CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Thousands | Dec. 31, 2009
| Dec. 31, 2008
|
Current assets | ||
Cash and equivalents | $9,008 | $16,233 |
Accounts receivable, net of related allowances of $20,674 and $29,008 as of December 31, 2009 and 2008, respectively | 396,036 | 453,011 |
Accounts receivable-related parties | 30,556 | 49,921 |
Inventories | 852,831 | 1,023,235 |
Deferred income taxes | 21,492 | 23,562 |
Tax refunds receivable | 137,024 | 86,321 |
Other current assets | 9,856 | 57,632 |
Total current assets | 1,456,803 | 1,709,915 |
Property, plant and equipment, net | 2,254,050 | 2,072,857 |
Restricted cash | 12,595 | 18,515 |
Intangible assets, net of accumulated amortization of $98,610 and $47,634 as of December 31, 2009 and 2008, respectively | 533,510 | 614,786 |
Goodwill | 758,259 | 770,438 |
Other assets | 114,655 | 67,066 |
Total assets | 5,129,872 | 5,253,577 |
Current liabilities | ||
Accounts payable | 255,520 | 259,742 |
Accounts payable-related parties | 6,765 | 3,651 |
Income taxes payable | 5,664 | 4,107 |
Accrued expenses | 156,570 | 209,697 |
Accrued profit sharing | 2,860 | 62,561 |
Senior secured revolving credit facility, due 2012 | 167,000 | 366,000 |
Current maturities of long-term debt | 1,182 | 65,223 |
Total current liabilities | 595,561 | 970,981 |
Long-term debt | ||
Senior secured term A loan, due 2012 | 503,800 | |
7 3/8% senior notes, due 2012 | 700,000 | 700,000 |
5.125% convertible senior notes, due 2014 | 287,500 | |
6 3/4% senior notes, due 2015 | 500,000 | 500,000 |
7 3/4% senior notes, due 2016 | 500,000 | 500,000 |
Other long-term debt | 67,072 | 15,361 |
Total long-term debt | 2,054,572 | 2,219,161 |
Deferred income taxes | 416,468 | 365,496 |
Other liabilities | 60,006 | 65,626 |
Stockholders' equity | ||
Common stock voting, $.0025 par value; 900,000,000 shares authorized; 252,589,627 and 218,733,363 shares issued; and 215,999,801 and 181,820,012 shares outstanding, as of December 31, 2009 and 2008, respectively | 629 | 545 |
Treasury stock, at cost; 36,589,826 and 36,913,351 shares, as of December 31, 2009, and 2008, respectively | (730,857) | (737,319) |
Additional paid-in capital | 972,985 | 541,686 |
Other accumulated comprehensive income (loss) | (1,411) | |
Retained earnings | 1,745,511 | 1,820,385 |
Total Steel Dynamics, Inc. stockholders' equity | 1,988,268 | 1,623,886 |
Noncontrolling interests | 14,997 | 8,427 |
Total stockholders' equity | 2,003,265 | 1,632,313 |
Total liabilities and stockholders' equity | $5,129,872 | $5,253,577 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | ||
In Thousands, except Share data | Dec. 31, 2009
| Dec. 31, 2008
|
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowances (in dollars) | $20,674 | $29,008 |
Intangible assets, accumulated amortization (in dollars) | $98,610 | $47,634 |
Common stock, par value (in dollars per share) | 0.0025 | 0.0025 |
Common stock, shares authorized | 900,000,000 | 900,000,000 |
Common stock, shares issued | 252,589,627 | 218,733,363 |
Common stock, shares outstanding | 215,999,801 | 181,820,012 |
Treasury stock, shares | 36,589,826 | 36,913,351 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | |||
In Thousands, except Per Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Net sales | |||
Unrelated parties | $3,810,378 | $7,743,251 | $4,158,844 |
Related parties | 148,428 | 337,270 | 225,705 |
Total net sales | 3,958,806 | 8,080,521 | 4,384,549 |
Costs of goods sold | 3,559,730 | 6,849,262 | 3,468,855 |
Gross profit | 399,076 | 1,231,259 | 915,694 |
Selling, general and administrative expenses | 223,013 | 276,560 | 151,274 |
Profit sharing | 2,980 | 66,997 | 61,703 |
Amortization of intangible assets | 53,552 | 41,334 | 11,972 |
Operating income | 119,531 | 846,368 | 690,745 |
Interest expense, net capitalized interest | 141,360 | 144,574 | 55,416 |
Other (income) expense, net | (3,592) | (33,147) | 5,500 |
Income (loss) before income taxes | (18,237) | 734,941 | 629,829 |
Income taxes (benefit) | (7,218) | 280,427 | 235,672 |
Net income (loss) | (11,019) | 454,514 | 394,157 |
Net loss attributable to noncontrolling interests | (2,835) | (8,872) | (409) |
Net income (loss) attributable to Steel Dynamics, Inc. | ($8,184) | $463,386 | $394,566 |
Basic earnings (loss) per share attributable to Steel Dynamics, Inc. stockholders (in dollars per share) | -0.04 | 2.45 | 2.12 |
Weighted average common shares outstanding (in shares) | 200,704 | 189,140 | 186,321 |
Diluted earnings (loss) per share attributable to Steel Dynamics, Inc. stockholders, including the effect of assumed conversions when dilutive (in dollars per share) | -0.04 | 2.38 | 2.01 |
Weighted average common shares and share equivalents outstanding (in shares) | 200,704 | 194,586 | 196,805 |
Dividends declared per share (in dollars per share) | 0.325 | 0.4 | 0.3 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | |||||||
In Thousands | Common Stock
| Additional Paid-In Capital
| Retained Earnings
| Other Accumulated Comprehensive Income (Loss)
| Noncontrolling Interests
| Treasury Stock
| Total
|
Balances at Dec. 31, 2006 | $537 | $367,772 | $1,093,271 | $1,424 | ($230,472) | $1,232,532 | |
Balances, shares at Dec. 31, 2006 | 193,967 | 21,764 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Issuance of common stock (net of expenses) and proceeds from exercise of stock options, including related tax effect | 5 | 29,441 | 29,446 | ||||
Issuance of common stock (net of expenses) and proceeds from exercise of stock options, including related tax effect, shares | 2,040 | ||||||
Dividends declared | (55,641) | (55,641) | |||||
Contributions from noncontrolling investors | 10,000 | 10,000 | |||||
Distributions to noncontrolling investors | (67) | (67) | |||||
Tax adjustment to noncontrolling interests | 90 | 90 | |||||
Equity-based compensation | 6,691 | 1,382 | 8,073 | ||||
Equity-based compensation, shares | 147 | (147) | |||||
Conversion of subordinated 4.0% notes | (595) | 845 | 250 | ||||
Conversion of subordinated 4.0% notes, shares | 58 | (58) | |||||
Acquisition of business | 150,496 | 304,531 | 455,027 | ||||
Acquisition of business, shares | 19,400 | (19,400) | |||||
