<PAGE> 1
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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 September 30, 1997
------------------
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-23320
-------
OLYMPIC STEEL, INC.
(Exact name of registrant as specified in its charter)
Ohio 34-1245650
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5096 Richmond Road, Bedford Heights, Ohio 44146
- ----------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 292-3800
--------------
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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
Indicate the number of shares of each of the issuer's classes of common stock,
as of the latest practicable date:
Class Outstanding as of October 31, 1997
------------------------------- ----------------------------------
Common stock, without par value 10,692,000
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<PAGE> 2
OLYMPIC STEEL, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE NO.
----------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets - September 30, 1997 and 3
December 31, 1996
Consolidated Statements of Income - for the three and nine
months ended September 30, 1997 and 1996 4
Consolidated Statements of Cash Flows - for the nine months
ended September 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 10-15
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 15
SIGNATURES 16
</TABLE>
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<PAGE> 3
Part I. FINANCIAL INFORMATION
OLYMPIC STEEL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Cash $ 2,388 $ 2,018
Accounts receivable 20,830 9,483
Inventories 137,630 138,238
Prepaid expenses and other 3,274 2,516
--------- ---------
Total current assets 164,122 152,255
--------- ---------
Property and equipment 118,008 93,954
Accumulated depreciation (18,798) (14,954)
--------- ---------
Net property and equipment 99,210 79,000
--------- ---------
Goodwill 13,366 9,875
Investments in joint ventures 5,961 --
--------- ---------
Total assets $ 282,659 $ 241,130
========= =========
LIABILITIES
Current portion of long-term debt $ 3,722 $ 1,869
Accounts payable 24,072 25,267
Accrued payroll 3,992 4,610
Other accrued liabilities 5,412 4,521
--------- ---------
Total current liabilities 37,198 36,267
--------- ---------
Revolving credit agreement 68,816 46,457
Term loans 18,277 7,851
Industrial revenue bonds 8,300 8,405
--------- ---------
Total long-term debt 95,393 62,713
--------- ---------
Deferred income taxes 5,892 4,823
--------- ---------
Total liabilities 138,483 103,803
--------- ---------
SHAREHOLDERS' EQUITY
Preferred stock -- --
Common stock 106,319 106,319
Retained earnings 37,857 31,008
--------- ---------
Total shareholders' equity 144,176 137,327
--------- ---------
Total liabilities and shareholders' equity $ 282,659 $ 241,130
========= =========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
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<PAGE> 4
OLYMPIC STEEL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share and tonnage data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1997 1996 1997 1996
--------- --------- --------- ---------
(unaudited)
<S> <C> <C> <C> <C>
Tons sold
Direct 265,752 249,644 830,186 775,173
Toll 59,284 35,593 149,436 113,356
--------- -------- --------- --------
325,036 285,237 979,622 888,529
--------- -------- --------- --------
Net sales $ 145,223 $134,971 $ 452,291 $424,257
Cost of sales 115,078 104,568 359,111 330,113
--------- -------- --------- --------
Gross margin 30,145 30,403 93,180 94,144
Operating expenses
Warehouse and processing 8,032 7,613 24,886 21,954
Administrative and general 6,868 6,304 20,142 18,681
Distribution 4,306 4,082 13,574 12,830
Selling 3,327 3,198 10,276 10,235
Occupancy 920 898 3,102 2,851
Depreciation and amortization 1,598 1,045 4,353 3,066
--------- -------- --------- --------
Total operating expenses 25,051 23,140 76,333 69,617
--------- -------- --------- --------
Operating income 5,094 7,263 16,847 24,527
Income from OCR joint venture 120 -- 283 --
Start-up costs of OLP joint venture (293) -- (293) --
--------- -------- --------- --------
Income before interest and taxes 4,921 7,263 16,837 24,527
Interest expense 1,247 899 3,145 3,822
Receivable securitization expense 930 848 2,733 2,543
--------- -------- --------- --------
Income before taxes 2,744 5,516 10,959 18,162
Income taxes 1,029 1,986 4,110 7,045
--------- -------- --------- --------
Net income $ 1,715 $ 3,530 $ 6,849 $ 11,117
========= ======== ========= ========
Net income per share $ 0.16 $ 0.36 $ 0.64 $ 1.23
========= ======== ========= ========
Weighted average shares outstanding 10,692 9,801 10,692 9,003
