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 April 30, 2000
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 0-2389
ROANOKE ELECTRIC STEEL CORPORATION
(Exact name of Registrant as specified in its charter)
Virginia 54-0585263
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
102 Westside Blvd., N.W., Roanoke, Virginia 24017
(Address of principal executive offices) (Zip Code)
(540) 342-1831
(Registrant's telephone number, including area code)
N/A
(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, and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of April 30, 2000.
10,955,688 Shares outstanding
ROANOKE ELECTRIC STEEL CORPORATION
FORM 10-Q
CONTENTS
Page
1. Part I - Financial Information 3 - 14
Item 1. Financial Statements
a. Consolidated Balance Sheets 3
b. Consolidated Statements of Earnings 4
c. Consolidated Statements of Cash Flows 5
d. Notes to Consolidated Financial Statements 6 - 9
e. Independent Accountants' Report 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11 - 13
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 14
2. Part II - Other Information 15
Item 1. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of
Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 15
3. Signatures 16
4. Exhibit Index pursuant to Regulation S-K 17
5. Exhibits
a. Financial Data Schedule 18
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
ROANOKE ELECTRIC STEEL CORPORATION
Consolidated Balance Sheets
ASSETS
(Unaudited)
April 30, October 31,
2000 1999 *
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 27,260,111 $ 33,286,934
Investments 11,663,532 11,772,902
Accounts receivable, net of allowances of
$2,248,484 in 2000 and $2,000,327 in 1999 55,082,820 57,692,504
Inventories 75,782,970 64,525,619
Prepaid expenses 1,350,040 1,476,561
Deferred income taxes 5,879,314 5,879,314
Total current assets 177,018,787 174,633,834
PROPERTY, PLANT AND EQUIPMENT
Land 8,077,943 8,077,943
Buildings 41,317,729 40,816,558
Other property and equipment 193,091,726 189,012,488
Assets under construction 4,786,637 2,135,854
Total 247,274,035 240,042,843
Less--accumulated depreciation 86,432,052 78,530,036
Property, plant and equipment, net 160,841,983 161,512,807
GOODWILL 15,083,419 15,488,343
OTHER ASSETS 1,235,623 1,110,828
TOTAL ASSETS $354,179,812 $352,745,812
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 15,036,469 $ 15,034,131
Accounts payable 27,333,852 22,821,864
Dividends payable 1,095,569 1,102,579
Employees' taxes withheld 578,342 530,139
Accrued profit sharing contribution 3,227,494 6,353,611
Accrued wages and expenses 10,390,500 11,138,478
Accrued income taxes 3,101,320 411,874
Total current liabilities 60,763,546 57,392,676
LONG-TERM DEBT
Notes payable 131,428,165 138,944,689
Less--current portion 15,036,469 15,034,131
Total long-term debt 116,391,696 123,910,558
DEFERRED INCOME TAXES 31,200,236 30,902,712
OTHER LIABILITIES 3,456,662 3,381,735
STOCKHOLDERS' EQUITY
Common stock--no par value--authorized 20,000,000 shares,
issued 12,228,802 shares in 2000 and 12,298,902 in 1999 3,933,327 3,699,678
Retained earnings 139,252,213 134,276,321
Total 143,185,540 137,975,999
Less--treasury stock, 1,273,114 shares -- at cost 817,868 817,868
Total stockholders' equity 142,367,672 137,158,131
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $354,179,812 $352,745,812
* Restated for change in method of accounting for certain inventories.
The accompanying notes to consolidated financial statements are an integral part of these statements.
