Russel Metals Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
For The Nine Months Ended September 30, 1995
The following management discussion and analysis of financial condition and
results of operations
should be read in conjunction with the audited Consolidated Financial
Statements for the year
ended December 31, 1994, including the notes thereto, and the accompanying
condensed unaudited Consolidated Financial Statements for the quarter and
nine months ended September 30, 1995. In the opinion of management, such
interim information contains all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the results
of such periods. The results of operations for the periods shown are not
necessarily indicative of the results for the full year. All dollar
references in this report are in Canadian dollars.
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September
30,
1995 Change 1995 Change
1995 1994 As % of 1994 1995 1994 As % of 1994 (in thousands) (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues
Metals $325,354 $280,357 16.0 % $1,028,553 $767,496 34.0%
Transport 42,310 81,539 (48.1) % 141,076 215,297 (34.5)%
$367,664 $361,896 1.6 % $1,169,629 $982,793 19.0 %
Segment Operating Margins
Metals $ 9,327 $15,048 (38.0) % $47,574 $42,435 12.1 %
Transport 8,685 10,389 (16.4) % 14,220 16,880(15.8)%
$18,012 $25,437 (29.2) % $61,794 $59,315 4.2 %
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Nine Months Ended September 30,
Annualized Operating Margin
Average Net Assets Return on Average Net
Assets
1995 1994 1995 1994
(in thousands)
<S> <C> <C> <C>
Return on Average Net Assets
Metals $383,400 $238,900 16.5 % 23.7 %
Transport 100,800 117,100 18.8 % 19.2 %
Corporate and Discontinued 225,000 238,500
$709,200 $594,500 11.6 % 13.3 %
</TABLE>
Total net assets employed are total assets less accounts payable, accrued
liabilities and the Thunder Bay Terminal, First Mortgage Bonds. These Bonds
will be repaid from a long-term receivable from Ontario Hydro. Average net
assets are calculated based on opening and closing monthly positions.
Segment Information
Metals - The following table shows the revenues and operating margins and the
changes for the business segments of the Metals operations for the periods
indicated:
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September
30,
1995 Change 1995 Change
1995 1994 As % of 1994 1995 1994 As % of 1994
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues
Service Centers $203,857 $197,802 3.1 % $659,532 $556,701 18.5 %
Specialty Metals
and Trading 121,497 82,555 47.2 % 369,021 210,795 75.1%
$325,354 $280,357 16.0 % $1,028,553 $767,496 34.0 %
Segment Operating Margins
Service Centers $4,520 $11,779 (61.6) % $29,722 $31,490 (5.6)%
Specialty Metals
and Trading 4,807 3,269 47.0 % 17,852 10,945 63.1%
$9,327 $15,048 (38.0) % $47,574 $42,435 12.1 %
The decline in prices for flat rolled steel evident last quarter has
impacted service center revenues and operating margins in the third quarter
of fiscal 1995.
Metals revenues increased 16.0% for the third quarter of 1995 compared to the
same period in 1994 and 34.0% year-to-date, compared with the first nine months
of 1994. The majority of the quarter and year-to-date increases in Specialty
Metals and Trading revenues relate to acquisitions made in the last twelve
months, all in specialty metals, which includes pipe and tubular distributors
and processing businesses. Acquisitions accounted for approximately 71%
of the total Metals increase in third quarter revenues compared to the same
quarter in 1994 and 49% of the increase year-to-date.
Trading revenues increased both for the quarter and year-to-date compared
to the corresponding periods in 1994 due to higher imports into North
America. The high demand for steel and corresponding short fall of domestic
mill capacity in the first quarter of 1995 led to import bookings which were
delivered and converted into sales in the third quarter. Import
bookings have dropped sharply since the second quarter of 1995, reflecting
softer North American demand and a corresponding increase in the ability of the
domestic mills to supply their customers' needs. The trading operations are
now shifting their focus from import activities towards export activities.
The increase in service center revenues for the third quarter of 1995 compared
to 1994 relates mainly to higher average selling prices per ton. Total tons
sold in the third quarter were marginally down compared to the same quarter
last year.
