UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-18641
HORSEHEAD RESOURCE DEVELOPMENT COMPANY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3353902
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
110 East 59th Street, New York, New York 10022
(Address of principal executive offices) (Zip Code)
(212) 527-3003
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ].
As of May 10, 1996 the registrant had 36,237,500 shares of its Common Stock
outstanding.
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HORSEHEAD RESOURCE DEVELOPMENT COMPANY, INC.
FORM 10-Q MARCH 31, 1996
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CONTENTS
Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - 3
March 31, 1996 and December 31, 1995
Condensed Consolidated Statements of Operations - 4
Three Months Ended March 31, 1996 and 1995
Condensed Consolidated Statement of Shareholders' - 5
Equity - Three Months Ended March 31, 1996
Condensed Consolidated Statements of Cash Flows - 6
Three Months Ended March 31, 1996 and 1995
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote 9
of Security Holders
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
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HORSEHEAD RESOURCE DEVELOPMENT COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
<CAPTION>
March 31, December 31,
1996 1995
___________ ____________
(Unaudited) (Audited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $66,260 $61,389
Accounts receivable, net 18,420 17,937
Inventories 10,185 11,346
Prepaid expenses and income taxes receivable 4,351 4,421
Deferred income taxes 3,925 4,311
___________ ____________
TOTAL CURRENT ASSETS 103,141 99,404
PROPERTY, PLANT AND EQUIPMENT 99,350 100,259
OTHER ASSETS 5,804 5,816
___________ ____________
$208,295 $205,479
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $4,674 $4,543
Accrued expenses 13,208 13,338
Note payable 10,700 10,700
___________ ____________
TOTAL CURRENT LIABILITIES 28,582 28,581
OTHER LIABILITIES 8,099 8,009
LONG-TERM DEBT 34,100 34,100
DEFERRED INCOME TAXES 10,351 10,356
SHAREHOLDERS' EQUITY
Common stock, $.01 par value; authorized 40,000
shares; issued and outstanding 36,237 shares 362 362
Additional paid-in capital 42,116 42,116
Retained earnings 84,685 81,955
___________ ____________
127,163 124,433
___________ ____________
$208,295 $205,479
=========== ============
<FN>
See notes to condensed consolidated financial statements.
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HORSEHEAD RESOURCE DEVELOPMENT COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
<CAPTION>
Three Months Ended
March 31,
__________________________
1996 1995
____________ ___________
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Operating revenues:
Service fees $14,435 $16,506
Product sales 10,503 10,831
____________ ___________
24,938 27,337
Operating costs 16,744 16,589
____________ ___________
GROSS PROFIT 8,194 10,748
Selling, general, administrative and
research and development costs 4,232 3,827
____________ ___________
OPERATING INCOME 3,962 6,921
Other income (expense):
Interest, net 23 (90)
Other, net 218 33
____________ ___________
241 (57)
INCOME BEFORE INCOME TAXES 4,203 6,864
Provision for income taxes 1,473 2,661
____________ ___________
NET INCOME $2,730 $4,203
============ ===========
Earnings per share $0.08 $0.12
============ ===========
Average common shares outstanding 36,237 36,237
============ ===========
<FN>
See notes to condensed consolidated financial statements.
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HORSEHEAD RESOURCE DEVELOPMENT COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
(In thousands)
<CAPTION>
Additional
Common Paid-In Retained
Stock Capital Earnings
__________ ___________ ___________
<S> <C> <C> <C>
Balance at December 31, 1995 $362 $42,116 $81,955
Net Income 2,730
__________ ___________ ___________
Balance at March 31, 1996 $362 $42,116 $84,685
========== =========== ===========
<FN>
See notes to condensed consolidated financial statements.
