[DESCRIPTION] THIRD QUARTER FISCAL 1994 10-Q
<PAGE> 1
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 June 30, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 33-22603
BAYOU STEEL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 72-1125783
(State of incorporation) (I.R.S. Employer
Identification No.)
River Road, P.O. Box 5000, LaPlace, Louisiana 70069
(Address of principal executive offices)
(Zip Code)
(504) 652-4900
(Registrant's telephone number, including area code)
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, 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.
Class Shares Outstanding at June 30, 1994
Class A Common Stock, $.01 par value 10,613,380
Class B Common Stock, $.01 par value 2,271,127
Class C Common Stock, $.01 par value 100
----------
12,884,607
==========<PAGE>
<PAGE> 2
BAYOU STEEL CORPORATION
INDEX
Page
PART I. FINANCIAL INFORMATION Number
Item 1. Financial Statements
Balance Sheets -- June 30, 1994
and September 30, 1993 3
Statements of Income (Loss) --
Nine Months Ended
June 30, 1994 and 1993 5
Statements of Cash Flows -- Nine Months
Ended June 30, 1994 and 1993 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis
Results of Operations 12
Liquidity and Capital Resources 15
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K 17<PAGE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
BAYOU STEEL CORPORATION
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
(Unaudited) (Audited)
June 30, September 30,
1994 1993
----------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and temporary cash investments $ 1,929,010 $ 517,900
Trade receivables, net of allowance
of $686,518 and $542,725,
respectively 20,126,589 18,350,338
Other receivables 321,149 326,569
Inventories 60,556,793 48,486,408
Prepaid expenses 502,472 222,277
------------ ------------
Total current assets 83,436,013 67,903,492
------------ ------------
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements 4,134,962 4,124,002
Machinery and equipment 75,250,917 72,954,682
Plant and office buildings 12,663,242 12,663,242
Construction in progress 2,641,625 3,302,603
Less-Accumulated depreciation (27,313,683) (23,785,622)
------------ ------------
Net property, plant and equipment 67,377,063 69,258,907
------------ ------------
OTHER ASSETS 3,537,758 1,117,788
------------ ------------
Total assets $154,350,834 $138,280,187
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.<PAGE>
<PAGE> 4
BAYOU STEEL CORPORATION
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
(Unaudited) (Audited)
June 30, September 30,
1994 1993
------------ -------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 13,238,347 $ 17,671,923
Accrued liabilities 7,308,453 4,560,249
Current maturities of long-term debt 337,804 9,282,156
Borrowings under line of credit -- 4,000,000
------------ ------------
Total current liabilities 20,884,604 35,514,328
------------ ------------
LONG-TERM DEBT:
Senior secured notes 75,000,000 39,900,000
Notes payable 847,037 1,634,625
------------ ------------
Total long-term debt 75,847,037 41,534,625
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value -
Class A 106,134 106,134
Class B 22,711 22,711
Class C 1 1
------------ ------------
Total common stock 128,846 128,846
Paid-in capital 44,890,554 44,890,554
Retained earnings 12,599,793 16,211,834
------------ ------------
Total stockholders' equity 57,619,193 61,231,234
------------ ------------
Total liabilities & stockholders'
equity $154,350,834 $138,280,187
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.<PAGE>
<PAGE> 5
BAYOU STEEL CORPORATION
STATEMENTS OF INCOME (LOSS)
<TABLE> (Unaudited)
<CAPTION>
Third Quarter Ended Nine Months Ended
June 30, June 30,
1994 1993 1994 1993
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET SALES $ 44,876,997 $ 34,485,273 $119,088,293 $ 99,725,980
COST OF SALES 39,711,252 33,740,020 108,127,312 93,305,959
------------ ------------ ------------ ------------
GROSS PROFIT 5,165,745 745,253 10,960,981 6,420,021
SELLING, GENERAL
& ADMINISTRATIVE
EXPENSES 963,370 963,068 2,842,346 3,073,123
NON-PRODUCTION
STRIKE EXPENSES 157,489 1,833,536 794,734 2,561,901
------------ ------------ ------------ ------------
OPERATING INCOME 4,044,886 (2,051,351) 7,323,901 784,997
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest expense (1,948,874) (2,077,801) (5,769,009) (6,274,431)
Interest income 47,273 50,515 198,656 135,508
Miscellaneous 172,839 895 102,627 (74,232)
------------ ------------ ------------ ------------
(1,728,762) (2,026,391) (5,467,726) (6,213,155)
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE
TAXES & EXTRAORDINARY
ITEMS 2,316,124 (4,077,742) 1,856,175 (5,428,158)
PROVISION FOR
INCOME TAXES -- -- -- --
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEMS 2,316,124 (4,077,742) 1,856,175 (5,428,158)
EXTRAORDINARY GAIN (LOSS),
NET OF APPLICABLE
INCOME TAX -- -- (5,468,216) 755,788
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 2,316,124 $ (4,077,742) $ (3,612,041) $ (4,672,370)
============ ============ ============ ============
AVERAGE NUMBER OF
COMMON SHARES
OUTSTANDING 12,884,607 12,884,607 12,884,607 12,884,607
============ ============ ============ ============
INCOME (LOSS) PER COMMON SHARE:
Income (loss) before
extraordinary
items $ .18 $ (.32) $ .14 $ (.42)
Extraordinary gain
(loss) -- -- (.42) .06
------------ ------------ ------------ ------------
Income (loss) per
common share $ .18 $ (.32) $ (.28) $ (.36)
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.<PAGE>
<PAGE> 6
BAYOU STEEL CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
1994 1993
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (3,612,041) $ (4,672,370)
Extraordinary loss (gain) 5,468,216 (755,788)
Depreciation and amortization 3,922,753 3,492,314
Provision for losses on accounts
receivable 183,793 283,324
Changes in working capital:
(Increase) in receivables (1,954,624) (3,023,364)
(Increase) decrease in inventories (12,070,383) 6,283,613
(Increase) in prepaid expenses (280,195) (279,589)
(Decrease) in accounts payable (4,433,576) (2,285,034)
Increase in accrued liabilities 2,748,204 1,832,810
------------ ------------
Net cash (used in) provided by
operations (10,027,853) 875,916
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Addition of property, plant
and equipment (1,646,217) (2,274,741)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments under line of credit (4,000,000) --
Payments of long-term debt (49,631,938) (3,950,825)
Proceeds from issuance of long-term debt 75,000,000 256,296
Refinancing cost (8,282,882) --
------------ ------------
Net cash provided by (used in)
financing activities 13,085,180 (3,694,529)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 1,411,110 (5,093,354)
CASH AND CASH EQUIVALENTS,
beginning balance 517,900 11,149,702
------------ ------------
CASH AND CASH EQUIVALENTS,
ending balance $ 1,929,010 $ 6,056,348
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.<PAGE>
<PAGE> 7
BAYOU STEEL CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 1994
(Unaudited)
1) BASIS OF PRESENTATION
The accompanying unaudited interim financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC). Certain information and note disclosures normally included
in annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to those rules
and regulations. Although Bayou Steel Corporation (the Company) believes that
disclosures made are adequate to ensure that information presented is not
misleading, it is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's latest annual report, Form 10-K, filed with the SEC on December 13,
1993 under File Number 33-22603.
