Exhibit 99.1
COMMERCIAL METALS COMPANY REPORTS LOSS OF $8.8 MILLION
OR $0.08 PER SHARE FOR THE THIRD QUARTER
Irving, TX — June 22, 2010 — Commercial Metals Company (NYSE: CMC) today reported a net loss of $8.8 million or $0.08 per diluted share on net sales of $1.8 billion for the quarter ended May 31, 2010. This compares with a net loss of $13.1 million or $0.12 per diluted share on net sales of $1.3 billion for the third quarter last year. This year’s third quarter included after-tax LIFO expense of $22 million or $0.20 per diluted share compared with income of $29 million or $0.26 per diluted share in last year’s third quarter.
Net loss for the nine months ended May 31, 2010 was $213.3 million or $1.88 per diluted share on net sales of $4.5 billion. For the same period last year, net earnings were $13.6 million or $0.12 per diluted share on net sales of $5.0 billion. For the nine months ended May 31, 2010, after-tax LIFO expense was $16 million or $0.14 per diluted share compared with income of $184 million or $1.64 per diluted share last year.
The Company recorded the following consolidated expenses in continuing operations during the third quarter and year-to-date (excludes charges taken for our joist and deck operations):
| | | | | | | | | |
| | | Three Months Ended | | Nine Months Ended |
| (in millions) | | 5/31/10 | | 5/31/10 |
| |
| Lower of cost or market inventory adjustments | | $ | 5.9 | | | $ | 37.3 | |
| Bad debt recoveries | | | (2.8 | ) | | | (2.0 | ) |
| Severance costs | | | 0.2 | | | | 9.3 | |
| Impairment charges | | | — | | | | 1.3 | |
| Job loss reserves | | | 8.9 | | | | 71.6 | |
No tax benefit was recognized on losses incurred in Croatia; tax expense was accrued on domestic operating results.
(more)
(CMC Third Quarter Fiscal 2010 — Page 2)
General Conditions
CMC Chairman, President and Chief Executive Officer Murray R. McClean said, “Market psychology turned positive at the beginning of the quarter. With the spring construction season underway, coupled with early indicators of some economic recovery, finished goods pricing first increased then stabilized by the end of the quarter. This was welcomed news to our customers who gained a measure of confidence to re-enter the market. Active end markets continue to be heavily weighted towards public works while the private sector remains weak. Internationally, by mid-quarter, metal margins in Poland expanded beyond breakeven points. CMC Sisak (Croatia) successfully started its new steelmaking furnace. The Marketing and Distribution segment did well in most major markets, and our raw materials division was particularly strong.”
Americas Recycling
McClean said, “The segment had an adjusted operating profit of $15.8 million (net of pre-tax LIFO expense of $5.8 million), its first substantial profit in seven quarters. The operating loss in the third quarter of last year was $6.7 million, net of pre-tax LIFO income of $2.0 million. Pricing peaked mid-quarter, modestly retreating at quarter end. Domestic demand was up on the strength of the spring construction season. Better weather increased scrap flows. Margin improvement was derived mainly from better ferrous volumes and prices. The average ferrous scrap sales price for the third quarter was $303 per short ton, a 108% increase over the prior year third quarter. Average nonferrous scrap pricing was $2,892 per short ton, up 86% from the prior year. Shipments of ferrous scrap totaled 671 thousand tons, an increase of 81% from the third quarter of last year. Nonferrous scrap shipments totaled 61 thousand tons, 22% higher than last year. We exported 11% of our ferrous scrap tonnage and 36% of our nonferrous scrap tonnage during the quarter.”
Americas Mills
McClean said, “Higher finished goods pricing combined with declining ferrous scrap prices resulted in sequentially expanded metal margins in the third quarter of this year compared to the second quarter of this year, but still below the third quarter of last year. Volumes, particularly rebar, were the highest of any quarter this year as well as above the prior year third quarter, driven by seasonal pickups, continued strong public works, and some stimulus projects. Our mills ran at 75% of capacity, up from the 58% of the second quarter.
“Our steel mills had an adjusted operating profit of $11.5 million compared to an adjusted operating profit of $39.2 million in the same quarter last year. The quarter had pre-tax LIFO expense of $20.5 million compared to pre-tax LIFO income of $17.3 million in last year’s third quarter. Our metal margin for the quarter was $303 per ton, up from the second quarter’s margin of $263 per ton, but still below last year’s third quarter of $365 per ton. The price of ferrous scrap consumed at the mills during the quarter increased $129 per ton compared to last year, and average selling prices increased $67 per ton. Sales volumes were 588 thousand tons of which 69 thousand tons were billets (compared with 37 thousand tons of billets sold in the third quarter of last year). Comparing third quarter to third quarter between years, tonnage melted was up 46% to 579 thousand tons and tonnage rolled increased 158 thousand tons to 523 thousand tons.”