Purchase of treasury stock | (533,654) | (533,654) | |||||
Purchase of treasury stock, shares | (25,288) | 25,288 | |||||
Comprehensive income: | |||||||
Net income | 394,566 | (409) | 394,157 | ||||
Unrealized gain on available-for-sale securities | 21 | 21 | |||||
Total comprehensive income (loss) | 394,178 | ||||||
Balances at Dec. 31, 2007 | 542 | 553,805 | 1,432,196 | 21 | 11,038 | (457,368) | 1,540,234 |
Balances, shares at Dec. 31, 2007 | 190,324 | 27,447 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Issuance of common stock (net of expenses) and proceeds from exercise of stock options, including related tax effect | 3 | 18,419 | 18,422 | ||||
Issuance of common stock (net of expenses) and proceeds from exercise of stock options, including related tax effect, shares | 962 | ||||||
Dividends declared | (75,197) | (75,197) | |||||
Contributions from noncontrolling investors | 5,000 | 5,000 | |||||
Tax adjustment to noncontrolling interests | 1,261 | 1,261 | |||||
Equity-based compensation | 11,965 | 2,313 | 14,278 | ||||
Equity-based compensation, shares | 136 | (136) | |||||
Conversion of subordinated 4.0% notes | (114,895) | 152,145 | 37,250 | ||||
Conversion of subordinated 4.0% notes, shares | 8,762 | (8,762) | |||||
Acquisition of business | 72,392 | 67,368 | 139,760 | ||||
Acquisition of business, shares | 3,938 | (3,938) | |||||
Purchase of treasury stock | (501,777) | (501,777) | |||||
Purchase of treasury stock, shares | (22,302) | 22,302 | |||||
Comprehensive income: | |||||||
Net income | 463,386 | (8,872) | 454,514 | ||||
Reversal of unrealized gain upon sale of available-for-sale securities | (21) | (21) | |||||
Unrealized loss on interest rate swap, net of tax of $883 | (1,411) | (1,411) | |||||
Total comprehensive income (loss) | 453,082 | ||||||
Balances at Dec. 31, 2008 | 545 | 541,686 | 1,820,385 | (1,411) | 8,427 | (737,319) | 1,632,313 |
Balances, shares at Dec. 31, 2008 | 181,820 | 36,913 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Issuance of common stock (net of expenses) and proceeds from exercise of stock options, including related tax effect | 84 | 420,846 | 420,930 | ||||
Issuance of common stock (net of expenses) and proceeds from exercise of stock options, including related tax effect, shares | 33,857 | ||||||
Dividends declared | (66,690) | (66,690) | |||||
Contributions from noncontrolling investors | 5,000 | 5,000 | |||||
Change in noncontrolling investment | 2,366 | 2,366 | |||||
Tax adjustment to noncontrolling interests | 2,039 | 2,039 | |||||
Equity-based compensation | 10,453 | 6,462 | 16,915 | ||||
Equity-based compensation, shares | 323 | (323) | |||||
Comprehensive income: | |||||||
Net income | (8,184) | (2,835) | (11,019) | ||||
Reversal of unrealized loss on interest rate swap, net of tax $883 | 1,411 | 1,411 | |||||
Total comprehensive income (loss) | (9,608) | ||||||
Balances at Dec. 31, 2009 | $629 | $972,985 | $1,745,511 | $0 | $14,997 | ($730,857) | $2,003,265 |
Balances, shares at Dec. 31, 2009 | 216,000 | 36,590 |
1_CONSOLIDATED STATEMENTS OF ST
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) (USD $) | ||
In Thousands | 1/1/2009 - 12/31/2009
| 1/1/2008 - 12/31/2008
|
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | ||
Unrealized loss on interest rate swap, tax | $883 | |
Reversal of unrealized loss on interest rate swap, tax | $883 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Operating activities: | |||
Net income (loss) attributable to Steel Dynamics, Inc. | ($8,184) | $463,386 | $394,566 |
Adjustments to reconcile net income (loss) attributable to Steel Dynamics, Inc. to net cash provided by operating activities: | |||
Depreciation and amortization | 221,426 | 208,752 | 138,136 |
Unamortized bond premium | (3,350) | ||
Equity-based compensation | 17,589 | 14,278 | 8,073 |
Deferred income taxes | 92,596 | 31,306 | 12,665 |
Loss on disposal of property, plant and equipment | 839 | 557 | 551 |
Noncontrolling interests | (2,835) | (8,872) | (409) |
Changes in certain assets and liabilities: | |||
Accounts receivable | 72,159 | 310,985 | 57,653 |
Inventories | 175,183 | (18,667) | (119,577) |
Other assets | 4,076 | (155,810) | (14,393) |
Accounts payable | (8,860) | (88,451) | (48,835) |
Income taxes payable | 1,611 | (21,765) | (10,684) |
Accrued expenses | (120,044) | 34,602 | 3,807 |
Net cash provided by operating activities | 445,556 | 770,301 | 418,203 |
Investing activities: | |||
Purchases of property, plant and equipment | (330,052) | (412,497) | (395,198) |
Acquisitions of businesses, net of cash acquired | (271,159) | (848,071) | |
Purchases of securities | (20,373) | (3,584) | |
Sales of securities | 32,758 | ||
Investment in direct financing lease | (27,967) | ||
Other investing activities | (15,926) | 2,037 | 224 |
Net cash used in investing activities | (373,945) | (669,234) | (1,246,629) |
Financing activities: | |||
Issuance of current and long-term debt | 1,268,435 | 2,845,900 | 3,157,053 |
Repayments of current and long-term debt | (1,690,557) | (2,402,033) | (1,761,807) |
Issuance of common stock (net of expenses) and proceeds from exercise of stock options, including related tax effect | 420,930 | 18,422 | 29,446 |
Purchases of treasury stock | (501,777) | (533,654) | |
Contribution from noncontrolling investor | 5,000 | 5,000 | 10,000 |
Dividends paid | (68,672) | (71,288) | (55,642) |
Debt issuance costs | (13,972) | (7,544) | (17,857) |
Net cash provided by (used in) financing activities | (78,836) | (113,320) | 827,539 |
Decrease in cash and equivalents | (7,225) | (12,253) | (887) |
Cash and equivalents at beginning of year | 16,233 | 28,486 | 29,373 |
Cash and equivalents at end of year | $9,008 | $16,233 | $28,486 |
Description of the Business and
