<PAGE>
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 26, 1995 or
( ) Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
---------------------------
Commission file number 0-14727
ACME METALS INCORPORATED
(formerly Acme Steel Company)
(Exact name of registrant as specified in its charter)
Delaware 36-3802419
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13500 South Perry Ave., Riverdale, Illinois 60627-1182
(Address of principal executive offices) (Zip Code)
(708) 849-2500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
--- ---
Number of shares of Common Stock outstanding as of April 23,1995, 11,575,684.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ACME METALS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
March 26, December 25,
1995 1994
--------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 98,510 $ 76,639
Short term investments 109,557 76,384
Receivables, less allowances of $1,375
in 1995 and $1,301 in 1994 62,135 60,878
Inventories 47,755 44,982
Deferred income taxes 13,354 13,354
Other current assets 1,785 1,605
---------- ----------
Total current assets 333,096 273,842
---------- ----------
INVESTMENTS AND OTHER ASSETS:
Investments in associated companies 14,368 14,358
Restricted cash and investments 154,659 201,397
Other assets 22,877 23,221
Deferred income taxes 20,684 20,683
---------- ----------
Total investments and other assets 212,588 259,659
---------- ----------
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost 364,099 363,699
Construction in Progress 90,209 46,605
Accumulated depreciation (265,573) (261,475)
---------- ----------
Total property, plant and equipment 188,735 148,829
---------- ----------
$ 734,419 $ 682,330
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 75,384 $ 36,732
Accrued expenses 39,560 42,718
Income taxes payable 6,365 1,941
---------- ----------
Total current liabilities 121,309 81,391
---------- ----------
LONG-TERM LIABILITIES
Long-term debt 267,858 265,055
Other long-term liabilities 10,449 10,012
Postretirement benefits other than pensions 84,541 83,867
Retirement benefit plans 18,498 18,727
---------- ----------
Total long-term liabilities 381,346 377,661
---------- ----------
Commitments and contingencies (see note titled
COMMITMENTS AND CONTINGENCIES)
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value, 2,000,000 shares
authorized, no shares issued
Common stock, $1 par value, 20,000,000 shares
authorized, 11,581,084 and 11,558,127
shares issued in 1995 and 1994, respectively 11,581 11,558
Additional paid-in capital 165,015 164,599
Retained earnings 75,766 67,719
Minimum pension liability adjustment (20,598) (20,598)
---------- ----------
Total shareholders'equity 231,764 223,278
---------- ----------
$ 734,419 $ 682,330
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of this financial statement.
2
<PAGE>
ACME METALS INCORPORATED
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
For The Three Months Ended
----------------------------
March 26, March 27,
1995 1994
----------------------------
<S> <C> <C>
NET SALES $ 131,548 $ 123,560
COSTS AND EXPENSES:
Cost of products sold 104,449 106,258
Depreciation expense 3,967 3,783
---------- ----------
Gross profit 23,132 13,519
Selling and administrative expense 8,822 7,363
---------- ----------
Operating income 14,310 6,156
NON-OPERATING INCOME (EXPENSE):
Interest expense (7,340) (1,334)
Interest income 3,841 394
Other - net 1,761 781
---------- ----------
Income before income taxes 12,572 5,997
Income tax provision 4,526 2,399
---------- ----------
Net income $ 8,046 $ 3,598
---------- ----------
---------- ----------
PER COMMON SHARE:
Net Income $ 0.69 $ 0.64
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of this financial statement.