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HORSEHEAD RESOURCE DEVELOPMENT COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
Three Months Ended
March 31,
________________________
1996 1995
___________ __________
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OPERATING ACTIVITIES
Net income $2,730 $4,203
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,371 2,606
Other liabilities 471 760
Changes in operating assets and liabilities:
Accounts receivable (483) (415)
Inventories 1,161 619
Prepaid expenses and income taxes receivable 59 1,509
Accounts payable and accrued expenses 1 (727)
___________ __________
NET CASH PROVIDED BY OPERATING ACTIVITIES 6,310 8,555
INVESTING ACTIVITIES
Capital expenditures (1,438) (635)
___________ __________
NET CASH USED IN INVESTING ACTIVITIES (1,438) (635)
INCREASE IN CASH AND CASH EQUIVALENTS 4,872 7,920
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 61,388 39,351
___________ __________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $66,260 $47,271
=========== ==========
<FN>
See notes to condensed consolidated financial statements.
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HORSEHEAD RESOURCE DEVELOPMENT COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(Unaudited)
Note 1: Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with Article 10 of Regulation S-X and, therefore,
do not include all information and footnotes necessary for a fair presentation
of financial position, results of operations, and cash flows in conformity with
generally accepted accounting principles. The information furnished reflects
all adjustments (consisting of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair summary of the results of
operations.
Note 2: Inventories
Inventories are as follows:
March 31, December 31,
1996 1995
_________ ____________
(In Thousands)
Raw materials. . . . . . . . . $ 526 $ 658
Supplies and spare parts . . . 4,088 4,023
Finished goods . . . . . . . . 5,571 6,665
_______ _______
$10,185 $11,346
======= =======
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three Months Ended March 31, 1996 Compared to Three Months Ended March 31, 1995
Operating revenues of $24.9 million for the quarter ended March 31, 1996
decreased $2.4 million from $27.3 million recorded in 1995's quarter. Service
fee revenues decreased from $16.5 million to $14.3 million, primarily as a
result of lower volumes of wastes received and service fee rates. Product
sales revenues of $10.6 million were essentially unchanged from the $10.8
million in the corresponding prior year period as neither the volume of
products sold nor the selling price of such products changed substantially.
Operating income for the first quarter of 1996 of $4.0 million represented
a decrease of $3.0 million from 1995's first quarter. This decrease was
primarily the result of the lower service fee revenues described above and
increased research and development expenses.
Net income for the quarter decreased $1.5 million from the first quarter
of 1996 to $2.7 million primarily as a result of the above factors.
Liquidity and Capital Resources
The Company's requirements for liquidity include capital expenditures and
general working capital needs. During 1996, the Company's $10.7 million bond
anticipation note must either be refinanced or retired. In addition, in 1996,
letters of credit supporting $34.1 million of industrial revenue bonds are
subject to renewal and if these letters of credit are not renewed or replaced
the $34.1 million of obligations become payable on demand. The Company
expects to be able to fund its liquidity needs through its cash on hand, cash
from operations, refinancings and additional borrowings.
The Company has a $25.0 million revolving credit facility expiring in
December 1997. As of May 10, 1996, the Company had no borrowings under this
facility but had outstanding facility-backed letters of credit totalling $21.8
million.
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HORSEHEAD RESOURCE DEVELOPMENT COMPANY, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See "Legal Proceedings" under Item 3 of the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 for
information regarding legal proceedings.
Item 2. Change in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Environmental Matters
See "Environmental Matters" under Item 1 of the Company's
Annual Report on Form 10-K for the year ended December 31,
1995 for information regarding regulatory developments
affecting the Company.
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits:
Not applicable
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K with the
Commission during the three months ended March 31, 1996.
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SIGNATURES
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.
HORSEHEAD RESOURCE DEVELOPMENT
COMPANY, INC.
Date: 5/15/96 William M. Quirk
William M. Quirk
President and Chief Executive Officer
Date: 5/15/96 Peter W. Nelson
Peter W. Nelson
Senior Vice President
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 66260
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0
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<INCOME-PRETAX> 4203
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