UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- -------
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
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.)
138 Highway 3217, 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 December 31, 1999
Class A Common Stock, $.01 par value 10,619,380
Class B Common Stock, $.01 par value 2,271,127
Class C Common Stock, $.01 par value 100
-----------
12,890,607
===========
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BAYOU STEEL CORPORATION
INDEX
Page
PART I. FINANCIAL INFORMATION Number
Item 1. Financial Statements
Consolidated Balance Sheets -- December 31, 1999 and
September 30, 1999 3
Consolidated Statements of Operations -- Three
Months Ended December 31, 1999 and 1998 5
Consolidated Statements of Cash Flows -- Three Months
Ended December 31, 1999 and 1998 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Results of Operations 9
Liquidity and Capital Resources 11
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K 12
Page 2
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PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
BAYOU STEEL CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
(Unaudited) (Audited)
December 31, September 30,
1999 1999
------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 26,876,323 $ 31,091,309
Receivables, net of allowance for doubtful accounts 24,179,328 23,650,668
Inventories 71,905,396 72,567,304
Deferred income taxes and other 5,844,866 5,131,454
------------- -------------
Total current assets 128,805,913 132,440,735
------------- -------------
PROPERTY, PLANT AND EQUIPMENT:
Land 3,790,399 3,790,399
Machinery and equipment 148,235,818 146,321,994
Plant and office building 23,632,571 23,372,143
------------- -------------
175,658,788 173,484,536
Less-Accumulated depreciation (65,899,935) (63,739,731)
------------- -------------
Net property, plant and equipment 109,758,853 109,744,805
------------- -------------
DEFERRED INCOME TAXES 3,238,012 3,466,541
OTHER ASSETS 2,806,794 2,897,888
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Total assets $ 244,609,572 $ 248,549,969
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
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BAYOU STEEL CORPORATION
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
(Unaudited) (Audited)
December 31, September 30,
1999 1999
------------ -------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 14,955,956 $ 16,618,555
Interest payable 1,425,000 4,275,000
Accrued liabilities 5,061,458 5,226,617
------------ ------------
Total current liabilities 21,442,414 26,120,172
------------ ------------
LONG-TERM DEBT 119,041,653 119,013,093
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value -
Class A: 24,271,127 authorized and 10,619,380
outstanding shares 106,194 106,194
Class B: 4,302,347 authorized and 2,271,127
outstanding shares 22,711 22,711
Class C: 100 authorized and outstanding shares 1 1
------------ ------------
Total common stock 128,906 128,906
Paid-in capital 47,795,224 47,795,224
Retained earnings 56,201,375 55,492,574
------------ ------------
Total common stockholders' equity 104,125,505 103,416,704
------------ ------------
Total liabilities and common stockholders' equity $244,609,572 $248,549,969
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
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BAYOU STEEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
December 31,
1999 1998
------------ ------------
NET SALES $ 52,386,622 $ 47,414,662
COST OF SALES 47,051,929 39,398,675
------------ ------------
GROSS MARGIN 5,334,693 8,015,987
SELLING, GENERAL AND ADMINISTRATIVE 1,815,594 1,637,902
------------ ------------
OPERATING PROFIT 3,519,099 6,378,085
------------ ------------
OTHER INCOME (EXPENSE):
Interest expense (2,850,000) (2,794,270)
Interest income 356,710 390,133
Miscellaneous 64,654 10,875
------------ ------------
(2,428,636) (2,393,262)
------------ ------------
INCOME BEFORE INCOME TAX 1,090,463 3,984,823
PROVISION FOR INCOME TAX 381,662 1,394,425
------------ ------------
NET INCOME $ 708,801 $ 2,590,398
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 12,890,607 12,890,607
Diluted 13,713,029 13,713,029
BASIC NET INCOME PER SHARE $ .05 $ .20
============ ============
DILUTED NET INCOME PER SHARE $ .05 $ .19
============ ============
The accompanying notes are an integral part of these consolidated statements.
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BAYOU STEEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
December 31,
1999 1998
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 708,801 $ 2,590,398
Depreciation 2,254,832 2,032,807
Amortization 119,654 102,424
Provision for losses on accounts receivable 44,937 47,904
Deferred income taxes 285,662 1,030,980
Changes in working capital:
(Increase) decrease in receivables (573,597) 5,731,763
Decrease (increase) in inventories 661,908 (8,972,645)
(Increase) in prepaid expenses (770,545) (613,961)
(Decrease) in accounts payable (1,662,599) (3,679,188)
(Decrease) in interest payable
and accrued liabilities (3,015,159) (1,475,923)
------------ ------------
Net cash (used in) operations (1,946,106) (3,205,441)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (2,268,880) (4,952,095)
------------ ------------
NET DECREASE IN CASH (4,214,986) (8,157,536)
CASH, beginning balance 31,091,309 34,028,855
------------ ------------
CASH, ending balance $ 26,876,323 $ 25,871,319
============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash paid during the period for:
Interest (net of amount capitalized) $ 5,700,000 $ 5,419,718
Income taxes $ 96,000 $ 363,445
The accompanying notes are an integral part of these consolidated statements.
