<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MAY 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-9944
CHAPARRAL STEEL COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 75-1424624
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 WARD ROAD, MIDLOTHIAN, TEXAS 76065
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: A/C 214 775-8241
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
COMMON STOCK, PAR VALUE $.10 NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X].
Aggregate market value of the voting stock (which consists solely of
shares of Common Stock) held by non-affiliates of the registrant as of August
11, 1995, computed by reference to the closing sale price of the registrant's
Common Stock on the New York Stock Exchange on such date: $61,769,000.
Indicate the number of shares outstanding of each of the Registrant's
classes of Common Stock, as of the latest practicable date.
COMMON STOCK - $.10 PAR VALUE
29,679,900 SHARES AS OF AUGUST 11, 1995
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE REGISTRANT'S ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR
ENDED MAY 31, 1995 INCLUDED AS EXHIBIT 13 TO THIS ANNUAL REPORT ARE
INCORPORATED BY REFERENCE INTO PART II.
PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD OCTOBER 18, 1995 (S.E.C. FILE NUMBER:
1.001-09944), ARE INCORPORATED BY REFERENCE INTO PART III.
(Page 1 of 19 pages including Exhibits)
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C>
PART I
Item 1. Business............................................. 1
Item 2. Properties........................................... 5
Item 3. Legal Proceedings.................................... 5
Item 4. Submission of Matters to a Vote of
Security Holders................................ 5
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters..................... 5
Item 6. Selected Financial Data.............................. 5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations............. 6
Item 8. Financial Statements and Supplementary Data.......... 6
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure............. 6
PART III
Item 10. Directors and Executive Officers of the Registrant... 7
Item 11. Executive Compensation............................... 9
Item 12. Security Ownership of Certain Beneficial Owners
and Management.................................. 9
Item 13. Certain Relationships and Related Transactions....... 9
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K............................. 10
</TABLE>
<PAGE> 3
PART I
ITEM 1. BUSINESS
(a) General development of business
Chaparral Steel Company (the "Company") was organized as a Delaware
corporation in July 1973 by Texas Industries, Inc. ("TXI") and Co-Steel
Inc.("Co-Steel"), a Canadian corporation, which owns steel mills in New Jersey,
Canada and the United Kingdom. TXI is a New York Stock Exchange listed company
which produces cement and concrete. At the time of the Company's organization,
TXI and Co-Steel each owned a 50% interest in the Company. TXI owned 100% of
the Company from November 1985 when it acquired the remaining 50% of the
outstanding securities of the Company from Co- Steel, until July 1988 when
approximately 19.8% of the outstanding securities were sold in an initial
public offering of common stock by the Company. The consolidated financial
statements include the operations of Chaparral Steel Company, America Steel
Transport and Castelite Steel Products Inc.
(b) Financial information about industry segments
The Company operates in the steel industry only; therefore, no
industry segment information is presented.
(c) Narrative description of business
The Company's original steel mill facility was completed in 1975 and
consisted of an electric arc furnace and a rolling mill, which produced rebar
used in concrete construction, and small size angles, channels, rounds and
flats.
In 1982, a major expansion of the steel mill, at a cost of
approximately $180 million, added an additional electric arc furnace and
rolling mill to produce medium-sized structural products. The expansion enabled
the Company to produce beams up to 8" wide. Additional modifications to the
medium section mill now enable the Company to produce beams up to 14" wide, in
addition to large channels and angles.
During fiscal 1992, commissioning was completed on a large beam mill
which has expanded the existing product range up to include 24" wide flange
beams. The expansion was financed with long-term senior unsecured notes of $80
million.
PRODUCTS
The Company's products are sold generally to steel service centers and
steel fabricators for use in the construction industry, as well as to cold
finishers, forgers and original equipment manufacturers for use in the
railroad, defense, automotive, mobile home and energy industries.
The Company designed its bar and structural mills to efficiently
produce bar mill products (31% of 1995 sales on a tonnage basis), structural
mill products (48% of 1995 sales on a tonnage basis) and large beam mill
products (21% of 1995 sales on a tonnage basis). The bar and structural mills
can be modified, without substantial cost or delay, to change current product
mix in order to comply with customer needs or changes in market conditions.
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After inspection, bundling and strapping, finished products are
delivered by common carrier, customer-owned truck, rail or barge. The Company
maintains an inventory of finished products based on anticipated short-term
usage to provide prompt shipments to customers when possible.
The following is a general description of the Company's products:
REINFORCING BAR
The Company produces all commercial sizes of rebar from 3/8" diameter
to 1-3/8" diameter for use in construction applications ranging from highway
and public works projects to residential and high-rise construction.
MERCHANT QUALITY ROUNDS
Merchant quality rounds are cylindrical steel bars used in
construction and fabrication operations. Common uses include roof joists,
anchor bolts and truss supports.
SPECIAL BAR QUALITY ROUNDS
Special Bar Quality ("SBQ") rounds are produced in a large variety of
carbon and alloy grades primarily for use in the forging, machining and cold
drawing industries for production of automotive gears and hand tools. SBQ
rounds are also used as sucker rod material in the oil industry.
BEAMS
Beams are used for building construction and the non-building
fabrication industries. Sales of beams currently constitute approximately 63%
of the Company's sales on a tonnage basis. Beams produced by the Company's
medium section mill include wide-flange beams (ranging in size from 4" x 4" to
14" x 6-3/4"), certain sizes of standard "I" beams and Bantam(TM) beams. Those
beams are used in low-rise construction (up to five stories) and in various
fabrication operations for industrial machinery and mobile home frames. The
large beam mill has enabled the Company to produce wide- flange beams from 8"
to 24" in diameter that are used in multi-story buildings, short-span bridges
and other heavy industrial applications.
STRUCTURAL MERCHANT SHAPES AND OTHER PRODUCTS
These products consist of structural channels, flat bars and squares
used in the equipment manufacturing and construction industries, particularly
in low-rise structures.
The Company's products are predominately marketed in North America
exclusively by Company salespersons. Approximately 48% of the Company's
products are sold in Texas, Oklahoma, Louisiana and Arkansas. Other regional
sales of the Company's products are approximately 15% in the midwest United
States and approximately 12% in the southeastern United States. Rebar, merchant
shapes and other products are sold principally to customers located in the
southwestern United States. The Free Trade Agreements between the United
States, Canada and Mexico may continue to favorably affect the Company's
position as a supplier of certain steel products in the Canadian and Mexican
markets. Export sales accounted for 7% of 1995 shipments.
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EXPANDING CAPACITY
Historically, the Company's philosophy was to operate its mill at full
production capacity. Recently, the Company refocused on serving customer
requirements and specific markets while striving to achieve the lowest possible
unit cost of production. The Company's strategy is to continually increase its
melting capacity through productivity improvements, the utilization of new
technology and capital expenditures. Continuing increases in melting capacity
have dictated further capital spending for increases in rolling capacity to
allow maximum use of the Company's facilities to take advantage of marketplace
opportunities.
RAW MATERIALS AND ENERGY
The Company's primary raw material is scrap steel, which includes
shredded steel. The Company produces a major portion of its shredded steel
requirements from its own shredder operation at the site of the steel mill.
Shredded material, which constitutes approximately 32% of the Company's raw
material mix, is produced by the Company at its facility and is primarily
composed of crushed auto bodies purchased on the open market. Another grade of
scrap steel is #1 Heavy, which constitutes approximately 29% of the Company's
scrap steel requirements and is also purchased on the open market.
Historically, the Company has had an adequate supply of scrap steel for its
operations, and the Company believes that the supply of scrap steel will be
adequate to meet future requirements. The purchase price of scrap steel is
subject to market forces largely beyond the control of the Company. The Company
has historically maintained a scrap inventory commensurate with market
conditions.
The Company's steel mill consumes large amounts of electricity and
natural gas. Electricity is obtained from a local electric utility under an
interruptible supply contract with price adjustments which reflect increases or
decreases in the utility's fuel costs. The Company believes that the savings in
the cost of electricity resulting from the interruption provisions of the
contract offsets any loss which might result from interruptions. Natural gas is
purchased in the open market generally under a one year supply contract. The
Company believes that adequate supplies of both electricity and natural gas are
readily available.
SEASONALITY
While there is generally no seasonality in demand for the Company's
products, production at the mill is normally shut down for up to two weeks each
summer and up to one week in December, in order to conduct comprehensive
maintenance (in addition to normal maintenance performed throughout the year)
and to install capital improvements. During these periods, much of the
equipment in the plant is dismantled, inspected and overhauled. The resulting
lower production during the three month periods ending August and February
affect the Company's financial results for those periods.