Description of the Business and Summary of Significant Accounting Policies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Description of the Business and Summary of Significant Accounting Policies | Note1. Description of the Business and Summary of Significant Accounting Policies Description of the Business Steel Dynamics,Inc. (SDI), together with its subsidiaries (the company), is a domestic manufacturer of steel products and metals recycler. The company has three reporting segments: steel operations, metals recycling and ferrous resources operations and steel fabrication operations. Approximately 10% of the company's workforce is represented by collective bargaining agreements, and two of these agreements expire during 2010. Steel Operations Steel operations include the company's Flat Roll Division, Structural and Rail Division, Engineered Bar Products Division, Roanoke Bar Division, Steel of West Virginia and The Techs operations. These operations consist of mini-mills, producing steel from steel scrap, using electric arc furnaces, continuous casting, automated rolling mills, and downstream finishing facilities. Steel operations accounted for 63%, 63% and 81% of the company's consolidated net sales during 2009, 2008 and 2007, respectively. The Flat Roll Division accounted for 28%, 24% and 32% of the company's consolidated net sales during 2009, 2008 and 2007, respectively. The Flat Roll Division sells a broad range of hot rolled, cold rolled and coated steel products, including a large variety of specialty products such as light gauge hot rolled, galvanized, and painted products. The Structural and Rail Division sells structural steel beams and pilings and is also designed to produce and sell a variety of rail for the railroad industry. The Engineered Bar Products Division primarily sells special bar quality and merchant bar quality rounds and round-cornered squares. The Roanoke Bar Division sells billets and merchant steel products, including angles, plain rounds, flats and channels. Steel of West Virginia primarily sells merchant beams, channels and specialty structural steel sections. The Techs was acquired in July 2007 and operates three galvanizing lines specializing in the galvanizing of specific types of flat rolled steels in non-automotive applications. The company's steel operations sell directly to end users and service centers. These products are used in numerous industry sectors, including the automotive, construction, commercial, transportation and industrial machinery markets. Metals Recycling and Ferrous Resources Operations Metals recycling and ferrous resources operations include Iron Dynamics (IDI), the company's iron-substitute production facility, and the company's steel scrap procurement and processing locations, including OmniSource Corporation (OmniSource) operations, which were acquired in October 2007 and Recycle South,LLC (Recycle South) operations which were acquired in June 2008 (See Note2). In addition, the impact related to the construction of the Mesabi Nugget iron-making facility and future mining operations in Hoyt Lakes, Minnesota, is also included in this segment. Metals recycling and ferrous resources operations accounted for 31%, 31% and 9% of the company's consolidated net sales during 2009, 2008 and 2007, respectively. Steel Fabrication Operations Steel fabrication operat |
Acquisitions
Acquisitions | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Acquisitions | Note2. Acquisitions Sturgis Iron Metal On June24, 2008, the company completed the acquisition of certain assets of Sturgis Iron Metal, an operator of scrap collection and processing locations in Indiana, Michigan and Georgia. The assets were purchased for approximately $43.4million in cash through bankruptcy proceedings and are operated as a part of OmniSource and reported in the company's metals recycling and ferrous resources segment. The company purchased the assets to continue its expansion of its metals recycling operations and has begun operating three of the ten acquired locations. The company plans to begin operations at the remaining locations at some point in the future. Recycle South On June9, 2008, the company completed its acquisition of Recycle South, one of the nation's largest, privately-held, regional scrap metal recycling companies, headquartered in Spartanburg, South Carolina. OmniSource (which already owned 25% of Recycle South), acquired the remaining 75% equity interest for a purchase price of approximately $376.3million. The company paid approximately $236.6million in cash, including transaction costs, and issued 3,938,000 shares of Steel Dynamics,Inc. common stock valued at $139.8million. In addition, the company assumed $144.9million of net debt, of which approximately $142.8million was repaid upon the closing of the acquisition. The cash portion of the acquisition was funded from the company's available cash which included proceeds from the issuance of the $500million 73/4% senior notes due April 2016. The company valued the common stock issued at $35.49 per share based on the average stock price of the company's common stock during the two days before and after the date the acquisition was agreed to and announced (May8, 2008). The company purchased Recycle South to expand its metals recycling business. Recycle South provides a significant presence in the southeastern United States through its 22 locations within North Carolina, South Carolina and Georgia. Recycle South's consolidated operating results have been reflected in the company's financial statements since June9, 2008, in the metals recycling and ferrous resources reporting segment. The purchase price of $376.3million for the remaining 75% equity interest in Recycle South, combined with the 25% interest already owned pursuant to the OmniSource acquisition, resulted in an aggregate purchase price of $501.8million. Goodwill and intangible assets of $301.3million and $126.0million, respectively, were recorded as a result of the acquisition. The goodwill is deductible for tax purposes. During 2009 the company adjusted the initial purchase price allocation to reflect further refinement in the valuation of the acquisition. The final purchase price allocation below is based on actual acquisition costs and the fair value of the acquired assets, assumed liabilities and identifiable intangible assets (in thousands): December31, 2008 Adjustments December31, 2009 Current assets $ 213,513 $ (2,400 ) $ 211,113 Property, plant and equipment, net 94,484 5,322 99,806 Intangible assets 155,000 |
Long-Term Debt