</TABLE>
<TABLE>
<CAPTION>
ROANOKE ELECTRIC STEEL CORPORATION
Consolidated Statements of Earnings
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
April 30, April 30,
2000 1999 * 2000 1999 *
<S> <C> <C> <C> <C>
SALES $ 99,712,737 $101,338,801 $191,117,869 $174,742,368
COST OF SALES 81,358,236 80,378,957 156,312,565 139,085,226
GROSS EARNINGS 18,354,501 20,959,844 34,805,304 35,657,142
OTHER OPERATING EXPENSES
Administrative 6,692,855 6,793,591 13,139,152 12,733,441
Interest, net 1,509,923 2,081,674 3,285,764 3,294,617
Profit sharing 2,016,847 2,236,747 3,545,824 3,650,261
Total 10,219,625 11,112,012 19,970,740 19,678,319
EARNINGS BEFORE INCOME TAXES 8,134,876 9,847,832 14,834,564 15,978,823
INCOME TAX EXPENSE 3,309,517 3,978,907 6,054,822 6,430,928
NET EARNINGS $ 4,825,359 $ 5,868,925 $ 8,779,742 $ 9,547,895
Net earnings per share of common stock:
Basic $ 0.44 $ 0.53 $ 0.80 $ 0.86
Diluted $ 0.44 $ 0.53 $ 0.79 $ 0.86
Cash dividends per share of common stock $ 0.10 $ 0.095 $ 0.20 $ 0.19
Weighted average number of common
shares outstanding :
Basic 10,966,394 11,087,000 10,987,307 11,081,352
Diluted 11,051,688 11,140,651 11,064,939 11,144,390
* Restated for change in method of accounting for certain inventories.
The accompanying notes to consolidated financial statements are an integral part of these statements.
</TABLE>
<TABLE>
<CAPTION>
ROANOKE ELECTRIC STEEL CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
April 30,
2000 1999 *
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net earnings $ 8,779,742 $ 9,547,895
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Deferred compensation liability 117,971 280,286
Postretirement liabilities 156,956 160,225
Depreciation and amortization 8,473,177 7,157,467
(Gain) loss on sale of investments and property, plant and equipment 14,076 (41,152)
Deferred income taxes 297,524 729,000
Changes in assets and liabilities which provided
(used) cash, exclusive of changes shown seperately (5,145,604) (2,664,498)
Net cash provided by operating activities 12,693,842 15,169,223
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment (7,366,607) (6,956,419)
Proceeds from sale of property, plant and equipment 8,094 274,553
Sale of investments 93,078 520,418
Acquisition of Steel of West Virginia, Inc. --- (67,921,073)
Other (161,495) (202,141)
Net cash used in investing activities (7,426,930) (74,284,662)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends (2,194,538) (2,106,010)
Increase (decrease) in dividends payable (7,010) 1,590
Proceeeds from exercise of common stock options 233,649 431,126
Payment of long-term debt (7,516,524) (84,916,468)
Proceeds from long-term debt --- 150,000,000
Repurchase of common stock (1,609,312) (311,750)
Loan costs --- (513,793)
Interest rate reverse swap settlement from lender (200,000) ---
Net cash provided by (used in) financing activities (11,293,735) 62,584,695
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (6,026,823) 3,469,256
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 33,286,934 16,167,025
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 27,260,111 $ 19,636,281
CHANGES IN ASSETS AND LIABILITIES WHICH PROVIDED
(USED) CASH, EXCLUSIVE OF CHANGES SHOWN SEPARATELY
(Increase) decrease in accounts receivable $ 2,609,684 $ 6,625,864
(Increase) decrease in inventories (11,257,351) 1,271,348
(Increase) decrease in prepaid expenses 126,521 1,127,927
Increase (decrease) in accounts payable 4,511,988 (10,007,466)
Increase (decrease) in employees' taxes withheld 48,203 (340,932)
Increase (decrease) in accrued profit sharing contribution (3,126,117) (2,726,816)
Increase (decrease) in accrued wages and expenses (747,978) (555,728)
Increase (decrease) in accrued income taxes 2,689,446 1,941,305
Total $ (5,145,604) $ (2,664,498)
* Restated for change in method of accounting for certain inventories.
The accompanying notes to consolidated financial statements are an integral part of these statements.
</TABLE>
ROANOKE ELECTRIC STEEL CORPORATION
Notes to Consolidated Financial Statements
April 30, 2000
Note 1. In the opinion of the Registrant, the accompanying unaudited
consolidated financial statements contain all adjustments necessary to
present fairly the financial position as of April 30, 2000 and the
results of operations for the three months and six months ended April
30, 2000 and 1999 and cash flows for the six months ended April 30,
2000 and 1999.