MARKETING AND BACKLOG
At present, the Company has approximately 1,100 customers, no one of
which accounted for more than 10% of the Company's products sold in 1995. The
commodity nature of certain of the Company's products is generally not
characteristic of a long lead time order cycle. The Company does not believe
that backlog is a significant factor in its business. While the Company has a
small number of long-term customer contracts, most contracts are for quarterly
customer requirements or for immediate shipment. Orders are generally filled
within 45 days and are cancelable.
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COMPETITION AND OTHER MARKET FACTORS
The Company competes with steel producers, including foreign
producers, on the basis of price, quality and service. Intense sales
competition exists for substantially all of the Company's products. A
substantial portion of the Company's products is sold to the construction
industry.
Both the domestic and foreign steel industries are characterized by
excess mill capacity. Steel producers in the United States have faced strong
competition from producers around the world. The Company believes that its
success in increasing productivity, reducing production costs and shifting into
higher margin product lines should continue to enable it to compete effectively
with both foreign and domestic producers.
ENVIRONMENTAL MATTERS
The operations of the Company and its subsidiaries are subject to
various federal and state environmental laws and regulations. Under these laws
the U.S. Environmental Protection Agency ("EPA") and agencies of state
government have the authority to promulgate regulations which could result in
substantial expenditures for pollution control and solid waste treatment. Three
major areas regulated by these authorities are air quality, water quality and
hazardous waste management. Pursuant to these laws and regulations emission
sources at the Company's facilities are regulated by a combination of permit
limitations and emission standards of statewide application, and the Company
believes that it is in substantial compliance with its permit limitations and
applicable laws and regulations.
The Company's steel mill generates, in the same manner as other
similar steel mills in the industry, electric arc furnace ("EAF") dust that
contains lead, chromium and cadmium. The EPA has listed this EAF dust, which is
collected in baghouses, as a hazardous waste. The Company has contracts with
reclamation facilities in the United States and Mexico pursuant to which such
facilities receive the EAF dust generated by the Company and recover the metals
from the dust for reuse, thus rendering the dust non-hazardous. In addition,
the Company is continually investigating alternative reclamation technologies
and has implemented processes for diminishing the amount of EAF dust generated.
In March 1991, the EPA issued an Administrative Order for Removal
Action requiring the Company, along with several other companies, to undertake
final removal activities (the "Final Activities") at a site to which it had
shipped EAF dust. The Company had participated earlier in preliminary remedial
activities at the site under an Administrative Order on Consent entered into in
January 1986 among the EPA, Chaparral and the other companies. Chaparral's
share of the costs associated with the Final Activities did not have a material
adverse effect on its competitive position, operations or financial condition.
The Company intends to comply with all legal requirements regarding
the environment but since many of them are not fixed, presently determinable,
or are likely to be affected by future legislation or rule making by government
agencies, it is not possible to accurately predict the aggregate future costs
of compliance and their effect on the Company's operations, future net income
or financial condition.
4
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EMPLOYEES
At May 31, 1995, the Company had 1,112 employees.
ITEM 2. PROPERTIES
The Company's original steel mill facility completed in 1975 in
Midlothian, Texas, consisted of an electric arc furnace and a rolling mill. In
1982, a major expansion of the steel mill, added an additional electric arc
furnace and rolling mill that produced medium-sized structural products. In
1992, a large beam mill was commissioned that results in excess rolling
capacity over the production capacity of the melting operation. The Company's
real property, plant and equipment are subject to liens securing its long-term
debt.
Operating facilities are as follows;
<TABLE>
<CAPTION>
(000's)
(000's) Production Approximate
Capacity 1995 square footage
(Tons) (Tons) of facilities
------ ------ -------------
<S> <C> <C> <C>
Melting 1,600 1,551 265,000
Rolling 1,900 1,438 560,000
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company is involved in litigation relating to
claims arising in the ordinary course of business operations. No material
litigation is pending against or currently affects the Company.
The Company maintains insurance with financially sound insurance
companies against certain risks, which insurance the Company believes to be
adequate in relation to the Company's business. The Company also maintains a
hazardous waste liability policy against certain third party claims.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Common stock market prices, dividends and certain other items as shown
in the "Quarterly Stock Prices and Dividends" information located on page 15 of
the Registrant's Annual Report to Stockholders for the year ended May 31, 1995,
are incorporated herein by reference. The restriction on the payment of
dividends described in Note E to the Consolidated Financial Statements entitled
"Long-Term Debt" on page 12 of the Registrant's Annual Report to Stockholders
for the year ended May 31, 1995, is incorporated herein by reference.
5
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ITEM 6. SELECTED FINANCIAL DATA
The "Selected Financial Data" on page five of the Registrant's Annual
Report to Stockholders for the year ended May 31, 1995, is incorporated herein
by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The "Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages three and four of the Registrant's Annual
Report to Stockholders for the year ended May 31, 1995, are incorporated herein
by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following Consolidated Financial Statements and Supplementary Data
of the Registrant and its subsidiaries, included in the Registrant's Annual
Report to Stockholders for the year ended May 31, 1995, are incorporated herein
by reference:
Consolidated Balance Sheets - May 31, 1995 and 1994
Consolidated Statements of Income - Years ended May 31, 1995,
1994 and 1993
Consolidated Statements of Cash Flows - Years ended May 31, 1995,
1994 and 1993
Consolidated Statements of Stockholders' Equity - Years ended
May 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements - May 31, 1995
Quarterly Financial Information
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Reference is made to "Election of Directors" on page two of the
Registrant's Proxy Statement for the Annual Meeting of Stockholders to be held
October 18, 1995. Information on the directors and executive officers of the
Registrant is presented below:
<TABLE>
<CAPTION>
POSITIONS WITH REGISTRANT, OTHER
--------------------------------
NAME AGE EMPLOYMENT DURING LAST FIVE YEARS
---- --- ---------------------------------
<S> <C> <C>
Robert D. Rogers.......... 59 Chairman of the Board of the Company; President, Chief Executive
Officer and Director of TXI; Director of Consolidated Freightways,
Inc. (2)(3)
Gordon E. Forward......... 59 President, Chief Executive Officer and Director; 1988 to 1991,
Cement/ Concrete Division President of TXI; Director of TXI (2)
Kenneth R. Allen.......... 38 1990 to present, Director of Investor Relations of Chaparral Steel
and TXI; 1991 to present, Treasurer of TXI; 1988 to 1990,
Corporate Financial Manager of TXI
Dennis E. Beach........... 56 Vice President-Administration
Larry L. Clark............ 51 October 1993 to present, Vice President-Controller and Assistant
Treasurer; 1976 to September 1993, Controller and Assistant
Treasurer
David A. Fournie.......... 47 1992 to present, Vice President of Operations; 1990 to 1991,
General Manager-Medium Section Mill
Richard M. Fowler......... 52 October 1994 to present, Senior Vice President-Finance and
Treasurer;
1990 to September 1994, Senior Vice President-Finance; 1986 to
1990, Vice President-Finance; Vice President- Finance of TXI
Richard T. Jaffre......... 52 Vice President-Raw Materials
Robert C. Moore........... 61 1990 to present, Vice President- General Counsel and Secretary;
1985 to 1990, Secretary; Vice President- General Counsel and
Secretary of TXI
Libor F. Rostik........... 61 1992 to present, Senior Vice President -Engineering; 1985 to 1991,
Vice President-Engineering
</TABLE>
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<TABLE>
<S> <C> <C>
Jeffry A. Werner.......... 52 Senior Vice President-Commercial
Peter H. Wright........... 53 October 1994 to present, Vice President - Quality Engineering and
SBQ Sales; 1991 to September 1994, Vice President - Quality
Control and SBQ Sales; 1986 to 1991, Vice President-Quality
Control
Robert Alpert............. 63 1989 to present, Director; Director of TXI and Consolidated
Freightways, Inc.; Chairman of the Board of Alpert Investment
Corporation (3)
John M. Belk.............. 75 Director; Chairman of the Board of Belk Stores Services, Inc.;
Director of Lowe's Companies, Inc. and Coca-Cola Bottling Co.
Consolidated (3)
Gerald R. Heffernan....... 76 Director; 1990 to present, President- G. R. Heffernan & Associates,
Ltd.; 1987 to 1990, Chairman of the Board of Co-Steel Inc.;
Director of TXI (1) (2)
Gerhard Liener............ 63 Director; Chief Financial Officer of Daimler-Benz AG; Director of
Consolidated Freightways, Inc. (1)
Eugenio Clariond Reyes.... 52 October 1993 to present, Director; Director General and Chief
Executive Officer, Grupo IMSA. S. A.; President, Mexico-U.S.
