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 July 31, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 0-2389
ROANOKE ELECTRIC STEEL CORPORATION
(Exact name of Registrant as specified in its charter)
| Virginia | 54-0585263 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 102 Westside Blvd., N.W., Roanoke, Virginia | 24017 | |
| (Address of principal executive offices) | (Zip Code) |
(540) 342-1831
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if
changed since last report)
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, and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes x No ¨
Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of July 31, 2004.
10,976,813 Shares outstanding
1
ROANOKE ELECTRIC STEEL CORPORATION
FORM 10-Q
| Page | ||||||
| 1. Part I | - | 3 - 20 | ||||
| Item 1. |
Financial Statements |
|||||
| a. |
3 | |||||
| b. |
4 | |||||
| c. |
5 | |||||
| d. |
6 - 12 | |||||
| e. |
13 | |||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14 - 18 | ||||
| Item 3. |
19 | |||||
| Item 4. |
20 | |||||
| 2. Part II | - | 21 - 22 | ||||
| Item 1. |
21 | |||||
| Item 6. |
21 - 22 | |||||
| 3. Signatures |
23 | |||||
| 24 - 25 | ||||||
| 5. Exhibits |
26 - 54 | |||||
2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
ROANOKE ELECTRIC STEEL CORPORATION
| (Unaudited) | ||||||||
| July 31, 2004 |
October 31, 2003 |
|||||||
| ASSETS | ||||||||
| CURRENT ASSETS |
||||||||
| Cash and cash equivalents |
$ | 8,527,477 | $ | 13,422,044 | ||||
| Investments |
23,913 | 3,778,392 | ||||||
| Accounts receivable, net of allowances of $5,270,579 in 2004 and $3,430,029 in 2003 |
66,560,274 | 46,469,280 | ||||||
| Refundable income taxes |
— | 608,244 | ||||||
| Inventories |
85,644,442 | 59,565,245 | ||||||
| Prepaid expenses |
1,429,734 | 1,466,176 | ||||||
| Deferred income taxes |
5,487,203 | 5,525,279 | ||||||
| Total current assets |
167,673,043 | 130,834,660 | ||||||
| PROPERTY, PLANT AND EQUIPMENT |
||||||||
| Land |
7,734,589 | 7,734,589 | ||||||
| Buildings |
45,295,153 | 45,099,325 | ||||||
| Manufacturing machinery and equipment |
137,240,097 | 136,053,175 | ||||||
| Trucks and forklifts |
7,373,712 | 7,242,124 | ||||||
| Fabricating plant equipment |
20,193,544 | 19,693,180 | ||||||
| Land improvements |
9,109,266 | 8,993,364 | ||||||
| Office equipment |
2,766,393 | 2,537,117 | ||||||
| Assets under construction |
1,603,818 | 1,375,707 | ||||||
| Total |
231,316,572 | 228,728,581 | ||||||
| Less—accumulated depreciation |
116,191,244 | 105,323,406 | ||||||
| Property, plant and equipment, net |
115,125,328 | 123,405,175 | ||||||
| GOODWILL |
13,868,647 | 13,868,647 | ||||||
| OTHER ASSETS |
2,227,587 | 2,759,004 | ||||||
| TOTAL ASSETS |
$ | 298,894,605 | $ | 270,867,486 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES |
||||||||
| Current portion of long-term debt and capital lease obligation |
$ | 15,023,328 | $ | 7,560,884 | ||||
| Accounts payable |
32,390,226 | 24,540,814 | ||||||
| Dividends payable |
1,097,681 | 546,641 | ||||||
| Employees’ taxes withheld |
322,378 | 275,112 | ||||||
| Accrued profit sharing contribution |
7,682,404 | 1,339,642 | ||||||
| Accrued wages and expenses |
13,499,284 | 11,289,678 | ||||||
| Accrued income taxes |
4,255,470 | — | ||||||
| Total current liabilities |
74,270,771 | 45,552,771 | ||||||
| LONG-TERM DEBT AND CAPITAL LEASE OBLIGATION |
||||||||
| Notes and capital lease payable |
67,717,673 | 71,519,832 | ||||||
| Less—current portion |
15,023,328 | 7,560,884 | ||||||
| Total long-term debt and capital lease obligation |
52,694,345 | 63,958,948 | ||||||
| DEFERRED INCOME TAXES |
28,686,416 | 29,908,754 | ||||||
| OTHER LIABILITIES |
4,567,808 | 5,381,389 | ||||||
| STOCKHOLDERS’ EQUITY |
||||||||
| Common stock—no par value—authorized 20,000,000 shares, issued 12,249,927 shares in 2004 and 12,205,927 in 2003 |
4,849,749 | 4,394,889 | ||||||
| Retained earnings |
135,011,078 | 123,236,904 | ||||||
| Accumulated other comprehensive loss |
(367,694.00 | ) | (748,301.00 | ) | ||||
| Total |
139,493,133 | 126,883,492 | ||||||
| Less—treasury stock, 1,273,114 shares — at cost |
817,868 | 817,868 | ||||||
| Total stockholders’ equity |
138,675,265 | 126,065,624 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 298,894,605 | $ | 270,867,486 | ||||
The accompanying notes to consolidated financial statements are an integral part of these statements.