3
<PAGE>
ACME METALS INCORPORATED
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
For The Three Months Ended
--------------------------
March 26, March 27,
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,046 $ 3,598
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation 4,114 3,930
Accretion of Senior Discount Note 2,803
CHANGE IN CURRENT ASSETS AND LIABILITIES:
Receivables (1,257) (609)
Inventories (2,773) 3,326
Accounts payable (1,621) (3,529)
Other current accounts 1,116 2,124
Other, net 1,292 1,331
---------- ----------
Net cash provided by operating activities 11,720 10,171
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments (135,240)
Sales and/or maturities of investments 108,607
Release of restricted cash 40,198
Capital expenditure (1,845) (1,842)
Capital expenditure - modernization project (2,008)
---------- ----------
Net cash provided by (used for) investing activities 9,712 (1,842)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Other 439 (94)
Proceeds from the exercise of stock options 2,258
---------- ----------
Net cash provided by financing activities 439 2,164
---------- ----------
Net increase in cash and cash equivalents 21,871 10,493
Cash and cash equivalents at beginning of period 76,639 50,444
---------- ----------
Cash and cash equivalents at end of period $98,510 $60,937
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of this financial statement.
4
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION:
The accompanying financial statements for the periods ended March 26, 1995 and
March 27, 1994 are unaudited. In the opinion of management, all adjustments
necessary for a fair presentation of such financial statements have been
included. The financial statements have been subjected to a limited review by
Price Waterhouse LLP, the Company's independent accountants, whose report
appears on page 10 of this filing. Such report is not a "report" or "part of
the Registration Statement" within the meaning of Sections 7 and 11 of the
Securities Act of 1933 and the liability provisions of Section 11 of such Act do
not apply.
The Company's fiscal year ends on the last Sunday in December 1995 which will
end on December 31, 1995 will contain 53 weeks. First quarter results for 1995
and 1994 cover 13-week periods.
SEGMENT INFORMATION:
The Company presents its operations in two segments, Steel Making and Steel
Fabricating.
Steel Making operations include the manufacture of sheet, strip and semifinished
steel in low-, mid-, and high-carbon alloy and special grades. Principal
markets include agricultural, automotive, industrial equipment, industrial
fasteners, welded steel tubing, processor and tool manufacturing industries.
The Steel Fabricating Segment processes and distributes steel strapping,
strapping tools and industrial packaging (Acme Packaging Corporation), welded
steel tube (Alpha Tube Corporation) and auto and light truck jacks (Universal
Tool & Stamping). The Steel Fabricating Segment sells to a number of markets.
All sales between Segments are recorded at current market prices. Income from
operations consists of total sales less operating expenses. Operating expenses
include an allocation of expenses incurred at the Corporate Office that are
considered by the Company to be operating expenses of the Segments rather than
general corporate expenses. Income from operations does not include other non-
operating income or expense, interest income or expense, or income taxes.
The products and services of the Steel Making and Steel Fabricating Segments are
distributed through their own respective sales organizations which have sales
offices at various locations in the United States. Export sales are
insignificant.
5
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
March 26, March 27,
1995 1994
-------- ---------
(in thousands)
<S> <C> <C>
Net Sales
Steel Making:
Sales to unaffiliated customers $ 60,274 $ 53,765
Intersegment sales 29,559 30,503
------- -------
89,833 84,268
Steel Fabricating:
Sales to unaffiliated customers 71,302 69,795
Intersegment sales 430 497
------- -------
71,732 70,292
Eliminations: (30,017) (31,000)
------- -------
Total $131,548 $123,560
------- -------
------- -------
Income from Operations
Steel Making $ 7,904 $ 2,313
Steel Fabricating 6,406 3,843
------- -------
Total $ 14,310 $ 6,156
------- -------
------- -------
Depreciation
Steel Making $ 3,132 $ 2,926
Steel Fabricating 953 979
Corporate 29 25
------- -------
Total $ 4,114 $ 3,930
------- -------
------- -------
Capital Expenditures
Steel Making $43,566 $1,506
Steel Fabricating 402 332
Corporate 68 4
------- -------
Total $ 44,036 $ 1,842
------- -------
------- -------
Steel Shipments (in tons) 170,741 170,965
------- -------
------- -------
</TABLE>
PER SHARE DATA:
Per share amounts for 1995 and 1994 are based on the weighted average number of
common and dilutive common equivalent shares outstanding during the three-month
period (11,643,406 in 1995 and 5,662,670 in 1994).