The reduced year-over-year profitability of the service center operations has
been caused by a change in the supply pricing trends, primarily in flat
rolled products. During fiscal 1994,
rapidly increasing prices generated inventory gains which contributed
to stronger operating margins. In fiscal 1995, as prices stabilized or, as
in the case of flat rolled products, declined, the Company experienced
inventory losses which have contributed to lower operating margins.
There are signs that flat rolled product pricing may be stabilizing but pricing
pressures are expected to continue into the fourth quarter. Accordingly,
the lower margins experienced in Metals in the third quarter of fiscal 1995
are expected to continue into the fourth quarter of fiscal 1995.
High inventory levels experienced in fiscal 1995 in the service center sector
further lowered the margins as inventory positions were reduced throughout
the industry. The Company reduced Metals inventory levels from the peak of
$270.0 million at May 31, 1995 to $237.0 million at September 30, 1995.
Transport - Reduced revenue and operating margins in the Transport operations
for the quarter ended September 30, 1995 relate primarily to the sale of the
White Pass Petroleum operations effective May 31, 1995 and the sale of
Consolidated Fastfrate effective September 1, 1994. The remaining
operations, Thunder Bay Terminals, White Pass Rail and Tri-Line trucking
operations, experienced similar operating margins as compared to the same
periods last year.
Consolidated Results
Revenues - The increase in consolidated revenues for the quarter and
year-to-date represent increases in Metals offset by decreases in Transport
as discussed above.
Operating Margins - The decrease in segment operating margins from continuing
operations of $7.4 million for the quarter ended September 30, 1995 is
primarily a result of the lower margins in Metals as discussed above and the
sale of the White Pass Petroleum operations.
The segment operating margin year-to-date reflects an increase in Metals
offset by a decrease in Transport when compared with the first three
quarters of 1994.
Interest Expense - The following table shows the components of interest
expense. The most significant factor affecting interest expense in the
quarter and year-to-date was the high level of borrowings under the
Company's short-term debt. The floating rate long-term interest
relates primarily to the U.S. note which was previously swapped from
fixed to floating rates. The reduction of floating rate long-term interest
expense in the third quarter is primarily due to a stronger Canadian dollar.
The table of average net assets employed (see page 2) shows that
the average net assets for the first nine months of 1995 were $114.7
million higher than for the same period in 1994. The additional borrowings
were primarily to support the higher working capital level in Metals and for
the replacement dock facility (see discussion in Liquidity section).
</TABLE>
<TABLE>
<CAPTION>
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
1995 1995 1995 1994 1994
(in thousands)
<S>
Interest
Long-term <C> <C> <C> <C> <C>
Fixed Rate $ 3,161 $ 3,138 $ 3,122 $3,175 $3,155
Floating Rate 4,279 4,239 4,449 4,677 4,327
Short-term
Standby and
Operating Loans 2,905 4,253 3,294 1,788 1,185
$10,345 $11.630 $10,865 $9,640 $8,667
</TABLE>
Earnings from Continuing Operations - Earnings from continuing operations
for the quarter were $2.6 million compared to $7.5 million for the same
quarter in 1994. The reduction is a result of the combination of lower
Metals and Transport segment margins and higher interest expense
as discussed above.
Year-to-date earnings from continuing operations are $11.6 million compared
to $14.0 million in 1994. The reduction year-to-date is primarily a result
of higher interest expense, partially offset by higher earnings from the
Metals segment.
Discontinued Operations - As at December 31, 1994, the Company announced a
plan to discontinue its Consumer operations. These operations had no impact
on consolidated earnings either in the third quarter or year-to-date in
1995, compared to a loss of $0.4 million in the third quarter of 1994, and a
loss of $8.9 million in the nine month ended September 30, 1994.
Liquidity and Capital Resources
The net assets employed, shown on page two, indicate the operating assets of
the Company for the Metals and Transport operations. The remaining $225.0
million of corporate assets are not productively employed by the Company.
The monetization of these assets represents a significant
liquidity opportunity as the funds will be used to grow the Metals
operation, or alternatively, to reduce interest bearing debt.
