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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 June 30, 2002
 
¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
Commission File No. 1-7170
 
 
 
 
IMCO Recycling Inc.
(Exact name of registrant as specified in its charter)
 
 
Delaware
(State or other jurisdiction of incorporation or organization)
 
 
75-2008280
(I.R.S. Employer Identification No.)
 
 
5215 North O’Connor Blvd., Suite 1500
Central Tower at Williams Square
Irving, Texas 75039
(Address of principal executive offices) (Zip Code)
 
 
(972) 401-7200
(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 (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 outstanding of each of the issuer’s classes of common stock, as of the close of business on July 31, 2002.
 
 
Common Stock, $0.10 par value, 14,480,450
 
 

PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
 
IMCO RECYCLING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
    
June 30,
2002
     
December 31,
2001
  
    
(unaudited)
         
ASSETS
                  
Current Assets
                  
Cash and cash equivalents
   
$
8,920
 
   
$
3,301
 
Accounts receivable, net of allowance of $1,740 and $2,488 at
    June 30, 2002 and December 31, 2001, respectively
   
 
39,347
 
   
 
23,569
 
Inventories
   
 
43,290
 
   
 
39,214
 
Deferred income taxes
   
 
4,301
 
   
 
6,879
 
Other current assets
   
 
11,297
 
   
 
7,570
 
    
  
Total Current Assets
   
 
107,155
 
   
 
80,533
 
Property and equipment, net
   
 
189,820
 
   
 
186,931
 
Excess of acquisition cost over the fair value of net assets acquired,
    net of accumulated amortization
   
 
50,567
 
   
 
115,562
 
Investments in joint ventures
   
 
16,008
 
   
 
17,892
 
Other assets, net
   
 
6,195
 
   
 
6,036
 
    
  
    
$
369,745
 
   
$
406,954
 
    
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                  
Current Liabilities
                  
Accounts payable
   
$
86,456
 
   
$
67,299
 
Accrued liabilities
   
 
15,823
 
   
 
13,908
 
Notes payable
   
 
12,093
 
   
 
—  
 
Current maturities of long-term debt
   
 
195
 
   
 
75
 
    
  
Total Current Liabilities
   
 
114,567
 
   
 
81,282
 
Long-term debt
   
 
117,008
 
   
 
125,314
 
Deferred income taxes
   
 
10,263
 
   
 
19,157
 
Other long-term liabilities
   
 
11,607
 
   
 
12,308
 
                   
STOCKHOLDERS’ EQUITY
                  
Preferred stock; par value $.10; 8,000,000 shares authorized; none
    issued
   
 
—  
 
   
 
—  
 
Common stock; par value $.10; 40,000,000 shares authorized;
    17,138,100 issued at June 30, 2002; 17,131,240 issued at
    December 31, 2001
   
 
1,714
 
   
 
1,713
 
Additional paid-in capital
   
 
107,292
 
   
 
105,800
 
Retained earnings
   
 
42,271
 
   
 
98,085
 
Accumulated other comprehensive loss from foreign currency
    translation adjustments and deferred hedging gains/losses
   
 
(6,280
)
   
 
(9,890
)
Treasury stock, at cost; 2,659,574 shares at June 30, 2002;
    2,494,952 shares at December 31, 2001
   
 
(28,697
)
   
 
(26,815
)
    
  
Total Stockholders’ Equity
   
 
116,300
 
   
 
168,893
 
    
  
    
$
369,745
 
   
$
406,954
 
    
  
 
See Notes to Consolidated Financial Statements.

Page 2

IMCO RECYCLING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
 
    
For the three months ended June 30,
     
For the six months ended June 30,
  
    
2002
     
2001
     
2002
     
2001
  
Revenues
   
$
180,509
 
   
$
177,496
 
   
$
338,410
 
   
$
364,848
 
Cost of sales
   
 
166,537
 
   
 
166,351
 
   
 
315,849
 
   
 
345,847
 
    
  
  
  
Gross profits
   
 
13,972
 
   
 
11,145
 
   
 
22,561
 
   
 
19,001
 
                                     
Selling, general and administrative expense
   
 
7,092
 
   
 
6,207
 
   
 
12,759
 
   
 
10,926
 
Amortization expense
   
 
—  
 
   
 
