| Consolidated Balance Sheets (USD $) | ||
| In Thousands | Jun. 30, 2009
| Dec. 31, 2008
|
| Current assets | ||
| Cash and equivalents | $18,217 | $16,233 |
| Accounts receivable, net | 340,426 | 453,011 |
| Accounts receivable - related parties | 24,310 | 49,921 |
| Inventories | 738,470 | 1,023,235 |
| Deferred income taxes | 32,179 | 23,562 |
| Income taxes receivable | 125,912 | 86,321 |
| Other current assets | 22,017 | 57,632 |
| Total current assets | 1,301,531 | 1,709,915 |
| Property, plant and equipment, net | 2,144,360 | 2,072,857 |
| Restricted cash | 13,932 | 18,515 |
| Intangible assets, net | 557,194 | 614,786 |
| Goodwill | 780,321 | 770,438 |
| Other assets | 84,474 | 67,066 |
| Total assets | 4,881,812 | 5,253,577 |
| Current liabilities | ||
| Accounts payable | 225,753 | 259,742 |
| Accounts payable - related parties | 1,693 | 3,651 |
| Accrued expenses | 81,025 | 148,627 |
| Accrued interest | 27,656 | 30,874 |
| Accrued payroll and benefits | 37,157 | 34,303 |
| Accrued profit sharing | 56 | 62,561 |
| Senior secured revolving credit facility, due 2012 | 114,000 | 366,000 |
| Current maturities of long-term debt | 1,049 | 65,223 |
| Total current liabilities | 488,389 | 970,981 |
| Long-term debt | ||
| Senior secured term A loan | 503,800 | |
| 7 3/8 percent senior notes, due 2012 | 700,000 | 700,000 |
| 5 1/8 percent convertible senior notes, due 2014 | 287,500 | |
| 6 3/4 percent senior notes, due 2015 | 500,000 | 500,000 |
| 7 3/4 percent senior notes, due 2016 | 500,000 | 500,000 |
| Other long-term debt | 42,392 | 15,361 |
| Total long-term debt | 2,029,892 | 2,219,161 |
| Deferred income taxes | 371,953 | 365,496 |
| Other liabilities | 67,095 | 65,626 |
| Stockholders' equity | ||
| Common stock voting, $.0025 par val.; 900,000,000 shs. author.; 251,398,691 and 218,733,363 shs. issued; and 214,808,597 and 181,820,012 shs. outstand., as of Jun 30, 2009 and Dec. 31, 2008, respectively | 626 | 545 |
| Treasury stock, at cost; 36,590,094 and 36,913,351 shares, as of June 30, 2009 and December 31, 2008, respectively | (730,862) | (737,319) |
| Additional paid-in capital | 958,558 | 541,686 |
| Other accumulated comprehensive loss | (1,411) | |
| Retained earnings | 1,682,208 | 1,820,385 |
| Total Steel Dynamics, Inc. stockholders' equity | 1,910,530 | 1,623,886 |
| Noncontrolling interests | 13,953 | 8,427 |
| Total stockholders' equity | 1,924,483 | 1,632,313 |
| Total liabilities and stockholders' equity | $4,881,812 | $5,253,577 |
| Balance Sheet Parenthetical (USD $) | ||
| Jun. 30, 2009
| Dec. 31, 2008
| |
| Consolidated Balance Sheets | ||
| Common stock, par value (in dollars per share) | 0.0025 | 0.0025 |
| Common stock, shares authorized (in shares) | 900,000,000 | 900,000,000 |
| Common stock, shares issued (in shares) | 251,398,691 | 218,733,363 |
| Common stock, shares outstanding (in shares) | 214,808,597 | 181,820,012 |
| Treasury stock, shares (in shares) | 36,590,094 | 36,913,351 |
| Consolidated Statements of Operations (USD $) | ||||
| In Thousands, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
| Net sales | ||||
| Unrelated parties | $773,137 | $2,289,121 | $1,560,947 | $4,103,082 |
| Related parties | 19,021 | 114,818 | 45,861 | 203,062 |
| Total net sales | 792,158 | 2,403,939 | 1,606,808 | 4,306,144 |
| Cost of goods sold | 723,321 | 1,924,284 | 1,578,598 | 3,479,180 |
| Gross profit | 68,837 | 479,655 | 28,210 | 826,964 |
| Selling, general and administrative expenses | 48,559 | 85,766 | 105,879 | 150,631 |
| Profit sharing | 26,897 | (42) | 45,404 | |
| Amortization of intangible assets | 13,994 | 8,120 | 29,692 | 19,650 |
| Total selling, general and administrative expenses | 62,553 | 120,783 | 135,529 | 215,685 |
| Operating income (loss) | 6,284 | 358,872 | (107,319) | 611,279 |
| Interest expense, net capitalized interest | 37,043 | 35,475 | 73,294 | 65,282 |
| Other (income) expense, net | 786 | (16,901) | 38 | (24,707) |
| Income (loss) before income taxes | (31,545) | 340,298 | (180,651) | 570,704 |
| Income taxes (benefit) | (15,024) | 129,013 | (74,356) | 216,387 |
| Net income (loss) | (16,521) | 211,285 | (106,295) | 354,317 |
| Net income (loss) attributable to noncontrolling interests | (530) | 791 | (2,442) | 1,266 |
| Net income (loss) attributable to Steel Dynamics, Inc. | ($15,991) | $210,494 | ($103,853) | $353,051 |
| Basic earnings (loss) per share attributable to Steel Dynamics, Inc. stockholders (in dollars per share) | -0.08 | 1.11 | -0.56 | 1.86 |