In the opinion of the Company, the accompanying unaudited financial
statements present fairly the Company's financial position as of June 30,
1994 and September 30, 1993 and the results of its operations for the
nine-month periods ended June 30, 1994 and 1993 and the cash flow statements
for the nine-month periods ended June 30, 1994 and 1993.
The results of operations for the nine-month periods ended June 30,
1994 and 1993 are not necessarily indicative of the results for the full year.
2) INVENTORIES
Inventories as of June 30, 1994 and September 30, 1993 consisted of the
following:
(Unaudited) (Audited)
June 30, September 30,
1994 1993
------------ -------------
Scrap steel $ 5,101,716 $ 3,187,963
Billets 2,770,185 3,918,223
Finished product 36,886,966 25,242,294
LIFO adjustments (1,487,839) (324,303)
------------ ------------
$ 43,271,028 $ 32,024,177
Mill rolls, operating
supplies and other 17,285,765 16,462,231
------------ ------------
$ 60,556,793 $ 48,486,408
============ ============
The inventory valuations are based on LIFO estimates of year-end levels
and prices. The actual LIFO inventories will not be known until year-end
quantities and indices are determined.
Shapes, billets, scrap steel, and certain production supplies are
pledged as collateral against the Company's line of credit.<PAGE>
<PAGE> 8
3) PROPERTY, PLANT AND EQUIPMENT
Betterments, improvements, and additions on property, plant and
equipment are capitalized at cost. Interest during construction of significant
additions is capitalized. Interest of $46,000 and $82,000 was capitalized
during the nine-month periods ended June 30, 1994 and 1993, respectively.
Interest of $115,000 was capitalized during the fiscal year ended September 30,
1993.
4) OTHER ASSETS
Other assets consist of costs associated with the issuance of the
10.25% First Mortgage Notes (the "10.25% Notes") and the Company's revolving
line of credit (see Notes 5 and 6) which are being amortized over the lives of
the related debt. The Company wrote off $953,000 of other assets related to
the 14.75% Senior Secured Notes (the "14.75% Notes") and capitalized $3,279,000
of deferred financing costs related to the 10.25% Notes. Amortization expense
was $389,000 and $372,000 for the nine-month periods ended June 30, 1994 and
1993. Amortization expense was $458,000 for the fiscal year ended September
30, 1993.
5) LONG-TERM DEBT
On March 3, 1994, the Company issued $75 million of the 10.25% Notes.
The proceeds were used to redeem and defease the 14.75% Notes and to repay the
borrowings under the new revolving line of credit. The remaining proceeds
will be used to implement a two year capital expenditure program directed
toward cost reduction and general working capital purposes. For more
information on the refinancing of debt, please refer to the Company's latest
annual report, Form 10-K, filed with the SEC on December 13, 1993 under File
Number 33-22603 and Form S-1 filed on February 21, 1994.
6) SHORT-TERM DEBT
On November 23, 1993, the Company entered into an amendment and
restatement of its revolving line of credit agreement. The terms of the
amended and restated agreement call for available borrowings up to $30 million
including outstanding letters of credit. The agreement is secured by inventory
and accounts receivable at interest rates of prime plus 1% or LIBOR plus 2%.
There were no outstanding borrowings under the line of credit as of June 30,
1994.
7) TAXES
As of September 30, 1993, for tax purposes, the Company had net
operating loss carryforwards ("NOLs") of approximately $310.5 million and
$284.5 million available to offset against regular tax and alternative
minimum tax, respectively. Due to the fact that book and tax losses were
generated in 1993, 1992 and 1991, there was no provision for income taxes
in any of these years.
The NOLs will expire in varying amounts through fiscal 2008. A
substantial portion of the available NOLs, approximately $200 million,
expires by fiscal 2000. In addition, the Company has $30.2 million of future
tax benefits attributable to its tax benefit lease which expires in 1996 and
which may, to the extent of taxable income in the year such tax benefit is
produced, be utilized prior to the NOLs. Even though management believes the
Company will be profitable in the future and will be able to utilize a portion
of the NOLs, management does not believe that it is likely that all of the NOLs
will be utilized. In February 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" ("FAS 109"), which was adopted beginning October 1, 1993. FAS<PAGE>
<PAGE> 9
109 requires, among other things, recognition of future tax benefits, subject
to a valuation allowance based on the likelihood of realizing such benefits.