Note 2. Effective November 1, 1999, the Company changed its inventory
costing method for a fabricating subsidiary's raw material (steel bar)
inventory from LIFO to FIFO. One reason for the change was to bring
this portion of inventory in line with all other inventories reported
consistently throughout the Company on the FIFO method. Further, due
to fluctuating steel prices, the move to FIFO reporting will provide
for accounting simplification.
The effect of the change in accounting principle was to reduce
net earnings reported for the 2000 second quarter by $68,670, or
$.00 per basic share, and to reduce net earnings for the six
months ended April 30, 2000 by $171,688, or $.01 per basic
share. The change has been applied to prior years by
retroactively restating the financial statements. The effect of
this restatement was to increase retained earnings as of October
31, 1999 by $616,590, and to increase net earnings for the
quarter ended April 30, 1999 by $97,240, or $.01 per basic
share, and to decrease net earnings for the six months ended
April 30, 1999 by $83,904, or $.01 per basic share.
Inventories include the following major classifications:
(Unaudited)
April 30, October 31,
2000 1999*
Scrap steel $ 6,375,011 $ 5,090,322
Melt supplies 3,702,798 3,520,825
Billets 15,584,002 14,477,006
Mill supplies 3,997,686 4,274,660
Work-in-process 5,948,696 4,234,402
Finished steel 40,174,777 32,928,404
Total inventories 75,782,970 64,525,619
* Restated for change in method of accounting for certain inventories.
Note 3. In February 1997, the Financial Accounting Standards Board issued
SFAS No. 128, "Earnings per Share", which changed the method of
calculating earnings per share. SFAS No. 128 requires the
presentation of "basic" earnings per share and "diluted" earnings per
share on the face of the income statement. Basic earnings per share
is computed by dividing the net income available to common
shareholders by the weighted average shares of outstanding common
stock. The calculation of diluted earnings per share is similar to
basic earnings per share except that the denominator includes
dilutive common stock equivalents such as stock options and warrants.
Basic earnings per share and diluted earnings per share calculated in
accordance with SFAS No. 128 are presented in the consolidated
statements of earnings.
Note 4. The Registrant retired all of its treasury stock applicable to the
shares recently acquired through its common stock repurchase plan.
Note 5. In June 1997, the Financial Accounting Standards Board issued SFAS
No. 130, "Comprehensive Income", and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information". SFAS No. 130
establishes standards for reporting and display of comprehensive
income and its components in a full set of general-purpose financial
statements. The Company adopted SFAS No. 130 during the 1999 first
quarter, but comprehensive income, and its required disclosure, is
the same as that shown in the consolidated statements of earnings.
SFAS No. 131 establishes disclosure standards regarding information
about operating segments in interim and annual financial statements.
The Company adopted SFAS No. 131 at the close of fiscal year 1999.
The Company's business consists of one industry segment, which is the
extracting of scrap metal from discarded automobiles and the
manufacturing, fabricating and marketing of merchant steel bar
products, specialty steel sections, reinforcing bars, open-web steel
joists and billets. The industry segment consists of three classes
of products - merchant steel products and specialty steel sections,
fabricated bar joists and reinforcing bars and billets.
<TABLE>
<CAPTION>
Financial Information Relating to Classes of Products
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
April 30, April 30,
2000 1999 2000 1999
Sales to unaffiliated
customers:
Merchant steel and
<S> <C> <C> <C> <C>
specialty steel sections $ 60,828,602 $ 61,756,340 $ 117,167,016 $ 99,157,212
Bar Joist and rebar 31,043,992 30,887,570 61,185,605 59,651,712
Billets 7,840,143 8,694,891 12,765,248 15,933,444
Total consolidated sales $ 99,712,737 $ 101,338,801 $ 191,117,869 $ 174,742,368
</TABLE>
Note 6. On December 16, 1998, the Registrant acquired all of the
outstanding common shares of Steel of West Virginia, Inc. ("SWVA"), a
Huntington, West Virginia steel manufacturer, 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, which translates into $10.75 net per SWVA share, for
approximately 6,028,000 shares on a fully-diluted basis. Upon
merger, SWVA became a wholly-owned subsidiary of Roanoke Electric
Steel Corporation, and each share of SWVA common stock not purchased
in the offer (approximately 3.6% of SWVA's outstanding shares) was
converted, subject to appraisal rights, into the right to receive
$10.75 in cash, without interest. Funding for the acquisition was
provided by a syndicate of four banks, including First Union National
Bank, Agent. SWVA operates a mini-mill in Huntington, West Virginia,
and steel fabrication facilities in Huntington and Memphis,
Tennessee, while custom designing and manufacturing special steel
products principally for use in the construction of truck trailers,
industrial lift trucks, off-highway construction equipment (such as
bulldozers and graders), manufactured housing, guardrail posts and
mining equipment.
