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 quarter ended January 31, 2005
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.) | |
| P.O. Box 13948, Roanoke, Virginia | 24038-3948 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (540) 342-1831
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 ¨
As of January 31, 2005, 11,110,313 shares of Roanoke Electric Steel Corporation common stock were issued and outstanding.
ROANOKE ELECTRIC STEEL CORPORATION
FORM 10-Q
CONTENTS
| Page | ||||||
| Part I |
||||||
| Item 1. | ||||||
| 1 | ||||||
| 2 | ||||||
| 3 | ||||||
| 4 | ||||||
| 11 | ||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
12 | ||||
| Item 3. | 18 | |||||
| Item 4. | 18 | |||||
| Part II |
||||||
| Item 4. | 19 | |||||
| Item 6. | 19 | |||||
| 20 | ||||||
FINANCIAL INFORMATION
Roanoke Electric Steel Corporation
Consolidated Balance Sheets
ASSETS
| (Unaudited) January 31, 2005 |
October 31, 2004 | ||||||
| CURRENT ASSETS |
|||||||
| Cash and cash equivalents |
$ | 2,992,551 | $ | 869,000 | |||
| Accounts receivable, net of allowances of $5,466,715 in 2005 and $5,338,719 in 2004 |
66,924,924 | 75,558,674 | |||||
| Inventories |
117,231,981 | 102,099,659 | |||||
| Prepaid and other expenses |
1,927,067 | 1,898,841 | |||||
| Deferred income taxes |
8,165,648 | 8,011,122 | |||||
| Total current assets |
197,242,171 | 188,437,296 | |||||
| PROPERTY, PLANT AND EQUIPMENT |
|||||||
| Land |
7,589,353 | 7,734,589 | |||||
| Buildings |
44,226,998 | 44,811,189 | |||||
| Manufacturing machinery and equipment |
136,863,690 | 136,230,189 | |||||
| Trucks and forklifts |
7,358,038 | 7,673,533 | |||||
| Fabricating plant equipment |
19,858,731 | 20,238,613 | |||||
| Land improvements |
8,776,886 | 8,800,131 | |||||
| Office equipment |
2,555,734 | 2,648,100 | |||||
| Assets under construction |
2,492,427 | 2,205,425 | |||||
| Total |
229,721,857 | 230,341,769 | |||||
| Less—accumulated depreciation |
119,969,228 | 117,318,369 | |||||
| Property, plant and equipment, net |
109,752,629 | 113,023,400 | |||||
| GOODWILL |
13,868,647 | 13,868,647 | |||||
| OTHER ASSETS |
3,609,603 | 3,641,690 | |||||
| TOTAL ASSETS |
$ | 324,473,050 | $ | 318,971,033 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||
| CURRENT LIABILITIES |
|||||||
| Current portion of long-term debt and capital lease obligation |
$ | 6,019,853 | $ | 6,019,598 | |||
| Bank overdraft |
— | 4,777,540 | |||||
| Accounts payable |
35,535,832 | 31,286,346 | |||||
| Dividends payable |
1,222,189 | 1,211,740 | |||||
| Employees’ taxes withheld |
323,755 | 248,408 | |||||
| Accrued profit sharing contribution |
4,616,458 | 7,281,552 | |||||
| Accrued wages and expenses |
10,899,989 | 11,964,585 | |||||
| Accrued income taxes |
8,403,729 | 10,146,773 | |||||
| Total current liabilities |
67,021,805 | 72,936,542 | |||||
| LONG-TERM DEBT AND CAPITAL LEASE OBLIGATION |
|||||||
| Notes and capital lease payable |
68,247,287 | 64,960,960 | |||||
| Less—current portion |
6,019,853 | 6,019,598 | |||||
| Total long-term debt and capital lease obligation |
62,227,434 | 58,941,362 | |||||
| DEFERRED INCOME TAXES |
27,474,620 | 28,152,620 | |||||
| OTHER LIABILITIES |
3,348,459 | 3,545,148 | |||||
| STOCKHOLDERS’ EQUITY |
|||||||
| Common stock—no par value—authorized 20,000,000 shares, issued 12,383,927 shares in 2005 and 12,288,927 in 2004 |
6,648,915 | 5,333,829 | |||||
| Additional paid-in capital |
885,427 | 885,427 | |||||
| Retained earnings |
157,695,394 | 149,731,709 | |||||
| Accumulated other comprehensive income (loss) |
(11,136 | ) | 262,264 | ||||
| Total |
165,218,600 | 156,213,229 | |||||
| Less—treasury stock, 1,273,114 shares — at cost |
817,868 | 817,868 | |||||
| Total stockholders' equity |
164,400,732 | 155,395,361 | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ | 324,473,050 | $ | 318,971,033 | |||
The accompanying notes to consolidated financial statements are an integral part of these statements.
