STEEL DYNAMICS INC - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the period ended September 30, 2004

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 0-21719

Steel Dynamics, Inc.

(Exact name of registrant as specified in its charter)

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

6714 Pointe Inverness Way, Suite 200, Fort Wayne, IN

(Address of principal executive offices)

Registrant’s telephone number, including area code: (260) 459-3553

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 checked box

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act. Yes checked box

As of November 2, 2004, Registrant had 49,881,377 outstanding shares of Common Stock.

STEEL DYNAMICS, INC.

PART I. Financial Information

STEEL DYNAMICS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

Cash and equivalents

Accounts receivable, net

Accounts receivable-related parties

Other current assets

Total current assets

Property, plant and equipment, net

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable-related parties

Other accrued expenses

Current maturities of long-term debt

Total current liabilities

Long-term debt, including unamortized bond premium of $7,569 and $8,834, as of September 30, 2004 and December 31, 2003, respectively

Commitments and contingencies

Stockholders’ equity:

Common stock voting, $.01 par value; 100,000,000 shares authorized; 52,130,841 and 51,011,839 shares issued; and 49,769,186 and 48,645,246 shares outstanding, as of September 30, 2004 and December 31, 2003, respectively

Treasury stock, at cost; 2,361,655 and 2,366,593 shares, at September 30, 2004 and December 31, 2003, respectively

Additional paid-in capital

Other accumulated comprehensive loss

Total stockholders’ equity

Total liabilities and stockholders’ equity

See notes to consolidated financial statements.

STEEL DYNAMICS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

Three Months Ended
September 30,

Nine Months Ended
September 30,

Selling, general and administrative expenses

Income before income taxes

Basic earnings per share

Weighted average common shares outstanding

Diluted earnings per share, including effect of assumed conversions

Weighted average common shares and share equivalents outstanding

Dividends declared per share

See notes to consolidated financial statements.

STEEL DYNAMICS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended
September 30,

Nine Months Ended
September 30,

Operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

PART I. Financial Information

		Page

Item 1.	Consolidated Financial Information:

	Consolidated Balance Sheets as of September 30, 2004 (unaudited) and December 31, 2003	1

	Consolidated Statements of Income for the three and nine month periods ended September 30, 2004 and 2003 (unaudited)	2

	Consolidated Statements of Cash Flows for the three and nine month periods ended September 30, 2004 and 2003 (unaudited)	3

	Notes to Consolidated Financial Statements	4


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	12

Item 4.	Controls and Procedures	13

PART II. Other Information

Item 1.	Legal Proceedings	13

Item 6.	Exhibits	13

	Signature	14

	September 30, 2004			December 31, 2003

	(unaudited)
ASSETS
Current assets:
Cash and equivalents	$	159,674		$	65,430
Accounts receivable, net		202,601			100,933
Accounts receivable-related parties		45,151			25,090
Inventories		285,790			184,496
Deferred taxes		8,883			23,217
Other current assets		15,383			8,769

Total current assets		717,482			407,935
Property, plant and equipment, net		1,014,698			1,001,116
Restricted cash		1,649			2,636
Other assets		31,184			36,752

Total assets	$	1,765,013		$	1,448,439

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	144,181		$	42,698
Accounts payable-related parties		1,300			36,628
Accrued interest		10,888			11,312
Other accrued expenses		69,490			46,678
Current maturities of long-term debt		2,277			15,988

Total current liabilities		228,136			153,304
Long-term debt, including unamortized bond premium of $7,569 and $8,834, as of September 30, 2004 and December 31, 2003, respectively		548,724			591,586
Deferred taxes		168,775			115,703
Minority interest		2,274			613
Commitments and contingencies
Stockholders’ equity:
Common stock voting, $.01 par value; 100,000,000 shares authorized; 52,130,841 and 51,011,839 shares issued; and 49,769,186 and 48,645,246 shares outstanding, as of September 30, 2004 and December 31, 2003, respectively		520			509
Treasury stock, at cost; 2,361,655 and 2,366,593 shares, at September 30, 2004 and December 31, 2003, respectively		(28,719	)		(28,670	)
Additional paid-in capital		384,185			362,328
Retained earnings		462,671			257,254
Other accumulated comprehensive loss		(1,553	)		(4,188	)

Total stockholders’ equity		817,104			587,233

Total liabilities and stockholders’ equity	$	1,765,013		$	1,448,439

	Three Months Ended September 30,						Nine Months Ended September 30,

	2004			2003			2004			2003

Net sales:
Unrelated parties	$	562,552		$	233,594		$	1,372,535		$	613,082
Related parties		72,189			30,358			172,008			95,006

Total net sales		634,741			253,952			1,544,543			708,088
Cost of goods sold		406,489			215,097			1,091,503			587,790

Gross profit		228,252			38,855			453,040			120,298
Selling, general and administrative expenses		34,992			16,010			86,124			45,667

Operating income		193,260			22,845			366,916			74,631
Interest expense		10,469			8,251			30,565			26,355
Other income		(458	)		(112	)		(5,704	)		(362	)

Income before income taxes		183,249			14,706			342,055			48,638
Income taxes		69,635			5,515			129,187			18,239

Net income	$	113,614		$	9,191		$	212,868		$	30,399

Basic earnings per share	$	2.29		$	.19		$	4.32		$	.64

Weighted average common shares outstanding		49,611			47,797			49,299			47,683

Diluted earnings per share, including effect of assumed conversions	$	2.01		$	.19		$	3.80		$	.63

Weighted average common shares and share equivalents outstanding		56,881			48,122			56,546			47,920

Dividends declared per share	$	.15		$	—		$	.15		$	—

	Three Months Ended September 30,				Nine Months Ended September 30,

	2004		2003		2004		2003

Operating activities:
Net income	$	113,614	$	9,191	$	212,868	$	30,399
Adjustments to reconcile net income to net cash provided by operating activities:

Indiana		35-1929476
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6714 Pointe Inverness Way, Suite 200, Fort Wayne, IN		46804
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (260) 459-3553