| Weighted average common shares outstanding (in shares) | 189,848 | 190,351 | 185,924 | 189,695 |
| Diluted earnings (loss) per share attributable to Steel Dynamics, Inc. stockholders, including the effect of assumed conversions when dilutive (in dollars per share) | -0.08 | 1.05 | -0.56 | 1.77 |
| Weighted average common shares and share equivalents outstanding (in shares) | 189,848 | 200,345 | 185,924 | 199,831 |
| Dividends declared per share (in dollars per share) | 0.075 | 0.1 | 0.175 | 0.2 |
| Consolidated Statements of Cash Flows (USD $) | ||||
| In Thousands | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
| Operating activities: | ||||
| Net income (loss) attributable to Steel Dynamics, Inc. | ($15,991) | $210,494 | ($103,853) | $353,051 |
| Adjustments to reconcile net income (loss) attributable to Steel Dynamics, Inc. to net cash provided by operating activities | ||||
| Depreciation and amortization | 57,765 | 47,582 | 114,728 | 100,794 |
| Equity-based compensation | 3,313 | 2,754 | 11,892 | 6,683 |
| Deferred income taxes | 5,797 | (6,872) | 13,492 | (7,845) |
| Gain on disposal of property, plant and equipment | (475) | (252) | (747) | (238) |
| Noncontrolling interests | (530) | 791 | (2,442) | 1,266 |
| Changes in certain assets and liabilities | ||||
| Accounts receivable | (5,297) | (211,411) | 135,796 | (397,204) |
| Inventories | 95,296 | (227,270) | 288,393 | (217,695) |
| Other assets | (14,581) | (15,680) | 3,244 | (13,047) |
| Accounts payable | (13,793) | 249,665 | (47,847) | 364,180 |
| Income taxes payable | 2,702 | (34,751) | (1,405) | 37,857 |
| Accrued expenses | (42,540) | 40,241 | (124,890) | 41,085 |
| Net cash provided by operating activities | 71,666 | 55,291 | 286,361 | 268,887 |
| Investing activities: | ||||
| Purchases of property, plant and equipment | (73,166) | (101,225) | (147,504) | (194,989) |
| Acquisition of businesses, net of cash acquired | (271,158) | (271,158) | ||
| Purchase of securities | (20,373) | |||
| Other investing activities | (7,290) | 2,824 | (10,513) | 4,153 |
| Net cash used in investing activities | (80,456) | (369,559) | (158,017) | (482,367) |
| Financing activities: | ||||
| Issuance of current and long-term debt | 471,685 | 786,900 | 708,744 | 1,004,900 |
| Repayment of current and long-term debt | (841,781) | (401,941) | (1,200,447) | (635,155) |
| Debt issuance costs | (13,298) | (5,568) | (13,751) | (7,514) |
| Issuance of common stock (net of expenses) and proceeds from exercise of stock options, including related tax effect | 412,547 | 10,277 | 410,489 | 17,454 |
| Purchase of treasury stock | (46,128) | |||
| Contribution from noncontrolling investor | 5,000 | |||
| Dividends paid | (18,213) | (18,884) | (36,395) | (33,158) |
| Net cash provided by (used in) financing activities | 10,940 | 370,784 | (126,360) | 300,399 |
| Increase in cash and equivalents | 2,150 | 56,516 | 1,984 | 86,919 |
| Cash and equivalents at beginning of period | 16,067 | 58,889 | 16,233 | 28,486 |
| Cash and equivalents at end of period | 18,217 | 115,405 | 18,217 | 115,405 |
| Supplemental disclosure information: | ||||
| Cash paid for interest | 67,450 | 57,334 | 79,433 | 68,719 |
| Cash paid for federal and state income taxes, net of refunds | $1,656 | $160,522 | ($53,774) | $161,909 |
| Description of the Business, Significant Accounting Policies, and Recent Accounting Pronouncements | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Notes to Consolidated Financial Statements | |
| Description of the Business, Significant Accounting Policies, and Recent Accounting Pronouncements | Note 1. Description of the Business, Significant Accounting Policies, and Recent Accounting Pronouncements Description of the Business Steel Dynamics,Inc. (SDI), together with its subsidiaries (the company), is a domestic manufacturer of steel products. The company has three reporting segments: steel operations, metals recycling and ferrous resources operations, and steel fabrication operations. Steel Operations. Steel operations include the companys Flat Roll Division, Structural and Rail Division, Engineered Bar Products Division, Roanoke Bar Division, Steel of West Virginia (SWVA) 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. The companys 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. Steel operations accounted for approximately 60% and 56% of the companys net sales during the three-month periods ended June30, 2009 and 2008, respectively, and 59% and 57% of the companys net sales during the six-month periods ended June30, 2009 and 2008, respectively. Metals Recycling and Ferrous Resources Operations. Metals recycling and ferrous resources operations primarily are composed of the companys steel scrap procurement and processing locations, operated through the companys wholly-owned subsidiary, OmniSource Corporation (OmniSource), as well as Iron Dynamics (IDI), the companys iron-substitute production facility. 