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BAYOU STEEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
(Unaudited)
1) BASIS OF PRESENTATION
The accompanying unaudited interim consolidated 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. However, all adjustments, which, in the opinion of
management, are necessary for fair presentation have been included except
adjustments related to inventory. The inventory valuations as of December 31,
1999 are based on last-in, first-out ("LIFO") estimates of year-end levels and
prices. The actual LIFO inventories will not be known until year-end quantities
and indices are determined. It is suggested that these consolidated financial
statements be read in conjunction with the consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K filed with
the SEC as of and for the year ended September 30, 1999.
The accompanying consolidated financial statements include the accounts of
Bayou Steel Corporation and its wholly-owned subsidiaries (the "Company") after
elimination of all significant intercompany accounts and transactions. The
results for the three months ended December 31, 1999 are not necessarily
indicative of the results to be expected for the fiscal year ending September
30, 2000.
Certain reclassifications have been made in the prior period financial
statements to conform to current period classifications.
2) INVENTORIES
Inventories consist of the following:
(Unaudited) (Audited)
December 31, September 30,
1999 1999
----------- ------------
Scrap steel $ 2,964,835 $ 4,738,110
Billets 9,739,063 7,923,519
Finished product 44,639,990 43,063,027
LIFO adjustments 2,982,686 5,689,596
----------- -----------
60,326,574 61,414,252
Operating supplies and other 11,578,822 11,153,052
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$71,905,396 $72,567,304
=========== ===========
3) LONG-TERM DEBT
The Company has $120 million of 9.5% first mortgage notes bearing interest
at 9.5% (9.65% effective rate) due 2008 with semi-annual interest payments due
May 15 and November 15 of each year. The notes were issued at a discount which
is being amortized over the life of the notes using the straight line method
which does not materially differ from the interest method. The notes are a
senior obligation of the Company, secured by a first priority lien, subject to
certain exceptions, on certain existing and future real property, plant and
equipment.
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Bayou Steel Corporation (Tennessee) and River Road Realty Corporation
(collectively the "guarantor subsidiaries"), which are wholly-owned by and which
comprise all of the direct and indirect subsidiaries of the Company, fully and
unconditionally guarantee the notes on a joint and several basis. The following
is summarized combined financial information of the guarantor subsidiaries.
Separate full financial statements and other disclosures concerning each
guarantor subsidiary have not been presented because, in the opinion of
management, such information is not deemed material to investors. The indenture
governing the notes provide certain restrictions on the ability of the guarantor
subsidiaries to make distributions to the Company.
(Unaudited) (Audited)
December 31, September 30,
1999 1999
----------- -------------
Current assets $30,945,000 $30,832,000
Noncurrent assets 21,845,000 21,153,000
Current liabilities 27,106,000 26,075,000
Noncurrent liabilities 34,972,000 34,973,000
(Unaudited)
Three Months Ended
December 31,
1999 1998
------------ ------------
Net sales $ 11,291,000 $ 10,378,000
Gross margin 235,000 934,000
Net income (loss) (225,000) 324,000
4) INCOME TAXES
As of December 31, 1999, for tax purposes, the Company had net operating
loss carryforwards ("NOLs") of approximately $170 million available to utilize
against regular taxable income. The NOLs will expire in varying amounts through
fiscal 2011. A substantial portion of the available NOLs, approximately $74
million, expire by fiscal 2001. The Company maintains a valuation allowance on a
portion of its NOLs. Deferred income tax expense of $0.4 million and $1.4
million was recognized in the first fiscal quarter of 2000 and 1999,
respectively, reflecting the utilization of a portion of the Company's available
NOLs to cover estimated taxable income.
5) PREFERRED STOCK AND WARRANTS
The Company issued 15,000 shares of redeemable preferred stock and warrants
to purchase six percent of its Class A Common Stock (or 822,422 shares) at a
nominal amount. In connection with a refinancing transaction in the third
quarter of fiscal 1998, the preferred stock was redeemed but the warrants remain
outstanding, and such warrants are considered as outstanding common stock
equivalents for purposes of computing diluted net income per share.
6) COMMITMENTS AND CONTINGENCIES
The Company is subject to various federal, state, and local laws and
regulations concerning the discharge of contaminants that 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.
Tennessee Valley Steel Corporation ("TVSC"), the prior owners of the assets
of Bayou Steel Corporation (Tennessee), entered into a Consent Agreement and
Order (the "TVSC Consent Order") with the Tennessee Department of Environment
and Conservation under its voluntary clean up program. The Company, in acquiring
the assets of TVSC,
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<PAGE>
entered into a Consent Agreement and Order (the "Bayou Steel Consent Order")
with the Tennessee Department of Environment and Conservation. The Bayou Steel
Consent Order is supplemental to the previous TVSC Consent Order and does not
affect the continuing validity of the TVSC Consent Order. The ultimate remedy
and clean up goals will be dictated by the results of human health and
ecological risk assessments which are components of a required, structured
investigative, remedial, and assessment process. As of December 31, 1999,
investigative, remedial, and risk assessment activities resulted in expenditures
of approximately $1.3 million and a liability of approximately $0.6 million is
recorded as of December 31, 1999 to complete the remediation. At this time, the
Company does not expect the cost or resolution of the TVSC Consent Order to
exceed its recorded obligation.