Deferred tax assets of approximately $118 million (NOLs and other temporary
timing differences multiplied by the federal income tax rate) and deferred
tax liabilities of approximately $8 million were recorded upon adoption of FAS
109 in the first quarter of fiscal 1994. However, in recording these deferred
assets, FAS 109 requires the Company to determine whether it is "more likely
than not" that the Company will realize such benefits and that all negative
and positive evidence be considered (with more weight given to evidence that is
"objective and verifiable") in making the determination. FAS 109 indicates
that "forming a conclusion that a valuation allowance is not needed is
difficult when there is negative evidence such as cumulative losses in recent
years"; therefore, the Company has determined that it is required by the
provisions of FAS 109 to establish a valuation allowance for all of the
recorded net deferred tax assets. In view of the fact that this
determination is based primarily on historical losses with no regard for the
impact of proposed capital expenditures and business plans, future favorable
adjustments to the valuation allowance may be required if and when
circumstances change and the Company returns to profitability. Adoption of FAS
109 will have no material adverse impact on income for financial reporting or
tax purposes.
8) MISCELLANEOUS
Miscellaneous for the nine-month periods ended June 30, 1994 and 1993
included the following:
June 1994 June 1993
--------- ---------
Discounts earned $ 199,697 $ 94,585
Provision for bad debts (183,793) (283,324)
Other 86,723 114,507
--------- ---------
$ 102,627 $ (74,232)
========= =========
9) COMMON STOCKHOLDERS' EQUITY
Common stock as of June 30, 1994 and 1993 consisted of:
Class A Class B Class C
---------- ---------- -------
Authorized 24,271,127 4,302,347 100
Outstanding, at end of
quarter 10,613,380 2,271,127 100
Average outstanding for
quarter 10,613,380 2,271,127 100
10) COMMITMENTS AND CONTINGENCIES
Strike
On March 21, 1993, the United Steelworkers of America Local 9121 (the
"Union") initiated a strike against the Company. Negotiations on a new
contract have continued, but differences have thus far precluded an agreement.
The Company cannot predict the impact that a new collective bargaining contract
will have on the Company's results. However, the Company believes its last<PAGE>
<PAGE> 10
contract proposal or a new contract will not have any adverse material effect
upon the Company's results. The Company cannot predict the impact that
workers returning under a new contract may have upon results, although it could
disrupt operations and result in additional costs for a time.
In connection with the strike, the Union filed unfair labor practice
charges against the Company with the New Orleans regional office of the
National Labor Relations Board ("NLRB"), which included 22 specific
allegations. In late January 1994, the Regional Director of the NLRB informed
the Company that it had sufficient grounds to issue a complaint against the
Company and order a trial with respect to eight of these allegations. In order
to avoid a lengthy and expensive trial on these issues, the Company agreed to
negotiate a settlement agreement with the NLRB. The settlement agreement does
not contain an admission by the Company that it engaged in any unfair labor
practices. The settlement agreement required the Company to post a notice
stating that it will not engage in any of the actions specified in the eight
allegations. The other 14 allegations were to be dismissed. The Union did not
sign the settlement agreement. The NLRB unilaterally approved the settlement
agreement with respect to the eight allegations and dismissed the 14 other
allegations. The Union has appealed the dismissal of the 14 other allegations.
The approval of the settlement agreement will not become effective until
completion of the appeals process relating to the dismissal of such allegations.
However, even if the appeal were successful and a trial were ordered, the
Company does not believe that the ultimate outcome would have a material affect
on the Company's operations.
Environmental and Safety
The Company is subject to various federal, state and local laws and
regulations concerning the discharge of contaminants which may be emitted
into the air, discharged into waterways, and the disposal of solid and/or
hazardous wastes such as electric arc furnace dust. In addition, in the event
of a release of a hazardous substance generated by the Company, the Company
could be potentially responsible for the remediation of contamination associated
with such a release. In the past, the Company's operations in some respects
have not met all of the applicable standards promulgated pursuant to such laws
and regulations. At this time, the Company believes that it is in compliance in
all material respects with applicable environmental requirements and that the
cost of such continuing compliance will not have a material adverse effect on
the Company's competitive position, operations or financial condition, or
cause a material increase in currently anticipated capital expenditures. The
Company currently has no mandated expenditures to address previously
contaminated sites and does not anticipate any infrequent or non-recurring
clean-up expenditures. Also, the Company is not designated as a Potential
Responsible Party ("PRP") under the Superfund legislation.
In August 1993, the Union announced a corporate campaign against the
Company. The corporate campaign is designed to bring pressure on the Company
from individuals and institutions with financial and other interest in the
Company. Due to the many allegations made by members of the Union as part of
its announced corporate campaign against the Company, the Louisiana
Department of Environmental Quality requested that the Environmental Protection
Agency conduct a multi-media review of the Company's environmental practices.
The field review was completed at the end of the third quarter of fiscal 1994.
The Company expects a report on the findings in several months. The Company
knows of no environmental issues that would require any material adjustment in
its environmental estimates.<PAGE>
<PAGE> 11
In furtherance of its harassment campaign, the Union has filed numerous
claims with the Occupational Safety and Health Administration (OSHA)
apparently utilizing some of the striking union members who have not been in
the plant in nearly 1-1/2 years. As a result, OSHA recently initiated a field
and documentation review of the Company's practices. Bayou has objected and
will present its position to a magistrate within the next week to stop OSHA from
utilizing this unreliable complaint. The Company is unaware of any area
where it is not in substantial compliance.