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 approximately 35% and 40% of the companys net sales during the three-month periods ended June30, 2009 and 2008, respectively, and 34% and 38% of the companys net sales during the six-month periods ended June30, 2009 and 2008, respectively. Steel Fabrication Operations. Steel fabrication operations represent the companys New Millennium Building Systems plants located in the eastern United States. Revenues from these plants are generated from the fabrication of trusses, girders, steel joists and steel decking used within the non-residential construction industry. Steel fabrication operations accounted for approximately 4% and 3% of the companys net sales during the three-month periods ended June30, 2009 and 2008, respectively, and 6% and 3% of the companys net sales during the six-month periods ended June30, 2009 and 2008, respectively. Significant Accounting Policies Principles of Consolidation. The consolidated financial statements include the accounts of SDI, together with its subsidiaries, after elimination of significant intercompany accounts and transactions. Noncontrolling interest represents the minority shareholders proportionate share in the equity or income of the companys consolidated subsidiaries. Use of Estimates. These fin |
| Acquisition | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Notes to Consolidated Financial Statements | |
| Acquisition | Note 2. Acquisition On June9, 2008, the company completed its acquisition of Recycle South, one of the nations 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 $376.3 million. The company paid approximately $236.6 million in cash, including transaction costs, and issued 3,938,000 shares of Steel Dynamics,Inc. common stock valued at $139.8 million. In addition, the company assumed $144.9 million of net debt, of which approximately $142.8 million was repaid upon the closing of the acquisition. The cash portion of the acquisition was funded from the companys available cash which included proceeds from the issuance of the $500 million 7% senior notes due April2016. The company valued the common stock issued at $35.49 per share based on the average stock price of the companys 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 Souths consolidated operating results have been reflected in the companys financial statements since June9,2008, in the metals recycling and ferrous resources reporting segment. The purchase price of $376.3 million for the remaining 75% equity interest in Recycle South, combined with the 25% interest owned pursuant to the OmniSource acquisition, results in an aggregate purchase price of $501.8 million. During the second quarter of 2009, the company adjusted the preliminary purchase price allocation to reflect additional 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): March31, 2009 Adjustments June30, 2009 Current assets $ 213,513 $ (2,400 ) $ 211,113 Property, plant equipment 99,403 403 99,806 Intangible assets 107,000 19,000 126,000 Goodwill 315,235 (16,077 ) 299,158 Other assets 5,406 (926 ) 4,480 Total assets acquired 740,557 740,557 Current liabilities, excluding debt 93,814 93,814 Debt 144,947 144,947 Total liabilities assumed 238,761 238,761 Net assets acquired $ 501,796 $ $ 501,796 Goodwill and intangible assets of $299.2 million and $126.0 million, respectively, were recorded as a result of the acquisition. The goodwill is deductible for tax purposes. The identifiable intangible assets related to the acquisition consisted of the following (in thousands): Amount Useful Life Customer relationships $ 21,000 20years Scrap generator relationships 77,000 20 years Trademarks 16,000 3 years Covenants |
| Earnings Per Share | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Notes to Consolidated Financial Statements | |