Long-Term Debt | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Long-Term Debt | Note3. Long-Term Debt The company's borrowings consisted of the following at December31 (in thousands): 2009 2008 Senior secured revolving credit facility, due 2012 $ 167,000 $ 366,000 Senior secured term A loan, due 2012 568,200 73/8% senior notes, due 2012 700,000 700,000 5.125% convertible senior notes, due 2014 287,500 63/4% senior notes, due 2015 500,000 500,000 73/4% senior notes, due 2016 500,000 500,000 Other secured obligations 68,254 16,184 Total debt 2,222,754 2,650,384 Less current maturities 168,182 431,223 Long-term debt $ 2,054,572 $ 2,219,161 Senior Secured Credit Facility The company has a senior secured revolving credit facility of $874.0million due June 2012 and is secured by substantially all of the company's and its wholly-owned subsidiaries' receivables and inventories and by pledges of all shares of the company's wholly-owned subsidiaries' capital stock. In June 2009, the company repaid its Term A loan of $552.0million from the net proceeds of a concurrent issuance of common stock and $287.5million of 5.125% convertible senior notes due 2014. Net proceeds received from the combined issuances were approximately $678.8million. In conjunction with these offerings, the company also amended its senior secured credit agreement, increasing the facility pricing, while allowing for greater flexibility within the financial covenants during 2009 and 2010, among other things. The amended facility pricing grid is adjusted quarterly and is based on company's leverage of total debt to last-twelvemonth's (LTM) adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and certain other non-cash transactions, as defined in the credit agreement). The minimum pricing is LIBOR plus 3.00% or Prime plus 1.00% and the maximum pricing is LIBOR plus 3.50% or Prime plus 1.50%. In addition the company is subject to an unused commitment fee of .50% which is applied to the unused portion of the $874.0million revolver each quarter. At December31, 2009, the weighted average interest rate of the company's outstanding borrowings under the senior secured credit facility was 3.6%. The company was in compliance with its financial covenants at December31, 2009 and anticipates remaining in compliance during the next twelve months. The amended financial covenants are as follows: I. First Lien LeverageFirst lien leverage is defined as the ratio of the company's consolidated LTM adjusted EBITDA to the company's consolidated first lien, or secured debt, as defined within the credit agreement. At December31, 2009, the company's first lien leverage was .49x. The company must maintain a first lien leverage of not more than: 2.50 to 1.00 for April1, 2009 to September30, 2010 3.00 to 1.00 for December31, 2010 through maturity II. Interest CoverageInterest coverage is defined as the ratio of the company's consolidated LTM adjusted EBITDA to the company's consolidated LTM interest payable, as defined in the credit agreement. At December31, 2009 th |
Income Taxes
Income Taxes | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Income Taxes | Note4. Income Taxes The company filesa consolidated federal income tax return. Cash paid for taxes was $5.0million, $341.5million, and $208.0million for the years ended December31, 2009, 2008 and 2007, respectively. The current and deferred federal and state income tax expense (benefit) for the years ended December31 is as follows (in thousands): 2009 2008 2007 Current income tax expense (benefit) $ (96,140 ) $ 255,382 $ 223,030 Deferred income tax expense 88,922 25,045 12,642 Total income tax expense (benefit) $ (7,218 ) $ 280,427 $ 235,672 A reconciliation of the statutory tax rates to the actual effective tax rates for the years ended December31, are as follows: 2009 2008 2007 Statutory federal tax rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal benefit 1.9 4.4 4.3 Other permanent differences 2.7 (1.2 ) (1.9 ) Effective tax rate 39.6 % 38.2 % 37.4 % Significant components of the company's deferred tax assets and liabilities at December31 are as follows (in thousands): 2009 2008 Deferred tax assets Capitalized start-up costs $ 29,784 $ 26,732 Assets capitalized for tax, expensed for books 18,552 17,842 Accrued expenses 35,465 35,513 Other 1,962 Total deferred tax assets 85,763 80,087 Deferred tax liabilities Property, plant and equipment (420,017 ) (361,785 ) Intangible assets (60,722 ) (52,525 ) Other (7,711 ) Total deferred tax liabilities (480,739 ) (422,021 ) Net deferred tax liability $ (394,976 ) $ (341,934 ) A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): 2009 2008 2007 Balance at January1, 2009 $ 47,875 $ 41,973 $ 31,097 Increases related to current year tax positions 780 1,815 4,552 Increases related to prior year tax positions 5,099 27,958 6,324 Decreases related to prior year tax positions (3,766 ) (3,166 ) Lapses in statutes of limitations (401 ) Settlements with taxing authorities (20,705 ) Balance at December31, 2009 $ 49,587 $ 47,875 $ 41,973 Included in the balance of unrecognized tax benefits at December31, 2009 are potential benefits of $20.3million that, if recognized, would affect the effective tax rate. The company recognizes interest and penalties related to its tax contingencies on a net-of-tax basis in income tax expense. During the year ended December31, 2009, the company recognized interest expense of $1.3million, net of tax, and benefits from the reduction of penalties of $111,000. At December31, 2009, the company had $9.1million accrued for the payment of interest and penalties. The company files income tax returns in the U.S. federal jurisdicti |
Shareholders' Equity