The acquisition has been accounted for as a purchase. Accordingly,
the results of operations and cash flows are reflected in the
consolidated financial statements from the date of acquisition, and
the acquired assets and liabilities are included in the accompanying
October 31,1999 consolidated balance sheet at values based on a
purchase price allocation, rendered through appraisals and other
evaluations. The purchase price allocation is summarized below:
December 16,1998
Accounts and other receivables $ 17,811,730
Inventories 35,089,765
Prepaid expenses and other current assets 1,848,853
Property, plant and equipment 79,914,154
Goodwill 16,196,961
Other assets 304,356
Acounts and other payables (9,596,233)
Accrued expenses and other current liabilities (7,194,079)
Long-term debt (52,804,120)
Other liabilities (13,650,314)
Net purchase price $ 67,921,073
Unaudited pro forma consolidated results of operations for the six
month period ended April 30, 1999, assuming the SWVA acquisition had
occurred at the beginning of the period, is as follows:
(Unaudited)
Six Months Ended
April 30, 1999*
Sales $ 186,901,479
Net earnings $ 8,327,103
Net earnings per share of common stock:
Basic $ .75
Diluted $ .75
* Restated for change in method of accounting for certain inventories.
The pro forma consolidated results of operations include adjustments
to give effect to amortization of goodwill, interest expense on
acquisition debt and certain other adjustments, together with related
income tax effects. The unaudited pro forma information is not
necessarily indicative of the results of operations that would have
occurred had the purchase been made at the beginning of the period
presented or the future results of the combined operations.
Note 7. Supplemental cash flow information:
(Unaudited)
Six Months Ended
April 30,
2000 1999
Cash paid during the period for:
Interest $ 4,571,726 $ 3,495,976
Income taxes $ 3,067,853 $ 3,760,623
Detail of acquisition:
Fair value of assets acquired $ 151,165,819
Liabilities assumed (83,244,746)
Net cash paid for acquisition $ 67,921,073
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors
Roanoke Electric Steel Corporation
We have reviewed the accompanying consolidated balance sheet of Roanoke
Electric Steel Corporation (the "Corporation") and subsidiaries as of April
30, 2000, and the related consolidated statements of earnings and cash flows
for the three-month and six-month periods ended April 30, 2000 and 1999.
These financial statements are the responsibility of the Corporation's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and of making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with auditing standards generally accepted in
the United States of America, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such consolidated financial statements for them to be in
conformity with accounting principles generally accepted in the United
States of America.
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of
Roanoke Electric Steel Corporation and subsidiaries as of
October 31, 1999, and the related consolidated statements of earnings,
stockholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated November 19, 1999, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying consolidated balance
sheet as of October 31, 1999 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
As discussed in Note 2 to the consolidated financial statements, the
Corporation changed its method of accounting for certain inventories.
Deloitte & Touche LLP
Winston-Salem, North Carolina
June 5, 2000
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's earnings during the periods
included in the accompanying consolidated statements of earnings.
A summary of the period to period changes in the principal items included in
the consolidated statements of earnings is shown below:
<TABLE>
<CAPTION>
Comparison of Increases (Decreases)
Three Months Ended Six Months Ended
April 30, April 30,
2000 1999* 2000 1999*
Amount Percent Amount Percent
<S> <C> <C> <C> <C>
Sales (1,626,064) (1.6) 16,375,501 9.4
Cost of Sales 929,279 1.2 17,227,339 12.4
Administrative Expenses (100,736) (1.5) 405,711 3.2
Interest Expense (571,751) (27.5) (8,853) (0.3)
Profit Sharing Expense (219,900) (9.8) (104,437) (2.9)
Earnings before Income Taxes (1,712,956) (17.4) (1,144,259) (7.2)
Income Tax Expense (669,390) (16.8) (376,106) (5.8)
Net Earnings (1,043,566) (17.8) (768,153) (8.0)
* Restated for change in method of accounting for certain inventories.