Chamber of Commerce; Director, Instituto Tecnologico y de Estudias
Superiores de Monterrey, A.C.(1)
</TABLE>
(1) Member of the Audit Committee.
(2) Member of the Executive Committee.
(3) Member of the Compensation Committee.
Directors who are not employees of the Company currently receive
$15,000 per year plus $1,000 for each day that a Board and/or a Committee
Meeting is attended. All references to years in the above biographies are
references to calendar years.
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ITEM 11. EXECUTIVE COMPENSATION
The "Executive Compensation" and "Report of the Compensation Committee
on Executive Compensation" on pages five through nine of the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held October 18, 1995,
is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The "Security Ownership of Certain Beneficial Owners" on page two and
the "Security Ownership of Management" on page four of the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held October 18, 1995,
is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No reportable transactions occurred between the Company and any
director, nominee for director, officer or any affiliate of, or person related
to, any of the foregoing since the beginning of the Company's last fiscal year
(June 1, 1994).
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(l) and (2) The response to this portion of Item 14 is submitted as
a separate section of this report.
(a)(3) Listing of Exhibits
3. Articles of Incorporation. (incorporated by reference from
Chaparral Steel Company's Form S-1 Registration No. 33-22103
as filed June 29, 1988)
4. Instruments defining rights of security holders. (incorporated
by reference from Chaparral Steel Company's Form S-1
Registration No. 33-22103 as filed June 29, 1988)
10. Material contracts. (incorporated by reference from Chaparral
Steel Company's Form S-1 Registration No. 33-22103 as filed
June 29, 1988)
11. Statement re: computation of per share earnings.
13. Annual report to security holders--Registrant's annual report
to security holders for its last fiscal year, except for those
portions thereof which are expressly incorporated by reference
in this filing, is furnished for the information of the
Commission and is not to be deemed "filed" as part of this
filing.
21. Subsidiaries of the Registrant.
23. Consents of experts and counsel.
24. Power of Attorney for certain members of the Board of
Directors.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended May
31, 1995.
(c) Exhibits -- The response to this portion of Item 14 is
submitted as a separate section of this report.
(d) Financial Statement Schedules -- The response to this portion
of Item 14 is submitted as a separate section of this report.
10
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the issuer has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Dallas, State of Texas, on the 23th day of August, 1995.
CHAPARRAL STEEL COMPANY
By: /s/GORDON E. FORWARD
--------------------
(Gordon E. Forward)
President, Chief
Executive Officer
and Director
Pursuant to the requirements of the Securities Act of 1934, this
report has been signed by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ROBERT D. ROGERS* Chairman of the Board August 23, 1995
--------------------
(Robert D. Rogers)
/s/GORDON E. FORWARD President, August 23, 1995
-------------------- Chief Executive Officer
(Gordon E. Forward) and Director
/s/RICHARD M. FOWLER Senior Vice President - August 23, 1995
-------------------- Finance and Treasurer
(Richard M. Fowler) Chief Financial and
Accounting Officer
Director August 23, 1995
---------------------
(Robert Alpert)
/s/JOHN M. BELK* Director August 23, 1995
----------------
(John M. Belk)
</TABLE>
11
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<TABLE>
<S> <C> <C> <C>
/s/GERALD R. HEFFERNAN* Director August 23, 1995
-----------------------
(Gerald R. Heffernan)
/s/GERHARD LIENER* Director August 23, 1995
------------------
(Gerhard Liener)
/s/EUGENIO CLARIOND REYES* Director August 23, 1995
--------------------------
(Eugenio Clariond Reyes)
*By /s/RICHARD M. FOWLER
--------------------
(Richard M. Fowler)
Attorney-in-Fact
</TABLE>
12
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ANNUAL REPORT ON FORM 10-K
ITEM 14 (A)(1) AND (2), (C) AND (D)
LIST OF FINANCIAL STATEMENTS AND SCHEDULES
FINANCIAL STATEMENT SCHEDULES
CERTAIN EXHIBITS
YEAR ENDED MAY 31, 1995
CHAPARRAL STEEL COMPANY AND SUBSIDIARIES
MIDLOTHIAN, TEXAS
13
<PAGE> 16
FORM 10-K
ITEM 14 (a)(1) and (2) and ITEM 14(d)
LIST OF FINANCIAL STATEMENTS AND SCHEDULES
The following consolidated financial statements of Chaparral Steel
Company included in the annual report of the Company to its stockholders for
the year ended May 31, 1995, are incorporated by reference in Item 8:
CHAPARRAL STEEL COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets - May 31, 1995 and 1994
Consolidated Statements of Income - Years ended May 31, 1995, 1994 and
1993
Consolidated Statements of Cash Flows - Years ended May 31, 1995, 1994
and 1993
Consolidated Statements of Stockholders' Equity - Years ended May 31,
1995, 1994 and 1993
Notes to Consolidated Financial Statements - May 31, 1995
The following consolidated financial statement schedule for the years
ended May 31, 1995, 1994 and 1993 is submitted herewith:
Schedule II - Valuation and qualifying accounts
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions, or are inapplicable and therefore,
have been omitted.
14
<PAGE> 17
CHAPARRAL STEEL COMPANY AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended May 31, 1995, 1994 and 1993
(In thousands)
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
------ ------ ------ ------ ------
Additions
Balance at Charged to Balance at
Beginning Costs and End of
Description of Period Expenses Deductions Period
----------- ---------- --------- ---------- ------
<S> <C> <C> <C> <C>
1995:
Allowance for
doubtful accounts........ $3,848 $ 1,440 $ 2,820 (1) $2,468
1994:
Allowance for
doubtful accounts........ $3,425 $ 800 $ 377 (1) $3,848
1993:
Allowance for
doubtful accounts........ $3,425 $ 150 $ 150 (1) $3,425
</TABLE>
(1) Uncollectible receivables written off.
15
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
3. Articles of Incorporation. (incorporated by reference from
Chaparral Steel Company's Form S-1 Registration No. 33-22103
as filed June 29, 1988)
4. Instruments defining rights of security holders. (incorporated
by reference from Chaparral Steel Company's Form S-1
Registration No. 33-22103 as filed June 29, 1988)
10. Material contracts. (incorporated by reference from Chaparral
Steel Company's Form S-1 Registration No. 33-22103 as filed
June 29, 1988)
11. Statement re: computation of per share earnings.
13. Annual report to security holders--Registrant's annual report
to security holders for its last fiscal year, except for those
portions thereof which are expressly incorporated by reference
in this filing, is furnished for the information of the
Commission and is not to be deemed "filed" as part of this
filing.
21. Subsidiaries of the Registrant.
23. Consents of experts and counsel.
24. Power of Attorney for certain members of the Board of
Directors.
27. Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
CHAPARRAL STEEL COMPANY
<TABLE>
<CAPTION>
Year Ended May 31,
--------------------------------
1995 1994 1993
---- ---- ----
(In thousands except per share)
<S> <C> <C> <C>
AVERAGE SHARES OUTSTANDING:
For 1995, 1994 and 1993, weighted average shares
outstanding......................................... 29,680 29,680 29,675
======== ======== =======
Primary:
Average shares outstanding............................. 29,680 29,680 29,675
Stock options and other equivalents
treasury stock method............................... 42 41 -
-------- -------- -------
TOTALS 29,722 29,721 29,675
======== ======== =======
Fully diluted:
Average shares outstanding............................. 29,680 29,680 29,675
Stock options and other equivalents
treasury stock method............................... 42 49 -
-------- -------- -------
TOTALS 29,722 29,729 29,675
======== ======== =======
INCOME (LOSS) APPLICABLE TO COMMON STOCK:
Primary and fully diluted:
NET INCOME (LOSS)................................... $ 19,607 $ 11,919 $(2,051)
Add:
Pre-September 1990 contingent
amortization................................ 233 233 233
-------- -------- -------
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK.............. $ 19,840 $ 12,152 $(1,818)
======== ======== =======
PRIMARY AND FULLY DILUTED:
NET INCOME (LOSS) PER COMMON SHARE........................ $ .67 $ .41 $ (.06)
======== ======== =======
</TABLE>
16
<PAGE> 1
EXHIBIT 13
CHAPARRAL STEEL
1995
ANNUAL REPORT
<PAGE> 2
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 1995 1994 1993
========================================================================---------------------------------
IN THOUSANDS EXCEPT PER SHARE
<S> <C> <C> <C>
RESULTS OF OPERATIONS
Tons shipped:
Bar mill 475 424 422
Structural mills 1,036 938 962
---------------------------------------------------------------------------------------------------------
Total 1,511 1,362 1,384
Net sales:
Bar mill $167,962 $138,353 $126,830
Structural mills 359,845 320,210 289,862
Transportation service 4,004 3,712 3,518
---------------------------------------------------------------------------------------------------------
Total 531,811 462,275 420,210
Net income (loss) 19,607 11,919 (2,051)
---------------------------------------------------------------------------------------------------------
PER SHARE INFORMATION
Net income (loss) .67 .41 (.06)
Dividends .20 .20 .20
---------------------------------------------------------------------------------------------------------
FOR THE YEAR
Net cash provided by operating activities 72,723 10,603 25,087
Capital expenditures 16,234 7,805 7,424
---------------------------------------------------------------------------------------------------------
YEAR END POSITION
Total assets 469,827 488,307 480,811
Net working capital 113,745 95,225 80,901
Stockholders' equity $269,868 $265,623 $259,598
</TABLE>
--------------------------------------------------------------------------------
MISSION STATEMENT
================================================================================
To be the leader in costs, quality and service in the markets we serve.