| Earnings Per Share | Note 3. Earnings Per Share The company computes and presents earnings per common share in accordance with FASB Statement No.128, Earnings Per Share. Basic earnings per share is based on the weighted average shares of common stock outstanding during the period. Diluted earnings per share assumes, in addition to the above, the weighted average dilutive effect of common share equivalents outstanding during the period. Common share equivalents represent dilutive stock options and dilutive shares related to the companys convertible subordinated debt and are excluded from the computation in periods in which they have an anti-dilutive effect. The following table presents a reconciliation of the numerators and the denominators of the companys basic and diluted earnings per share computations for net income (loss) attributable to Steel Dynamics,Inc. (in thousands, except per share data): ThreeMonthsEndedJune30, 2009 2008 NetLoss (Numerator) Shares (Denominator) PerShare Amount NetIncome (Numerator) Shares (Denominator) PerShare Amount Basic earnings (loss) per share $ (15,991 ) 189,848 $ (.08 ) $ 210,494 190,351 $ 1.11 Dilutive stock option effect 1,616 Convertible subordinated 4.0% notes 203 8,378 Convertible 5.125% senior notes Diluted earnings (loss) per share $ (15,991 ) 189,848 $ (.08 ) $ 210,697 200,345 $ 1.05 SixMonthsEndedJune30 2009 2008 NetLoss (Numerator) Shares (Denominator) PerShare Amount NetIncome (Numerator) Shares (Denominator) PerShare Amount Basic earnings (loss) per share $ (103,853 ) 185,924 $ (.56 ) $ 353,051 189,695 $ 1.86 Dilutive stock option effect 1,566 Convertible subordinated 4.0% notes 415 8,570 Convertible 5.125% senior notes Diluted earnings (loss) per share $ (103,853 ) 185,924 $ (.56 ) $ 353,466 199,831 $ 1.77 As of June30, 2009, all of the companys convertible subordinated 4.0% notes have been converted. Options to purchase 2.9 million shares were anti-dilutive at June30, 2009. No options were excluded at June30, 2008. |
| Inventories | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Notes to Consolidated Financial Statements | |
| Inventories | Note 4. Inventories Inventories are stated at lower of cost or market. Cost is determined principally on a first-in, first-out basis. The company recorded lower of cost or market adjustments of $36.6 million to certain inventories at December31, 2008. Inventory consisted of the following, of which all ferrous materials residing at both the steel and metals recycling and ferrous resources operations are included in raw materials (in thousands): June30, December31, 2009 2008 Raw materials $ 334,201 $ 554,815 Supplies 229,761 224,710 Work-in-progress 43,584 57,489 Finished goods 130,924 186,221 Total inventories $ 738,470 $ 1,023,235 |
| Debt | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Notes to Consolidated Financial Statements | |
| Debt | Note 5. Debt Senior Secured Credit Facility The companys senior secured credit agreement contains financial covenants and other covenants that limit or restrict the companys ability to make capital expenditures; incur indebtedness; permit liens on property; enter into transactions with affiliates; make restricted payments or investments; enter into mergers, acquisitions or consolidations; conduct asset sales; pay dividends or distributions and enter into other specified transactions and activities. The companys ability to borrow funds within the terms of the revolver is dependent upon its continued compliance with its financial covenants, and other covenants contained in the senior secured credit agreement. An amendment to the credit agreement was completed on June12, 2009. This amendment made certain adjustments to the covenant structure. The current financial covenants state that the company must maintain an interest coverage ratio of not less than 1.25:1.00 for June30, 2009 to December31, 2009; 2.00:1.00 for March31, 2010 to June30, 2010; and 2.50:1.00 for September30, 2010 through maturity. At June30, 2009 the companys interest coverage ratio was 3.30. The company must also maintain a first lien debt to consolidated last-twelve-months trailing adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and certain other non-cash transaction adjustments as defined in the credit agreement) ratio of not more than 2.50:1.00 for April1, 2009 to September30, 2010; and 3.00:1.00 for December31, 2010 through maturity. At June30, 2009 the companys first lien debt to consolidated last-twelve-months trailing adjusted EBITDA was 0.28. In addition, beginning with the twelve month period ending December31, 2010, and at all times through the maturity date, a