(more)
(CMC Third Quarter Fiscal 2010 — Page 3)
McClean continued, “Our micro mill, CMC Steel Arizona, continued its successful ramp up by melting, rolling, and shipping over 51 thousand tons during the quarter. Our copper tube mill reported adjusted operating profit of $1.7 million (pre-tax LIFO expense of $2.4 million) compared to $2.9 million operating profit (pre-tax LIFO expense of $0.9 million) in last year’s third quarter.”
Americas Fabrication
McClean added, “Though overshadowed by an operating loss for the quarter, there were some positives for our Americas Fabrication segment. With relatively stable steel pricing, margin compression eased minimizing the need for accruing potential contractual losses. Backlogs built as customers gained confidence in pricing as well as the usual spring construction season boost. Public works remained the most active end-use market; commercial and industrial markets continue to be plagued by high unemployment, illiquidity, high vacancy rates, and suboptimal manufacturing utilization. The segment reported an adjusted operating loss of $24.5 million compared to last year’s third quarter adjusted operating income of $21.8 million. The current quarter recorded pre-tax LIFO expense of $22.2 million; last year’s third quarter had pre-tax LIFO income of $9.0 million. The composite average fab selling price (excluding stock and buyouts and the joist and deck discontinued operations) was $768 per ton, 21% below last year’s third quarter price.”
International Mills
According to McClean, “Our International Mills segment had its lowest adjusted quarterly operating loss in almost two years as the Polish economy remained positive and our Croatian operation completed its furnace renovation. Our metal margins expanded as Polish ferrous scrap prices fell, and finished goods pricing strengthened as construction markets thawed. By quarter end, we had produced 6 thousand tons of steel in our new furnace at CMC Sisak and significantly increased our backlog.
“CMC Zawiercie had adjusted operating income of $1.1 million compared to a loss of $11.9 million in the third quarter of last year. Shipments totaled 363 thousand tons (69 thousand tons of billets) compared to 328 thousand tons (69 thousand tons of billets) in the prior year’s third quarter. Tons melted were 394 thousand tons compared to 324 thousand tons and tons rolled were 295 thousand tons compared to 253 thousand tons. Average selling prices increased 26% to PLN 1,477 per ton compared to PLN 1,172 per ton for the same period last year. The cost of scrap entering production increased 43%. The average metal margin per ton increased slightly to PLN 481 from PLN 477 in last year’s third quarter. Results were positively impacted by our scrap operations and the reversal of significant contract reserves set up in prior periods and reversed as sales were delivered this quarter. By quarter end, we hot commissioned our new flexible rolling mill; with this new rolling mill and our existing long products and wire rod mills, as well as our rod block, we will be able to upgrade, expand, and tailor our product offerings.”
“CMC Croatia’s adjusted operating loss of $12.0 million compares to the prior year’s loss of $8.5 million,” McClean added. “During the quarter we melted 17 thousand tons, rolled 14 thousand tons, and shipped 16 thousand tons.”
(more)
(CMC Third Quarter Fiscal 2010 — Page 4)
International Marketing and Distribution
McClean continued, “Our International Marketing and Distribution segment remained profitable in the third quarter as it has for each of the quarters in this fiscal year. Our global presence and ability to source and sell in niche markets allowed us to profit despite an uneven world economic recovery. General price recovery has minimized the need for contract or inventory loss charges. Each of our major geographic marketing operations was profitable. The segment achieved adjusted operating profit of $30.9 million compared to a loss in last year’s third quarter of $16.6 million, a period where the segment was still fighting contractual noncompliance issues. Our steel import operation is on LIFO; for the quarter it had pre-tax LIFO income of $7.9 million compared to pre-tax LIFO income of $6.6 million in last year’s third quarter.”
Discontinued Operations
McClean said, “Our joist and deck operations, previously reported in our Americas Fabrication segment, are now reported as discontinued operations as the Company has made the decision to exit the business. It had an adjusted operating profit of $4.0 million for the third quarter (pre-tax LIFO income of $8.5 million) as operations are winding down at each location. We have an active divestiture program to sell each of the locations.”
Financial Condition
McClean said, “We remain financially strong. Our cash and short-term investments total $290 million at May 31, 2010. Our inventories are conservatively valued on LIFO (at May 31, 2010, the reserve was $266 million), and our accounts receivable are substantially backed by credit insurance or letters of credit in addition to our allowance for doubtful accounts of $35.7 million. Our working capital ratio is 2.0. At May 31, 2010, goodwill and intangibles totaled $125.6 million, representing only 3.5% of total assets.
“In accordance with our February 26, 2010 amendments to our $400 million revolver and $100 million accounts receivable securitization agreement, we are required to maintain $300 million in liquidity as defined and an EBITDA to interest coverage of 2.5 for the third quarter. We met both covenants.”