</TABLE>
Sales for the six months increased significantly, due mainly to the
acquisition of Steel of West Virginia, Inc. ("SWVA"), on December 16, 1998.
Sales for the current year included SWVA's revenues for the entire period,
whereas sales for last year included only the portion of SWVA's revenues
from the date of acquisition. Increased tons shipped of fabricated
products, together with improved selling prices for merchant bar products
and billets, favorably impacted sales for the six months. However, sales
were negatively affected by a substantial decrease in tons shipped of
billets, together with a decline in selling prices for fabricated products,
while shipment levels for bar products were flat. The decline in sales for
the quarter was primarily the result of significantly lower billet
shipments, reduced shipment levels for all other product classes and a drop
in selling prices for specialty products; even though, selling prices were
considerably higher for bar products and billets, and slightly up for
fabricated products. For the quarter, specialty steel shipments were
slightly lower due to decreased demand within certain markets segments.
Average selling prices for specialty steel sections were down during both
periods compared, as a result of the mix of higher sales volumes of much
lower priced products. A dramatic change in market conditions for billets
brought diminished demand and declines in tons shipped of 30% for the six
months and 24% for the quarter. Billet selling prices increased in both
periods with sharp rises in scrap prices which normally trigger changes in
billet pricing. The improvement in merchant bar product selling prices,
during both periods compared, was due mainly to rising scrap steel costs
which prompted a number of industry-wide price increases during the past
year. More cautious buying patterns at steel service centers, due to rising
prices, contributed to the reduced tons shipped of bar products for the
quarter. The six month increase in shipments of fabricated products was due
mainly to continued strong construction activity; however, shipments lagged
for the quarter, hampered by shortages of structural steel components at
construction sites. The decline in fabricated product selling prices,
during the six month period, was caused by increased competition within the
commercial construction industry; even though, business conditions continued
strong and backlogs remained high. Fabricated product selling prices
increased slightly for the quarter, influenced mainly by higher raw material
costs. Cost of sales increased for the six months compared mainly due to the
impact of SWVA costs, the increased shipments of fabricated products and an
increase in the cost of scrap steel, our main raw material. Cost of sales
increased for the three months compared primarily as a result of higher
scrap steel and other raw material costs, in spite of the effects of the
decreased tons shipped for all product classes. Gross profit as a
percentage of sales declined from 20.4% to 18.2% and from 20.7% to 18.4% for
the six month and three month periods, respectively. These lower margins,
for both periods compared, primarily resulted from higher scrap costs and
lower specialty product selling prices, which more than offset higher bar
and billet selling prices and the effects of increased production levels on
costs. Both gross profit and net earnings declined for the six months
compared, due mainly to the reduced margins in spite of the improved
shipment levels. The decline in gross profit margins at the reduced
shipment levels caused the reductions in gross profit and net earnings for
the quarter. Administrative expenses increased for the six months mainly as
a result of the inclusion of SWVA's expenses in 2000 covering a longer
period than in the 1999 results. For the three months, administrative
expenses declined as a result of reductions in a number of expenses.
Administrative expenses, as a percentage of sales, dropped from 7.3% to 6.9%
for the six month period, while the three month period remained at 6.7%.
Interest expense for the six months was virtually unchanged as higher
interest income, coupled with lower interest rates, offset lower capitalized
interest and higher average borrowings, related to the SWVA acquisition.
For the three months, interest expense decreased as higher interest income,
lower average borrowings and lower interest rates more than offset lower
capitalized interest. Profit sharing expense is based on earnings before
income taxes in accordance with the provisions of various plans. For both
periods compared, profit sharing expense declined as a result of lower
earnings. The effective income tax rate is higher in both 2000 periods
compared due to nondeductible amortization of the excess investment in SWVA
net assets.