Roanoke Electric Steel Corporation
Consolidated Statements of Earnings
| (Unaudited) Three Months Ended January 31, |
||||||||
| 2005 |
2004 |
|||||||
| SALES |
$ | 131,309,983 | $ | 85,173,685 | ||||
| COST OF SALES |
102,714,466 | 76,501,378 | ||||||
| GROSS EARNINGS |
28,595,517 | 8,672,307 | ||||||
| OTHER OPERATING EXPENSES (INCOME) |
||||||||
| Administrative |
7,844,436 | 6,965,793 | ||||||
| Interest expense |
851,203 | 1,122,938 | ||||||
| Profit sharing |
3,551,807 | 999,391 | ||||||
| Interest income |
(21,982 | ) | (75,256 | ) | ||||
| Antitrust litigation settlement |
— | (3,061,820 | ) | |||||
| Total |
12,225,464 | 5,951,046 | ||||||
| EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
16,370,053 | 2,721,261 | ||||||
| INCOME TAX EXPENSE |
6,506,538 | 1,084,617 | ||||||
| EARNINGS FROM CONTINUING OPERATIONS |
9,863,515 | 1,636,644 | ||||||
| DISCONTINUED OPERATIONS (NOTE 1) |
||||||||
| LOSS FROM OPERATIONS OF DISCONTINUED OPERATIONS (INCLUDING LOSS ON SALE) |
(1,118,263 | ) | (171,613 | ) | ||||
| INCOME TAX BENEFIT |
(440,622 | ) | (68,645 | ) | ||||
| LOSS ON DISCONTINUED OPERATIONS |
(677,641 | ) | (102,968 | ) | ||||
| NET EARNINGS |
$ | 9,185,874 | $ | 1,533,676 | ||||
| Earnings (loss) per share of common stock: |
||||||||
| Earnings from continuing operations: |
||||||||
| Basic |
$ | 0.89 | $ | 0.15 | ||||
| Diluted |
$ | 0.88 | $ | 0.15 | ||||
| Loss on discontinued operations: |
||||||||
| Basic |
(0.06 | ) | (0.01 | ) | ||||
| Diluted |
(0.06 | ) | (0.01 | ) | ||||
| Net earnings per share of common stock: |
||||||||
| Basic |
$ | 0.83 | $ | 0.14 | ||||
| Diluted |
$ | 0.82 | $ | 0.14 | ||||
| Cash dividends per share of common stock |
$ | 0.11 | $ | 0.05 | ||||
| Weighted average number of common shares outstanding : |
||||||||
| Basic |
11,038,710 | 10,932,813 | ||||||
| Diluted |
11,177,438 | 10,970,133 | ||||||
The accompanying notes to consolidated financial statements are an integral part of these statements.
2
Roanoke Electric Steel Corporation
Consolidated Statements of Cash Flows
| (Unaudited) Three Months Ended January 31, |
||||||||
| 2005 |
2004 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
| Net earnings |
$ | 9,185,874 | $ | 1,533,676 | ||||
| Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |
||||||||
| Deferred compensation liability |
(4,257 | ) | 51,239 | |||||
| Postretirement liabilities |
(201,448 | ) | (38,212 | ) | ||||
| Landfill closure obligation |
9,016 | 8,409 | ||||||
| Depreciation and amortization |
3,629,753 | 3,931,937 | ||||||
| Gain on sale of investments and property, plant and equipment |
(1,226 | ) | (854 | ) | ||||
| Deferred income taxes |
(678,000 | ) | (511,000 | ) | ||||
| Loss on sale of subsidiary |
790,685 | — | ||||||
| Changes in assets and liabilities which provided (used) cash, exclusive of changes shown separately |
(12,269,083 | ) | (3,235,822 | ) | ||||
| Net cash provided by operating activities |
461,314 | 1,739,373 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
| Expenditures for property, plant and equipment |
(1,174,508 | ) | (664,478 | ) | ||||
| Proceeds from sale of property, plant and equipment |
17,783 | 660 | ||||||
| Sale of investments |
— | 143,013 | ||||||
| Proceeds from sale of subsidiary |
4,206,829 | — | ||||||
| Net cash provided by (used in) investing activities |
3,050,104 | (520,805 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
| Cash dividends |
(1,222,189 | ) | (546,641 | ) | ||||
| Increase in dividends payable |
10,449 | — | ||||||
| Payment of long-term debt |
(15,708,868 | ) | (11,231 | ) | ||||
| Proceeds from long-term debt |
19,000,000 | — | ||||||
| Proceeds from exercise of common stock options |
1,315,086 | — | ||||||
| Repayment of bank overdraft |
(4,777,540 | ) | — | |||||
| Interest rate swap termination fee |
— | (195,869 | ) | |||||
| Payment of capital lease principal |
(4,805 | ) | (4,561 | ) | ||||
| Net cash used in financing activities |
(1,387,867 | ) | (758,302 | ) | ||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS |
2,123,551 | |||||||