========= ======== ========= ========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 5
OLYMPIC STEEL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(in thousands)
<TABLE>
<CAPTION>
1997 1996
-------- ---------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,849 $ 11,117
Adjustments to reconcile net income to net
cash from (used for) operating activities-
Depreciation and amortization 4,353 3,066
Start-up costs in excess of income from joint ventures 10 --
Long-term deferred income taxes 1,069 782
-------- --------
12,281 14,965
Changes in working capital:
Accounts receivable (10,584) (10,398)
Inventories 608 (4,575)
Prepaid expenses and other (567) (275)
Accounts payable (1,359) 10,176
Accrued payroll and other accrued liabilities 138 (866)
-------- --------
(11,764) (5,938)
-------- --------
Net cash from operating activities 517 9,027
-------- --------
Cash flows from investing activities:
Acquisition of SMP (net of working capital of $377) (13,689) --
Investments in joint ventures (6,075) --
Iowa facility construction and equipment deposits (5,047) --
Lafayette plant expansion and equipment deposits (2,138) (2,013)
Tube mill equipment deposits (2,682) --
Temper mill facility and equipment (68) (1,176)
Other capital expenditures, net (1,881) (7,433)
-------- --------
Net cash used for investing activities (31,580) (10,622)
-------- --------
Cash flows from financing activities:
Revolving credit agreement 22,359 (18,420)
Net proceeds from secondary offering -- 49,100
Borrowings (repayments) of other long-term debt 9,074 (26,987)
-------- --------
Net cash from financing activities 31,433 3,693
-------- --------
Cash:
Net increase 370 2,098
Beginning balance 2,018 1,884
-------- --------
Ending balance $ 2,388 $ 3,982
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 6
OLYMPIC STEEL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
The accompanying consolidated financial statements have been prepared from the
financial records of Olympic Steel, Inc. (Olympic or the Company) and its
wholly-owned subsidiaries, without audit and reflect all adjustments which are,
in the opinion of management, necessary to fairly present the results of the
interim periods covered by this report. All significant intercompany
transactions and balances have been eliminated in consolidation. Certain amounts
in the 1996 consolidated financial statements have been reclassified to conform
with the 1997 presentation.
(1) EARNINGS PER SHARE:
Earnings per share have been calculated based on the weighted average shares
outstanding during each of the periods presented. Shares outstanding increased
from 8.6 million to 10.7 million in August 1996 as of result of the Company's
follow-on stock offering of 2.1 million shares. Primary and fully diluted
earnings per share are the same as the effect of dilutive outstanding stock
options is immaterial.
(2) INVESTMENTS IN JOINT VENTURES:
In January 1997, the Company completed the formation of Olympic Continental
Resources LLC (OCR), a joint venture with Atlas Iron Processors, Inc. (Atlas)
and OCR's Chief Executive Officer. OCR buys, sells and trades ferrous and
non-ferrous metals and alternate iron products to steel mills and scrap
processors. The venture acquired the business activities previously conducted by
Thyssen Continental Resources LLC, a profitable joint venture between Thyssen
Inc. and Atlas. The Company made a $4 million cash investment for its 45%
ownership share in OCR and guarantees up to $10 million of outstanding debt
under OCR's $35 million revolving bank credit facility. Olympic's investment
in OCR is accounted for under the equity method.
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<PAGE> 7
In April 1997, the Company and the U.S. Steel Group of USX Corporation (USS)
formed Olympic Laser Processing, LLC (OLP), a joint venture to process laser
welded sheet steel blanks for the automotive industry. OLP is owned 50% by each
of the companies. OLP is constructing a new facility to be initially equipped
with two laser-welding lines. Production is expected to begin in 1998. The
Company and USS each contributed $2 million in cash to OLP during the first half
of 1997 and each guarantees up to $10 million of outstanding debt under OLP's
$20 million bank loan agreement. The investment in OLP is accounted for under
the equity method and OLP start-up costs are being expensed as incurred.
(3) ACQUISITION:
Effective June 1, 1997, the Company completed the acquisition of substantially
all of the assets and assumed certain liabilities of Southeastern Metal
Processing, Inc. and Southeastern Transshipping Realty (SMP). SMP operated as a
metals toll processor and is located near Atlanta, Georgia.