Working capital decreased $985,917 during the period to $116,255,241 mainly
as a result of capital expenditures, dividends, debt maturities and
repurchases of common stock amounting to $7,366,607, $2,194,538, $7,516,524
and $1,609,312, respectively, which exceeded working capital provided from
operations. The current ratio of 2.9 to 1 and the quick ratio of 1.5 to 1
both indicate very strong liquidity and a healthy financial condition. In
addition, cash, cash equivalents and investments total $38,923,643. Due to
the new credit facilities in conjunction with the SWVA acquisition, current
debt maturities are approximately $15,000,000 annually, which will affect
working capital and future liquidity. Our unused $30,000,000 revolving
credit facility combined with strong earnings and the cash and investments
mentioned above should provide the liquidity and capital resources necessary
to remain competitive, fund operations and meet required debt retirement.
At April 30, 2000, there were commitments for the purchase of property,
plant and equipment of approximately $11,500,000, a significant portion of
which is for SWVA's #2 mill state-of-the-art shearing and gauging equipment
and finishing stands, expected to be in operation by the third quarter with
anticipated improvements in rolling mill productivity and efficiency. These
commitments will also affect working capital and future liquidity and will
be financed from internally generated funds, the revolving credit facility
and existing cash reserves.
During the first half of the year, the ratio of debt to equity decreased to
1.5 to 1, and the percentage of long-term debt to total capitalization
declined to 45.0%, due to current maturities of $7,516,524 reducing
long-term debt to $116,391,696. Stockholders' equity increased to
$142,367,672 mainly due to net earnings of $8,779,742 exceeding dividends of
$2,194,538 and common stock repurchases of $1,609,312.
From time to time, the Company may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products, research and
development activities and similar matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. In order to comply with the terms of the safe harbor, the
Company notes that a variety of factors could cause the Company's actual
results and experience to differ materially from the anticipated results or
other expectations expressed in the Company's forward-looking statements.
The risks and uncertainties that may affect the operations, performance,
development and results of the Company's business include economic and
industry conditions, availability and prices of supplies, prices of steel
products, competition, governmental regulations, interest rates, inflation,
labor relations, environmental concerns, and others.
The Company successfully completed its efforts to ensure Year 2000 readiness
for all of its critical systems. As a result, the Company experienced no
interruption in its operations during the transition to the Year 2000. The
cost of the Company's Year 2000 efforts totaled approximately $590,000.
PART I - ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Quantitative and qualitative information about market risk was addressed in
Form 10-K for fiscal year ended October 31, 1999, as previously filed with
the commission. There has been no material changes to that information
required to be disclosed in this 2nd quarter 10-Q filing.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
To the best of Registrant's information and belief no new legal
proceedings were instituted against Registrant or any of its
wholly-owned subsidiaries during the period covered by this report
and there was no material development in or termination of the
legal proceedings reported earlier by the Registrant on Form 10-K
for fiscal year ended October 31, 1999 and Form 10-Q for the
quarter ended January 31, 2000, as previously filed with the
Commission.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On February 15, 2000, the Annual Meeting of Shareholders was held
and the following persons were elected as Class A directors of the
Registrant, with terms expiring in 2003:
Authority Not
Director For Withheld Voted
George B. Cartledge, Jr. 10,179,933 19,823 826,032
Thomas L. Robertson 10,175,043 24,713 826,032
Donald G. Smith 10,179,933 19,823 826,032
The following persons continued to serve as Class B and Class C
directors of the Registrant after the annual meeting:
Class B directors, with terms expiring in 2001
Frank A. Boxley
Timothy R. Duke
George W. Logan
Class C directors, with terms expiring in 2002
Charles I. Lunsford, II
Paul E. Torgersen
John D. Wilson
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits.
(27) Financial Data Schedule
b. Reports on Form 8-K.
No reports on Form 8-K have been filed during the quarter for
which this report is filed.
Items 2, 3 and 5 are omitted because the information required by these items
is not applicable.
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.
ROANOKE ELECTRIC STEEL CORPORATION
Registrant
Date June 5, 2000 Donald G. Smith
Donald G. Smith, Chairman, President,
Treasurer and Chief Executive Officer
(Principal Financial Officer)
Date June 5, 2000 John E. Morris
John E. Morris, Vice President-Finance
and Assistant Treasurer
(Chief Accounting Officer)
EXHIBIT INDEX
Exhibit No. Exhibit Page
(27) Financial Data Schedule 18
EXHIBIT NO. 27
FINANCIAL DATA SCHEDULE