1,038
 
   
 
—  
 
   
 
2,077
 
Interest expense
   
 
2,504
 
   
 
2,806
 
   
 
4,755
 
   
 
6,084
 
Fees on receivables sale
   
 
432
 
   
 
916
 
   
 
851
 
   
 
2,127
 
Interest and other income
   
 
(190
)
   
 
(34
)
   
 
(292
)
   
 
(475
)
Equity in net earnings of affiliates
   
 
(372
)
   
 
(860
)
   
 
(644
)
   
 
(1,897
)
    
  
  
  
Earnings before income taxes, minority interest, and cumulative effect of accounting change
   
 
4,506
 
   
 
1,072
 
   
 
5,132
 
   
 
159
 
Provision for (benefit from) income taxes
   
 
1,789
 
   
 
96
 
   
 
1,983
 
   
 
(460
)
    
  
  
  
Earnings before minority interests and cumulative effect of accounting change
   
 
2,717
 
   
 
976
 
   
 
3,149
 
   
 
619
 
Minority interests, net of provision for income taxes
   
 
183
 
   
 
58
 
   
 
233
 
   
 
68
 
    
  
  
  
Earnings before cumulative effect of accounting change
   
 
2,534
 
   
 
918
 
   
 
2,916
 
   
 
551
 
    
  
  
  
Cumulative effect of accounting change (after tax benefit of $7,132)
   
 
—  
 
   
 
—  
 
   
 
(58,730
)
   
 
—  
 
    
  
  
  
Net earnings (loss)
   
$
2,534
 
   
$
918
 
   
$
(55,814
)
   
$
551
 
    
  
  
  
Net earnings (loss) per common share:
                                    
Basic before cumulative effect of accounting change
   
$
0.17
 
   
$
0.06
 
   
$
0.20
 
   
$
0.04
 
Cumulative effect of accounting change
   
 
—  
 
   
 
—  
 
   
 
(4.02
)
   
 
—  
 
    
  
  
  
Basic earnings per share
   
 
0.17
 
   
 
0.06
 
   
 
(3.82
)
   
 
0.04
 
                                     
Diluted before cumulative effect of accounting change
   
 
0.17
 
   
 
0.06
 
   
 
0.20
 
   
 
0.04
 
Cumulative effect of accounting change
   
 
—  
 
   
 
—  
 
   
 
(3.99
)
   
 
—  
 
    
  
  
  
Diluted earnings per share
   
 
0.17
 
   
 
0.06
 
   
 
(3.79
)
   
 
0.04
 
                                     
Weighted average shares outstanding:
                                    
Basic
   
 
14,552
 
   
 
15,138
 
   
 
14,601
 
   
 
15,276
 
Diluted
   
 
14,702
 
   
 
15,303
 
   
 
14,732
 
   
 
15,454
 
 
See Notes to Consolidated Financial Statements.

Page 3

IMCO RECYCLING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(in thousands)
 
    
For the six months ended June 30,
  
    
2002
     
2001
  
OPERATING ACTIVITIES
                  
Earnings before cumulative effect of accounting change
   
$
2,916
 
   
$
551
 
Depreciation
   
 
11,568
 
   
 
13,859
 
Provision (Benefit) for deferred income taxes
   
 
(136
)
   
 
507
 
Equity in earnings of affiliates
   
 
(644
)
   
 
(1,897
)
Other non-cash charges
   
 
1,032
 
   
 
859
 
Changes in operating assets and liabilities:
                  
Accounts receivable
   
 
(16,563
)
   
 
11,706
 
Accounts receivable sold
   
 
1,100
 
   
 
(23,000
)
Inventories
   
 
(3,993
)
   
 
11,047
 
Other current assets
   
 
(3,457
)
   
 
1,319
 
Accounts payable and accrued liabilities
   
 
23,212
 
   
 
(4,581
)
    
  
Net cash from operating activities
   
 
15,035
 
   
 
10,370
 
                   
INVESTING ACTIVITIES
                  
Payments for property and equipment
   
 
(4,846
)
   
 
(5,055
)
Acquisition of Brazil Facility, Net of Cash Acquired
   
 
(50
)
   
 
—  
 
Dividend from a non-consolidated subsidiary
   
 
2,607
 
   
 
1,242