The preliminary purchase price, which is subject to post-closing adjustments and
includes assumed liabilities, totaled $17.2 million. The adjusted cash portion
of the purchase price, including fees and expenses and the repayment of $2.5
million of SMP's bank debt, totaled $13.7 million. The acquisition has been
accounted for as a purchase and, accordingly, assets and liabilities are
reflected at estimated fair values. The preliminary purchase price allocation
resulted in goodwill of $3.7 million which is being amortized over 40 years.
(4) LONG-TERM DEBT:
The Company amended its revolving bank credit agreement on May 30, 1997 and July
14, 1997. The amendments added a fourth bank to the bank group, increased the
unsecured revolving credit availability from $60 million to $68 million, added a
secured $17 million term loan component to finance the construction and
equipping of a new temper mill facility in Iowa (the Iowa Term Loan), and
extended the agreement expiration date to June 30, 2000. The Iowa Term Loan
allows draws to be made through December 30, 1998 and requires annual principal
repayments of 10% of the amount borrowed to commence May 30, 1999. As of
September 30, 1997, Iowa Term Loan borrowings outstanding totaled $2.5 million.
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<PAGE> 8
Included in the revolving credit balances on the accompanying consolidated
balance sheets are $15.8 million and $5.5 million of checks issued that have not
cleared the bank as of September 30, 1997 and December 31, 1996, respectively.
On May 28, 1997, the Company entered into a $10 million loan agreement with a
domestic bank to finance a portion of the SMP acquisition. The loan agreement
includes a 10 year $3.5 million term loan component, and a seven year $6.5
million term loan component. The term loans are secured by the real estate and
equipment acquired from SMP and are repayable in quarterly installments
commencing September 1, 1997. Pricing was initially established at LIBOR plus
1.25% and was subsequently reduced to LIBOR plus 1% effective June 30, 1997.
Interest rates under the Company's various credit agreements are generally based
on prime or LIBOR plus a premium determined quarterly, which varies with the
Company's operating performance and financial leverage. Borrowing rates in 1997
were prime plus 0% and LIBOR plus .75% through May 31, 1997. Commencing June 1,
1997, the LIBOR premium increased to 1.0%. The majority of the Company's
borrowings are based on the LIBOR option. The overall effective interest rate
for all debt for the three and nine month periods ended September 30, 1997,
amounted to 6.9% and 6.8%, respectively, in 1997, and 6.7% and 7.2% for the
comparable periods in 1996.
(5) ACCOUNTS RECEIVABLE SECURITIZATION AGREEMENT:
In July 1997, the Company amended its accounts receivable securitization
agreement to increase the maximum amount of receivables available for sale from
$65 million to $70 million. The term of the agreement was also extended to July
31, 2000.
As of September 30, 1997, $57 million of eligible receivables were sold under
the accounts receivable securitization program, compared to $55 million at
December 31, 1996.
(6) STOCK OPTIONS:
During the second quarter of 1997, additional non-qualified options to purchase
8,000 shares of Common Stock were issued to the Company's outside directors at
an option price of $14.63, the market value of a share of Common Stock at the
grant date. Including the new grants, options to purchase 152,500 shares were
outstanding at September 30, 1997, of which 74,500 were exercisable.
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<PAGE> 9
(7) SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid during the nine months ended September 30, 1997 and 1996 totaled
$3.2 million and $4.0 million, respectively. Income taxes paid during the nine
months ended September 30, 1997 and 1996 totaled $3.4 million and $7.7 million,
respectively.
(8) IMPACT OF NEW ACCOUNTING STANDARDS:
The Financial Accounting Standards Board has issued SFAS No. 128, "Earnings per
Share," and SFAS No. 129, "Disclosure of Information about Capital Structure."
Both of these statements are effective for financial statements for periods
ending after December 15, 1997. Management does not anticipate that the
implementation of SFAS No. 128 will have any effect on the Company's historical
earnings per share data.
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<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company's results of operations are affected by numerous external
factors, such as general economic and political conditions, competition, and
steel pricing and availability.