On November 6, 1995, the Company completed the sale of its Cashway Building
Centres business to a group led by management for proceeds of approximately
$33.0 million. Under the terms of sale, the Company has leased real
property, valued at $23.0 million, to the purchaser and has
retained a minority equity interest and subordinated debt in the new
company valued at $11.5 million. This transaction has reduced corporate
assets by approximately $21.5 million.
Corporate and discontinued assets are comprised of the following items:
<TABLE>
As at September 30,
<CAPTION>
1995 1994
<S> <C> <C>
Deferred Tax Debits and Taxes Recoverable $ 65.7 $ 62.2
Working Capital - Discontinued Operations 36.3 48.0
Fixed Assets - Discontinued Operations 65.1 69.3
Replacement White Pass Dock Facility 30.8 -
Ensis Minority Interest 11.9 11.9
Vendor Take Backs on Divestitures 13.3 8.8
Other 3.2 13.5
TOTAL $226.3 $213.7
</TABLE>
The Company has expended approximately $30.8 million to date in 1995 to
replace a dock facility which was destroyed in an underwater avalanche
in November, 1994 in Skagway, Alaska. The Company believes that it has
a valid insurance claim for the replacement costs of this facility and that
it is entitled to recover substantially all of the amounts expended to date.
The Company has recently
commenced legal action against its insurers for the recovery of these
amounts. For the purposes of
the net asset analysis, the dock receivable from the insurance claim has
been excluded from the Transport sector and included as part of corporate
capital employed.
During the nine months ended September 30, 1995, the Company generated
$21.0 million in cash from continuing operations. Continuing operations
generated $25.7 million cash from operations and
$14.3 million from working capital, primarily related to higher accounts
payable partially offset by higher inventories in Metals. The sale of the
White Pass petroleum operations generated cash of
$34.1 million, while capital spending utilized $18.0 million.
Year-to-date expenditures also included $4.9 million to acquire three
specialty Metals processing businesses. Discontinued operations
consumed $15.9 million in cash during the period, primarily related to
seasonal accounts receivable and inventory buildup at Cashway Building
Centres.
For the nine months ended September 30, 1994, the Company utilized $97.6
million of cash in continuing operations and generated $6.3 million of
cash from discontinued operations. Continuing operations generated cash
from operations of $36.7 million and $80.4 million from the issue of
common shares, with $55.0 million of the common share issue used to
redeem preference shares.
Cash utilized by continuing operations included $24.7 million to acquire
Total Distributors and Pioneer Steel, $30.7 million to repay our Australian
debenture and $84.7 million for increased
working capital requirements. The cash generated in discontinued operations
related to the sale of SmithBooks in May 1994, offset by seasonal increases in
working capital and the funding of operating
losses .
The Company currently has a $275 million banking facility, of which $131.8
million was available for future draw down as at September 30, 1995.
The Company has no significant long-term debt repayments scheduled before 1998.
The $16.6 million in current long-term debt as at June 30, 1995, represents
the 10.2% debentures retractable annually until due on July 13, 1998. The
full amount of these debentures is included as a commitment against our $275
million operating line even though it is not anticipated that the remaining
majority holder of these debentures will retract the debentures before
maturity.
The ratio of current assets to current liabilities was 1.6 at September 30,
1995 and December 31,
1994. The debt to equity ratio was 0.8 at September 30, 1995 and
December 31, 1994.
<PAGE>
Russel Metals Inc.
Reconciliation of Net Income to U.S. GAAP
Quarter and Nine Months Ended September 30, 1995
(000)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net income as shown on the
financial statements $2,579 $7,171 $11,647 $5,177
Items having the effect of
increasing reported income
Amortization of unrealized
exchange loss (gain) on
long-term debt (51) (28) (45) 62
Items having the effect of decreasing
reported income
Unrealized exchange gain (loss)
on long-term debt 259 374 499 (114)
______ ______ ______ ______
Net income according to U.S. GAAP $2,787 $7,517 $12,101 $5,125
</TABLE>
<PAGE>
Report to Shareholders
The third quarter results reflect the continued softness in demand for flat
rolled products, which
began in the first quarter of 1995, particularly relating to the automobile
and durable goods
sector. Resultant price reductions in hot rolled steel of 21% since October
1994, and disposal
by the industry of excess inventories, combined to reduce selling margins
sharply during the
quarter.
