f) have not been presented as this information is not
applicable.
</TABLE>
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Supplemental Schedules
Exhibit 23
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-23563) pertaining to the Birmingham Steel Corporation 401(k) Plan of
our report dated May 26, 2000, with respect to the financial statements and
schedules of the Birmingham Steel Corporation 401(k) Plan included in this
Annual Report (Form 11-K) for the year ended December 31, 1999.
/s/Ernst & Young LLP
---------------------------
Ernst & Young LLP
Birmingham, Alabama
June 28, 2000
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SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1923,
the trustee (or other persons who administer the Plan) has duly caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
Date: June 28, 2000
BIRMINGHAM STEEL CORPORATION
401(k) PLAN
by: Birmingham Steel Corporation
Philip L. Oakes
--------------------------
Philip L. Oakes - Member of
the Employee Benefits
Committee of the Plan and
Vice President - Human
Resources