As of December 31, 1999, the Company believes that it is in compliance, in
all material respects, with applicable environmental requirements and that the
cost of such continuing compliance is not expected to have a material adverse
effect on the Company's competitive position, or results of operations, and
financial condition, or cause a material increase in currently anticipated
capital expenditures. As of December 31, 1999, the Company has accrued
management's best estimate with respect to loss contingencies for certain
environmental matters.
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 financial
position or results of operations.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Management's Discussion and Analysis of Financial Condition and Results of
Operations included as part of the Company's Annual Report on Form 10-K as of
and for the year ended September 30, 1999.
RESULTS OF OPERATIONS
The Company reported consolidated pretax income of $1.1 million in the
first quarter of fiscal 2000 compared to $4.0 million in the comparable period
of fiscal 1999. The $2.9 million change in earnings was due to a decrease in the
metal margin (the difference between the average selling price and the net scrap
cost) and to a lesser extent an increase in conversion cost. These changes were
partially offset by increased shipments and the proceeds from a lawsuit
settlement with a supplier of materials utilized in our melting operations.
The following table sets forth shipment and sales data.
Three Months Ended
December 31,
1999 1998
--------- ----------
Net Sales (in thousands) $ 52,387 $ 47,415
Shipment Tons 161,554 135,543
Average Selling Price Per Ton $ 318 $ 342
A. Sales
Net sales for the quarter increased by 10% on a 19% increase in shipments
and a 7% decrease in the average selling price. During the current quarter,
shipment volumes began to recover from the adverse effects of imports in the
prior year while the average selling price has not responded as quickly.
Shipments were adversely affected by the eighteen-day outage at our Tennessee
rolling mill during the quarter. It is estimated that the Company lost 12,000
tons of sales and that the average selling price was reduced because of the
limited mix of product available. Price increases have been announced throughout
the first fiscal quarter and subsequently that have various effective dates
extending
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<PAGE>
into the second fiscal quarter. These price increases impact substantially all
of the Company's product lines.
B. Cost of Goods Sold
Cost of goods sold was 90% of sales for the quarter compared to 83% of
sales for the prior year period due largely to the selling price decrease and
the increase in the cost of scrap steel. The increase in cost of goods sold as a
percentage of sales was partially offset by the proceeds from the lawsuit
settlement previously noted which reduced cost of goods sold in the current
quarter by approximately 3%.
Scrap is used in the operation of the Company's melt shop in Louisiana and
is a significant component of the cost of billets utilized by the Company's
rolling mills. Scrap cost during the first quarter increased 17% compared to the
same period of last year as scrap prices have been trending upward over the past
quarters. This trend may level off in the second quarter; however, any future
increases will adversely impact metal margin and may minimize potential
favorable impacts of future selling price improvements.
The Company has been able to control the availability and the cost of scrap
to some degree by producing its own shredded and cut grade scrap through its
scrap processing division. This division, coupled with its local scrap
purchasing program, supplied almost 50% of the Company's scrap requirements
during the quarter.
Conversion cost includes labor, energy, maintenance materials, and supplies
used to convert raw materials into billets and billets into shapes. Conversion
cost per ton for the Company's Louisiana operations increased by 4% in the first
quarter of fiscal 2000 compared to the same period of last year as a result of
two factors. First, the Company is working through a learning curve associated
with capital installed in the melt shop last fiscal year. Additionally, the cost
of power has increased as the utility that services its Louisiana operations has
not been as competitive on pricing as it has in years past. Second, the rolling
mill in Louisiana continues operating in a reduced mode only working six and a
half days per week. The Company expects to resume full capacity during the
second quarter. Subsequent to quarter end, the melt shop experienced a
mechanical problem with its main furnace requiring a twelve day shutdown. During
that period the Company operated its less efficient back-up furnace which may
result in higher per ton costs and less production in the second fiscal quarter.
The Tennessee rolling mill experienced a 13% reduction in conversion cost
and a 12% increase in production despite taking an eighteen-day shutdown for
major repairs in the roughing mill. Although conversion costs improved and the
mill is back at full production, the capital required to replace the roughing
mill will not be installed until the end of the year. It is estimated that the
outage cost in excess of $0.5 million after netting expected insurance proceeds.
C. Selling, General and Administrative Expense
Selling, general and administrative expense in the first quarter increased
by $0.2 million compared to the same period of last year. The change is
primarily due to a recently resolved legal matter in the current year.