Other
There are various claims and legal proceedings arising in the ordinary
course of business pending against or involving the Company wherein monetary
damages are sought. It is management's opinion that the Company's liability,
if any, under such claims or proceedings would not materially affect its
results of operations, liquidity, financial position or ability to comply with
its debt covenants.<PAGE>
<PAGE> 12
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
RESULTS OF OPERATION
The Company's results for the third quarter of fiscal 1994 were mainly
affected by four factors. First, conversion cost, the cost to convert scrap
metal into shapes, decreased approximately $23 per ton compared to the third
fiscal quarter of last year. Second, the metal margin, the spread between
the selling price of the Company's products and the cost of scrap metal, was
$22 per ton higher than the same period of last year. During the third quarter
of fiscal 1994, shape selling prices improved slightly, while the cost of scrap
metal decreased by approximately $5 per ton compared to the second quarter of
fiscal 1994, resulting in improved margins. Third, strike-related expenses,
compared to the third quarter of last year, are $1.7 million lower. Fourth,
shape shipments were 14.4% higher than the prior year quarter. As a result,
the Company posted a net income of $2.3 million which represents a swing in
earnings of $6.4 million compared to the third quarter of fiscal 1993.
The Company's results for the first nine months of fiscal 1994 were
impacted by the same factors affecting the third quarter's results. First,
the conversion cost for these comparable periods decreased by 10%. Second, the
metal margin was $6 per ton higher in the first nine months of fiscal 1994
compared to the same period of fiscal 1993 as shape price increases finally
caught up with the scrap increases in the first quarter of 1994. Third,
strike-related expenses are significantly lower, compared to the first nine
months of fiscal 1993. Fourth, shape shipments increased by 8.5%.
Consequently, the Company posted an income of $1.9 million before the
extraordinary loss of $5.5 million due to refinancing; this represents a $7.3
million improvement in earnings compared to the same prior fiscal year period.
The extraordinary loss was caused by the early redemption and defeasance
of the 14.75% Senior Secured Notes (the "14.75% Notes"). The loss includes
prepayment penalties, interest during the defeasance period, and the
write-off of the unamortized portion of deferred financing cost. This debt was
replaced with $75 million of 10.25% First Mortgage Notes (the "10.25% Notes")
which are due in 2001.
The following table sets forth shipment and sales data for the periods
indicated.
Third Quarter Ended Nine Months Ended
June 30, June 30,
1994 1993 1994 1993
-------- -------- -------- --------
Net Sales (in thousands) $ 44,877 $ 34,485 $119,088 $ 99,726
Shape Shipment Tons 120,715 105,541 328,605 302,780
Shape Selling Price Per Ton $ 342 $ 297 $ 335 $ 297
Billet Shipment Tons 13,543 13,132 32,800 39,114
Billet Selling Price Per Ton $ 226 $ 210 $ 225 $ 206
A. Sales
Net sales increased by 30% in the third quarter of fiscal 1994 compared
to the third quarter of fiscal 1993. Net sales increased by 19% in the first
nine months of fiscal 1994 compared to the same period of fiscal 1993. The
increase in both periods was primarily due to higher selling prices and
shipment volume for shape products.<PAGE>
<PAGE> 13
Shapes - Shape shipment tons increased in the third quarter and the
first nine months of fiscal 1994 by 14.4% and 8.5%, respectively, compared to
the same periods of fiscal 1993. The increases are attributable to an improving
economy and the Company's improved product mix and availability. Export
shipments decreased in the third quarter and the first nine months of fiscal
1994 compared to the same periods of fiscal 1993, but this decrease was
replaced with domestic shipments which have higher margins. In the third
quarter of fiscal 1993, domestic sales were affected by the lack of availability
and mix of product resulting from a reduced production schedule caused by the
strike. However, the strong export shipments in the third quarter of fiscal
1993 were able to offset the lost domestic sales. Backlog of orders at June 30,
1994 continues to be strong. In the fourth quarter of fiscal 1994, the
availability of outgoing transportation, particularly rail, has been very
limited; this could adversely affect shipments.
Shape prices increased by 15.2% and 12.8% in the third quarter and
first nine months of fiscal 1994 compared to the same periods of fiscal 1993.
These higher prices were primarily in response to sharp increases in scrap
costs. However, shape selling price increases offset these scrap price
increases by the end of the second fiscal quarter resulting in increased margin
in the third quarter compared to the same period of fiscal 1993. Also, during
the third quarter of fiscal 1994 the Company, due to strong market demand, was
able to reduce competitive allowances compared to the same period of fiscal
1993. In the third quarter of fiscal 1993, the shape prices were affected by
export shipments which carry a lower selling price than domestic shipments due
to duties and freight. In response to rising raw material prices, the Company
announced a price increase effective on July 11, 1994 of $10 per ton. It is
uncertain that this price increase will be accepted in the market.
Billets - Shipments of billets, the Company's semi-finished product,
remained relatively stable in the third quarter of fiscal 1994 and decreased
6,314 tons in the first nine months of fiscal 1994 compared to the same
periods of fiscal 1993. More billets were required by the Rolling Mill due to
higher shape production levels; this resulted in less billets being available
for sale. The overall selling price of billets increased in the third quarter
and the first nine months of fiscal 1994 compared to the same periods of fiscal
1993 by 7.6% and 9.2%, respectively, due to increasing raw material costs.
However, the average billet metal margin for the third fiscal quarter and the
first nine months of fiscal 1994 compared to the same periods of fiscal 1993
were $7 and $13 per ton lower, respectively. Since billet prices for a major
billet customer are related to prior month's scrap prices, the Company expects
margins to improve once scrap prices stabilize or decrease.
B. Cost of Sales
The major component of cost of sales is scrap. In the third quarter
and first nine months of fiscal 1994, average steel scrap cost was
approximately $23 and $33 per ton higher than the average steel scrap cost for
the same periods of fiscal 1993. Scrap prices appear to have bottomed out by
the end of the third quarter of fiscal 1994 and are expected to increase
significantly in the fourth quarter of fiscal 1994.