1994 Annual Report 1993 Annual Report 1992 Annual Report
1991 Annual Report 1990 Annual Report 1989 Annual Report
<PAGE> 3
--------------------------------------------------------------------------------
CHAPARRAL STEEL COMPANY STOCKHOLDER INFORMATION
================================================================================
<TABLE>
<S> <C> <C>
DIRECTORS OFFICERS TRANSFER AGENT AND REGISTRAR OF STOCK
Chemical Bank
ROBERT D. ROGERS GORDON E. FORWARD Common Stock
Chairman of the Board President and Chief Executive Officer Stockholder Inquiries
1-800-635-9270
GORDON E. FORWARD KENNETH R. ALLEN
President and Chief Executive Officer Director-Investor Relations STOCK EXCHANGE LISTING
New York Stock Exchange
ROBERT ALPERT DENNIS E. BEACH
Chairman of the Board Vice President-Administration FORM 10-K AND 10-Q REQUESTS
Alpert Companies Stockholders may obtain, without
Dallas, Texas LARRY L. CLARK charge, a copy of the Company's Form
Vice President-Controller and 10-K for the year ended May 31, 1995,
JOHN M. BELK Assistant Treasurer and Form 10-Q for the quarters ended
Chairman of the Board August 31, 1994, November 30, 1994
Belk Stores Services, Inc. DAVID A. FOURNIE and February 28, 1995, as filed with
Charlotte, North Carolina Vice President-Operations the Securities and Exchange
Commission. Written requests should
LIC. EUGENIO CLARIOND REYES RICHARD M. FOWLER be addressed to the Director-Investor
Director General and Chief Senior Vice President-Finance and Relations.
Executive Officer Treasurer
Grupo IMSA, S.A. The information contained herein is
Monterrey RICHARD T. JAFFRE not given in connection with any sale
Vice President-Raw Materials or offer of, or solicitation of any
GERALD R. HEFFERNAN offer to buy, any securities.
President ROBERT C. MOORE
G.R. Heffernan & Associates, Ltd. Vice President-General Counsel and ANNUAL MEETING
Toronto, Ontario Secretary The Annual Meeting of Stockholders of
Chaparral Steel Company will be held
DR. GERHARD LIENER LIBOR F. ROSTIK Wednesday, October 18, 1995, at 9:30
Kobellstrasse, Germany Senior Vice President-Engineering a.m., CDT, at KERA-KDTN, 3000 Harry
Hines Boulevard, Dallas, Texas.
JEFFRY A. WERNER
Senior Vice President-Commercial and
Transportation
PETER H. WRIGHT
Vice President-Quality Engineering
and SBQ Sales
</TABLE>
<PAGE> 4
CHAPARRAL STEEL COMPANY AND SUBSIDIARIES 1
C O R P O R A T E P R O F I L E
CHAPARRAL STEEL COMPANY, LOCATED IN MIDLOTHIAN, TEXAS, OWNS AND OPERATES A
TECHNOLOGICALLY ADVANCED STEEL MILL WHICH PRODUCES BAR AND STRUCTURAL STEEL
PRODUCTS BY RECYCLING SCRAP STEEL. THE PLANT COMMENCED OPERATIONS IN 1975 AND
MORE THAN DOUBLED IN CAPACITY IN 1982. IN 1992, A LARGE BEAM MILL WAS COMPLETED
WHICH FURTHER EXPANDED CHAPARRAL'S CAPACITY AND PRODUCT RANGE. THE COMPANY NOW
HAS TWO ELECTRIC ARC FURNACES WITH CONTINUOUS CASTERS, A BAR MILL, STRUCTURAL
MILL AND A LARGE BEAM MILL WHICH ENABLE IT TO PRODUCE A BROADER ARRAY OF STEEL
PRODUCTS THAN TRADITIONAL MINI MILLS. CHAPARRAL FOLLOWS A MARKET MILL CONCEPT
WHICH ENTAILS THE PRODUCTION OF A WIDE VARIETY OF PRODUCTS RANGING FROM
REINFORCING BAR AND SPECIALTY PRODUCTS TO LARGE-SIZED STRUCTURAL BEAMS AT LOW
COST AND IS ABLE TO CHANGE ITS PRODUCT MIX TO RECOGNIZE CHANGING MARKET
CONDITIONS OR CUSTOMER REQUIREMENTS. THE COMPANY'S STEEL PRODUCTS INCLUDE
BEAMS, REINFORCING BARS, SPECIAL BAR QUALITY ROUNDS, CHANNELS AND MERCHANT
QUALITY ROUNDS. THESE PRODUCTS ARE SOLD PRINCIPALLY TO THE CONSTRUCTION
INDUSTRY AND TO THE RAILROAD, DEFENSE, AUTOMOTIVE, MOBILE HOME AND ENERGY
INDUSTRIES. CHAPARRAL'S PRINCIPAL CUSTOMERS ARE STEEL SERVICE CENTERS, STEEL
FABRICATORS, COLD FINISHERS, FORGERS AND ORIGINAL EQUIPMENT MANUFACTURERS. THE
COMPANY DISTRIBUTES ITS PRODUCTS PRIMARILY TO MARKETS IN NORTH AMERICA, AND
UNDER CERTAIN MARKET CONDITIONS, TO EUROPE AND ASIA. CHAPARRAL IS LISTED ON THE
NEW YORK STOCK EXCHANGE AND IS 81 PERCENT OWNED BY TEXAS INDUSTRIES, INC.
<PAGE> 5
2 CHAPARRAL STEEL COMPANY AND SUBSIDIARIES
T O O U R S T O C K H O L D E R S
Fiscal year 1995 saw earnings improve for the second straight year. More
importantly, the year saw U.S. nonresidential construction recover. As a
result, demand for structural products increased, leading to higher beam
shipments for the year and to a recovery in beam prices towards the end of the
year. The Company is managing its structural and bar operations as separate
strategic business units and each has established an enviable record in
customer satisfaction. All of these factors lead to the expectation for
further earnings improvement.
Net income for 1995 equaled $19.6 million or $.67 per share, a 65% increase
over the previous year's earnings of $11.9 million or $.41 per share. Record
shipments of 1.5 million tons were 11% higher than last year; average selling
prices improved 4%.
STRUCTURAL MILLS
Shipments from the structural mills were just over one million tons during the
year, a 10% increase from the last year. Average selling prices increased 2%.
Demand for wide flange beams, the largest single product in the structural mix,
improved throughout the year as U.S. nonresidential building finally
recovered. The market for manufactured homes remained strong, generating strong
shipments of Chaparral's Bantam BeamTM product.
Four price increases were announced during the spring, marking the end of an
extended shake out period among beam producers in the United States. Older,
less efficient producers have exited the market and imports are no longer a
factor. The price increases, which should have a total impact of approximately
10% compared to pre-announcement levels, should be fully realized during the
first quarter of fiscal year 1996.
Chaparral's competitive advantage in beams is centered in the very lightweight
ranges. Our goal is to aggressively market and develop new applications for
lighter weight beam products in order to further expand consumption.
BAR MILL
Shipments of bar mill products were 475,000 tons in 1995, a 12% increase
compared to the prior year. Average selling prices improved 8%.