D. Income Taxes
In fiscal 1998, the Company recorded an adjustment to its net deferred tax
asset valuation allowance and subsequently has provided for income taxes at the
35% statutory tax rate, although its cash tax requirement was limited to the 2%
alternative minimum tax because of its net operating loss position. As of
December 31, 1999, the Company has $7.8 million of recorded net deferred tax
assets. For financial reporting purposes, the Company periodically assesses the
carrying value of its net deferred tax assets. Such an assessment includes many
factors, including changing market conditions, that could impact this assessment
over time and may result in positive or negative adjustments to the deferred tax
asset valuation allowance in the future that would ultimately affect net income.
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E. Net Income
Net income decreased $1.9 million in the first quarter compared to the
first quarter of last year due primarily to a reduced metal margin and increased
conversion cost that were somewhat offset by increased shipments and the
proceeds from a lawsuit settlement with a supplier of materials.
LIQUIDITY AND CAPITAL RESOURCES
A. Cash and Working Capital
The Company ended the first fiscal quarter with $26.9 million in cash and
temporary cash investments. In the first quarter, cash used in operations was
$1.9 million compared to $3.2 million in the first quarter of last year. At
December 31, 1999, current assets exceeded current liabilities by a ratio of
6.01 to 1.00. Working capital increased by $1.1 million to $107.4 million during
the three month period. The Company has an unused $50 million line of credit
which is also available for general corporate purposes.
B. Capital Expenditures
Capital expenditures totaled $2.3 million in the first quarter of fiscal
2000 compared to $5.0 million in the same period last year. The spending is
directed towards cost reduction, productivity enhancements, plant maintenance
and safety and environmental programs. Depending on market conditions, the
Company expects to spend approximately $20 million on various capital projects
during the next twelve months. Included in this amount is $3 million of a $7
million project to increase melting capacity by 20% to 30%. The Company is also
considering spending an additional $15 to $20 million over several years to
increase its Louisiana finished goods capacity by 20% to 30%.
C. Impact of Year 2000 Compliance
To date, the Company's systems have continued to operate without disruption
related to year 2000 issues. The Company will continue to closely monitor areas
of particular risk.
OTHER COMMENTS
Forward-Looking Information, Inflation and Other
This document contains various "forward-looking" statements which represent
the Company's expectation or belief concerning future events. The Company
cautions that a number of important factors could, individually or in the
aggregate, cause actual results to differ materially from those included in the
forward-looking statements including, without limitation, the following: changes
in the price of supplies, power, natural gas, or purchased billets; changes in
the selling price of the Company's finished products or the purchase price of
steel scrap; changes in demand due to imports or a general economic downturn;
cost overruns or start-up problems with capital expenditures; weather conditions
in the market area of the finished product distribution; unplanned equipment
outages; and changing laws affecting labor, employee benefit costs and
environmental and other governmental regulations.
The Company is subject to increases in the cost of energy, supplies,
salaries and benefits, additives, alloys and steel scrap due to inflation. Shape
prices are influenced by supply, which varies with steel mill capacity and
utilization, import levels, and market demand.
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 financial
position or results of operations.
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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 reprot on
Form 10-Q.
3.1 - Amended and Restated By-Laws.
(b) Reports on Form 8-K
None were filed during the first quarter of fiscal year 2000.
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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, Chief Financial Officer,
Treasurer, and Secretary
Date: January 27, 2000
Page 13
Exhibit 3.1
COMPOSITE BY-LAWS
of
BAYOU STEEL CORPORATION
a Delaware Corporation
(as amended through November 2, 1999)
ARTICLE I
MEETINGS OF STOCKHOLDERS
1.1 Annual Meeting. The annual meeting of stockholders shall be held no
later than five months after the end of the Corporation's fiscal year, or as
soon thereafter as practicable, and shall be held at a place and time determined
by the board of directors (the "Board").
1.2 Special Meetings. Special meetings of the stockholders may be called by
resolution of the Board or by the chairman of the board or the chief executive
officer and shall be called by the chief executive officer or secretary upon the
written request (stating the purpose or purposes of the meeting) of any two of
the directors then in office or the holders of 10% of the aggregate voting
power. As used in these by-laws, the term "aggregate voting power" means the
total number of votes cast by stockholders for all matters other than the
election of directors of the Corporation and other than matters as to which a
class vote is applicable. Only business related to the purposes set forth in the
notice of the meeting may be transacted at a special meeting.
1.3 Place and Time of Meetings. Meetings of the stockholders may be held in
or outside Delaware at the place and time specified by the Board or the
directors or shareholders requesting the meeting.
1.4 Notice of Meetings; Waiver of Notice. Written notice of each meeting of
stockholders shall be given to each stockholder entitled to vote at the meeting,
except that (a) it shall not be necessary to give notice to any stockholder who
submits a signed waiver of notice before or after the meeting, and (b) no notice
of an adjourned meeting need be given except when required under Section 1.5 of
these by-laws or by law. Each notice of a meeting shall be given, personally or
by mail, not less than ten nor more than sixty days before the meeting, or if
such meeting shall be scheduled to occur after the redemption of the Preferred
Stock, not less than thirty nor more than sixty days before the meeting, and
shall state the time and place of the meeting, and unless it is the annual
meeting, shall state at whose direction or request the meeting is called and the
purposes for which it is called. If mailed, notice shall be considered given
when mailed to a stockholder at his address on the corporation's records. The
attendance of any stockholder at a meeting, without protesting at the beginning
of the meeting that the meeting is not lawfully called or convened, shall
constitute a waiver of notice by him.