6
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
INVENTORIES:
Inventories are summarized as follows:
<TABLE>
<CAPTION>
March 26, December 25,
1995 1994
-------- -----------
(in thousands)
<S> <C> <C>
Raw materials $ 5,088 $ 5,200
Semi-finished and finished products 33,937 31,434
Supplies 8,730 8,348
------- -------
$ 47,755 $ 44,982
------- -------
------- -------
</TABLE>
PROPERTY, PLANT AND EQUIPMENT:
The Company capitalized expenditures related to the construction of the
Modernization and Expansion Project ("the Project") totaling $86.9 million at
March 26, 1995. The capitalized expenditures are comprised of $82.2 million of
cash and accrued payments to Raytheon Engineers & Constructors Inc., the general
contractor, $3.5 million of related capitalized interest, and $1.2 million of
other costs related directly to the construction of the Project.
CASH FLOWS:
Cash payments for interest expense were $8.6 million in the first quarter of
1995, as compared to sixty-four thousand in 1994 for the same period. Cash
flows from investing activities were increased by a release of $40.2 million of
non-current restricted cash to cash and cash equivalents in the first quarter of
1995. The restricted cash was reclassified to recognize an amount currently
owed to the general contractor. Due to the non-cash nature of this capital
expenditure it has been excluded from cash flow statement.
COMMITMENTS AND CONTINGENCIES:
The Company's interest in an iron ore mining joint venture requires payment of
its proportionate share of all fixed operating costs, regardless of the quantity
of ore received, plus the variable operating costs of minimum ore production for
the Company' s account. Normally, the Company reimburses the joint venture for
these costs through its purchase of ore at the higher of cost or market prices.
The Company is subject to various Federal, state and local environmental
statutes and regulations which provide a comprehensive program for controlling
the release of materials into the environment and require responsible parties to
remediate certain waste disposal sites. In addition, various health and safety
statutes and regulations apply to the work-place environment. Administrative,
civil and criminal penalties may be applicable for failure to comply with these
laws. These environmental laws and regulations are subject to periodic revision
and modification. The United States Congress, for
7
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
example, has recently completed a major overhaul of the Federal Clean Air Act
which is a major component of the Federal environmental statutes affecting the
Company's operations.
From time to time, the Company is also involved in administrative proceedings
involving the issuance, or renewal, of environmental permits relating to the
conduct of its business. The final issuance of these permits have been
resolved on terms satisfactory to the Company; and, in the future, the Company
expects such permits will similarly be resolved on satisfactory terms.
Although management believes it will be required to make further substantial
expenditures for pollution abatement facilities in future years, because of the
continuous revision of these regulatory and statutory requirements, the Company
is not able to reasonably estimate the specific pollution abatement
requirements, the amount or timing of such expenditures to maintain compliance
with these environmental laws. While such expenditures in future years may be
substantial, management does not presently expect they will have a material
adverse effect on the Company's future ability to compete within its markets.
In those cases where the Company has been identified as a Potentially
Responsible party ("PRP") or is otherwise made aware of a possible exposure to
incur costs associated with an environmental matter, management determines (i)
whether, in fact, the Company has been properly named or is otherwise obligated,
(ii) the extent to which the Company may be responsible for costs associated
with the site in question, (iii) an assessment as to whether another party may
be responsible under various indemnification agreements or insurance policies
the Company is a part to, and (iv) an estimate, if one can be made, of the costs
associated with the clean-up efforts or settlement costs. It is the Company's
policy to make provisions for environmental clean-up at the time that a
reasonable estimate can be made. At March 26, 1995, the Company had recorded
reserves for environmental clean-up matters which were not material. While it
is not possible to predict the ultimate costs of resolving environmental related
issues facing the Company, based upon information currently available, they are
not expected to have a material effect on the consolidated financial condition
or results of operations of the Company.