Another significant portion of cost of sales is conversion costs, which
include labor, energy, maintenance materials and supplies used to convert raw
materials into billets and billets into shapes. Conversion cost per ton in
the third quarter and first nine months of fiscal 1994 decreased by $23 and $14
per ton, respectively, compared to the same periods of fiscal 1993.
Productivity improvements above pre-strike levels contributed to this
decrease in per unit<PAGE>
<PAGE> 14
costs. The decrease in conversion cost was due to the reduced per ton fixed
costs resulting from increased production and productivity in the third
quarter and first nine months of fiscal 1994 compared to the same periods of
fiscal 1993. Variable cost per ton also decreased in the third quarter and
first nine months of fiscal 1994 compared to the same periods of fiscal 1993
due to more efficient consumption of supplies. Conversion cost per ton in
1993 were abnormally high due to the strike. Resuming normal operations reduced
these per unit cost significantly.
The current work force is well trained and performing at a high skill
level. The Melt Shop established a one furnace production record in April
and again in May and operated at 105% of pre-strike productivity levels in the
third quarter of fiscal 1994. The Rolling Mill for the third quarter of
fiscal 1994 operated at 107% of pre-strike levels. Labor cost per ton in the
first nine months of fiscal 1994 has decreased by $9 per ton and man-hours per
ton has decreased 8% compared to the same period in fiscal 1993. The Company's
goal is to further reduce labor cost per ton through increased shipments,
productivity, reduction of overtime, and implementation of its proposed labor
agreement.
Late in the third quarter of fiscal 1994, the Company began a planned
shutdown for major maintenance for the Melt Shop and the Rolling Mill. The
shutdown was completed in July within the planned time constraints. The
Company expects a reduction in production in the beginning of the fourth
quarter of fiscal year 1994 due to the shutdown. In addition, minor start-up
problems in the idle equipment have resulted in some production delays which
will result in higher production cost. Costs related to the shutdown work have
been accrued over the past 18 months.
C. Selling, General and Administrative Expense
Selling, general and administrative expenses remained relatively stable
for the third quarter and decreased 7.5% for the first nine months of fiscal
1994 compared to the same periods of fiscal 1993. The decrease in the first
nine months of fiscal 1994 compared to the same period of fiscal 1993 was due
to reductions in collection expenses and consulting fees.
D. Non-Production Strike Expenses
Strike-related expenses decreased by $1.7 million and $1.8 million for
the third quarter and the first nine months of fiscal 1994, respectively,
compared to the same periods of fiscal 1993. Given the same level of
strike-related activity, the Company expects that future strike-related costs
will not exceed $100,000 per month. These expenses are primarily incurred
for legal and security services.
E. Other Income (Expense)
Interest expense decreased in the first nine months of fiscal 1994
compared to the same period of fiscal 1993 due to the Company purchasing
$11.1 million of its 14.75% Notes in fiscal 1993. The Company accrued interest
on the remainder of the 14.75% Notes in the first six months of fiscal 1994 at a
rate of 14.75% and accrued interest at a rate of 10.25% on the 10.25% Notes in
the third quarter of fiscal 1994. Interest expense for the comparable third
quarters were approximately the same. Interest income remained relatively
the same in the third quarter of fiscal 1994 and increased in the first nine
months of fiscal 1994 compared to the same periods of fiscal 1993 due to
investing excess cash from the $75 million 10.25% Notes issued. Miscellaneous
income increased in the third quarter and the first nine months of fiscal 1994<PAGE>
<PAGE> 15
compared to the same periods of fiscal 1993 due to an increase in vendor
discounts and a favorable experience on the provision for bad debts.
F. Net Income/Loss
The net income of $2.3 million for the third quarter of fiscal 1994
represents a favorable swing of $6.4 million compared to the same period of
fiscal 1993. This was due to four main reasons. First, conversion cost
decreased approximately $23 per ton. Second, the metal margin was $22 per
ton higher than the third quarter of fiscal 1993. Third, strike-related
expenses were significantly lower. Fourth, shape shipments were 14.4% higher.
The income of $1.9 million before extraordinary loss for the first nine
months of fiscal 1994 represents a favorable swing of $7.3 million compared
to the same period of fiscal 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company has increased its cash position by $1.4 million to $1.9
million as of June 30, 1994.
In March, 1994, the Company issued $75 million of the 10.25% Notes (the
"Offering"). The proceeds of the Offering were used for the defeasance and
to redeem the $48.9 million of outstanding 14.75% Notes, to repay the then
outstanding loans under the Company's revolving credit facility ("Credit
Facility"), and for working capital purposes.
Working capital increased by $30.2 million to $62.6 million in the
first nine months of fiscal 1994. The increase was due to the increase in cash
from the Offering, replenishment of inventory, reductions of accounts payable
and the repayment of the short-term debt under the Credit Facility.
In the first nine months of fiscal 1994, cash flow from operations
decreased by $10.0 million. The decrease was due to a $12 million increase
in inventory. The Company has rebuilt its inventories, which were depleted due
to lower production in the early phases of the strike. Inventories were
reduced by $1.4 million in June 1994 because of a two-week planned shutdown
which began late in the third quarter of fiscal 1994. Shape inventories were
reduced, but the reduction was partially offset by the increase in scrap
inventories in anticipation of rising scrap cost. The Company intends to reduce
its scrap and shape inventory levels over the next several months to more normal
levels. This should provide $2 to $4 million in cash. The Company plans to
spend $3 million in the beginning of the fourth quarter of fiscal 1994 for the
planned shutdown. Also, accounts payable decreased by $4 million due to
actively taking attractive vendor discounts and paying vendors that were
previously paid slowly due to the cash position. These decreases were partially
offset by increases in accrued liabilities.
Capital expenditures amounted to $1.6 million in the first nine months
of fiscal 1994. These expenditures were used for minor upgrades to the plant
and major maintenance projects. The Company intends to spend $8.6 million of
the funds from the Offering for a two-year capital improvements program directed
towards cost reduction. Most of the commitments have been finalized during
this quarter.