total debt to consolidated adjusted EBITDA ratio of not more than 5.00:1.00 must be maintained. The company was in compliance with these covenants at June30, 2009, and expects to remain in compliance over the next twelve months. The amendment also activated a monthly borrowing base requirement. The borrowing base is determined by 85% of eligible accounts receivable and 65% of eligible inventory. In addition, if the total debt to EBITDA ratio exceeds 3.50:1.00, then the ability of the company to make restricted payments as defined in the credit agreement (which includes cash dividends to stockholders and share purchases, among other things), is limited to $25 million per quarter. 5.125% Convertible Senior Notes In June 2009 the company issued $287.5 million of 5.125% convertible senior notes due 2014. Note holders can convert the notes into shares of the companys common stock at an initial conversion rate of 56.9801 per $1,000 principal amount of notes. The net proceeds from these notes along with the issuance of common stock was slightly more than $675 million and was used to prepay the term A loan as well as repay a portion of the companys revolving credit facility. |
| Changes in Shareholders Equity | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Notes to Consolidated Financial Statements | |
| Changes in Stockholders' Equity | Note 6. Changes in Stockholders Equity The following table provides a reconciliation of the beginning and ending carrying amounts of total stockholders equity, equity attributable to stockholders of Steel Dynamics, Inc. and equity attributable to the noncontrolling interests (in thousands): Stockholders of Steel Dynamics, Inc. Common Additional Paid-In Retained Other Accumulated Comprehensive Treasury Noncontrolling Total Stock Capital Earnings Income (Loss) Stock Interests Balances at January 1, 2009 $ 1,632,313 $ 545 $ 541,686 $ 1,820,385 $ (1,411 ) $ (737,319 ) $ 8,427 Issuance of common stock (net of expenses) and proceeds from exercise of stock options, including related tax effect 410,489 81 410,408 Dividends declared (34,324 ) (34,324 ) Contribution from noncontrolling investor 5,000 5,000 Tax adjustment to noncontrolling interest 2,968 2,968 Equity-based compensation and issuance of restricted stock 12,921 6,464 6,457 Comprehensive income and net loss (104,884 ) (103,853 ) 1,411 (2,442 ) Balances at June 30, 2009 $ 1,924,483 $ 626 $ 958,558 $ 1,682,208 $ $ (730,862 ) $ 13,953 In June 2009 Steel Dynamics, Inc. completed a public offering of 31,050,000 shares of its common stock at a public offering price of $13.50. Net proceeds of the offering along with the issuance of the 5.125% convertible senior notes was slightly more than $675 million, after deducting underwriting discounts, commissions, and offering expenses. |
| Derivative Financial Instruments | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Notes to Consolidated Financial Statements | |
| Derivative Financial Instruments | Note 7. Derivative Financial Instruments Financial Accounting Standards Board Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended (FAS 133) requires companies to recognize all of their derivative instruments as either assets or liabilities in the balance sheet at fair value. The accounting for changes in fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship, and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge or a cash flow hedge. The company is exposed to certain risks relating to its ongoing business operations. The primary risks mitigated by using derivative instruments by the company are 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 from the companys metals recycling and ferrous resources operations. Interest rate swaps are entered into to manage interest rate risk associated with the companys 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. In accordance with FAS 133, 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. The following summarizes the companys commodity futures contract commitments as of June 30, 2009 (MT represents metric tons and Lbs represents pounds): Commodity Long/Short Total Aluminum Long 12,500 MT Aluminum Short 13,700 MT Copper Long 8,471 MT Copper Short 5,296 MT |
| Fair Value Measurements | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Notes to Consolidated Financial Statements | |
