SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 4, 1999
ROANOKE ELECTRIC STEEL CORPORATION
(Exact name of Registrant as specified in its charter)
Virginia 0-2389 54-0585263
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
P.O. Box 13948, Roanoke, Virginia 24038-3948
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (540) 342-1831
N/A
(Former name or former address,
if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On December 16, 1998, the Registrant acquired all of the outstanding
common shares of Steel of West Virginia, Inc., upon completion of its cash
tender offer. The consideration given was approximately $117.1 million,
including the assumption of approximately $52.3 million of indebtedness.
Funding was provided by a syndicate of four banks, including First Union
National Bank, Agent.
The Registrant has not completed reviewing Steel of West Virginia's
records in order to make its determination of the fair value of Steel of
West Virginia's assets and liabilities. The fair value adjustments reflected
in the pro forma condensed combined financial statements reflect, among
other things, estimates of fair value made by the Company based on
assumptions it believes to be reasonable. Accordingly, the final pro forma
condensed combined amounts may be different from those set forth herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
The following documents of Steel of West Virginia, Inc.
are incorporated herein by reference:
(1) Form 10-K for December 31, 1997.
(2) Form 10-Q for March 31, 1998.
(3) Form 10-Q for June 30, 1998.
(4) Form 10-Q for September 30, 1998.
(b) Pro Forma Condensed Combined Financial Information.
Pro forma condensed combined balance sheets (unaudited)
and pro forma condensed combined statements of earnings (unaudited)
are incorporated herein by reference. The pro forma financial
statements combine historical financial information of the
Registrant for the period ended October 31,1998 with historical
financial information of Steel of West Virginia, Inc. for the
period ended September 30, 1998. The historical financial
information is adjusted for events that are directly attributable
to the acquisition.
(c) Exhibits.
Pursuant to Regulation S-K the following Exhibit Index
is added immediately preceding the exhibits filed as part of the
subject Form 8-K:
EXHIBIT INDEX
Exhibit No. Exhibit Page
(23) Independent Auditors' Consent 5
(99) (a) Form 10-K for December 31, 1997 6
Incorporated by
Reference
(b) Form 10-Q for March 31, 1998 6
Incorporated by
Reference
(c) Form 10-Q for June 30, 1998 6
Incorporated by
Reference
(d) Form 10-Q for September 30, 1998 6
Incorporated by
Reference
(e) Pro Forma Condensed Combined
Balance Sheets (Unaudited) 7
(f) Pro Forma Condensed Combined
Statements of Earnings (Unaudited) 8
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 hereunto duly authorized.
ROANOKE ELECTRIC STEEL CORPORATION
Registrant
Date: February 4, 1999 By John E. Morris
John E. Morris
Vice President-Finance
EXHIBIT NO. 99(a)
Form 10-K for December 31, 1997
Incorporated by reference to Steel of West Virginia, Inc.'s
previously filed Form 10-K for December 31, 1997 on file in the
Commission office.
EXHIBIT NO. 99(b)
Form 10-Q for March 31, 1998
Incorporated by reference to Steel of West Virginia, Inc.'s
previously filed Form 10-Q for March 31, 1998 on file in the
Commission office.
EXHIBIT NO. 99(c)
Form 10-Q for June 30, 1998
Incorporated by reference to Steel of West Virginia, Inc.'s
previously filed Form 10-Q for June 30, 1998 on file in the
Commission office.
EXHIBIT NO. 99(d)
Form 10-Q for September 30, 1998
Incorporated by reference to Steel of West Virginia, Inc.'s
previously filed Form 10-Q for September 30, 1998 on file in the
Commission office.