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1.5 Quorum. At any meeting of stockholders, the presence in person or by
proxy of the holders of shares of stock having a majority of the aggregate
voting power shall constitute a quorum for the transaction of any business. In
the absence of a quorum, a majority in voting interest of those present or, if
no stockholders are present, any officer entitled to preside at or to act as
secretary of the meeting, may adjourn the meeting until a quorum is present. At
any adjourned meeting at which a quorum is present any action may be taken which
might have been taken at the meeting as originally called. No notice of an
adjourned meeting need be given if the time and place are announced at the
meeting at which the adjournment is taken except that, if adjournment is for
more than thirty days or if, after the adjournment, a new record date is fixed
for the meeting, notice of the adjourned meeting shall be given pursuant to
Section 1.4.
1.6 Voting; Proxies. Each holder of outstanding shares of Class A Common
Stock, Class B Common Stock, Class C Common Stock and Cumulative Preferred Stock
and any other authorized and outstanding class of stock shall be entitled to the
number of votes per share, if any, and shall vote in the manner provided in the
Certificate of Incorporation. Corporate action to be taken by stockholder vote
shall be authorized by a majority of the votes cast at a meeting of
stockholders, except as otherwise provided by law, by the Certificate of
Incorporation or by Section 1.8 of these by-laws. Directors shall be elected in
the manner provided in Section 2.1 of these by-laws. Voting need not be by
ballot unless requested by a stockholder at the meeting or ordered by the
chairman of the meeting. Each stockholder entitled to vote at any meeting of
stockholders or to express consent to or dissent from corporate action in
writing without a meeting may authorize another person to act for him by proxy.
Every proxy must be signed by the stockholder or his attorney-in- fact. No proxy
shall be valid after three years from its date unless it provides otherwise.
1.7 List of Stockholders. Not less than ten days prior to the date of any
meeting of stockholders, the secretary of the Corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. For a period of not less than ten days prior to
the meeting, the list shall be available during ordinary business hours for
inspection by any stockholder for any purpose germane to the meeting. During
this period, the list shall be kept at a place within the city where the meeting
is to be held. The list shall also be available for inspection by stockholders
at the time and place of the meeting.
1.8 Action by Consent Without a Meeting. Any action required or permitted
to be taken at any meeting of stockholders may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voting. Prompt notice of the taking of any such action shall be
given to those stockholders who did not consent in writing.
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ARTICLE II
BOARD OF DIRECTORS
2.1 Number, Qualification, Election and Term of Directors. The business of
the Corporation shall be managed by the Board, which shall consist of not less
than the number of directors provided for in the Certificate of Incorporation,
as determined by resolution of the Board. Directors shall be elected at each
annual meeting of stockholders in the manner provided in the Certificate of
Incorporation and shall hold office until the next annual meeting of
stockholders and until the election and qualification of their respective
successors, subject to the provisions of Section 2.9.
2.2 Quorum and Manner of Acting. A majority of the directors then in office
shall constitute a quorum for the transaction of business at any meeting. Action
of the Board shall be authorized by the vote of a majority of the directors
present at the time of the vote if there is a quorum, unless otherwise provided
by law, the Certificate of Incorporation or these by-laws. In the absence of a
quorum, a majority of the directors present may adjourn any meeting from time to
time until a quorum is present.
2.3 Place of Meetings. Meetings of the Board may be held in or outside
Delaware.
2.4 Annual and Regular Meetings. Annual meetings of the Board, for the
election of officers and consideration of other matters, shall be held either
(a) without notice immediately after the annual meeting of stockholders and at
the same place, or (b) as soon as practicable after the annual meeting of
stockholders, on notice as provided in Section 2.6 of these by-laws. Regular
meetings of the Board shall be held not less than four times per annum. Regular
meetings of the Board may be held without notice at such times and places as the
Board determines. If the day fixed for a regular meeting is a legal holiday, the
meeting shall be held on the next business day.
2.5 Special Meetings. Special meetings of the Board may be called by the
chairman of the board, the chief executive officer or by any two of the
directors.
2.6 Notice of Meetings; Waiver of Notice. Notice of the time and place of
each special meeting of the Board, and of each annual meeting not held
immediately after the annual meeting of stockholders and at the same place,
shall be given to each director by mailing it to him at his residence or usual
place of business at least three days before the meeting, or by delivering,
telephoning or telegraphing it to him at least two days before the meeting.
Notice of a special meeting shall also state the purpose(s) for which the
meeting is called. Notice need not be given to any director who submits a signed
waiver of notice before or after the meeting or who attends the meeting without
protesting at the beginning of the meeting the transaction of any business
because the meeting was not lawfully called or convened. Notice of any adjourned
meeting need not be given, other than by announcement at the meeting at which
the adjournment is taken.