| Fair Value Measurements | Note 8. Fair Value Measurements FASB Statement No. 157 (FAS 157), Fair Value Measurements, provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, FAS 157 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. FAS 157 defines levels within the hierarchy as follows: Level 1Unadjusted quoted prices for identical assets and liabilities in active markets; Level 2Quoted prices for similar assets and liabilities in active markets (other than those included in Level 1) which are observable for the asset or liability, either directly or indirectly; and Level 3Valuations 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 sheets and the respective levels to which the fair value measurements are classified within the fair value hierarchy as of June 30, 2009, and December 31, 2008 (in thousands): June 30, 2009 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Commodity futures financial assets $ 7,184 $ $ 7,184 $ Commodity futures financial liabilities $ 13,705 $ $ 13,705 $ December 31, 2008 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Commodity futures financial 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 long-term debt, including current maturities, was approximately $2.0 billion and $2.1 billion at June 30, 2009, and December 31, 2008, respectively. |
| Commitments and Contingencies | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Notes to Consolidated Financial Statements | |
| Commitments and Contingencies | Note 9. Commitments and Contingencies On February 1, 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 $1.1 billion, 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 April 30, 2008, Steel Dynamics filed a Motion to Dismiss the lawsuit, and on February 23, 2009, the court dismissed the complaint with prejudice and denied the plaintiffs leave to amend their complaint. The Plaintiff has appealed this dismissal. On September 17, 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 Section 1 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 of such steel products. Six additional lawsuits, each of them materially similar to the original, have also been filed in the same federal court, each of them likewise seeking similar class certification. All but one of the Complaints purport to be brought on behalf of a class consisting of all direct purchasers of steel products between January 1, 2005 and the present. The other Complaint purports to be brought on behalf of a class consisting of all indirect purchasers of steel products within the same time period. All Complaints seek treble damages and costs, including reasonable attorney fees, pre- and post-judgment interest and injunctive relief. On January 2, 2009, Steel Dynamics and the other defendants filed a Joint Motion to Dismiss all of the direct purchaser lawsuits. On June 12, 2009, however, the Court denied the Motion. Although the company believes that the lawsuits are without merit and plans to aggressively defend these actions, the company cannot presently predict the outcome of this litigation or make any judgment with respect to its potential exposure, if any. On March 18, 2009, Steel Dynamics, Inc., together with its Chairman and Chief Executive Officer, Keith E. Busse, and John Bates, a member of its board of directors, were served with a complaint, captioned Panasuk v. Steel Dynamics, Inc., et al., Civil Action No. 1109cv0066, filed in the United States District Court for the Northern District of Indiana, Fort Wayne Division, and purporting to represent a class of purchasers of Steel Dynamics common stock between January 26, 2009 and March 11, 2009. The complaint, which was amended on July 13, 2009, alleges securities fraud in connection with the companys issuance of certain earnings guidance and seeks damages in an unspecified amount. The company believes that the complaint is without merit and will appropriately defend its interests. |
| Segment Information | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Notes to Consolidated Financial Statements | |