On November 6, 1995, the Company completed the sale of the business and
operating assets of Cashway Building Centres, the last remaining operating
entity in discontinued operations. The proceeds consisted of $21.5 million
cash on closing, and a secured note and minority equity
interest valued at $11.5 million. In addition, real estate of $23.0 million
has been leased to the purchaser.
The Company has expended approximately $30.8 million to date in its White Pass
Rail operation to
replace a dock facility which was destroyed in an underwater avalanche in
November, 1994 in
Skagway, Alaska. The Company believes that it has a valid insurance claim for
the replacement costs of this facility and that it is entitled to recover
substantially all of the amounts expended to date. The
Company has recently commenced legal action against its insurers for the
recovery of these amounts.
THIRD QUARTER RESULTS
Third quarter total revenues of $367.7 million increased by 2% over the same
period a year ago.
The Metals segment sales grew by 16% to $325.4 million in the quarter ended
September 30, 1995.
Acquisitions made in 1994 accounted for 78% of the growth with the balance
representing internal
expansion.
For the nine months ended September 30, 1995, revenues increased 19% to
$1,169.6 million.
Metals operations led the way, growing by 34% to $1,028.6 million, half of
which increase was generated by acquisitions.
Transport sales in the third quarter and nine months ended September 30, 1995,
declined due to the divestiture in September 1994 of our Consolidated
Fastfrate poolcar operations and in June 1995 of our White Pass Petroleum
Distribution operations. Comparable Transport revenues
increased marginally both in the quarter and year-to-date.
Third quarter 1995 operating margins for Metals declined 38% to $9.3 million
when compared with the third quarter of fiscal 1994, while results for the
nine months increased by 12% to $47.6 million. The third quarter earnings
for Metals reflects the negative pricing trend in flat rolled
steel discussed above. There are signs that product pricing may be
stabilizing but pressures are expected to continue through the fourth quarter
of fiscal 1995.
Comparable Transport operations generated substantially the same operating
profits in the quarter and nine months to date compared to 1994. The
reduction in aggregate dollar operating margin is caused by the divested
operations discussed above.
Unaudited net earnings for the three month period ended September 30, 1995,
were $2.6 million versus $7.2 million for the same period in fiscal 1994.
The decline in operating income as noted,
combined with a $1.7 million increase in interest expense due to increased
borrowings, were the major contributors. For the nine months ended
September 30, 1995 net earnings of $11.6 million were up from $5.2 million
in the same period in fiscal 1994. This increase was due to $8.9
million improvement in losses from discontinued operations and reduction
of $3.4 million in income taxes offset by a $7.2 million increase in
interest expense.
After preferred share dividends the unaudited net earnings per share were
$0.04 for the third quarter of 1995 and $0.20 for the nine months ended
September 30, 1995, compared with $0.14 for the third quarter of 1994 and
$0.05 in the nine months ended September 30, 1994.