In connection with the Spin-Off from The Interlake Corporation ("Interlake") on
May 29, 1986, Acme Steel Company (a subsidiary of the Company) entered into
certain indemnification agreements with Interlake. Pursuant to the terms of the
indemnification agreements, Interlake undertook to defend, indemnify and hold
Acme Steel Company harmless from any claims, as defined, relating to Acme Steel
Company operations or predecessor operations occurring before May 29, 1986, the
inception of Acme Steel Company. The indemnification agreements cover certain
environmental matters including certain litigation and Superfund sites in
Duluth, Minnesota and Gary, Indiana for which either Interlake or Acme Steel
Company's predecessor operations have been named as defendants or PRP's, as
applicable. To date, Interlake has met its obligations under the
indemnification agreements and has provided the defense and paid all costs
related to these environmental matters. The Company does not have sufficient
information to determine the potential liability, if any, for the matters
covered by the indemnification agreements in the event Interlake fails to meet
its obligations thereunder in the future.
8
<PAGE>
ACME METALS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
In the event that Interlake, for any reason, was unable to fulfill its
obligations under the indemnification agreements, the Company could have
increased future obligations which could be significant.
Also in connection with the Spin-Off from Interlake, Acme Steel Company entered
into a Tax Indemnification Agreement ("TIA") which generally provided for
Interlake to indemnify Acme Steel Company for certain tax matters. While
certain issues have been negotiated and settled between the Company, Interlake
and the Internal Revenue Service, certain significant issues for the tax years
beginning in 1982 through 1986 remain unresolved.
On March 17, 1994, Acme Steel Company received a Statutory Notice of Deficiency
("Notice") in the amount of $16.9 million in tax as a result of the Internal
Revenue Service's examination of the 1982-1984 tax years. The Company is
contesting the unresolved issues and the Notice. Should the government sustain
its position as proposed for those unresolved issues and those contained in the
Notice, substantial interest would also be due (potentially in an amount greater
than the tax claimed). The taxes claimed relate principally to adjustments for
which Acme Steel Company is indemnified by Interlake pursuant to the TIA. The
Company has adequate reserves to cover that portion for which it believes it may
be responsible per the TIA. To date, Interlake has met its obligations under
the TIA with respect to all covered matters. In the event that Interlake, for
any reason, were unable to fulfill its obligations under the TIA, the Company
could have increased future obligations.
The Company's subsidiaries also have various litigation matters pending which
arise out of the ordinary course of their businesses. In the opinion of
management, the ultimate resolution of these matters will not have a material
adverse effect on the financial position of the Company.
9
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of
Acme Metals Incorporated
We have reviewed the accompanying consolidated balance sheet as of March 26,
1995 and the consolidated statements of income and cash flows for the three-
month periods ended March 26, 1995 and March 27, 1994 (the "consolidated
financial information") of Acme Metals Incorporated and its subsidiaries. These
financial statements are the responsibility of the company'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 making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in accordance with
generally accepted auditing standards, 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 the accompanying consolidated financial information for it to be in
conformity with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing standards,
the consolidated balance sheet as of December 25, 1994, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
the year then ended (not presented herein), and in our report dated March 17,
1995 we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
consolidated balance sheet information as of December 25, 1994, is fairly stated
in all material respects in relation to the consolidated balance sheet from