| Segment Information | Note 10. Segment Information The company has three reportable segments: steel operations, metals recycling and ferrous resources operations, and steel fabrication operations. These operations are described in Note 1 to the financial statements. Revenues included in the category All 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, All Other also includes certain unallocated corporate accounts, such as the companys senior secured credit facilities, senior notes, certain other investments, and certain profit sharing expenses. The companys 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 Note 1 to the financial statements. Refer to the companys Annual Report on Form 10-K for the year ended December 31, 2008, for more information related to the companys segment reporting. Inter-segment sales and any related profits are eliminated in consolidation. The companys segment results for the three and six-month periods ended June 30 are as follows (in thousands): For the three months ended Metals Recycling / Steel Fabrication June 30, 2009 Steel Operations Ferrous Resources Operations Other Eliminations Consolidated Net Sales External $ 494,873 $ 213,070 $ 36,470 $ 8,337 $ $ 752,750 External Non-U.S. 12,020 27,328 60 39,408 Other segments 15,811 68,540 556 1,163 (86,070 ) 522,704 308,938 37,026 9,560 (86,070 ) 792,158 Operating income (loss) 32,699 (6,887 ) (38 ) (8,602 )(1) (10,888 )(2) 6,284 Income (loss) before income taxes 16,319 (15,683 ) (1,295 ) (16,324 ) (14,562 ) (31,545 ) Depreciation and amortization 25,996 27,299 1,490 2,980 57,765 Capital expenditures 12,690 60,406 17 53 73,166 As of June 30, 2009 Assets 2,203,502 2,142,622 158,364 598,232 (3) (220,908 )(4) 4,881,812 Liabilities 184,559 211,557 8,930 2,735,762 (5) (183,479 )(6) 2,957,329 Footnotes related to June 30, 2009 segment results (in millions): (1) Corporate SGA $ (9.2 ) Other income 0.6 $ (8.6 ) (2) Margin impact from inter-company sales $ (10.9 ) (3) Deferred tax asset $ 317.0 Income taxes receivable 125.9 Debt issuance costs 27.7 Other 127.6 $ 598.2 (4) Elimination of inter-company receivables $ (19.4 ) Deferred taxes elimination (111.0 ) Other (90.5 ) $ (220.9 ) (5) Debt $ 2,101.5 D |
| Condensed Consolidating Information | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Notes to Consolidated Financial Statements | |
| Condensed Consolidating Information | Note 11. Condensed Consolidating Information Certain 100%-owned subsidiaries of SDI have fully and unconditionally guaranteed all of the indebtedness relating to the issuance of the companys senior notes due 2012, 2015, and 2016 and convertible senior notes due 2014. Following are the companys 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 for the company on a consolidated basis. The following statements should be read in conjunction with the accompanying consolidated financial statements and the companys Annual Report on Form 10-K for the year ended December 31, 2008. Condensed Consolidating Balance Sheets (in thousands) Combined Consolidating Total As of June 30, 2009 Parent Guarantors Non-Guarantors Adjustments Consolidated Cash and equivalents $ 5,032 $ 12,024 $ 1,161 $ $ 18,217 Accounts receivable, net 162,971 427,995 4,355 (230,585 ) 364,736 Inventories 430,363 290,419 20,330 (2,642 ) 738,470 Other current assets 233,585 11,903 291 (65,671 ) 180,108 Total current assets 831,951 742,341 26,137 (298,898 ) 1,301,531 Property, plant and equipment, net 1,178,378 743,074 222,908 2,144,360 Intangible assets, net 557,194 557,194 Goodwill 780,321 780,321 Other assets, including investments in subs 2,327,031 312,303 8,891 (2,549,819 ) 98,406 Total assets $ 4,337,360 $ 3,135,233 $ 257,936 $ (2,848,717 ) $ 4,881,812 Accounts payable $ 82,294 $ 134,459 $ 28,708 $ (18,015 ) $ 227,446 Accrued expenses 83,664 102,209 826 (40,805 ) 145,894 Current maturities of long-term debt 114,787 262 14,906 (14,906 ) 115,049 Total current liabilities 280,745 236,930 44,440 (73,726 ) 488,389 Long-term debt 2,002,598 50 92,342 (65,098 ) 2,029,892 Other liabilities 376,153 2,304,923 15,809 (2,257,837 ) 439,048 Common stock 626 19,753 7,713 (27,466 ) 626 Treasury stock (730,862 ) (730,862 ) Additional paid-in capital 958,558 117,753 105,000 (222,753 ) 958,558 Retained earnings 1,449,542 455,824 (21,321 ) (201,837 ) 1,682,208 Total Steel Dynamics, Inc. stockholders equity 1,677,864 593,330 91,392 (452,056 ) 1,910,530 Noncontrolling interests 13,953 13,953 Total stockholders equity 1,677,864 593,330 105,345 (452,056 ) 1,924,483 Total liabilities and stockholders equity $ 4,337,360 $ 3,135,233 |
| Document and Entity Information (USD $) | |||
| 6 Months Ended
Jun. 30, 2009 | Aug. 03, 2009
| Jun. 30, 2008
| |
| Document and Entity Information | |||
| Entity Registrant Name | Steel Dynamics Inc | ||
| Entity Central Index Key | 0001022671 | ||
| Document Type | 10-Q | ||
| Document Period End Date | 2009-06-30 | ||
| 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 | $6,663,729,977 | ||
| Entity Common Stock, Shares Outstanding | 215,163,173 |