Cash from financing activities of $13.1 million in the first nine months
of fiscal 1994 was due to the Offering. The 10.25% Notes are due in 2001 and
require semi-annual interest payments only until 2001.<PAGE>
<PAGE> 16
On November 23, 1993, the Company entered into an amendment and
restatement of the Credit Facility, which is a three-year line of credit that
permits loans to be made to the Company thereunder, on a secured basis, of up
to $30 million. As of June 30, 1994, there were no borrowings under the
Credit Facility. Interest rates under the Credit Facility are prime plus 1% or
LIBOR plus 2% at the Company's option. The Company's Credit Facility contains
certain covenants, such as the Interest Expense Coverage Ratio, which become
more restrictive over time. Under the Credit Facility, the Interest Expense
Coverage Ratio for the quarter ending September 30, 1994 is 1.25 to 1.00 and
becomes increasingly more restrictive for the quarters thereafter. For the
quarter ended June 30, 1994, the Company's Interest Expense Coverage Ratio is
2.92 to 1.00. In the event of a default under the Credit Facility, the Company
would not be permitted to borrow under the Credit Facility and the lenders
thereunder may accelerate payment of all amounts then outstanding and terminate
their commitments. In such an event, the Company would seek a waiver of the
covenant from its lenders under the Credit Facility or otherwise renegotiate
the terms of the Credit Facility. The Company believes that current cash
balances, internally generated funds, the Credit Facility and additional
purchase money mortgages will provide adequate funds for the Company's operating
requirements.
There are no financial obligations with respect to post-employment or
post-retirement benefits.
OTHER COMMENTS
A. Environmental and Safety
In August 1993, the Union announced a corporate campaign against the
Company. The corporate campaign is designed to bring pressure on the Company
from individuals and institutions with financial and other interest in the
Company. Due to the many allegations made by members of the Union as part of
its announced corporate campaign against the Company, the Louisiana
Department of Environmental Quality requested that the Environmental Protection
Agency conduct a multi-media review of the Company's environmental practices.
The field review was completed at the end of the third quarter of fiscal 1994.
The Company expects a report on the findings in several months. The Company
knows of no environmental issues that would require any material adjustment in
its environmental estimates.
In furtherance of its harassment campaign, the Union has filed numerous
claims with the Occupational Safety and Health Administration (OSHA)
apparently utilizing some of the striking union members who have not been in
the plant in nearly 1-1/2 years. As a result, OSHA recently initiated a field
and documentation review of the Company's practices. Bayou has objected and
will present its position to a magistrate within the next week to stop OSHA from
utilizing this unreliable complaint. The Company is unaware of any area
where it is not in substantial compliance.
B. Strike
Negotiations on a new labor contract have continued, but differences
have thus far precluded an agreement. The Company believes its last contract
proposal or a new contract will not have any adverse material effect upon the
Company's results. The Company cannot predict the impact that workers
returning under a new contract may have upon results, although it could disrupt
operations and result in additional costs for a time.<PAGE>
<PAGE> 17
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following is an index of the exhibits included in this
report on Form 10-Q.
13.10 - Quarterly Report for the first fiscal quarter
ended December 31, 1993.
Quarterly Report for the second fiscal quarter
ended March 31, 1994.
(b) Reports on Form 8-K
None were filed during the second and third quarters of
fiscal year 1994.<PAGE>
<PAGE> 18
SIGNATURE
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.
BAYOU STEEL CORPORATION
By /s/ Richard J. Gonzalez
Richard J. Gonzalez
Vice President, Treasurer and
Chief Financial Officer
Date: August 2, 1994
<PAGE> 1
BAYOU STEEL CORPORATION
To Our Stockholders:
The net loss of $973,000 in the first quarter of fiscal 1994 was due to a
decline in margins and, to a lesser extent, the non-production expenses
related to the ongoing labor disruption by the United Steelworkers of America,
Local 9121, which began on March 21, 1993.
BUSINESS REVIEW
Shape shipments of 103,168 for the December quarter were 11.5% above last
year. The increase is due to an improving economy and improved product mix
and availability.
Despite the labor disruption, productivity in the first quarter of fiscal
1994 was 98% and 108% of the prior year comparable quarter in the melt shop
and rolling mill, respectively. Out of pocket strike expenses have decreased
sharply and are expected to be less than $100,000 per month going forward.
The Company's conversion costs - the cost of converting scrap metal into
finished product - decreased by $6 per ton in the December quarter compared to
the prior year quarter. Labor cost per ton has decreased but is still higher
than competitive levels. The Company intends to address this problem through
its latest labor contract proposal and by continuing to make operational
improvements.
In the first quarter of fiscal 1994, overall steel scrap cost was $40 per
ton higher than average steel scrap cost for the prior year quarter. While
the Company was able to increase shape prices several times during the most
recent fiscal quarter, the shape price increases lagged the increases in scrap
prices. This resulted in lower margins. However, by the end of the December
quarter, shape prices did improve relative to the first two months of the
quarter.
FINANCIAL CONDITION
On March 3, 1994, the Company issued $75 million of 10.25% First Mortgage
Notes. The proceeds were used to redeem the 14.75% Senior Notes and to repay
the borrowings under the new credit line. The remaining proceeds will be used
to implement a capital expenditure program directed toward cost reduction. In
addition, cash flow should improve since no principal payments are required
for seven years. The Company also recently entered into a three-year line of
credit that permits loans on a secured basis of up to $30 million at
attractive interest rates.<PAGE>
<PAGE> 2
OUTLOOK
Continued improvement in operating results is expected as the year
develops. This is a direct result of our continuing cost reduction efforts
and improving margins due to a strengthening economy. Extreme weather
conditions in some major market areas and the mix of products available for
shipment may affect second quarter shipments. However, favorable operating
earnings can be expected in the March quarter.