which it has been derived.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
April 26, 1995
Chicago, Illinois
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Years Ended
-------------------------- -------------------
March 26, March 27, December 25, December 26 December 27,
1995 1994 1994 1993 1992
-------- -------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
NET SALES 100.0% 100.0% 100.0% 100.0% 100.0%
COSTS AND EXPENSES:
Cost of products sold 79.4 86.0 82.5 86.9 88.8
Depreciation expense 3.0 3.0 2.9 3.2 3.0
----- ----- ----- ----- -----
Gross profit 17.6 11.0 14.6 9.9 7.5
Selling and administrative expense 6.7 6.0 6.4 6.7 7.4
Restructuring/Nonrecurring charge 1.8 0.4 0.6
----- ----- ----- ----- -----
Operating income (loss) 10.9 5.0 6.4 2.8 (0.5)
Interest expense, net (5.6) (1.1) (1.2) (0.9) (1.0)
Other non-operating income, net 4.2 0.9 0.3 0.1 0.1
Unusual income items 0.0 0.3 0.3
Income tax provision (credit) 3.4 1.9 1.9 0.9 (0.4)
----- ----- ----- ----- -----
Net income (loss) before extraordinary
item and cumulative effect of
accounting changes 6.1 2.9 3.6 1.4 (0.7)
Cumulative effect of changes in
accounting principles, net of taxes (12.9)
----- ----- ----- ----- -----
Net income (loss) before
extraordinary item 6.1 2.9 3.6 1.4 (13.6)
----- ----- ----- ----- -----
Extraordinary item, net of taxes 0.0 0.0 (0.3) 0.0 0.0
----- ----- ----- ----- -----
Net income (loss) 6.1% 2.9% 3.3% 1.4% (13.6)%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
FIRST QUARTER 1995 COMPARED WITH FIRST QUARTER 1994
NET SALES. Consolidated net sales of $131.5 million in the first quarter of
1995 were $7.9 million, or 6 percent higher than the first quarter 1994 net
sales. A 7 percent increase in average selling prices contributed $9.1 million
to the favorable comparison but was somewhat reduced by lower shipments for the
Steel Fabricating Segment and changes in sales mix which decreased sales by $1.2
million. The favorable results were largely related to a continued strong
economy and increased average selling prices, as compared to 1994. Although
economic conditions have remained strong, there is some indication of an
expected softening in future quarters.
11
<PAGE>
STEEL MAKING SEGMENT. Net sales for the Steel Making Segment were $89.8 million
in the first quarter of 1995, a $5.5 million, or 7 percent, improvement over
last year's comparable period. Sales to unaffiliated customers increased 12
percent to $60.3 million while intersegment sales of $29.6 million were 3
percent lower than in the first quarter of 1994. The increase in the Steel
Making Segment's net sales was the result of a 4 percent increase in average
selling prices and a 3 percent increase in shipments.
STEEL FABRICATING SEGMENT. The Steel Fabricating Segment net sales of $71.7
million in the first quarter of 1995 were $1.4 million, or 2 percent higher than
the comparable period in the prior year. A 7 percent increase in average
selling prices accounted for the sales improvement but was reduced by a 5
percent decrease in shipments as compared to 1994's first quarter. Shipments
were affected by increased 1994 fourth quarter activity in anticipation of price
increases.
GROSS PROFIT. The gross profit margin for the first quarter of 1995 of $23.1
million was $9.6 million higher than the margin recorded during last year's
comparable period. The increase in margin was due to higher average selling
prices for the Company's products. Operating costs, however, were lower in the
first quarter of 1995 due to the lower costs relating to natural gas, scrap, and
iron ore in the Steel Making Segment. The gross profit, as a percentage of
sales, was 17.6 percent in the first quarter of 1995 versus 11.0 percent in last
year's comparable period.
SELLING AND ADMINISTRATIVE EXPENSE. Selling and administrative
expense totaled $8.8 million and $7.3 million for the first quarters of 1995 and
1994, respectively. Selling and administrative expenses represented 6.7 percent
of net sales in 1995 compared to 6.0 percent in 1994. The increase was
generated by higher salaries, and expenses associated with on-going efforts to
implement new information technology systems and business processes within the
Company.
OPERATING INCOME. Operating income for the Company for the first quarter of
1995 was $14.3 million as compared to operating income of $6.2 million in the
first quarter of 1994.