The primary strategy of the bar mill business unit has been to increase the
Special Bar Quality (SBQ) portion of its business. This strategy, along with
strong demand in the many niche markets served by our SBQ line, resulted in a
26% increase in SBQ shipments for the year. In addition, the rebar product line
was repositioned to serve those markets which consume the smaller sizes of
rebar in which Chaparral has a competitive advantage.
Customers of SBQ products demand an almost continuous improvement in product
quality and capabilities. To meet customer requirements, Chaparral is
reconfiguring the continuous caster that supplies the bar mill in order to
increase the mill's ability to upgrade its product line.
OUTLOOK
Although net income showed improvement for the year, there is still opportunity
for much better results. The positive trend in earnings is expected to continue
as the wide flange beam market benefits from further recovery in nonresidential
building and as Chaparral continues to focus on products which play to its
competitive strengths.
Gordon E. Forward, Ph.D.
President and Chief Executive Officer
July 14, 1995
<PAGE> 6
CHAPARRAL STEEL COMPANY AND SUBSIDIARIES 3
--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
================================================================================
GENERAL
The Company's steel plant is a market mill with the flexibility to produce a
wide range of steel products. The ability to produce a variety of products at
low cost has enabled the Company to penetrate markets throughout the United
States and overseas. The principal components of the Company's cost of sales
are raw material and conversion costs. Scrap steel, the cost of which
fluctuates with market conditions, is the Company's primary raw material.
Conversion costs are comprised principally of energy, maintenance and labor.
RESULTS OF OPERATIONS
NET SALES Net sales in 1995 increased $69.5 million from the previous year as
shipments increased 149,000 to a record level of 1,511,000 tons. Export sales
were 7% of total shipments in 1995. The supply/demand balance for structural
products has continued to improve from the winter months helped by a stronger
United States economy. Special Bar Quality shipments increased 26% during
fiscal 1995 reflecting the Company's expanded penetration in this market. The
Company's average net selling price increased $13 per ton from the prior year.
The price of structural products, which had lagged other mini mill products,
continued its improvement in the second half of fiscal 1995, as the Company
announced numerous structural price increases. SBQ and other bar product prices
were improved from the prior year due to increased demand brought about by
better economic conditions.
In 1994, net sales increased $42.1 million from the previous year as a 12% inc
rease in average selling price was offset by a 22,000 ton decrease in
shipments. The change in pricing strategy for certain structural products
announced in the May 1993 quarter and general price increases in fiscal 1994,
intended to offset the continued escalation in scrap prices, have combined to
produce the improvement in selling price. Export sales were 7% of total
shipments in 1994.
COST OF SALES (EXCLUSIVE OF DEPRECIATION AND AMORTIZATION) In 1995, cost of
sales increased $56.6 million due primarily to the 149,000 ton increase in
shipments. Increases in scrap and melt shop conversion costs were offset by
decreases in combined rolling costs.
Higher scrap costs in 1994 accounted for a significant portion of the 7%
increase in average cost per ton. All areas of melt shop conversion costs were
slightly lower than the previous year. Combined rolling conversion costs were
unchanged from 1993.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE Selling, general and administrative
expenses generally fluctuated with the provisions for employee incentive
programs that are based on profitability which amounted to $2.8 million, $(.1)
million and $(2.4) million for 1995, 1994 and 1993, respectively. In an effort
to stay competitive and reduce costs, the Company decreased its number of
employees in the first quarter of fiscal 1994. As a result, a non-recurring
charge of $1.6 million for severance pay is included in selling, general and
administrative in 1994.
INTEREST EXPENSE Payment of scheduled maturities of long-term debt during the
three years ended May 31, 1995 served to reduce the amount of interest expense.
NET INCOME (LOSS) In 1995, net income (loss) improved $7.7 million to $19.6
million due primarily to the 149,000 ton increase in shipments. Depreciation
costs were unchanged as the Company did not incur any major capital
improvements during 1995. Amortization of commissioning costs, that are being
expensed over a five year period, totaled $3 million in 1995. Amortization of
goodwill totaled $2.3 million in 1995.
Net income (loss) improved $14 million in 1994 due primarily to a $36 increase
in average selling price due to the change in pricing strategy and the market
reaction to higher raw material prices. Depreciation costs were unchanged as
the Company did not incur any major capital improvements during 1994.
Amortization of commissioning costs and goodwill totaled $3 million and $2.3
million, respectively, in fiscal 1994.
<PAGE> 7
4 CHAPARRAL STEEL COMPANY AND SUBSIDIARIES
--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
================================================================================
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased $18.5 million to an all-time high of $113.7 million
at May 31, 1995. Cash provided by operations increased by $62.1 million from
the prior year as net income increased by $7.7 million and cash provided by
inventory increased substantially. At May 31, 1994, inventory levels had
increased $24.9 million from May 1993 as the Company anticipated increased
demand for its products during the months of June and July of 1994. As that
increased demand materialized the amount of inventory returned to a more normal
historical level at August 31, 1994. That level of inventory was constant for
the remainder of fiscal year 1995. As a result, at May 31, 1995, cash and cash
equivalents increased $15.9 million to $19.1 million after the Company acquired
$16.2 million of capital additions, repaid $15 million of short-term debt and
$20.5 million of long-term debt and paid cash dividends of $5.9 million.
Capital expenditures for fiscal 1996 are currently estimated to be
approximately $25 - $30 million; which represents normal replacement,
technological upgrades of existing equipment and growth in subsidiaries. The
Company currently does not plan any major capital expenditures requiring
significant capital resources within the next two years.
The Company's capitalization of $350.9 million at May 31, 1995, consisted of
$81.1 million in long-term debt and $269.8 million of stockholders' equity. The
Company's stockholders' equity includes paid-in capital which resulted from the
excess of cost over fair value of net assets acquired, net of amortization. In
1995, paid-in capital and goodwill were decreased by $9.4 million due to an
adjustment to the excess of cost over fair value of net assets acquired. The
long-term debt-to-capitalization ratio was 23% at May 31, 1995 versus 27% at
May 31, 1994. The decrease was caused by the repayment of $20.5 million of
long-term debt and the increase in stockholders' equity which was due to the
net income of $19.6 million minus the payment of cash dividends of $5.9 million
and the $9.4 million reduction of paid-in capital described above.
The Company's earnings improved in 1995 due primarily to the 11% increase in
shipments. Based on the current outlook for steel consumption levels in 1996
and its impact on prices, the Company anticipates its average selling price to
improve modestly, as numerous price increases for structural products announced
in the May 1995 quarter are expected to hold. Cost per ton levels should
stabilize assuming no continued upward pressure of raw material prices that are
currently near all-time highs. Management anticipates further increases in
shipment levels during fiscal 1996 resulting from both increased raw steel
production and purchases of billets and finished products from other mills.
Significant changes in average selling price without a corresponding change in
the scrap raw material costs could have a substantial effect on the Company's
operating results and liquidity.
The Company has short-term credit facilities with two banks totaling $20
million which will expire in January 1996, if not renewed by the banks or the
Company. The Company has had similar arrangements with various banks since
January 1990. During fiscal 1995 the Company had maximum borrowings of $15
million at any one time under the current arrangements. At May 31, 1995, there
were no outstanding borrowings under these facilities. The Company believes
that it will be able to renew these credit facilities or negotiate similar
arrangements with other financial institutions if they are deemed necessary.
The Company expects the current financial resources and anticipated cash
provided from operations will be sufficient to provide funds for capital
expenditures, meet scheduled debt payments and satisfy other known working
capital needs for fiscal 1996. If additional funds are required to accomplish
long-term expansion of its productive capabilities, the Company believes that
funding can be obtained to meet such requirements.
INFLATION Energy, scrap and labor, which are the principal components of the
Company's manufacturing cost, are generally susceptible to inflationary
pressures, while finished product prices are more readily influenced by
competition within the steel industry. Since May 31, 1992, inflation has not
materially affected the Company's results of operations or financial condition.