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<PAGE>
2.7 Board or Committee Action Without a Meeting. Any action required or
permitted to be taken by the Board or by any committee of the Board may be taken
without a meeting if all of the members of the Board or of the committee consent
in writing to the adoption of a resolution authorizing the action. The
resolution and the written consents by the members of the Board or the committee
shall be filed with the minutes of the proceeding of the Board or of the
committee.
2.8 Participation in Board or Committee Meetings by Conference Telephone.
Any or all members of the Board or of any committee of the Board may participate
in a meeting of the Board or of the committee by means of a conference telephone
or similar communications equipment allowing all persons participating in the
meeting to hear each other at the same time. Participation by such means shall
constitute presence in person at the meeting.
2.9 Resignation and Removal of Directors. Any director may resign at any
time by delivering his resignation in writing to the chief executive officer or
secretary of the Corporation, to take effect at the time specified in the
resignation; the acceptance of a resignation, unless required by its terms,
shall not be necessary to make it effective. Any or all of the directors may be
removed at any time, either with or without cause, in the manner provided by
applicable law or by the Certificate of Incorporation.
2.10 Vacancies. Any vacancy in the Board, including one created by an
increase in the number of directors, may be filled for the unexpired term either
in the manner provided in the Certificate of Incorporation or by the unanimous
vote of the remaining directors elected by the respective classes of
stockholders.
2.11 Compensation. Subject to Section 3.2, directors shall receive such
compensation as the Board determines, together with reimbursement of their
reasonable expenses in connection with the performance of their duties. A
director may also be paid for serving the Corporation, its affiliates or
subsidiaries in other capacities.
ARTICLE III
COMMITTEES
3.1 Executive Committee. The Board, by resolution adopted by a majority of
the entire Board, may designate an Executive Committee of one or more directors
which shall have all the powers and authority of the Board, except as otherwise
provided in the resolution or by applicable law. The members of the Executive
Committee shall serve at the pleasure of the Board. All action of the Executive
Committee shall be reported to the Board at its next meeting.
3.2 Compensation Committee. The Board shall designate a Compensation
Committee of one or more directors who shall not be officers or employees of the
Corporation. The Compensation Committee shall establish compensation payable to
directors and executive officers of the Corporation as well as any loans or
advances by the Corporation to such persons.
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<PAGE>
3.3 Nominating Committees. The Board shall designate a Class A Nominating
Committee of all of the current directors who have been elected by the holders
of Class A Common Stock (or otherwise designated as Class A Common Stock
directors) and not officers or employees of the Corporation, and service on such
committee shall be voluntary and discretionary for each director. The Board may
designate a Class B Nominating Committee of one or more directors, who shall be
directors elected by the holders of the Class B Common Stock or otherwise
designated as Class B Common Stock directors. The Class A and Class B Nominating
Committees shall nominate persons for election as directors by the holders of
Class A Common Stock and Class B Common Stock, respectively, at the annual
meeting of stockholders.
3.4 Other Committees. The Board, by resolution adopted by a majority of the
entire Board, may designate other committees of directors of one or more
directors, including but not limited to an Audit Committee, which shall serve at
the Board's pleasure and have such powers and duties as the Board determines.
3.5 Rules Applicable to Committees. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of any member of a committee, the member(s) present at a
meeting of the committee and not disqualified, whether or not a quorum, may
unanimously appoint another director to act at the meeting in place of the
absent or disqualified member. All action of a committee shall be reported to
the Board at its next meeting. Each committee shall adopt rules of procedure and
shall meet as provided by those rules or by resolutions of the Board.
ARTICLE IV
OFFICERS
4.1 Number; Security. The officers of the Corporation shall be the chairman
of the board, one or more vice chairmen, the chief executive officer, the
president, the chief operating officer, the chief financial officer and one or
more vice presidents (including an executive vice president, if the Board so
determines). Any two or more offices may be held by the same person. The Board
may require any officer, agent or employee to give security for the faithful
performance of his duties.
4.2 Election; Term of Office. The officers of the Corporation shall be
elected annually by the Board and each such officer shall hold office until the
next annual meeting of the Board and until the election of his successor,
subject to the provisions of Section 4.4.
4.3 Subordinate Officers and Employees. The Board may appoint subordinate
officers, agents or employees, (including one or more vice presidents, a
secretary, one or more assistant secretaries, a controller, a treasurer and one
or more assistant treasurers), each of whom shall hold office for such period
and have such powers and duties as the Board determines. The Board may
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<PAGE>
delegate to any officer or to any committee the power to appoint and define the
powers and duties of any subordinate officers, agents or employees.
4.4 Resignation and Removal of Officers. Any officer may resign at any time
by delivering his resignation in writing to the president or secretary of the
Corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Except as provided in the Certificate of
Incorporation, any officer appointed by the Board or appointed by an officer or
by a committee may be removed by the Board either with or without cause, and in
the case of an officer appointed by an officer or by a committee, by the officer
or committee who appointed him.