STEEL MAKING SEGMENT. The Steel Making Segment earned $7.9 million from
operations. The earnings improvement was driven by a 4 percent increase in
average selling prices and increased shipments of 4,500 tons. Shipments to
external customers were 8 percent over last year's comparable period while
shipments to the Steel Fabricating Segment were 4,900 tons, or 7 percent, lower
than in the first quarter of 1994. Approximately 65 percent of shipments and
gross profit in 1995 was attributable to external customers while the remainder
was generated by sales to the Steel Fabricating Segment. In total, the
increased selling prices generated $4.9 million in increased revenue while the
lower operating cost contributed to the remainder of the improvement over the
first quarter of 1994.
STEEL FABRICATING SEGMENT. The Steel Fabricating Segment's operating income of
$6.4 million for the first quarter of 1995 was $2.6 million higher than in last
year's comparable period with all of the increase derived from a 7 percent
increase in average selling prices. Acme Packaging's operating income for the
first quarter of 1995 was higher than last year's comparable period due
principally to an increase in average selling prices. Alpha Tube's results in
the first quarter of 1995 were up substantially as a result of a 14 percent
increase in average selling prices for welded tubing, and Universal's operating
income was slightly lower than the prior year for the same period due to
decreased sales volume related to its auto customers. The majority of the price
increases for the Steel Fabricating Segment in the first quarter of 1995 was the
result of price hikes initiated in 1994. Partially offsetting the effect of the
Steel Fabricating Segment's sales related gains were increased raw material
costs in the form of higher flat-rolled prices from the Steel Making Segment and
external suppliers.
12
<PAGE>
INTEREST INCOME / EXPENSE. Interest income for the first quarter of 1995
totaled $3.8 million, exceeding the first quarter of 1994 by $3.4 million. The
increase is due primarily to higher investment levels in connection with the
Project resulting from the issuance of debt and equity in the third quarter of
1994. Interest expense of $7.3 million for the first quarter of 1995 surpassed
the same period for the prior year by $6.0 million arising from the issuance of
$255.0 million of long term debt in the third quarter of 1994. In the first
quarter of 1995, interest expense of $1.5 million was capitalized as part of the
Project.
NON-OPERATING INCOME. Non-operating income in the first quarter of 1995 was
$1.8 million, $1.0 million higher than the $0.8 million income recorded in last
year's comparable period. Non-operating income in the first quarter of 1995
included a $1.6 million gain on the sale related to the sale of the Company's
interest in a West Virginia coal producing property. The first quarter of 1994
included $0.7 million refund of prior year utility costs from Commonwealth
Edison.
NET INCOME. The Company recorded earnings of $8.0 million, or $0.69 per share
in the first quarter of 1995 versus income of $3.6 million, or $0.64 cents per
share, recorded in the first quarter of 1994. Per share amounts for 1995 and
1994 are based on weighted average number of shares common and dilutive common
equivalent shares outstanding during the three month period (11,643,406 in 1995
and 5,662,670 in 1994).
LIQUIDITY AND CAPITAL RESOURCES. At the end of the first quarter, the
Company's cash and cash equivalents balance was $98.5 million, up $21.9 million
from the December 1994 balance. Operating activities generated $11.7 million of
cash in the quarter due to a combination of net income, and add-back of $4.1
million of non-cash depreciation and $2.8 million of non-cash accretion of the
Senior Discount Notes, and a decrease of $3.3 million from changes in working
capital and other non-current accounts. Investing activities increased cash
$9.7 million resulting from the release of $40.2 million of restricted cash and
investments to make funds available for amounts owing the general contractor. A
purchase of short-term investments reduced cash from investing activities by
$26.6 million. Working capital stood at $211.8 million at the end of the first
quarter, up $9.3 million over last December's ending amount.
As of March 26, 1995, the Company's long term indebtedness was $267.9 million.