<PAGE> 8
CHAPARRAL STEEL COMPANY AND SUBSIDIARIES 5
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
SELECTED FINANCIAL DATA 1995 1994 1993 1992 1991
=================================================================--------------------------------------------------
In thousands except per share
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Net sales $531,811 $ 462,275 $420,210 $416,610 $ 418,311
Gross profit (exclusive of depreciation and
amortization) 94,761 81,777 58,624 66,678 81,478
Employee profit sharing 2,933 1,896 - 1,199 2,699
Interest expense 12,082 13,439 14,650 12,541 10,513
Net income (loss) 19,607 11,919 (2,051) 7,090 19,125
-------------------------------------------------------------------------------------------------------------------
PER SHARE INFORMATION
Net income (loss) $ .67 $ .41 $ (.06) $ .25 $ .63
Dividends .20 .20 .20 .20 .20
-------------------------------------------------------------------------------------------------------------------
FOR THE YEAR
Net cash provided by operating activities $ 72,723 $ 10,603 $ 25,087 $ 28,841 $ 45,827
Capital expenditures 16,234 7,805 7,424 12,616 94,099
-------------------------------------------------------------------------------------------------------------------
YEAR END POSITION
Total assets $469,827 $ 488,307 $480,811 $504,905 $ 499,654
Net working capital 113,745 95,225 80,901 75,252 55,459
Long-term debt 81,065 96,219 113,997 126,714 119,214
Stockholders' equity 269,868 265,623 259,598 267,584 266,429
-------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 9
6 CHAPARRAL STEEL COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS May 31 1995 1994
=========================================================================================--------------------
IN THOUSANDS
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 19,140 $ 3,203
Trade accounts receivable, net of allowance of $2.5 million and
$3.8 million, respectively 51,679 41,734
Inventories 101,377 117,583
Prepaid expenses 8,110 8,914
-------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 180,306 171,434
PROPERTY, PLANT AND EQUIPMENT
Buildings and improvements 48,689 47,217
Machinery and equipment 447,982 434,041
Land 1,288 1,288
-------------------------------------------------------------------------------------------------------------
497,959 482,546
Less allowance for depreciation 275,476 247,660
-------------------------------------------------------------------------------------------------------------
222,483 234,886
OTHER ASSETS
Goodwill, commissioning costs and other assets, net of accumulated
amortization of $22.3 million and $16.9 million, respectively 67,038 81,987
-------------------------------------------------------------------------------------------------------------
$469,827 $488,307
================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ - $ 15,000
Trade accounts payable 37,818 28,667
Accrued interest payable 1,862 2,435
Other accrued expenses 13,236 12,124
Current portion of long-term debt 13,645 17,983
-------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 66,561 76,209
LONG-TERM DEBT 81,065 96,219
DEFERRED INCOME TAXES AND OTHER CREDITS 52,333 50,256
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 500,000 authorized, none outstanding - -
Common stock, $.10 par value, 50,000,000 authorized, 29,679,900 outstanding 2,994 2,994
Paid-in capital 178,611 188,037
Retained earnings 90,767 77,096
Cost of common shares in treasury (2,504) (2,504)
-------------------------------------------------------------------------------------------------------------
269,868 265,623
--------------------------------
$469,827 $488,307
================================
</TABLE>
See notes to consolidated financial statements.
<PAGE> 10
CHAPARRAL STEEL COMPANY AND SUBSIDIARIES 7
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME Year ended may 31 1995 1994 1993
=======================================================================--------------------------------------
IN THOUSANDS EXCEPT PER SHARE
<S> <C> <C> <C>
Net sales $531,811 $462,275 $420,210
Costs and expenses:
Cost of sales (exclusive of items stated separately below) 437,050 380,498 361,586
Depreciation and amortization 33,887 33,756 33,814
Selling, general and administrative 20,362 15,937 13,992
Interest 12,082 13,439 14,650
Other income (3,116) (3,372) (2,072)
-------------------------------------------------------------------------------------------------------------
500,265 440,258 421,970
------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES 31,546 22,017 (1,760)
Provision for income taxes 11,939 10,098 291
-------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 19,607 $ 11,919 $ (2,051)
=============================================================================================================
NET INCOME (LOSS) PER COMMON SHARE $ .67 $ .41 $ (.06)
=============================================================================================================
CASH DIVIDENDS PER COMMON SHARE $ .20 $ .20 $ .20
=============================================================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE> 11
8 CHAPARRAL STEEL COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS YEAR ended May 31 1995 1994 1993
=======================================================================---------------------------------------
IN THOUSANDS
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 19,607 $ 11,919 $ (2,051)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 33,887 33,756 33,814
Provision for deferred income taxes 1,994 3,101 3,005
Other deferred credits 83 (2,193) (3,044)
Changes in operating assets and liabilities:
Trade accounts receivable, net (9,548) (8,380) 2,362
Inventories 16,206 (24,911) (2,177)
Prepaid expenses 804 (767) (3,472)
Trade accounts payable 9,151 1,465 (6,102)
Accrued interest payable (573) (609) (627)
Other accrued expenses 1,112 (2,778) 3,379
--------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 72,723 10,603 25,087
INVESTING ACTIVITIES
Capital expenditures (16,234) (7,805) (7,424)
Other (124) 93 -
--------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (16,358) (7,712) (7,424)
FINANCING ACTIVITIES
Short-term borrowings - 30,000 7,000
Repayments on short-term debt (15,000) (15,000) (7,000)
Long-term borrowings 985 260 -
Repayments on long-term debt (20,477) (12,775) (12,718)
Dividends paid (5,936) (5,936) (5,935)
--------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (40,428) (3,451) (18,653)
--------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 15,937 (560) (990)
Cash and cash equivalents at beginning of year 3,203 3,763 4,753
--------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 19,140 $ 3,203 $ 3,763
==============================================================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE> 12
CHAPARRAL STEEL COMPANY AND SUBSIDIARIES 9
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
PREFERRED COMMON STOCK PAID-IN RETAINED TREASURY STOCK
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY STOCK SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT
===========================================================================================================================
IN THOUSANDS
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at May 31, 1992 $ - 29,940 $2,994 $188,050 $79,099 (265) $(2,559)
Net loss for the year ended May 31, 1993 - - - - (2,051) - -
Dividends paid to stockholders ($.20 per share) - - - - (5,935) - -
---------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1993 - 29,940 2,994 188,050 71,113 (265) (2,559)
Net income for the year ended May 31, 1994 - - - - 11,919 - -
Dividends paid to stockholders ($.20 per share) - - - - (5,936) - -
Treasury stock issued for options - 4,500 shares - - - (13) - 5 55
---------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1994 - 29,940 2,994 188,037 77,096 (260) (2,504)
Net income for the year ended May 31, 1995 - - - - 19,607 - -
Dividends paid to stockholders ($.20 per share) - - - - (5,936) - -
Adjustment to the excess of cost over fair value
of net assets acquired - - - (9,426) - - -
---------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1995 $ - 29,940 $2,994 $178,611 $90,767 (260) $(2,504)
===========================================================================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE> 13
10 CHAPARRAL STEEL COMPANY AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS May 31, 1995
================================================================================
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION AND RELATED MATTERS: The consolidated financial
statements include the operations of Chaparral Steel Company (the "Company")
and its majority owned subsidiaries. The Company is 81% owned by Texas
Industries, Inc. ("TXI").
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS: The Company operates in the
steel industry only; therefore, no industry segment information is presented.
CASH EQUIVALENTS: Cash equivalents consist of highly liquid investments with
original maturities of three months or less.
CREDIT RISK: The Company extends credit to various companies in steel
distribution, fabrication and related industries. Such credit risk is
considered by management to be limited due to the Company's sizable customer
base and the geographical dispersion of the customer base. The Company performs
ongoing credit evaluations of its customers and generally does not require
collateral.
INVENTORIES: Inventories are stated at the lower of cost (last-in, first-out)
or market, except rolls which are stated at cost (specific identification) and
supplies which are stated at average cost.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are recorded at
cost. Depreciation is computed using the straight-line method over the
estimated useful lives of the property.
EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED: The amount of goodwill,
net of amortization, arising from the purchase of 50% of the outstanding
securities of the Company by TXI, was recorded using the purchase method of
accounting and totaled $61.2 million and $73 million at May 31, 1995 and 1994,
respectively. This goodwill is being amortized over 40 years using the
straight-line method and reduced earnings by $2.3 million in 1995, 1994 and
1993. Due to an adjustment of the original amount, goodwill and paid-in capital
were decreased $9.4 million in 1995.
COMMISSIONING COSTS: The Company's policy for new facilities is to capitalize
certain costs until the facility is substantially complete and ready for its
intended use.
INCOME TAXES: The Company and TXI have a tax sharing agreement (the
"Agreement") whereby the Company is included in the consolidated income tax
return of TXI. The agreement provides that the Company will account for income
taxes on a stand-alone basis. Accordingly, the Company makes payments to or
receives payments from TXI in amounts equal to the income taxes it would have
otherwise paid or received. Deferred income taxes are determined using the
liability method.