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EXHIBIT NO. 99 (e)
PRO FORMA CONDENSED COMBINED BALANCE SHEETS (UNAUDITED)
($ THOUSANDS)
Roanoke
Electric Steel of
Steel West Virginia Adjustments
10/31/98 09/30/98 Debit Credit Pro Forma
Assets
Current assets
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash and investments $ 27,895 $ (1,048) (1) $ 3,285 $ 30,132
Accounts receivable 42,415 15,812 (3) $ 1,604 56,623
Inventories 31,903 31,031 62,934
Other 3,195 2,002 5,197
Total current assets 105,408 47,797 3,285 1,604 154,886
Property, plant and equipment, net 83,636 65,095 (1) 5,000 153,731
Goodwill and other assets 167 17,673 (1) 61,752 (2) 57,457 22,135
Total $ 189,211 $ 130,565 $ 70,037 $ 59,061 $ 330,752
Liabilities and Stockholders' Equity
Current liabilities
Current portion of long-term debt $ 4,250 $ 3,691 (1) $ 7,059 $ 15,000
Accounts payable 15,274 9,671 (3) $ 1,604 23,341
Other 10,966 7,077 18,043
Total current liabilities 30,490 20,439 1,604 7,059 56,384
Long-term debt 24,292 47,730 (1) 62,978 135,000
Other long-term liabilities 14,981 4,939 19,920
Stockholders' equity
Common stock 2,858 71 (2) 71 2,858
Paid-in capital - 26,785 (2) 26,785 -
Retained earnings 117,408 42,084 (2) 42,084 117,408
Treasury stock (818) (11,483) (2) 11,483 (818)
119,448 57,457 68,940 11,483 119,448
Total $ 189,211 $ 130,565 $ 70,544 $ 81,520 $ 330,752
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<TABLE>
<CAPTION>
EXHIBIT NO. 99 (f)
PRO FORMA CONDENSED COMBINED STATEMENTS OF EARNINGS (UNAUDITED)
($ THOUSANDS)
Roanoke
Electric Steel of
Steel West Virginia
Twelve Months Twelve Months
Ended Ended Adjustments
10/31/98 09/30/98 Debit Credit Pro Forma
<S> <C> <C> <C> <C> <C> <C>
Sales $ 295,204 $ 130,247 (3) $ 7,652 $ 417,799
Cost of sales 237,484 116,552 (5) 417 (3) $ 7,652 346,878
(6) 77
Gross earnings 57,720 13,695 8,146 7,652 70,921
Other operating expenses
Administrative 19,772 4,733 (5) 1,078 25,583
Interest, net 831 2,461 (4) 5,326 8,618
Profit sharing 5,674 5,674
Total 26,277 7,194 6,404 39,875
Earnings before income taxes 31,443 6,501 14,550 7,652 31,046
Income tax expense 11,568 2,708 (7) 2,102 12,174
Net earnings $ 19,875 $ 3,793 $ 14,550 $ 9,754 $ 18,872
Net earnings per share of common stock:
Basic $ 1.79 $ 1.70
Diluted $ 1.77 $ 1.68
Explanation of Adjustments:
(1) To increase funded debt for purchase price of stock and acquisition expenses.
(2) To recognize the excess purchase price (fixed assets and goodwill), which is estimated
and will be adjusted upon completion of purchase accounting.
(3) To eliminate intercompany sales and balances.
(4) To increase interest expense for the additional borrowings.
(5) To amortize goodwill over 20 years and depreciate write-up of fixed assets over 12 years.
(6) To eliminate intercompany profits in inventories.
(7) To recognize the tax effects of adjustments (4) and (6) at statutory income tax rates.
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EXHIBIT NO. 23
ERNST & YOUNG LLP Phone: 304 343 8971
900 United Center Fax: 304 357 5994
500 Virginia Street East (25301)
P.O. Box 2906
Charleston, West Virginia 25330
CONSENT OF ERNST & YOUNG LLP
We consent to the incorporation by reference in Registration
Statement Nos. 333-49525 and 333-25299 on Form S-8 of Roanoke
Electric Steel Corporation of our report dated January 19, 1998,
on the consolidated financial statements of Steel of West
Virginia, Inc., included in its Annual Report on Form 10-K for
the year ended December 31, 1997 and incorporated by reference in
this Current Report on Form 8-K of Roanoke Electric Steel
Corporation.
/s/Earnst & Young LLP
Charleston, West Virginia
February 4, 1999