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September
30,
1995 Change 1995 Change
1995 1994 As % of 1994 1995 1994 As % of 1994 (in thousands) (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues
Metals $325,354 $280,357 16.0 % $1,028,553 $767,496 34.0 %
Transport 42,310 81,539 (48.1)% 141,076 215,297 (34.5)%
$367,664 $361,896 1.6 % $1,169,629 $982,793 19.0 %
Segment Operating Margins
Metals $ 9,327 $15,048 (38.0)% $47,574 $42,435 12.1 %
Transport 8,685 10,389 (16.4)% 14,220 16,880 (15.8)%
$18,012 $25,437 (29.2)% $61,794 $59,315 4.2 %
</TABLE>
OUTLOOK
The divestiture of Cashway Building Centres enables the Company to concentrate
more resources and attention on maximizing the Metals profitability. Flat
rolled steel prices may be stabilizing, and with service center inventories
at more traditional levels, we expect less volatility in 1996
operating profits.<PAGE>
RUSSEL METALS INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
($000)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
Current assets
Accounts receivable $217,166 $223,729
Income taxes recoverable 17,888 17,888
Inventories 239,992 239,629
Prepaid expenses and other assets 5,718 3,583
Current assets - discontinued operations 75,263 79,258
556,027 564,087
Fixed assets
Property, plant and equipment 167,749 153,309
Property, plant and equipment - discontinued
operations 66,145 68,549
233,894 221,858
Other assets
Long-term receivable 32,432 34,245
Other investments 5,575 11,258
Deferred charges 12,330 14,233
Goodwill 12,359 11,471
Deferred income taxes 47,797 50,141
Other assets - discontinued operations 15,255 15,125
125,748 136,473
$915,669 $922,418
Current liabilities
Bank indebtedness $ 94,079 $ 99,122
Accounts payable and accrued liabilities 188,226 170,543
Current portion of long-term debt 16,581 16,985
Current liabilities - discontinued operations 39,954 62,150
338,840 348,800
Long-Term Debt 184,759 191,388
Convertible Debentures and Shareholders' Equity 392,070 382,230
$915,669 $922,418
ON BEHALF OF THE BOARD,
Director Director
</TABLE>
<PAGE>
RUSSEL METALS INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
<TABLE>
<CAPTION>
($000, except for per share amounts and average shares outstanding)
Quarter Ended Nine Months Ended
Sept. 30, Sept. 30,
1995 1994 1995 1994
(Restated) (Restated)
<S> <C> <C> <C> <C>
Sales and services $367,664 $361,896 $1,169,629 $982,793
Cost of sales and operating expenses 352,837 338,399 1,116,272 930,125
Interest on long-term debt 7,440 7,482 22,388 23,433
Other interest expense 2,905 1,185 10,452 2,224
Other expense (income) (387) 536 (394) 337
362,795 347,602 1,148,718 956,119
Earnings before income taxes 4,869 14,294 20,911 26,674
Provision for income taxes 2,290 6,766 9,264 12,628
Earnings from continuing operations 2,579 7,528 11,647 14,046
Loss from discontinued operations - net
of related income taxes - (357) - (8,869)
Net earnings for the period $ 2,579 $ 7,171 $ 11,647 $ 5,177
Earnings per common share from
continuing operations
Basic $0.04 $0.14 $0.20 $0.23
Fully diluted $0.04 $0.13 $0.20 $0.23
Net earnings per common share
Basic $0.04 $0.14 $0.20 $0.05
Fully diluted $0.04 $0.13 $0.20 $0.05
Average shares outstanding 51,007,864 48,761,417 51,007,864 48,761,417<PAGE>
</TABLE>
<TABLE>
<CAPTION>
RUSSEL METALS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(UNAUDITED)
Nine Months ended September 30
($000)
1995 1994
(Restated)
<S> <C> <C>
Operating activities
Net earnings from continuing operations $11,647 $14,046
Depreciation and amortization 12,904 12,335
Deferred income taxes 2,277 10,681
Accrued revenue - deferred income taxes (763) (668)
Loss (gain) on sale of fixed assets (394) 337
Cash from continuing operations 25,671 36,731
Changes in working capital items
Accounts receivable 5,269 (51,334)
Income taxes recoverable - 2,116
Inventories (16,797) (42,948)
Accounts payable and accrued liabilities 28,007 8,403
Other (2,127) (980)
Cash from (used in) continuing operating activities 40,023 (48,012)
Financing activities
Decrease in long-term debt (1,228) (30,759)
(Increase) decrease in long-term receivable 2,576 (6,953)
Issue of common shares - 80,396
Redemption of preferred shares - (55,000)
Dividends (1,688) (2,898)
Cash used in financing activities (340) (15,214)
Investing activities
Purchase of fixed assets (18,020) (10,071)
Costs to rebuild dock (30,839) -
Proceeds on sale of fixed assets 2,111 720
Proceeds on sale of subsidiary company 34,074 6,885
Purchase of subsidiary companies (4,857) (24,656)
Other (1,182) (7,259)
Cash used in investing activities (18,713) (34,381)
Increase (decrease) in cash from continuing operations 20,970 (97,607)
Cash from (used in) discontinued operations (15,927) 6,259
Increase (decrease) in cash 5,043 (91,348)
Cash position, beginning of the period (99,122) 37,372
Cash position, end of the period $(94,079) $(53,976)
NOTE: Cash position represents cash or bank indebtedness.