4.5 Vacancies. A vacancy in any office may be filled for the unexpired term
in the manner prescribed in Sections 4.2 and 4.3 of these by-laws for election
or appointment to the office.
4.6 Chairman of the Board. The chairman of the board shall preside at all
meetings of the Board and of the stockholders and shall have such powers and
duties as the Board assigns to him.
4.7 Chief Executive Officer. The chief executive officer of the Corporation
shall have general supervision over the business of the Corporation and shall
have such other powers and duties as the Board assigns to him.
4.8 President. Subject to the control of the chief executive officer, the
president of the Corporation shall have such powers as the chief executive
officer assigns to him.
4.9 Chief Operating Officer. The chief operating officer, subject to the
powers of the chief executive officer and the supervision of the Board, shall
manage the day-to-day operations of the Corporation, shall perform such other
duties as may be prescribed by the Board or the chief executive officer, and
shall have the general powers and duties usually vested in the chief operating
officer of a corporation. Without limiting the generality of the foregoing, the
chief operating officer shall have supervision and direction over any other
subordinate officer of the Corporation and its subsidiaries, and all such powers
as may be reasonably incident to such responsibilities. He may sign, execute and
deliver in the name of the Corporation powers of attorney, contracts, bonds, and
other obligations and shall perform such other duties as may be prescribed from
time to time by the Board or by the chief executive officer.
4.10 Chief Financial Officer. The chief financial officer shall be the
principal financial officer of the Corporation. He shall manage the financial
affairs of the Corporation and direct the activities of the treasurer,
controller and other officers or employees responsible for the Corporation's
finances. He shall be responsible for all internal and external financial
reporting and for coordinating the audit of the Corporation's financial records
with the external auditors. He may sign, execute and deliver in the name of the
Corporation powers of attorney, contracts, bonds, and other obligations and
shall perform such other duties as may be prescribed from time to time by the
Board or by these by-laws.
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<PAGE>
4.11 Vice President. Each vice president shall have such powers and duties
as the Board or the chief executive officer assigns to him.
4.12 Secretary. The secretary shall be the secretary of, and keep the
minutes of, all meetings of the Board and of the stockholders, shall be
responsible for giving notice of all meetings of stockholders and of the Board,
and shall keep the seal and, when authorized by the Board, apply it to any
instrument requiring it. Subject to the control of the Board, he shall have such
powers and duties as the Board or the chief executive officer assigns to him. In
the absence of the secretary from any meeting, the minutes shall be kept by the
person appointed for that purpose by the presiding officer.
4.13 Salaries. The Board may fix the officers' salaries, if any, or it may
authorize the chief executive officer to fix the salary of any other officer.
ARTICLE V
SHARES
5.1 Certificates. Subject to requirements prescribed by law and the
Certificate of Incorporation, the Corporation's shares shall be represented by
certificates in the form approved by the Board. Each certificate shall be signed
by the chairman of the Board, the president or a vice president and by the
secretary or an assistant secretary, or the treasurer or any assistant
treasurer, and shall be sealed with the Corporation's seal or a facsimile of the
seal. Whenever a certificate is countersigned by a transfer agent, one or both
of the officers' or assistant officers' signature and the seal may be in
facsimile, engraved or printed. In case any officer or assistant officer whose
signature appears on any share certificate shall have ceased to be such because
of death, resignation or otherwise, before the certificate is issued, it may be
issued by the Corporation with the same effect as if he had not ceased to be
such at the date of its issue. So long as the restrictions set forth in Article
5.9 of the Certificate of Incorporation shall not have lapsed, all share
certificates for shares of common stock shall bear a conspicuous legend as
follows:
"THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS
PURSUANT TO ARTICLE 5.9 OF THE CERTIFICATE OF INCORPORATION OF THE
CORPORATION, A COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE
CORPORATIONS'S PRINCIPAL PLACE OF BUSINESS LOCATED AT 1111 W. MOCKINGBIRD
LANE, DALLAS, TEXAS 75247.
If the Corporation is authorized to issue shares of more than one class, it
shall be stated on the face or back of all certificates that the Corporation
will furnish to any shareholder, upon request and without charge, a full or
summary statement of the designations, preferences, limitations, and relative
rights of the shares of each class authorized to be issued and, if the
Corporation is authorized to issue any preferred or special class in a series,
the variations in the relative rights and preferences between the shares of each
such series so far as the same have been fixed and determined, and the authority
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<PAGE>
of the Board of Directors to fix and determine the relative rights and
preferences of subsequent series.
5.2 Share Register. All certificates representing shares shall be
registered in the share register as they are issued, and those of the same class
or series shall be consecutively numbered. Subject to Article 5.9 of the
Certificate of Incorporation and Section 5.4 hereof, the Corporation shall be
entitled to treat the registered holder of any share(s) as the holder thereof in
fact and law and shall not be bound to recognize any equitable or other claim
to, or interest in, such share(s) on the part of any other person, whether or
not it shall have express or other notice thereof, save as otherwise expressly
provided by statute.