Shareholders' Equity | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Shareholders' Equity | Note5. Shareholders' Equity Common Stock Issuance In June 2009 the company completed a public offering of 31,050,000 shares of its common stock at a public offering price of $13.50 per share. Net proceeds of the offering along with the concurrent issuance of the company's 5.125% convertible senior notes due 2014 was approximately $678.8million, after deducting underwriting discounts, commissions and other offering expenses. The net proceeds from this offering were used to repay the company's Term A loan of $552.0million and for general corporate purposes, including the repayment of then outstanding borrowings on the company's senior secured revolver. Two-For-One Stock Split Effective March19, 2008, the company's board of directors authorized a two-for-one stock split and an increase in the company's authorized common shares from 200million with a par value of $.005 per common share to 900million with a par value of $.0025 per common share. Stockholders of the company approved this increase on May21, 2008 at the company's annual meeting. All prior period share and per share amounts have been adjusted to reflect the stock split. Cash Dividends The company declared cash dividends of $66.7million, or $.325 per common share, during 2009; $75.2million, or $.40 per common share, during 2008; and $55.6million, or $.30 per common share, during 2007. The company paid cash dividends of $68.7million, $71.3million and $55.6million during 2009, 2008 and 2007, respectively. Pursuant to the company's senior secured credit agreement, if the company's total debt leverage exceeds 3.50 to 1.00 at any time, the company's restricted payments, which include dividends, are limited to $25.0million per quarter. Treasury Stock The company's board of directors has authorized the company to repurchase shares of the company's common stock through open market trades. The company did not repurchase any shares during 2009, and repurchased 22.3million shares for $501.8million during 2008; and 25.3million shares for $533.7million during 2007. As of December31, 2009, the company had remaining authorization to repurchase approximately 3.6million additional shares. The repurchase program does not have an expiration date. On June8, 2008, the company issued 3.9million shares of its treasury stock pursuant to the acquisition of Recycle South. On October26, 2007, the company issued 19.4million shares of its treasury stock pursuant to the acquisition of OmniSource. During 2008 and 2007, the company issued 8.8million and 58,800 shares, respectively, of its treasury stock upon conversion of $37.3million and $250,000 of its 4.0% convertible subordinated notes due 2012. As of December31, 2008, all the 4.0% convertible subordinated notes had been exchanged for the company's common stock. |
Equity-based Incentive Plans
Equity-based Incentive Plans | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Equity-based Incentive Plans | Note6. Equity-based Incentive Plans 2006 Equity Incentive Plan (2006 Plan) The company's stockholders approved the 2006 Plan at the company's annual meeting of stockholders held May18, 2006. The 2006 plan replaced the company's Amended and Restated 1996 Incentive Stock Option Plan and the Non-Employee Director Stock Option Plan. The replaced plans will continue in effect until all matters relating to the exercise of the existing options have been settled; however, no further options will be issued from the replaced plans. The company reserved 16.0million shares of common stock for issuance upon exercise of options or grants under the 2006 Plan. At December31, 2009, there were 5.4million shares still available for issuance. The 2006 Plan was designed to attract, motivate and retain qualified persons that are able to make important contributions to the company's success. To accomplish these objectives, the 2006 Plan provides for awards of equity-based incentives through option grants, restricted stock awards, unrestricted stock awards, stock appreciation rights and performance awards. The company issued 32,900 shares, 14,500 shares and 21,700 shares of restricted stock and 1.6million, 5.6million and 1.2million options were granted to the 2006 Plan participants during 2009, 2008 and 2007, respectively. No other equity-based incentives were issued pursuant to the 2006 Plan during the three year period ended December31, 2009. The company satisfies stock options with newly issued shares and satisfies restricted stock awards with treasury shares. Substantially all of the company's employees are eligible for the stock option element of the 2006 Plan, pursuant to which the options vest 100% six months after the date of grant, with a maximum term of five years. Options are granted each May and November at an exercise price of 100% of the fair market value of the company's common stock on the date of grant. The estimated weighted-average fair value of the individual options granted on the date of grant was $5.14, $3.12, and $5.64 during 2009, 2008 and 2007, respectively. The aggregate intrinsic value of options exercised was $26.2million, $17.5million and $26.9million for the years ended December31, 2009, 2008 and 2007, respectively. The aggregate intrinsic value of options which were exercisable as of December31, 2009 was $40.8million. The aggregate intrinsic value of options that are currently outstanding and that are expected to be exercised is $41.9million. The disclosures related to the effect of equity-based compensation expense for the year ended December31, 2009, 2008 and 2007, are based on the fair value of stock option awards estimated on the date of grant using the Black-Scholes option valuation model with the following assumptions: 2009 2008 2007 Volatility(1) 67.2 - 67.4 % 50.8 - 60.2 % 38.2 - 40.2 % Risk-free interest rate(2) 2.1 - 2.2 % 2.0 - 3.1 % 3.4 - 4.7 % Dividend yield(3) 1.7 - 2.0 % 1.0 - 3.6 % 0.7 - 0.9 % Expected life (years)(4) 2.2 - 3.9 2.2 - 3.9 2.3 - 3.9 (1) The volatility is based on the historical volatility of the c |
Derivative Financial Instrument