Sincerely,
HOWARD M. MEYERS JERRY M. PITTS
President and Executive Vice President
Chief Executive Officer and Chief Operating Officer
April 15, 1994<PAGE>
<PAGE> 3
BAYOU STEEL CORPORATION
Balance Sheets
<TABLE>
<CAPTION>
(Unaudited) (Audited)
December 31, September 30,
1993 1993
------------- --------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and temporary cash investments $ 3,073,937 $ 517,900
Trade receivables 14,096,150 18,350,338
Other receivables 451,635 326,569
Inventories 53,930,823 48,486,408
Prepaid expenses 802,908 222,277
------------ ------------
Total current assets 72,355,453 67,903,492
------------ ------------
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements 4,124,002 4,124,002
Machinery and equipment 73,139,509 72,954,682
Plant and office building 12,663,242 12,663,242
Construction in progress 3,531,274 3,302,603
Less-Accumulated depreciation (24,949,331) (23,785,622)
------------ ------------
Net property, plant and equipment 68,508,696 69,258,907
------------ ------------
OTHER ASSETS: 1,546,357 1,117,788
------------ ------------
Total assets $142,410,506 $138,280,187
============ ============
<CAPTION>
(Unaudited) (Audited)
December 31, September 30,
1993 1993
------------- --------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 19,167,924 $ 17,671,923
Accrued liabilities 6,840,346 4,560,249
Current maturities of long-term debt 9,249,068 9,282,156
Borrowings under line of credit 5,900,000 4,000,000
------------ ------------
Total current liabilities 41,157,338 35,514,328
------------ ------------
LONG-TERM DEBT:
Senior secured notes 39,900,000 39,900,000
Notes payable 1,094,865 1,634,625
------------ ------------
Total long-term debt 40,994,865 41,534,625
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value -
Class A 106,134 106,134
Class B 22,711 22,711
Class C 1 1
------------ ------------
Total common stock 128,846 128,846
Paid-in capital 44,890,554 44,890,554
Retained earnings 15,238,903 16,211,834
------------ ------------
Total stockholders' equity 60,258,303 61,231,234
------------ ------------
Total liabilities & stockholders'
equity $142,410,506 $138,280,187
============ ============
<PAGE> 4
BAYOU STEEL CORPORATION
Statements of Income (Loss) (Unaudited)
<CAPTION>
First Quarter Ended December 31,
1993 1992
------------ ------------
<S> <C> <C>
NET SALES $ 36,778,489 $ 31,832,929
COST OF SALES 34,558,324 28,198,559
------------ ------------
GROSS PROFIT 2,220,165 3,634,370
SG&A EXPENSES 889,849 1,080,693
NON-PRODUCTION STRIKE EXPENSES 399,181 -
------------ ------------
OPERATING INCOME (LOSS) 931,135 2,553,677
------------ ------------
OTHER EXPENSES (1,904,066) (2,206,976)
------------ ------------
INCOME (LOSS) BEFORE EXTRAORDINARY GAIN (972,931) 346,701
EXTRAORDINARY GAIN - 755,788
------------ ------------
NET INCOME (LOSS) $ (972,931) $ 1,102,489
============ ============
INCOME (LOSS) PER COMMON SHARE:
Income (loss) before extraordinary gain $ (.08) $ .03
Extraordinary gain - .06
------------ ------------
Income (loss) per common share $ (.08) $ .09
============ ============
- - -------------------------
SHAPE SHIPMENT TONS 103,168 92,487
============ ============
BILLET SHIPMENT TONS 13,375 18,488
============ ============
The quarterly cost of goods sold calculations are based on LIFO estimates.
The actual cost will not be known until year-end inventory quantities and
indices are determined.<PAGE>
Statements of Cash Flows (Unaudited)
<CAPTION>
Three-Months Ended December 31,
1993 1992
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (972,931) $ 1,102,489
Extraordinary gain - (755,788)
Depreciation and amortization 1,250,086 1,277,926
Provision for losses on accounts
receivable 112,369 90,080
Changes in working capital 1,767,806 (5,190,138)
------------ ------------
Net cash provided by operations 2,157,330 (3,475,431)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES (413,498) (1,186,777)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES 812,205 (3,786,725)
------------ ------------
NET INCREASE (DECREASE) IN CASH 2,556,037 (8,448,933)
CASH, beginning balance 517,900 11,149,702
------------ ------------
CASH, ending balance $ 3,073,937 $ 2,700,769
============ ============
For additional information contact: Vice President, Treasurer and Chief
Financial Officer, Bayou Steel Corporation, P.O. Box 5000, LaPlace, Louisiana 70069,
1-504-652-4900
</TABLE>
<PAGE> 1
BAYOU STEEL CORPORATION
To Our Stockholders:
We are pleased with your Company's consistent improvement over the last four
quarters. Your Company reported a net income of $513,000 before an
extraordinary loss for the second quarter of fiscal 1994. This represents a
favorable swing of $2.2 million compared to the same period of fiscal 1993.
This was due to three main reasons. First, the metal margin was $7 per ton
higher than the second quarter of fiscal 1993. Second, conversion cost
decreased approximately 11% per ton. Third, strike-related expenses are
significantly lower.
BUSINESS REVIEW
Shape shipments were flat in the second quarter compared to the prior year
quarter due to inclement weather which delayed shipments. However, net sales
increased by 12% due primarily to an increase of 13.5% in shape selling
prices.
The higher prices were primarily in response to sharp increases in scrap
costs. The overall price increases only partially offset the scrap increases
for the first quarter of fiscal 1994 as shape price increases lagged behind
scrap price increases. However, by the second fiscal quarter shape selling
price increases offset the scrap price increases resulting in increased
margin compared to the same period of fiscal 1993.