5.3 Transfers. Subject to Article 5.9 of the Certificate of Incorporation
and Section 5.4 hereof, shares of the Corporation shall be transferred only on
its books upon the surrender to the Corporation or its transfer agent of the
share certificate(s) therefor duly endorsed by the person named therein, or
accompanied by proper evidence of succession, assignment or authority to
transfer such shares; provided, no transfers of shares shall be made while the
books of the Corporation are closed against transfers as hereinafter provided in
these by-laws. Subject to Section 5.4 hereof, upon transfer the surrendered
certificate(s) shall be cancelled, a new certificate or certificates shall be
issued to the person entitled thereto, and the transaction shall be recorded
upon the books of the Corporation.
5.4 Restrictions on Transfer. In addition to the restrictions in Article
5.9 of the Certificate of Incorporation, transfers of shares may be restricted
in any lawful manner by law, by the Certificate of Incorporation, or by contract
if a copy of the contract is filed with the Corporation, provided that notice of
the restrictions shall be typed or printed conspicuously on the share
certificate. The secretary shall enforce the restrictions of Article 5.9 of the
Certificate of Incorporation. In so doing, the secretary shall determine
ownership of stock of the Corporation in accordance with all rules relating to
direct, indirect or constructive ownership of stock under Section 382 of the
Internal Revenue Code of 1986 (including, without limitation, the rules under
Section 382(1)(3) entitled "Operating Rules Relating to Ownership of Stock"), as
the same may be amended from time to time, and the secretary may seek, and rely
upon, the advice of counsel in order to attribute stock ownership. If the
secretary determines that an attempted transfer violates or would violate
Article 5.9 of the Certificate of Incorporation, any such transfer, unless
otherwise authorized by the Board of Directors in accordance with such Article
5.9, shall be null and void ab initio. Except as authorized by the secretary in
accordance with the procedures set forth above, no employee or agent of the
Corporation shall be permitted to record any attempted or purported transfer and
no intended transferee of shares of common stock of the Corporation in any
attempted or purported transfer shall be recognized as a shareholder of the
Corporation for any purpose whatever except as provided in Article 5.9.
5.5 Lost, Destroyed or Mutilated Certificates. The Board of Directors may
direct a new share certificate to be issued in place of any share certificate
theretofore issued by the Corporation and claimed to have been lost, destroyed
or mutilated, upon the claimant's furnishing an affidavit
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<PAGE>
of the facts and, if required by the Board of Directors, a bond of indemnity in
such amount or in open penalty and in such form, with such surety thereon, as
the Board may approve for the protection of the Corporation and its officers and
agents.
5.6 Determination of Stockholders of Record. The Board may fix, in advance,
a date as the record date for the determination of stockholders entitled to
notice of or to vote at any meeting of the stockholders, or to express consent
to or dissent from any proposal without a meeting, or to receive payment of any
dividend or the allotment of any rights, or for the purpose of any other action.
The record date may not be more than sixty or less than ten days before the date
of the meeting or more than sixty days before any other action.
ARTICLE VI
MISCELLANEOUS
6.1 Seal. The Board shall adopt a corporate seal, which shall be in the
form of a circle and shall bear the Corporation's name and the year and state in
which it was incorporated.
6.2 Fiscal Year. The Board may determine the Corporation's fiscal year.
Until changed by the Board, the Corporation's fiscal year shall be October 1
through September 30.
6.3 Voting of Shares in Other Corporations. Shares in other corporations
which are held by the Corporation may be represented and voted by the chairman
of the board, the president or a vice president of this Corporation, by proxy or
proxies appointed by one of them, or by any person appointed by the Board.
6.4 Amendments. By-laws may be amended, repealed or adopted by the Board.
Additionally, any amendment or repeal of Sections 3.3, 4.7 or this Section 6.4
shall be by unanimous vote of the Board.
Page 22
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM BAYOU STEEL CORPORATION CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED
STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 26,876,323
<SECURITIES> 0
<RECEIVABLES> 24,784,066
<ALLOWANCES> 604,738
<INVENTORY> 71,905,396
<CURRENT-ASSETS> 128,805,913
<PP&E> 175,658,788
<DEPRECIATION> 65,899,935
<TOTAL-ASSETS> 244,609,572
<CURRENT-LIABILITIES> 21,442,414
<BONDS> 119,041,653
0
0
<COMMON> 128,906
<OTHER-SE> 104,125,505
<TOTAL-LIABILITY-AND-EQUITY> 244,609,572
<SALES> 52,386,622
<TOTAL-REVENUES> 52,386,622
<CGS> 47,051,929
<TOTAL-COSTS> 48,867,523
<OTHER-EXPENSES> (109,591)
<LOSS-PROVISION> 44,937
<INTEREST-EXPENSE> 2,850,000
<INCOME-PRETAX> 1,090,463
<INCOME-TAX> 381,662
<INCOME-CONTINUING> 708,801
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 708,801
<EPS-BASIC> .05
<EPS-DILUTED> .05
</TABLE>