Derivative Financial Instruments | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Derivative Financial Instruments | Note7. Derivative Financial Instruments The company is exposed to certain risks relating to its ongoing business operations. At times the company utilizes derivative instruments to mitigate commodity margin risk, interest rate risk, and foreign currency exchange rate risk. Forward contracts on various commodities are entered into to manage the price risk associated with forecasted purchases and sales of non-ferrous materials (specifically aluminum, copper, nickel and silver) from the company's metals recycling operations. Interest rate swaps are entered into to manage interest rate risk associated with the company's fixed and floating-rate borrowings. Forward exchange contracts on various foreign currencies are entered into to manage the foreign currency exchange rate risk as necessary. The company designated its interest rate swap, which was terminated in June 2009, as a cash flow hedge of floating-rate borrowings. Forward contracts on various commodities and forward exchange contracts on various foreign currencies are not designated as hedging instruments. Cash Flow Hedging Strategy.For derivative instruments that are designated and qualify as a cash flow hedge (i.e.,hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings (e.g.,in "interest expense" when the hedged transactions are interest cash flows associated with floating-rate borrowings). The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any (i.e.,the ineffectiveness portion), or hedge components excluded from the assessment of effectiveness, are recognized in the statement of operations during the current period. Commodity futures contracts.If the company is "long" on futures contracts, it means the company has more futures contracts purchased than futures contracts sold for the underlying commodity. If the company is "short" on a futures contracts, it means the company has more futures contracts sold than futures contracts purchased for the underlying commodity. The following summarizes the company's commodity futures contract commitments as of December31, 2009 (MT represents tonnes and Lbs represents pounds): Commodity Long/Short Total Aluminum Long 1,400 MT Aluminum Short 2,775 MT Copper Long 3,402 MT Copper Short 8,301 MT Nickel Long 684 MT Nickel Short 1,344 MT Silver Short 1,029 Lbs The following summarizes the location and amounts of the fair values reported on the company's balance sheets and gains or losses related to derivatives included in the company's statements of operations as of and for the years ended December31 (in thousands): Fair Value Balance Sheets, as o |
Fair Value Measurements
Fair Value Measurements | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Fair Value Measurements | Note8. Fair Value Measurements FASB accounting standards provide a comprehensive framework for measuring fair value and sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. Levels within the hierarchy are defined as follows: Level1Unadjusted quoted prices for identical assets and liabilities in active markets; Level2Quoted prices for similar assets and liabilities in active markets (other than those included in Level1) which are observable for the asset or liability, either directly or indirectly; and Level3Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The following table sets forth financial assets and liabilities measured at fair value in the consolidated balance sheet and the respective levels to which the fair value measurements are classified within the fair value hierarchy as of December31, 2009 and 2008 (in thousands): Total Quoted Prices in Active Markets for Identical Assets (Level1) Significant Other Observable Inputs (Level2) Significant Unobservable Inputs (Level3) 2009 Commodity futuresfinancial assets $ 3,819 $ $ 3,819 $ Commodity futuresfinancial liabilities 6,932 6,932 2008 Commodity futuresfinancial assets 15,866 15,866 Interest rate swap 2,294 2,294 Commodity futures 54,237 54,237 Financial liabilities $ 56,531 $ $ 56,531 $ The carrying amounts of financial instruments including cash and equivalents, accounts receivable and accounts payable approximate fair value, because of the relatively short maturity of these instruments. The fair value of the interest rate swap was based on quoted market prices for similar swap agreements. The fair values of commodity futures contracts are estimated by the use of quoted market prices, estimates obtained from brokers, and other appropriate valuation techniques based on references available. The fair value of long-term debt, including current maturities, was approximately $2.3billion and $2.1billion at December31, 2009 and 2008, respectively, and was determined based on quoted market prices. |
Commitments and Contingencies
Commitments and Contingencies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Commitments and Contingencies | Note9. Commitments and Contingencies The company has entered into certain commitments with suppliers which are of a customary nature within the steel industry. Commitments have been entered into relating to future expected requirements for such commodities as iron ore, zinc, natural gas, electricity and certain transportation services. Certain commitments contain provisions which require that the company "take or pay" for specified quantities without regard to actual usage for periods of up to 24months for physical commodity requirements and for up to 11years for commodity transportation requirements. The company has commitments for natural gas and its transportation with "take or pay" or other similar commitment provisions for the years ending December31, as follows (in thousands): 2010 $ 32,019 2011 11,955 2012 1,979 2013 1,773 2014 1,737 Thereafter 8,319 $ 57,782 The company fully utilized all such "take or pay" requirements during the past three years under these contracts. The company believes that production requirements will be such that consumption of the products or services purchased under these commitments will occur in the normal production process. The company purchases its electricity consumed at its Flat Roll Division pursuant to a contract which extends through December 2012. The contract designates 160hours annually as "interruptible service" during 2010. The contract also establishes an agreed fixed-rate energy charge per Mill/kWh consumed for each year through the expiration of the agreement. At December31, 2009, the company has outstanding construction-related commitments of $60.1million primarily related to construction of the iron-nugget production facility and potential future mining