<PAGE> 1
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 19, 1999
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HUNTCO INC.
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(Exact name of registrant as specified in its charter)
Missouri 1-13600 43-1643751
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
14323 S. Outer Forty, Suite 600N, Town & Country, Missouri 63017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 878-0155
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Not applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events
Huntco Inc. (the "Company") issued a news release on April 19, 1999, with
respect to its release of earnings for its quarter ended March 31, 1999, and
to announce that it had completed a refinancing of its long-term debt. This
news release is incorporated herein by reference to Exhibit 99 attached
hereto.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HUNTCO INC.
By: /s/ Robert J. Marischen
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Robert J. Marischen,
Vice Chairman, President & CFO
Date: April 19, 1999
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EXHIBIT INDEX
These Exhibits are numbered in accordance with the Exhibit Table of Item
601 of Regulation S-K:
Exhibit No. Description
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99 News release of April 19, 1999
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HUNTCO INC.
14323 SOUTH OUTER FORTY - SUITE 600N
TOWN & COUNTRY, MISSOURI 63017
NEWS RELEASE
FOR IMMEDIATE RELEASE:
HUNTCO REPORTS FIRST QUARTER RESULTS AND ANNOUNCES COMPLETION OF DEBT
REFINANCING.
TOWN & COUNTRY, MISSOURI, April 19, 1999. . . . . Huntco Inc. (NYSE:"HCO"), an
intermediate steel processor, today announced results of operations for its
first quarter ended March 31, 1999. Net sales for the quarter were $90.4
million, a decrease of 18.1% in comparison to net sales of $110.4 million for
the three months ended March 31, 1998 (the "prior year's first quarter"). The
Company reported a net loss available for common shareholders, for the 1999
first quarter, of $3.2 million, or $.36 per share, both basic and diluted,
which compares to net income available for common shareholders of $.6 million,
or $.07 per share, both basic and diluted, in the prior year's first quarter.
The Company attributes the decrease in net sales to lower average selling
prices, which declined approximately 9.6% in the 1999 first quarter, in
comparison to the 1998 first quarter, and declined approximately 8.0% in
comparison to the 1998 fourth quarter. These declines in selling values
reflect the continuing devaluation of steel prices, which continued through
the 1999 first quarter. Also reflected in the lower net sales for the 1999
first quarter, in relation to the 1998 first quarter, was a slight reduction
in shipping volume, measured in tons shipped, as well as a higher tolling
percentage in the 1999 first quarter. The Company processed and shipped
330,269 tons of steel in the quarter, a decrease of 2.9% in comparison to the
prior year's first quarter. Approximately 26.1% of the tons processed in the
first quarter of 1999 represented customer-owned material processed on a per
ton, fee basis, versus a tolling percentage of 23.8% in the comparable period
of the prior year. The Company sold 61,820 tons of cold rolled products during
the first quarter of 1999, which compares to 85,840 tons in the prior year's
first quarter.
Gross profit expressed as a percentage of net sales was 2.4% for the quarter
ended March 31, 1999, which compares to 7.0% for the prior year's first
quarter. The lower gross profit margin reflects the continuing devaluation in
steel prices, resulting in an extremely competitive market environment as the
Company and its competitors strive to achieve a high level of inventory
turnover in the face of falling prices.
The Company also announced that it had completed a refinancing of its long-
term debt by entering into a three year, $140.0 million revolving credit
agreement with a domestic commercial lender. The Company used the proceeds of
this new financing to retire its existing bank revolving credit agreement and
its term notes, which notes were due in installments through July 15, 2005.
The new credit agreement eliminated the limitation on the amount of debt which
could be incurred by the Company, which was limited to 50% of total capital
pursuant to the terms of the previous bank revolver and the term notes. This
change allowed the Company to immediately access approximately $25.0 to $30.0
million in incremental borrowings. The early retirement of the fixed rate
term notes caused the Company to incur a prepayment penalty and related
charges of approximately $4.0 million, before income tax benefits, which
amount will be reported as an extraordinary item in the 1999 second quarter.