COMPUTATION OF NET INCOME (LOSS) PER COMMON SHARE: Net income (loss) per common
share is calculated based upon a weighted average of 29,722,000, 29,721,000 and
29,675,000 shares outstanding (including common stock equivalents that are not
antidilutive) during 1995, 1994 and 1993, respectively.
The calculations of net income (loss) per common share for periods after August
31, 1990, contain an adjustment for the previous amortization of an estimated
amount of goodwill.
NOTE B - INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
MAY 31 1995 1994
======================================================------------------------
IN THOUSANDS
<S> <C> <C>
Finished goods $ 54,323 $ 72,946
Work in process 9,856 14,477
Raw materials 14,052 10,407
Rolls 18,148 15,602
Supplies 15,487 14,878
LIFO adjustment (10,489) (10,727)
------------------------------------------------------------------------------
$101,377 $117,583
===================================
</TABLE>
<PAGE> 14
CHAPARRAL STEEL COMPANY AND SUBSIDIARIES 11
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE C - COMMISSIONING COSTS
In fiscal 1990, the Company began construction of the large beam mill and
commissioning commenced in February 1991. The mill was substantially complete
and ready for its intended use in the third quarter of fiscal 1992 with a total
of $15.1 million of costs deferred. The amounts of commissioning costs (net of
amortization) were $5 million and $8 million at May 31, 1995 and 1994,
respectively. The amounts of amortization charged to income were $3 million in
1995, 1994 and 1993, based on a five year period.
NOTE D - CONTINGENCIES
The Company and subsidiaries are defendants in lawsuits which arose in the
normal course of business. In management's judgement (based on the opinion of
counsel) the ultimate liability, if any, from such legal proceedings will not
have a material effect on the Company's financial position.
The Company has no post-retirement health benefits and, therefore, realizes no
effect from accounting requirements under Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Post-retirement Benefits Other
Than Pensions" (SFAS 106).
The Company is subject to federal, state and local environmental laws and
regulations concerning, among other matters, air emissions, furnace dust
disposal and wastewater discharge. The Company believes it is in substantial
compliance with applicable environmental laws and regulations. Notwithstanding
such compliance, if damage to persons or property or contamination of the
environment has been or is caused by the conduct of the Company's business or
by hazardous substances or wastes used in, generated or disposed of by the
Company, the Company could be held liable for such damages and be required to
pay the cost of investigation and remediation of such contamination. The amount
of such liability could be material. Changes in federal or state laws,
regulations or requirements or discovery of unknown conditions could require
additional expenditures by the Company. At May 31, 1995, the Company had $1.5
million accrued for closure and post closure costs as prescribed by the Texas
Natural Resource Conservation Commission.
NOTE E - LONG-TERM DEBT
Outstanding long-term debt is as follows:
<TABLE>
<CAPTION>
MAY 31 INTEREST RATE 1995 1994
=========================================================================-----------------
IN THOUSANDS
<S> <C> <C> <C>
First mortgage notes payable:
$61.4 million note, due in
annual installments through
January 2000 14.2% $ 20,458 $ 26,595
$70.9 million note, due in 1.5% to
semiannual installments 2% over
through June 1995 Libor(1) 1,248 7,257
------------------------------------------------------------------------------------------
21,706 33,852
$80 million senior unsecured notes
due in annual installments from
April 1995 through 2004 10.2% 72,000 80,000
Other notes payable, due through 1999 Various 1,004 350
------------------------------------------------------------------------------------------
94,710 114,202
Less current portion 13,645 17,983
------------------------------------------------------------------------------------------
$ 81,065 $ 96,219
===========================
</TABLE>
(1) London Interbank Offered Rate (Libor) (6% at May 31, 1995).
<PAGE> 15
12 CHAPARRAL STEEL COMPANY AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
Scheduled maturities of long-term debt at May 31, 1995 for each of the five
succeeding fiscal years are as follows:
<TABLE>
<S> <C>
================================================================================
IN THOUSANDS
1996 $13,645
1997 12,353
1998 12,331
1999 12,290
2000 12,091
</TABLE>
Substantially all of the assets of the Company except accounts receivable,
inventories and certain equipment not forming an integral part of the mill have
been pledged as collateral on the first mortgage notes.
The Company has arrangements for up to $20 million of short-term borrowings
with banks for which it pays quarterly fees at an annual rate of 1/4 of 1% on
the unused portion of the commitment. These short-term credit lines are due to
expire in January 1996, if not renewed by the banks or the Company.
The terms of the loan agreements impose certain restrictions on the Company,
the most significant of which require the Company to maintain minimum amounts
of working capital, limit the incurrence of certain indebtedness and restrict
payments of cash dividends and purchases of treasury stock. The amounts of
earnings available for restricted payments were approximately $37 million and
$33 million at May 31, 1995 and 1994, respectively.
Interest payments were $12.7 million, $14 million and $15.2 million in 1995,
1994 and 1993, respectively.
NOTE F - INCOME TAXES
The provisions for income taxes are comprised of:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31 1995 1994 1993
==============================================----------------------------------
IN THOUSANDS
<S> <C> <C> <C>
Current $ 9,451 $ 6,982 $ 3,196
Deferred 2,488 3,116 (2,905)
--------------------------------------------------------------------------------
$11,939 $ 10,098 $ 291
===========================================
</TABLE>
The reasons for the differences between the provisions for income taxes and the
amounts computed by applying the statutory federal income tax rates to income
(loss) before income taxes are:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31 1995 1994 1993
==================================================----------------------------------
IN THOUSANDS
<S> <C> <C> <C>
Statutory rate applied
to income (loss) before income taxes $11,041 $ 7,706 $ (598)
Increase in taxes resulting from:
Change in statutory federal tax rate - 1,443 -
Goodwill amortization 811 811 787
Other - net 87 138 102
------------------------------------------------------------------------------------
$11,939 $10,098 $ 291
===========================================
</TABLE>
<PAGE> 16
CHAPARRAL STEEL COMPANY AND SUBSIDIARIES 13
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
The components of the net deferred tax liability as of May 31, 1995 and 1994
are summarized below:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31 1995 1994
=============================================================================-------------------
IN THOUSANDS
<S> <C> <C>
Deferred tax assets:
Deferred compensation $ 242 $ 290
Accounts receivable 864 1,347
Uniform capitalization expense 1,117 1,388
Net operating loss carryforwards 15 15
Alternative minimum tax credit carryforwards 1,391 6,491
Expenses not currently tax deductible 1,563 1,302
------------------------------------------------------------------------------------------------
Total deferred tax assets 5,192 10,833
Deferred tax liabilities:
Accelerated tax depreciation (51,010) (53,085)
Commissioning costs (1,760) (2,817)
Other - net (247) (268)
------------------------------------------------------------------------------------------------
Total deferred tax liabilities (53,017) (56,170)
Net deferred tax liability (47,825) (45,337)
Current portion 3,544 4,038
------------------------------------------------------------------------------------------------
Non-current portion of deferred tax liability $(51,369) $(49,375)
================================================================================================
</TABLE>
The Company made income tax payments of $9.6 million, $7.2 million and $2.5
million in 1995, 1994 and 1993, respectively.
NOTE G - RETIREMENT PLAN
A non-contributory defined contribution plan provides retirement benefits for
substantially all employees. The Company makes a regular contribution of 1% of
annual compensation for each participant and a variable contribution equal to
1/2 of 1% of pre-tax income, as defined, to this plan. The amounts of expense
charged to income for this plan were $.6 million, $.5 million and $.4 million
in 1995, 1994 and 1993, respectively. The plan is funded to the extent of
charges to income.
NOTE H - INCENTIVE PLANS
The Company has a profit-sharing plan which provides that all personnel
employed as of May 31 share currently in the pre-tax income, as defined, of the
Company for the year then ended based on a predetermined formula. The duration
of the plan is one year and is subject to annual renewal by the Board of
Directors. The provisions for this plan were $2.9 million, $1.9 million and
$-0- for 1995, 1994 and 1993, respectively.
In 1987, the Board of Directors approved a deferred compensation plan for
certain executives of the Company. The plan is based on a five-year average of
earnings. Amounts recorded as expense (income) under this plan were ($.1)
million, ($2) million and ($2.4) million for 1995, 1994 and 1993, respectively.
The amount of deferred compensation currently payable was $.1 million and $.2
million at May 31, 1995 and 1994, respectively.