3
ROANOKE ELECTRIC STEEL CORPORATION
Consolidated Statements of Earnings (Loss)
| (Unaudited) Three Months Ended July 31, |
(Unaudited) Nine Months Ended July 31, |
||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
||||||||||||
| SALES |
$ | 129,443,989 | $ | 82,285,245 | $ | 335,649,021 | $ | 220,490,923 | |||||||
| COST OF SALES |
103,505,946 | 76,028,790 | 281,490,908 | 206,884,930 | |||||||||||
| GROSS EARNINGS |
25,938,043 | 6,256,455 | 54,158,113 | 13,605,993 | |||||||||||
| OTHER OPERATING EXPENSES (INCOME) |
|||||||||||||||
| Administrative |
8,122,013 | 5,471,207 | 22,659,114 | 16,318,519 | |||||||||||
| Interest, net |
771,094 | 1,246,546 | 2,570,992 | 3,752,732 | |||||||||||
| Profit sharing |
4,118,966 | 75,000 | 7,814,051 | 230,400 | |||||||||||
| Antitrust litigation settlement |
— | — | (3,061,820 | ) | (520,960 | ) | |||||||||
| Total |
13,012,073 | 6,792,753 | 29,982,337 | 19,780,691 | |||||||||||
| EARNINGS (LOSS) BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE |
12,925,970 | (536,298 | ) | 24,175,776 | (6,174,698 | ) | |||||||||
| INCOME TAX EXPENSE (BENEFIT) |
5,168,425 | (216,729 | ) | 9,662,499 | (2,477,420 | ) | |||||||||
| EARNINGS (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE |
7,757,545 | (319,569 | ) | 14,513,277 | (3,697,278 | ) | |||||||||
| CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE |
— | — | — | (228,410 | ) | ||||||||||
| NET EARNINGS (LOSS) |
$ | 7,757,545 | $ | (319,569 | ) | $ | 14,513,277 | $ | (3,925,688 | ) | |||||
| Earnings (loss) per share of common stock: |
|||||||||||||||
| Earnings (loss) before cumulative effect of change in accounting principle: |
|||||||||||||||
| Basic |
$ | 0.71 | $ | (0.03 | ) | $ | 1.33 | $ | (0.34 | ) | |||||
| Diluted |
$ | 0.70 | $ | (0.03 | ) | $ | 1.32 | $ | (0.34 | ) | |||||
| Cumulative effect of change in accounting principle: |
|||||||||||||||
| Basic |
— | — | — | (0.02 | ) | ||||||||||
| Diluted |
— | — | — | (0.02 | ) | ||||||||||
| Net earnings (loss) per share of common stock: |
|||||||||||||||
| Basic |
$ | 0.71 | $ | (0.03 | ) | $ | 1.33 | $ | (0.36 | ) | |||||
| Diluted |
$ | 0.70 | $ | (0.03 | ) | $ | 1.32 | $ | (0.36 | ) | |||||
| Cash dividends per share of common stock |
$ | 0.10 | $ | 0.05 | $ | 0.25 | $ | 0.15 | |||||||
| Weighted average number of common shares outstanding : |
|||||||||||||||
| Basic |
10,958,009 | 10,937,683 | 10,943,266 | 10,941,084 | |||||||||||
| Diluted |
11,045,557 | 10,937,683 | 11,014,517 | 10,945,119 | |||||||||||
The accompanying notes to consolidated financial statements are an integral part of these statements.
4
ROANOKE ELECTRIC STEEL CORPORATION
Consolidated Statements of Cash Flows
| (Unaudited) Nine Months Ended |
||||||||
| 2004 |
2003 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
| Net earnings (loss) |
$ | 14,513,277 | $ | (3,925,688 | ) | |||