operations in Hoyt Lakes, Minnesota. The company's commitments for operating leases are discussed in Note12. On February1, 2008, the company was sued by Prime Eagle Group Limited (Plaintiff), a corporation with its principal place of business in Thailand, alleging damages in excess of $1.1billion, arising out of Steel Dynamics' activities in providing consulting services to a Thailand-based steel company, Nakornthai Strip Mill Public Company, Limited (NSM) in its operational start-up in 1998. On April30, 2008, Steel Dynamics filed a Motion to Dismiss the lawsuit,, and on February23, 2009, the court dismissed the complaint, with prejudice, and denied the plaintiffs leave to amend their complaint. The Plaintiff has appealed this dismissal. All briefs have been filed and oral argument was held on October8, 2009. On September17, 2008, Steel Dynamics,Inc. and eight other steel manufacturing companies were served with a class action antitrust complaint, filed in the United States District Court for the Northern District of Illinois in Chicago by Standard Iron Works of Scranton, Pennsylvania, alleging violations of Section1 of the Sherman Act. The Complaint alleges that the defendants conspired to fix, raise, maintain and stabilize the price at which steel products were sold in the United States, starting in 2005, by artificially restricting the supply |
Transactions with Affiliated Co
Transactions with Affiliated Companies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Transactions with Affiliated Companies | Note10. Transactions with Affiliated Companies The company sells flat rolled products and occasionally purchases ferrous materials from Heidtman. The president and chief executive officer of Heidtman is a member of the company's board of directors and a stockholder of the company. Transactions with Heidtman for the years ended December31, are as follows (in thousands): 2009 2008 2007 Sales $ 132,272 $ 291,030 $ 219,737 Percentage of consolidated net sales 3 % 4 % 5 % Accounts receivable 26,983 47,999 39,741 Purchases 11,864 63,182 64,613 Accounts payable 468 919 4,905 On September15, 2009, the company purchased from Heidtman a 32 acre tract of land adjacent to the company's Flat Roll Division in Butler, Indiana, together with a 387,000 square foot building for a purchase price of $9.3million. Contemporaneously the company purchased from Heidtman equipment located at this site for a purchase price of $18.6million. Immediately following the acquisition of this property, the company leased the real estate and equipment to Heidtman for a term of five years commencing on September15, 2009 and terminating on August31, 2014. Heidtman pays the company a monthly rental for the real estate and for the equipment. The real estate and equipment have been used, and will continue to be used, by Heidtman in its steel processing operations. The company also purchases and sells recycled and scrap metal with other smaller affiliated companies. These transactions are as follows (in thousands): 2009 2008 2007 Sales $ 16,156 $ 46,240 $ 5,968 Accounts receivable 3,573 1,922 4,362 Purchases 81,926 217,575 36,711 Accounts payable 6,297 2,732 15,023 |
Retirement Plans
Retirement Plans | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Retirement Plans | Note11. Retirement Plans The company sponsors several 401(k) retirement savings and profit sharing plans for eligible employees, which are considered "qualified plans" for federal income tax purposes. The company's total expense for the plans was $5.3million, $73.0million and $62.9million for the years ended December31, 2009, 2008 and 2007, respectively. The company's board of director's increased the contribution percentage of its primary 401(k) retirement savings and profit sharing plan from 6% to 8% of pretax earnings effective August1, 2006, to accommodate increased participant levels. During 2008 the company's board of directors modified the contribution percentage to consist of 2% of consolidated pretax earnings plus a unique percentage of each of the company's operating segments' pretax earnings after allocation of certain corporate expenses. The resulting total contribution was $2.2million, $61.7million and $50.2million for the years ended December31, 2009, 2008 and 2007, respectively. |
Leases
Leases | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Leases | Note12. Leases The company has operating leases principally relating to transportation equipment, real estate, and office equipment. Certain leases include escalation clauses, and/or purchase options. The company paid $15.3million, $14.6million, and $3.6million for operating leases, including month-to-month agreements, for the years ended December31, 2009, 2008, and 2007, respectively. At December31, 2009, future minimum payments for all non-cancelable operating leases with an initial or remaining term of one year or more are as follows (in thousands): 2010 $ 13,091 2011 10,922 2012 8,360 2013 6,247 2014 3,995 Thereafter 5,531 $ 48,146 |
Segment Information
Segment Information | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Segment Information | Note13. Segment Information The company has three reportable segments: steel operations, steel fabrication operations and metals recycling and ferrous resources operations. These operations are described in Note1 to the financial statements. Revenues included in the category "Other" are from subsidiary operations that are below the quantitative thresholds required for reportable segments and primarily consist of further processing, slitting, and sale of certain steel products and the resale of certain secondary and excess steel products. In addition, "Other" also includes certain unallocated corporate accounts, such as the company's senior secured credit facilities, senior notes, convertible senior notes, certain other investments and certain profit sharing expenses. The company's operations are primarily organized and managed by operating segment. Operating segment performance and resource allocations are primarily based on operating results before income taxes. The accounting policies of the reportable segments are consistent with