<PAGE> 17
14 CHAPARRAL STEEL COMPANY AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTE I - STOCK OPTION PLAN
================================================================================
In 1989, the stockholders approved a stock option plan whereby options to
purchase Common Stock may be granted to officers and key employees at prices
not less than the market value at the date of grant. Generally, options become
exercisable beginning two years after date of grant and expire ten years after
the date of grant.
A summary of option transactions for the two years ended May 31, 1995, follows:
<TABLE>
<CAPTION>
SHARES UNDER OPTION AGGREGATE
OPTION PRICE OPTION PRICE
=======================================================================================
IN THOUSANDS EXCEPT OPTION PRICE
<S> <C> <C> <C>
Outstanding at May 31, 1993 1,070 $8.88 - 12.13 $11,615
Granted 108 10.625 1,148
Terminated (63) 8.88 - 12.13 (677)
Exercised (5) 8.88 (40)
---------------------------------------------------------------------------------------
Outstanding at May 31, 1994 1,110 8.88 - 12.13 12,046
Granted 395 8.34 - 8.38 3,307
Terminated (10) 10.625 - 12.13 (114)
---------------------------------------------------------------------------------------
Outstanding at May 31, 1995 1,495 $8.34 - 12.13 $15,239
=======================================================================================
</TABLE>
<TABLE>
<CAPTION>
MAY 31 1995 1994
===========================================================================-----------
IN THOUSANDS
<S> <C> <C>
Shares at end of year:
Exercisable 796 682
Available for future grants -0- 390
</TABLE>
The options outstanding at May 31, 1995, expire on various dates to January 18,
2005.
NOTE J - FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value amounts of financial instruments at May 31, 1995 and
1994 have been determined using available market information and the following
methodologies:
* Cash and cash equivalents, accounts receivable, accounts payable: The
carrying amounts of these items are a reasonable estimate of their fair
values at May 31, 1995 and 1994.
* Long-term debt: Interest rates that are currently available to the Company
for issuance of the debt with similar terms and remaining maturities are
used to estimate fair value for debt issues using a discounted cash flow
analysis.
<TABLE>
<CAPTION>
MAY 31 1995 1994
=========================================================------------
IN MILLIONS
<S> <C> <C>
Long-term debt:
Carrying amount $94.7 $114.2
Estimated fair value 110.0 130.0
</TABLE>
<PAGE> 18
CHAPARRAL STEEL COMPANY AND SUBSIDIARIES 15
--------------------------------------------------------------------------------
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
================================================================================
The following table is a summary of quarterly financial information for the two
years ended May 31, 1995:
<TABLE>
<CAPTION>
THREE MONTHS ENDED AUG. NOV. FEB. MAY
==========================================================================================================
IN THOUSANDS EXCEPT PER SHARE
<S> <C> <C> <C> <C>
1995
Net sales $124,382 $126,273 $ 132,388 $148,768
Gross profit(1) 18,463 23,200 23,382 29,716
Net income 1,753 4,969 5,070 7,815(2)
Net income per common share .06 .17 .17 .27
----------------------------------------------------------------------------------------------------------
1994
Net sales $101,896 $117,225 $ 118,687 $124,467
Gross profit(1) 16,549 22,371 22,403 20,454
Net income (loss) (874) 4,423 4,408 3,962
Net income (loss) per common share (.03) .15 .15 .14
----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Gross profit exclusive of depreciation and amortization.
(2) Reflects higher selling prices and shipments.
QUARTERLY STOCK PRICES AND DIVIDENDS (UNAUDITED)
The Company's common stock is listed on the New York Stock Exchange (ticker
symbol CSM). The number of record holders of the Company's common stock at May
31, 1995 was 985. High and low stock prices and dividends for the last two
years were:
<TABLE>
<CAPTION>
STOCK PRICES DIVIDENDS
HIGH LOW
=================================================================
<S> <C> <C> <C>
1995
First quarter 9 1/2 8 3/8 $ .05
Second quarter 10 1/8 6 7/8 .05
Third quarter 9 6 1/2 .05
Fourth quarter 10 8 3/8 .05
1994
First quarter 10 1/8 7 7/8 $ .05
Second quarter 10 1/8 8 3/8 .05
Third quarter 11 1/2 9 1/4 .05
Fourth quarter 12 1/4 8 7/8 .05
</TABLE>
<PAGE> 19
16 CHAPARRAL STEEL COMPANY AND SUBSIDIARIES
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
================================================================================
BOARD OF DIRECTORS
CHAPARRAL STEEL COMPANY
MIDLOTHIAN, TEXAS
We have audited the accompanying consolidated balance sheets of Chaparral Steel
Company and subsidiaries as of May 31, 1995 and 1994, and the related
consolidated statements of income, cash flows and stockholders' equity for each
of the three years in the period ended May 31, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Chaparral Steel
Company and subsidiaries at May 31, 1995 and 1994, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended May 31, 1995, in conformity with generally accepted accounting
principles.
Dallas, Texas
July 14, 1995
<PAGE> 20
A New York Stock Exchange Company
300 Ward Road
Midlothian, TX 76065-9651
214-775-8241
Fax: 214-775-1930
Copy Rights1995 Chaparral Steel
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
CHAPARRAL STEEL COMPANY
<TABLE>
<CAPTION>
Jurisdiction
Subsidiary of Incorporation
---------- ----------------
<S> <C>
Wholly-Owned:
Castelite Steel Products Inc.............................. Texas
80% Owned:
America Steel Transport, Inc.............................. Texas
</TABLE>
17
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Chaparral Steel Company of our report dated July 14, 1995, included in the
1995 Annual Report to Stockholders of Chaparral Steel Company.
Our audits also included the financial statement schedule of Chaparral Steel
Company listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-39626) pertaining to the Chaparral Steel Company Stock Option
Plan and in the related Prospectus of our report dated July 14, 1995, with
respect to the consolidated financial statements incorporated herein by
reference, and our report included in the preceding paragraph with respect to
the financial statement schedule included in this Annual Report (Form 10-K) of
Chaparral Steel Company.
Ernst and Young LLP
Dallas, Texas
August 21, 1995
18
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
Each of the undersigned hereby constitutes and appoints GORDON E.
FORWARD, RICHARD M. FOWLER and LARRY L. CLARK, and each of them, with full
power of substitution as the undersigned's attorney or attorney-in-fact, to
sign for each of them and in each of their names, as members of the Board of
Directors, an Annual Report on Form 10-K for the year ended May 31, 1995, and
any and all amendments, filed by CHAPARRAL STEEL COMPANY, a Delaware
corporation, with the Securities and Exchange Commission under the provisions
of the Securities Act of 1934, as amended, with full power and authority to do
and perform any and all acts and things necessary or appropriate to be done in
the premises.
DATED: July 13, 1995
ROBERT ALPERT
(Director)
JOHN M. BELK
(Director)
GERALD R. HEFFERNAN
(Director)
GERHARD LIENER
(Director)
EUGENIO CLARIOND REYES
(Director)
ROBERT D. ROGERS
(Director)
STATE OF TEXAS Section
Section
COUNTY OF DALLAS Section
On this 13th day of July, 1995, before me personally came
ROBERT ALPERT, JOHN M. BELK, GERALD R. HEFFERNAN, GERHARD LIENER, EUGENIO
CLARIOND REYES AND ROBERT D. ROGERS, known to me to be the same persons
described in and who executed the foregoing Power of Attorney and each of them
duly acknowledged to me that they each executed the same for the purposes
therein stated.
GWYNN E. HERRICK
__________________________________
Notary Public in and for the
State of Texas
19
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000833226
<NAME> CHAPARRAL STEEL COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-END> MAY-31-1995
<CASH> 19,140
<SECURITIES> 0
<RECEIVABLES> 54,147
<ALLOWANCES> 2,468
<INVENTORY> 101,377
<CURRENT-ASSETS> 180,306
<PP&E> 497,959
<DEPRECIATION> 275,476
<TOTAL-ASSETS> 469,827
<CURRENT-LIABILITIES> 66,561
<BONDS> 81,065
<COMMON> 2,994
0
0
<OTHER-SE> 266,874
<TOTAL-LIABILITY-AND-EQUITY> 469,827
<SALES> 531,811
<TOTAL-REVENUES> 531,811
<CGS> 437,050
<TOTAL-COSTS> 437,050
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,440
<INTEREST-EXPENSE> 12,082
<INCOME-PRETAX> 31,546
<INCOME-TAX> 11,939
<INCOME-CONTINUING> 19,607
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,607
<EPS-PRIMARY> .67
<EPS-DILUTED> .67
</TABLE>