</TABLE>
RUSSEL METALS/NEWS
FOR IMMEDIATE RELEASE
STOCK SYMBOL: TSE: RUS.A NASDAQ: RUSAF
RUSSEL METALS DECLARES DIVIDEND
FOR CLASS II PREFERRED SHARES, SERIES C
TORONTO (November 16, 1995) -- Russel Metals Inc., announced today that it has
declared a dividend of 46.875 cents per share on its Convertible Class II
Preferred Shares, Series C, payable on December 15, 1995 to shareholders of
record at the close of business on November 30, 1995.
Russel is one of North America's five largest metals distribution and
processing organizations, with a network of 45 Canadian and 13 U.S. service
centres, which provide and process a wide
range of carbon steel and alloy metal products.
-30-
For further information, contact:
John S. Pelton
Chairman and CEO,
Russel Metals
(905) 819 - 7777<PAGE>
RUSSEL METALS/NEWS
FOR IMMEDIATE RELEASE
STOCK SYMBOL: TSE: RUS.A NASDAQ: RUSAF
RUSSEL METALS REPORTS THIRD QUARTER RESULTS
TORONTO (November 16, 1995) -- Russel Metals Inc. today reported third quarter
net income of $2.6 million, or 4 cents per share, compared to $7.2 million,
or 14 cents per share, in the third quarter of last year. Lower prices in
the flat rolled steel segment were the major cause of the lower earnings in
the quarter. For the year-to-date period ended September 30, 1995 net
earnings were $11.6 million, or $.20 per share, up from $5.2 million, or 5
cents per share in the same period last year.
The Company's consolidated revenues for the quarter increased by 2% to $367.7
million. The 16% increase in Metals revenue growth was offset by a decline
in revenues in the Transport segment due to divestitures completed in the
last year. The remaining Transport operations recorded slight increases
both in the quarter and year-to-date.
Third quarter 1995 operating margins for Metals declined 38% to $9.4 million
when compared to the third quarter of 1994. On a year-to-date basis, the
Metals operating margins for the nine months ended September 30, 1995
increased by 12% to $47.6 million. The comparable Transport
operations generated substantially the same operating margin in the quarter
and nine months to date as recorded in the same periods of fiscal 1994.
The reduction in aggregate Transport operating margin is caused by the
divested operations discussed above.
Russel Metals Chairman and Chief Executive Officer, John S. Pelton,
commented, "In recognition of the decline in demand and prices for flat
rolled products, the Company took steps beginning early this year to bring
inventories into line with market realities. These actions mitigated the
impact of the price declines on our earnings. Currently, there are signs that
pricing may be stabilizing, although some additional pressure is expected
to continue into the fourth quarter."
The lower net income in the quarter was a result of the decline in operating
income combined with a $1.7 million increase in interest expense due to
increased borrowings. The continuing reduction in Metals working capital
requirements combined with proceeds from the divestment of
non-metals assets will result in lower interest costs in the fourth quarter
of 1995.
Russel Metals is one of the five largest processors of metal and metal products
in North America through its network of 58 service centers. The Company's
operating units trade under various names including Russel Metals, Drummond
McCall, Baldwin International, I. Bahcall Steel & Pipe, Total Distributors,
Pioneer Steel & Tube, Comco Pipe and Supply and Wirth Limited.
Russel Metals also has investments in the transportation sector.
-30-
For further information, contact:
John S. Pelton
Chairman and CEO,
Russel Metals
(905) 819 - 7777<PAGE>
<TABLE>
<CAPTION>
RUSSEL METALS INC.