The new financing agreement provides for variable rates of interest based upon
LIBOR or prime options, at rates comparable to the previous bank revolver and
below the rate of interest pursuant to the retired term notes.
The Company plans to use the proceeds of the incremental borrowings, net of
the amounts required for debt retirement and transaction expenses, including
the prepayment penalty, to reduce its obligations to trade vendors which were
unusually high because of abnormally high inventory levels. The Company's
inventory levels peaked around the beginning of March, 1999, and are expected
to return to significantly lower levels by the end of the second quarter.
While permitted under the Company's new debt agreements, the Company's Board
of Directors elected not to declare a quarterly dividend on the Company's
common stock for the second quarter. Future dividends may or may not be
declared, at the discretion of the Board of Directors, depending on industry
conditions, the Company's performance, or internal investment alternatives,
including the potential repurchase of shares of the Company's Class A common
stock.
Notwithstanding the difficult market environment experienced during the first
quarter, the Company continues to see strong market demand as it enters the
second quarter and some firming in market prices. The Company expects that
its operating results will improve in the second quarter, benefiting from
price increases, lower material costs and lower operating expenses.
This press release contains certain statements that are forward-looking and
involve risks and uncertainties. Words such as "expects," "believes," and
"anticipates," and variations of such words and similar expressions are
intended to identify such forward-looking statements. These statements are
based on current expectations and projections concerning the Company's plans
for 1998 and about the steel processing industry in general, as well as
assumptions made by Company management and are not guarantees of future
performance. Therefore, actual events, outcomes, and results may differ
materially from what is expressed or forecasted in such forward-looking
statements. The Company encourages those who make use of this forward-looking
data to make reference to a complete discussion of the factors which may cause
the forward-looking data to differ materially from actual results which is
contained in the Company's Annual Report and in Form 10-K, both for the year
ended December 31, 1998.
Huntco Inc. is a major, intermediate steel processor, specializing in the
processing of flat rolled carbon steel.
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HUNTCO INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
1999 1998
------- -------
<S> <C> <C>
Net sales $90,377 $110,373
Cost of sales 88,230 102,617
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Gross profit 2,147 7,756
Selling, general and administrative expenses 4,789 4,718
-------- -------
Income (loss) from operations (2,642) 3,038
Interest, net (2,197) (2,021)
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Income (loss) before income taxes (4,839) 1,017
Provision (benefit) for income taxes (1,662) 366
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Net income (loss) (3,177) 651
Preferred dividends 50 50
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Net income (loss)
available for common shareholders $ (3,227) $ 601
======== =======
Earnings (loss) per common share:
Basic and diluted $(.36) $ .07
===== =====
Weighted average common shares outstanding:
Basic 8,942 8,942
===== =====
Diluted 8,942 8,998
===== =====
</TABLE>
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HUNTCO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---------- -----------
(unaudited) (audited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 28 $ 21
Accounts receivable, net 47,086 43,579
Inventories 110,683 92,240
Other current assets 2,855 2,914
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160,652 138,754
Property, plant and equipment, net 141,010 143,401
Other assets 11,041 11,076
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$312,703 $293,231
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LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 82,720 $ 56,923
Accrued expenses 1,632 3,451
Current maturities of long-term debt 7,352 7,352
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91,704 67,726
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Long-term debt 101,589 102,555
Deferred income taxes 7,376 7,376
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108,965 109,931
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Shareholders' equity:
Series A preferred stock (issued and
outstanding, 225; stated at liquidation value) 4,500 4,500
Common stock:
Class A (issued and outstanding, 5,292) 53 53
Class B (issued and outstanding, 3,650) 37 37
Additional paid-in-capital 86,530 86,530
Retained earnings 20,914 24,454
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112,034 115,574
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$312,703 $293,231
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</TABLE>