The Company's 1997 results include the results of the Company's
Southeastern operation (Southeastern), the net assets of which were acquired
effective June 1, 1997. Southeastern has historically operated as a metals toll
processor, and is located near Atlanta, Georgia.
Olympic sells a broad range of products, many of which have different
gross margins. Moreover, products that have more value-added processing
generally have a greater gross margin. Accordingly, the Company's overall gross
margin is affected by product mix and the amount of processing performed, as
well as volatility in selling prices and material purchase costs. The Company
also performs toll processing of customer-owned steel, substantially all of
which is performed by its Lafayette Steel and Southeastern operations. Toll
processing generally results in lower selling prices and gross margin dollars
per ton but higher gross margin percentages than the Company's historical direct
sales.
During the first half of 1997, the Company invested in two joint
ventures, Olympic Continental Resources (OCR), which buys, sells and trades
ferrous and non-ferrous metals and alternate iron products to steel mills and
scrap processors, and Olympic Laser Processing (OLP), a company formed to
process laser welded sheet steel blanks for the automotive industry. The Company
guarantees up to $10 million of outstanding debt under each of OCR's $35 million
revolving bank credit facility and OLP's $20 million bank loan. The Company's
45% interest in OCR and 50% interest in OLP are accounted for under the equity
method.
Financing costs include interest expense on debt and costs associated
with the Company's accounts receivable securitization program (the Financing
Costs). Interest rates paid by the Company under its credit agreement are
generally based on prime or LIBOR plus a premium (the Premium) determined
quarterly, which varies based on the Company's operating performance and
financial leverage. Receivable securitization costs are based on commercial
paper rates calculated on the amount of receivables sold.
10 of 16
<PAGE> 11
In August 1996, the Company completed a follow-on stock offering of 2.1
million shares of common stock (the Offering). The net proceeds from the
Offering, which totaled $49.1 million, were used to repay outstanding bank debt.
The Company sells certain products internationally, primarily in Mexico
and Puerto Rico. All international sales and payments are made in United States
dollars. These sales historically involve the Company's direct representation of
steel producers and may be covered by letters of credit or trade receivable
insurance. Typically, international sales are more transactional in nature with
lower gross margins than domestic sales. Domestic steel producers generally
supply domestic customers before meeting foreign demand, particularly during
periods of supply constraints. As a result, domestic and international sales
tend to be countercyclical.
Because the Company conducts its operations generally on the basis of
short-term orders, backlog is not a meaningful indicator of future performance.
RESULTS OF OPERATIONS
Tons sold increased 14.0% to 325 thousand in the third quarter of 1997
from 285 thousand in the third quarter of 1996, and 10.3% in the first nine
months of 1997 to 980 thousand from 889 thousand in the first nine months of
1996. Tons sold in the third quarter of 1997 include 266 thousand from direct
sales and 59 thousand from toll processing, compared with 250 thousand direct
tons and 35 thousand tolling tons in the comparable period of last year. Tons
sold in the first nine months of 1997 include 830 thousand from direct sales and
150 thousand from toll processing, compared with 775 thousand direct tons and
114 thousand tolling tons in the comparable period of last year. Substantially
all of increase in tolling tons is attributable to Southeastern.
Net sales increased 7.6% to $145.2 million for the third quarter of
1997 from $135.0 million for the third quarter of 1996. For the first nine
months, net sales increased 6.6% to $452.3 million from $424.3 million in the
1996 period. Average selling prices declined 5.6% and 3.3% between years for the
three and nine month periods, respectively, with the decline primarily due to
the increased proportion of tolling sales in 1997. International sales
represented 4.2% of consolidated net sales for both the three and nine month
periods ended September 30, 1997, compared to 5.1% and 5.3%, respectively, for
the 1996 periods.
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<PAGE> 12
As a percentage of net sales, gross margin decreased to 20.8% for the
third quarter of 1997 from 22.5% for 1996. For the nine month period, gross
margin decreased to 20.6% in 1997 from 22.2% in 1996. The decrease reflects the
impact of market pressures that have not allowed price increases for steel to be
fully passed on to customers.