EARNINGS (UNAUDITED)
($000, except for per share amounts)
Quarter Ended Nine Months Ended
Sept. 30, Sept. 30,
1995 1994 1995 1994
(Restated) (Restated)
<S> <C> <C> <C> <C>
Sales and services
Metals $325,354 $280,357 $1,028,553 $767,496
Transport 42,310 81,539 141,076 215,297
$367,664 $361,896 $1,169,629 $982,793
Earnings before interest and taxes
Metals $ 9,327 $15,048 $47,574 $42,435
Transport 8,685 10,389 14,220 16,880
Corporate (2,798) (2,476) (8,043) (6,984)
15,214 22,961 53,751 52,331
Interest 10,345 8,667 32,840 25,657
Earnings before income taxes 4,869 14,294 20,911 26,674
Provision for income taxes 2,290 6,766 9,264 12,628
Earnings from continuing operations 2,579 7,528 11,647 14,046
Loss from discontinued operations - net
of related income taxes - (357) - (8,869)
Net earnings for the period $ 2,579 $ 7,171 $ 11,647 $ 5,177
Earnings per common share from
continuing operations
Basic $0.04 $0.14 $0.20 $0.23
Fully diluted $0.04 $0.13 $0.20 $0.23
Net earnings per common share
Basic $0.04 $0.14 $0.20 $0.05
Fully diluted $0.04 $0.13 $0.20 $0.05
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RUSSEL METALS INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
($000)
September 30, December 31,
1995 1994
<S> <C> <C>
Current assets
Accounts receivable $217,166 $223,729
Income taxes recoverable 17,888 17,888
Inventories 239,992 239,629
Prepaid expenses and other assets 5,718 3,583
Current assets - discontinued operations 75,263 79,258
556,027 564,087
Fixed assets
Property, plant and equipment 167,749 153,309
Property, plant and equipment - discontinued
operations 66,145 68,549
233,894 221,858
Other assets
Long-term receivable 32,432 34,245
Other investments 5,575 11,258
Deferred charges 12,330 14,233
Goodwill 12,359 11,471
Deferred income taxes 47,797 50,141
Other assets - discontinued operations 15,255 15,125
125,748 136,473
$915,669 $922,418
Current liabilities
Bank indebtedness $ 94,079 $ 99,122
Accounts payable and accrued liabilities 188,226 170,543
Current portion of long-term debt 16,581 16,985
Current liabilities - discontinued operations 39,954 62,150
338,840 348,800
Long-Term Debt 184,759 191,388
Convertible Debentures and Shareholders' Equity 392,070 382,230
$915,669 $922,418
</TABLE>
<TABLE>
<CAPTION>
RUSSEL METALS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(UNAUDITED)
Nine Months ended September 30
($000)
1995 1994
(Restated)
<S> <C> <C>
Operating activities
Net earnings from continuing operations $11,647 $14,046
Depreciation and amortization 12,904 12,335
Deferred income taxes 2,277 10,681
Accrued revenue - deferred income taxes (763) (668)
Loss (gain) on sale of fixed assets (394) 337
Cash from continuing operations 25,671 36,731
Changes in working capital items
Accounts receivable 5,269 (51,334)
Income taxes recoverable - 2,116
Inventories (16,797) (42,948)
Accounts payable and accrued liabilities 28,007 8,403
Other (2,127) (980)
Cash from (used in) continuing operating activities 40,023 (48,012)
Financing activities
Decrease in long-term debt (1,228) (30,759)
(Increase) decrease in long-term receivable 2,576 (6,953)
Issue of common shares - 80,396
Redemption of preferred shares - (55,000)
Dividends (1,688) (2,898)
Cash used in financing activities (340) (15,214)
Investing activities
Purchase of fixed assets (18,020) (10,071)
Costs to rebuild dock (30,839) -
Proceeds on sale of fixed assets 2,111 720
Proceeds on sale of subsidiary company 34,074 6,885
Purchase of subsidiary companies (4,857) (24,656)
Other (1,182) (7,259)
Cash used in investing activities (18,713) (34,381)
Increase (decrease) in cash from continuing operations 20,970 (97,607)
Cash from (used in) discontinued operations (15,927) 6,259
Increase (decrease) in cash 5,043 (91,348)
Cash position, beginning of the period (99,122) 37,372
Cash position, end of the period $(94,079) $(53,976)
NOTE: Cash position represents cash or bank indebtedness.
</TABLE>