Long term debt increased $2.8 million in the first quarter of 1995 due to the
accretion of Senior Secured Discount Notes. The Company also currently has
unused $80.0 million working capital facility all of which, remained available.
At March 26, 1995, the Company's ratio of debt to capitalization was .54 to 1.
Capital expenditures totaled $44.0 million for the first quarter 1995, $42.2
million, of which related to current amounts owing the general contractor,
capitalized interest, and other costs related to the Project. The remainder
of capital expenditures were for normal, expected replacement and
rehabilitation of production facilities throughout the Company.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 15 - Letter Regarding Unaudited Interim Financial Information
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
On March 17, 1995 the Company issued a press release announcing that its
Acme Steel Company Subsidiary (Acme Steel"), now engaged in a major
modernization and expansion of its steel making operations, has signed a
Joint Development Program Agreement with SMS Schloemann Siemag AG,
Dusseldorf ("SMS").
SMS is the primary equipment supplier for Acme Steel's Modernization and
Expansion Project, which includes installation of a continuous thin slab
caster/hot strip mill at Acme Steel's Riverdale, IL plant.
The report on Form 8-K discussing the above matter was filed on March
23, 1995.
On May 5, 1995 the Company issued a press release announcing that its Acme
Steel Company Subsidiary ("Acme Steel") and National Material L.P., an
affiliate of Tang Industries, Inc., have signed a letter of intent to form
a joint venture to construct and operate a facility to pickle, oil and slit
(process) wide steel coils from Acme Steel's new continuous thin-slab
caster/hot strip mill modernization project under construction in
Riverdale, Illinois. The location for the proposed joint venture facility
has not been finalized.
Under the terms of the letter of intent, Acme Steel would be a minority
equity participant and the processing facility would be constructed and
managed by National Material L.P.
Consummation of the joint venture agreement will, among other conditions,
be subject to the execution of a mutually satisfactory definitive joint
venture agreement between the parities and final approval of the Board of
Directors of the respective parties.
The report on Form 8-K discussing the above was filed on May 8, 1995.
14
<PAGE>
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.
ACME METALS INCORPORATED
Date: May 9, 1995 By: /s/ J. F. Williams
---------------------------
Jerry F. Williams
Vice President - Finance
and Administration
(Principal Financial Officer)
By: /s/ G. J. Pritz
---------------------------
Gregory J. Pritz
Controller
(Principal Accounting Officer)
15
<PAGE>
Exhibit 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Dear Sirs:
We are aware that Acme Metals Incorporated has included our report dated April
26, 1995 (issued pursuant to the provisions of Statement on Auditing Standards
No. 71) in the Prospectuses constituting part of its Registration Statements on
Form S-8 (Nos. 33-17235, 33-19437, 33-38747 and 33-30841). We are also aware of
our responsibilities under the Securities Act of 1933.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
May 9, 1995
Chicago, Illinois
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Unaudited Consolidated Balance Sheets at March 26, 1995 and Unaudited
Consolidated Statements of Operations for the Three Months Ended March 26, 1995
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> DEC-26-1994
<PERIOD-END> MAR-26-1995
<CASH> 98,510
<SECURITIES> 109,557
<RECEIVABLES> 62,135
<ALLOWANCES> 1,375
<INVENTORY> 47,755
<CURRENT-ASSETS> 333,096
<PP&E> 454,308
<DEPRECIATION> 265,573
<TOTAL-ASSETS> 734,419
<CURRENT-LIABILITIES> 121,309
<BONDS> 267,858
<COMMON> 11,581
0
0
<OTHER-SE> 220,183
<TOTAL-LIABILITY-AND-EQUITY> 734,419
<SALES> 131,548
<TOTAL-REVENUES> 131,548
<CGS> 108,416
<TOTAL-COSTS> 117,238
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,340
<INCOME-PRETAX> 12,572
<INCOME-TAX> 4,526
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,046
<EPS-PRIMARY> .69
<EPS-DILUTED> 0
</TABLE>