On a per ton basis, operating expenses decreased to $77.07 from $81.13
for the third quarter and to $77.92 from $78.35 for the first nine months. As a
percentage of net sales, operating expenses increased to 17.3% for the third
quarter of 1997 from 17.1% for 1996, and to 16.9% for the first nine months of
1997 from 16.4% in 1996. The increases as a percentage of net sales are due
partially to the impact of lower average selling prices and increased
depreciation expense in the current year. The increase in depreciation expense
relates to the Southeastern acquisition; the Cleveland temper mill facility;
completion of the Lafayette plant expansion; and continued investment in
management information systems. The nine month increase as a percentage of sales
is also partially attributable to higher warehouse and processing expenses in
1997.
Income from the OCR joint venture totaled $120 thousand in the third
quarter and $283 thousand in the first nine months of 1997. The OLP joint
venture began expensing its start-up costs in the third quarter of 1997.
Olympic's share of OLP's start-up costs totaled $293 thousand. Start-up costs
related to OLP are expected to continue during 1998.
Financing Costs for the third quarter of 1997 increased to $2.2 million
from $1.7 million in 1996. For the nine month period, financing costs decreased
to $5.9 million in 1997 from $6.4 million last year. Average borrowings
outstanding in the third quarter of 1997 increased primarily as a result of
higher inventory levels, the acquisition of Southeastern and capital
expenditures. For the nine month period, average borrowings decreased primarily
as a result of the Offering. The Company's effective bank borrowing rate
increased to 6.9% from 6.7%, and decreased to 6.8% from 7.2% for the three and
nine month periods of 1997 and 1996, respectively. Lower Premiums as a result of
the Company's 1996 financial performance and the Offering favorably impacted
effective borrowing rates for the nine month period. The Company's Premium will
remain at 1% over LIBOR for the three months commencing December 1, 1997.
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<PAGE> 13
Pretax income for the third quarter of 1997 decreased 50.3% to $2.7
million from $5.5 million for 1996. For the first nine months of 1997, pretax
income decreased 39.7% to $11.0 million from $18.2 million for 1996. Income
taxes approximated 37.5% of pretax income in the 1997 periods compared to 36%
and 38.8% for the three and nine month periods of 1996. The decrease in income
taxes as a percentage of pretax income for the nine months of 1997 is
attributable to the implementation of tax planning strategies in the third
quarter of 1996.
Net income for the third quarter of 1997 decreased 51.4% to $1.7
million, or $.16 per share, from $3.5 million, or $.36 per share for 1996. Net
income for the first nine months of 1997 decreased 38.4% to $6.8 million, or
$.64 per share, from $11.1 million, or $1.23 per share in the 1996 period. As a
result of the Offering, weighted average shares increased from 9.8 million and
9.0 million in the third quarter and first nine months of 1996 to 10.7 million
for the 1997 periods.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital requirement is to fund its growth,
including strategic acquisitions and joint ventures, the purchase and upgrading
of processing equipment and services, the construction and upgrading of related
facilities, and additional working capital. The Company uses cash generated from
operations, long-term debt obligations, proceeds from the Company's accounts
receivable securitization program, equity offerings, and leasing transactions to
fund these requirements. Historically, the Company has used revolving credit
borrowings under its bank credit facility to finance its working capital
requirements.
Net cash from operating activities primarily represents net income plus
non-cash charges for depreciation, amortization and start-up costs in excess of
income from joint ventures, as well as changes in working capital. During the
first nine months of 1997, $517 thousand of net cash was provided from operating
activities, consisting of $12.3 million of cash generated from net income and
non-cash charges offset by $11.8 million of cash used for working capital
purposes.
Working capital at September 30, 1997 increased by $10.9 million or
9.4% since December 31, 1996. The increase is primarily attributable to a $10.6
million increase in accounts receivable, which is the result of strong September
1997 sales compared to sales in December, which historically represent the
lowest sales period of each year for the Company.
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<PAGE> 14
As of September 30, 1997, $57 million of eligible receivables were sold
under the Company's accounts receivable securitization program, compared to $55
million at December 31, 1996. The amount of trade receivables sold by the
Company typically changes monthly depending upon the level of defined eligible
receivables available for sale at each month end. In July 1997, the Company
amended its receivable securitization agreement to increase the maximum amount
of receivables available for sale from $65 million to $70 million. The term of
the agreement was also extended to July 31, 2000.