those described in Note1 to the financial statements. Intra-segment sales and any related profits are eliminated in consolidation. The company's segment results for the years ended December31, are as follows (in thousands): For the year ended December31, 2009 Steel Operations Metals Recycling / Ferrous Resources Steel Fabrication Operations Other Eliminations Consolidated Net Sales External $ 2,443,709 $ 1,121,803 $ 156,499 $ 50,937 $ $ 3,772,948 External Non-U.S. 67,394 118,351 113 185,858 Other segments 95,866 441,979 1,509 5,796 (545,150 ) 2,606,969 1,682,133 158,008 56,846 (545,150 ) 3,958,806 Operating income (loss) 196,225 (4,709 ) (6,356 ) (45,356 )(1) (20,273 )(2) 119,531 Income (loss) before income taxes 127,701 (42,360 ) (11,861 ) (68,793 ) (22,924 ) (18,237 ) Depreciation and amortization 104,184 105,627 6,060 5,555 221,426 Capital expenditures 68,968 251,695 (473 ) 12,443 (2,581 ) 330,052 As of December31, 2009 Assets 2,236,985 2,276,238 151,512 759,859 (3) (294,722 )(4) 5,129,872 Liabilities 194,234 412,360 7,778 2,802,696 (5) (290,461 )(6) 3,126,607 Footnotes related to December31, 2009 segment results (in millions): (1) Corporate SGA $ (26.5 ) (2) Margin reduction from intra-company sales $ (20.3 ) Company-wide stock option expense (13.2 ) Profit Sharing (2.2 ) Other losses (3.5 ) $ (45.4 ) (3) Deferred tax asset $ 307.0 (4) Elimination of intra-company receivables $ (27.0 ) Tax refunds receivable 137.0 Deferred income taxes elimination (85.8 ) Debt issuance costs 24.0 |
Condensed Consolidating Informa
Condensed Consolidating Information | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Condensed Consolidating Information | Note14. Condensed Consolidating Information Certain 100%-owned subsidiaries of SDI have fully and unconditionally guaranteed all of the indebtedness relating to the issuance of the company's senior notes due 2012, 2014, 2015, and 2016. Following are the company's condensed consolidating financial statements, including the guarantors, which present the financial position, results of operations and cash flows of (i)SDI (in each case, reflecting investments in its consolidated subsidiaries under the equity method of accounting), (ii)the guarantor subsidiaries of SDI, (iii)the non-guarantor subsidiaries of SDI, and (iv)the eliminations necessary to arrive at the information on a consolidated basis. The following statements should be read in conjunction with the accompanying consolidated financial statements, and notes thereto. Condensed Consolidating Balance Sheets (in thousands) As of December31, 2009 Parent Guarantors Combined Non-Guarantors Consolidating Adjustments Total Consolidated Cash and equivalents $ 430 $ 6,363 $ 2,215 $ $ 9,008 Accounts receivable, net 201,749 461,535 9,217 (245,909 ) 426,592 Inventories 437,375 368,823 50,376 (3,743 ) 852,831 Other current assets 177,271 5,954 551 (15,404 ) 168,372 Total current assets 816,825 842,675 62,359 (265,056 ) 1,456,803 Property, plant and equiment, net 1,159,215 728,601 368,815 (2,581 ) 2,254,050 Intangible assets, net 533,510 533,510 Goodwill 758,259 758,259 Other assets, including investments in subs 2,476,435 326,293 9,415 (2,684,893 ) 127,250 Total assets $ 4,452,475 $ 3,189,338 $ 440,589 $ (2,952,530 ) $ 5,129,872 Accounts payable $ 87,635 $ 157,711 $ 43,567 $ (26,628 ) $ 262,285 Accured expenses 86,035 107,375 2,774 (31,090 ) 165,094 Current maturities of long-term debt 167,832 350 14,907 (14,907 ) 168,182 Total current liabilities 341,502 265,436 61,248 (72,625 ) 595,561 Long-term debt 2,001,953 25 238,192 (185,598 ) 2,054,572 Other liabilities 370,492 2,298,846 29,556 (2,222,420 ) 476,474 Common stock 629 19,753 7,763 (27,516 ) 629 Treasury stock (730,857 ) (730,857 ) Additional paid-in-capital 972,985 117,753 112,437 (230,190 ) 972,985 Retained earnings 1,495,771 487,525 (23,604 ) (214,181 ) 1,745,511 Total Steel Dynamics,Inc. stockholders' equity 1,738,528 625,031 96,596 (471,887 ) 1,988,268 Noncontrolling interests 14,997 14,997 Total stockholders' equity 1,738,528 625,031 111,593 (471,887 ) 2,003,265 Total liabilities and stockholders' equity $ 4,452,475 $ 3,189,338 $ 440,58 |
Quarterly Financial Information
Quarterly Financial Information (Unaudited) | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
Quarterly Financial Information (unaudited, in thousands, except per share data) | Note15. Quarterly Financial Information (unaudited, in thousands, except per share data) 1stQuarter 2ndQuarter 3rdQuarter 4thQuarter 2009: Net sales $ 814,650 $ 792,158 $ 1,172,196 $ 1,179,802 Gross profit (loss) (40,627 ) 68,837 216,693 154,173 Operating income (loss) (113,603 ) 6,284 148,448 78,402 Net income (loss) (89,774 ) (16,521 ) 68,730 26,546 Net income (loss) attributable to Steel Dynamics,Inc. (87,862 ) (15,991 ) 69,018 26,651 Earnings (loss) per share: Basic (.48 ) (.08 ) .32 .12 Diluted (.48 ) (.08 ) .30 .12 2008: Net sales $ 1,902,205 $ 2,403,939 $ 2,563,943 $ 1,210,434 Gross profit (loss) 347,309 479,655 445,206 (40,911 ) Operating income (loss) 252,407 358,872 330,918 (95,829 ) Net income (loss) 143,032 211,285 187,744 (87,547 ) Net income (loss) attributable to Steel Dynamics,Inc. 142,557 210,494 193,008 (82,673 ) Earnings per share: Basic .75 1.11 .99 (.45 ) Diluted .72 1.05 .98 (.45 ) Earnings per share are computed independently for each of the quarters presented. Therefore, the sum of the quarterly earnings per share may not equal the total for the year. All prior period share data has been adjusted to reflect the company's two-for-one stock split effective March 2008. In addition the 2008 amounts have been adjusted to be consistent with the required reporting of net income (loss) attributable to Steel Dynamics,Inc. |
Document and Entity Information
Document and Entity Information (USD $) | |||
12 Months Ended
Dec. 31, 2009 | Feb. 11, 2010
| Jun. 30, 2009
| |
Document and Entity Information | |||
Entity Registrant Name | STEEL DYNAMICS INC | ||
Entity Central Index Key | 0001022671 | ||
Document Type | 10-K | ||
Document Period End Date | 2009-12-31 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $3,014,728,313 | ||
Entity Common Stock, Shares Outstanding | 216,333,971 |