The decreases in conversion cost were due to the reduced per ton fixed costs
resulting from increased production and productivity. The melt shop
established a one furnace production record in March. The rolling mill for
the second quarter operated at 112% of pre-strike levels.
FINANCIAL CONDITION
Bayou Steel's financial position continues to be strong. Stockholders' equity
is $55.3 million. Net working capital, after the Company issued the $75
million of the 10.25% First Mortgage Notes, was $59.7 million with a current
ratio of 4 to 1.
The extraordinary loss of $5.5 million was caused by the early extinguishment
of the 14.75% Senior Secured Notes. The loss includes prepayment penalties,
interest during the defeasance period, and the write-off of the unamortized
portion of deferred financing cost.<PAGE>
<PAGE> 2
OUTLOOK
We are optimistic about the remainder of the fiscal year. The improving
economy and product availability continues to keep shipments and backlog high.
Our work force is well trained and performing at a very high skill level while
displaying the motivation necessary to meet the operational challenges. In
April, the melt shop again set monthly and daily production records. The
rolling mill productivity continues to be better than pre-strike levels. We
will continue our efforts to improve conversion cost and productivity.
Sincerely,
Howard M. Meyers Jerry M. Pitts
President and Executive Vice President Chief
Executive Officer and Chief Operating Officer
April 30, 1994<PAGE>
<PAGE> 3
BAYOU STEEL CORPORATION
Balance Sheets (in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, September 30,
1994 1993
------------ -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and temporary cash investments $ 3,854 $ 518
Trade receivables 15,883 18,350
Other receivables 633 327
Inventories 58,473 48,486
Prepaid expenses 554 222
------------ ------------
Total current assets 79,397 67,903
------------ ------------
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements 4,135 4,124
Machinery and equipment 73,186 72,955
Plant and office building 12,663 12,663
Construction in progress 3,976 3,303
Less-Accumulated depreciation (26,126) (23,786)
------------ ------------
Net property, plant and equipment 67,834 69,259
------------ ------------
OTHER ASSETS: 3,697 1,118
------------ ------------
Total assets $ 150,928 $ 138,280
============ ============<PAGE>
<CAPTION>
(Unaudited) (Audited)
March 31, September 30,
1994 1993
------------ -------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 13,393 $ 17,672
Accrued liabilities 5,964 4,560
Current maturities of long-term debt 335 9,282
Borrowings under line of credit -- 4,000
------------ ------------
Total current liabilities 19,692 35,514
------------ ------------
LONG-TERM DEBT:
Senior secured notes 75,000 39,900
Notes payable 933 1,635
------------ ------------
Total long-term debt 75,933 41,535
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value -
Class A 106 106
Class B 23 23
Class C -- --
------------ ------------
Total common stock 129 129
Paid-in capital 44,891 44,891
Retained earnings 10,283 16,211
------------ ------------
Total stockholders' equity 55,303 61,231
------------ ------------
Total liabilities & stockholders' equity $ 150,928 $ 138,280
============ ============<PAGE>
<PAGE> 4
BAYOU STEEL CORPORATION
Statements of Income (Loss) (Unaudited; in thousands, except per share data)
<CAPTION>
Second Quarter Ended March 31, Six Months Ended March 31,
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET SALES $ 37,433 $ 33,408 $ 74,211 $ 65,241
COST OF SALES 33,858 31,368 68,416 59,566
---------- ---------- ---------- ----------
GROSS PROFIT 3,575 2,040 5,795 5,675
SG&A EXPENSES 989 1,029 1,879 2,110
NON-PRODUCTION STRIKE
EXPENSES 238 728 637 728
---------- ---------- ---------- ----------
OPERATING INCOME 2,348 283 3,279 2,837
---------- ---------- ---------- ----------
OTHER EXPENSES (1,835) (1,980) (3,739) (4,187)
---------- ---------- ---------- ----------
INCOME (LOSS)BEFORE
EXTRAORDINARY
ITEMS 513 (1,697) (460) (1,350)
EXTRAORDINARY GAIN
(LOSS) (5,468) -- (5,468) 755
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ (4,955) $ (1,697) $ (5,928) $ (595)
========== ========== ========== ==========
INCOME (LOSS) PER
COMMON SHARE:
Income (loss)
before
extraordinary
gain $ .04 $ (.13) $ (.04) $ (.11)
Extraordinary
gain (loss) (.42) -- (.42) .06
---------- ---------- ---------- ----------
Income (loss)
per common
share $ (.38) $ (.13) $ (.46) $ (.05)
========== ========== ========== ==========
SHAPE SHIPMENT
TONS 104,722 104,752 207,890 197,239
========== ========== ========== ==========
BILLET SHIPMENT
TONS 5,882 7,494 19,257 25,982
========== ========== ========== ==========
The quarterly cost of goods sold calculations are based on LIFO estimates.
The actual cost will not be known until year-end inventory quantities and
indices are determined.<PAGE>
Statements of Cash Flows (Unaudited; in thousands)
<CAPTION>
Six Months Ended March 31,
1994 1993
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (5,928) $ (595)
Extraordinary loss (gain) 5,468 (755)
Depreciation and amortization 2,572 2,455
Provision for losses on accounts receivable 219 185
Changes in working capital (11,251) (1,650)
----------- -----------
Net cash (used in) operations (8,920) (360)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES (916) (2,139)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES 13,172 (3,597)
----------- -----------
NET INCREASE (DECREASE) IN CASH 3,336 (6,096)
CASH, beginning balance 518 11,150
----------- -----------
CASH, ending balance $ 3,854 $ 5,054
=========== ===========
For additional information contact: Vice President, Treasurer and Chief
Financial Officer, Bayou Steel Corporation, P.O. Box 5000, LaPlace, Louisiana
70069, 1-504-652-4900
</TABLE>