During the first nine months of 1997, net cash used for investing
activities totaled $31.6 million, consisting of $13.7 million for the June 1
acquisition of Southeastern, $6.1 million in investments in the two joint
ventures, and $11.8 million in capital expenditures, including completion of a
71,000 square foot expansion of Lafayette Steel's existing facility, deposits
made for a new $3.7 million tube mill in Cleveland expected to become
operational in early 1998, and deposits made for a new facility and equipment
to be located in Bettendorf, Iowa. The Company plans to invest more than $22
million for the construction and equipping of a 170,000 square foot Iowa
facility which will house a second temper mill and cut-to-length line, a
slitter, and multiple pieces of plate burning equipment. The plate processing
equipment and slitter are expected to be operational by the end of the first
half of 1998, while the temper mill and cut-to-length line is expected to be
operational by the end of 1998. The Company also made purchase commitments in
excess of $3 million to purchase a new cut-to-length line for its Lafayette
operation, a used cut-to-length line for the Minneapolis coil processing
facility and a new plasma burner for the Minneapolis plate processing facility.
Each of these pieces of equipment is anticipated to become operational within
the next 6 months.
Cash flows used from financing activities primarily consists of net
borrowings under the Company's revolving credit agreement and proceeds from a
new $10 million secured bank term loan used to finance a portion of the
Southeastern acquisition, offset by scheduled payments under other existing
long-term agreements.
The Company amended its revolving bank credit agreement on May 30, 1997
and July 14, 1997. The amendments added a fourth bank to the bank group,
increased the unsecured revolving credit availability from $60 million to $68
million, added a secured $17 million term loan component to finance the
construction and equipping of the new Iowa facility, and extended the agreement
expiration date to June 30, 2000.
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<PAGE> 15
As of September 30, 1997, approximately $12.2 million in unused
availability existed under the Company's revolving credit and accounts
receivable securitization facilities, and $2.5 million was borrowed under the
$17 million Iowa term loan. The Company believes that funds available under its
revolving credit facility, other credit and financing agreements and funds
generated from operations will be sufficient to provide the Company with the
liquidity necessary to fund its anticipated working capital requirements and
capital expenditure requirements over the next 12 months. Capital requirements
are subject to change as business conditions warrant and opportunities arise. In
connection with its internal and external expansion strategies, the Company may
from time to time seek additional funds to finance other new facilities,
acquisitions and significant improvements to processing equipment to respond to
customers' demands.
FORWARD-LOOKING INFORMATION
This document contains various forward-looking statements and
information that are based on management's beliefs as well as assumptions made
by and information currently available to management. When used in this
document, the words "expect," "believe," "anticipate," "plan" and similar
expressions are intended to identify forward-looking statements, which are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such statements are subject to certain risks, uncertainties
and assumptions including, but not limited to, general business and economic
conditions; competitive factors such as the availability and pricing of steel
and fluctuations in demand, specifically in the automotive market; work
stoppages by automotive manufacturers; potential equipment malfunction;
equipment installation and facility construction delays, particularly for the
Iowa temper mill project; and the successes of its joint ventures and the
successful integration of Southeastern into the Company's operations. Should one
or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
expected, believed, anticipated or planned. Readers are cautioned not to place
undue reliance on these forward-looking statements which speak only as of the
date hereof. The Company undertakes no obligation to republish revised
forward-looking statements to reflect the occurrence of unanticipated events or
circumstances after the date hereof.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule
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<PAGE> 16
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 thereto duly authorized.
OLYMPIC STEEL, INC.
(Registrant)
Date: November 3, 1997 By: /s/ R. Louis Schneeberger
---------------------------------
R. LOUIS SCHNEEBERGER
Chief Financial Officer
By: /s/ Richard T. Marabito
---------------------------------
RICHARD T. MARABITO
Treasurer and Corporate Controller
(Principal Accounting Officer)
16 of 16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,388
<SECURITIES> 0
<RECEIVABLES> 20,830
<ALLOWANCES> 0
<INVENTORY> 137,630
<CURRENT-ASSETS> 164,122
<PP&E> 118,008
<DEPRECIATION> (18,798)
<TOTAL-ASSETS> 282,659
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0
0
<COMMON> 106,319
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<CGS> 115,078
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<INCOME-TAX> 1,029
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<NET-INCOME> 1,715
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