Outlook for Fourth Quarter
McClean continued, “We anticipate our fourth quarter to be better than our third quarter, mainly due to seasonal factors. However, global economies remain fragile, with any further fallout due to the public debt problems of Greece and other countries within the euro zone likely to slow global growth. Scrap and steel prices have declined in major international markets since mid-May. While this correction was anticipated, any further significant declines could impact future results. The nonresidential construction market in the U.S. should continue to be relatively good in the public sector; however, the private sector is likely to remain weak. We have had active interest in the purchase of our joist and deck operations and anticipate that most facilities will be under contract by the end of the quarter.
“In summary, we believe we will be moderately profitable in our fourth quarter.”
(more)
(CMC Third Quarter Fiscal 2010 — Page 5)
Conference Call
CMC invites you to listen to a live broadcast of its third quarter 2010 conference call today, Tuesday, June 22, 2010, at 11:00 a.m. ET. The call will be hosted by Murray McClean, Chairman, President and CEO and Bill Larson, Senior Vice President and CFO, and can be accessed via our website atwww.cmc.com or atwww.streetevents.com. In the event you are unable to listen to the live broadcast, the call will be archived and available for replay within two hours of the webcast. Financial and statistical information presented in the broadcast can be found on CMC’s website under “Investor Relations.”
Commercial Metals Company and subsidiaries manufacture, recycle and market steel and metal products, related materials and services through a network including steel minimills, steel fabrication and processing plants, construction-related product warehouses, a copper tube mill, metal recycling facilities and marketing and distribution offices in the United States and in strategic international markets.
Forward-Looking Statement
This news release contains forward-looking statements regarding the outlook for the Company’s financial results including net earnings, product pricing and demand, production rates, stimulus spending, inventory and backlog levels, GDP growth and general market conditions. These forward-looking statements generally can be identified by phrases such as the company or its management “expect,” “anticipates,” “believe,” “ought,” “should,” “likely,” “appears,” “projected,” “forecast,” “outlook,” “will” or other words or phrases of similar impact. There are inherent risks and uncertainties in any forward-looking statements. Variances will occur and some could be materially different from our current opinion.
Developments that could impact the Company’s expectations include the following: absence of global economic recovery or possible recession relapse; solvency of financial institutions and their ability or willingness to lend; success or failure of governmental efforts to stimulate the economy, including restoring credit availability and confidence in a recovery; customer or supplier non-compliance with contracts; the level of construction activity; difficulties or delays in the execution of construction contracts resulting in cost overruns or contract disputes; metals pricing over which the Company exerts little influence; interest rate changes; increased capacity and product availability from competing steel minimills and other steel suppliers, including import quantities and pricing; court decisions; changes in state and local jurisdictions’ ability to fund infrastructure projects; industry consolidation or changes in production capacity or utilization; global factors, including political and military uncertainties; currency fluctuations; ability to integrate acquisitions into operations; litigation claims and settlements; inability to sell operations or assets at fair values; execution of cost minimization strategies; availability of customer credit and liquidity; scrap metal, energy, insurance and supply prices; sovereign debt concerns; energy and supply prices; decisions by governments impacting the level of steel imports and exports, including tariffs and duties; stimulus spending; continued public debt problems in Greece and other countries within the euro zone; and the pace of overall economic activity, particularly China.
(more)
(CMC Third Quarter Fiscal 2010 — Page 6)
| | | | | | | | | | | | | | | | | |
| | | Three months ended | | | Nine months Ended | |
| (Short Tons in Thousands) | | 5/31/10 | | | 5/31/09 | | | 5/31/10 | | | 5/31/09 | |
| | | | | |
| Domestic Steel Mill Rebar Shipments | | | 335 | | | | 249 | | | | 814 | | | | 712 | |
| Domestic Steel Mill Structural and Other Shipments | | | 253 | | | | 178 | | | | 793 | | | | 538 | |
| CMCZ Shipments | | | 363 | | | | 328 | | | | 1,000 | | | | 860 | |
| | | | | | | | | | | | | |
Total Mill Tons Shipped | | | 951 | | | | 755 | | | | 2,607 | | | | 2,110 | |
| | | | | | | | | | | | | | | | | |
| Average FOB Mill Domestic Selling Price (Total Sales) | | $ | 631 | | | $ | 564 | | | $ | 566 | | | $ | 673 | |
| Average Cost Domestic Mill Ferrous Scrap Utilized | | $ | 328 | | | $ | 199 | | | $ | 293 | | | $ | 251 | |
| Domestic Mill Metal Margin | | $ | 303 | | | $ | 365 | | | $ | 273 | | | $ | 422 | |
| Average Domestic Mill Ferrous Scrap Purchase Price | | $ | 302 | | | $ | 152 | | | $ | 258 | | | $ | 193 | |
| Average FOB Mill CMCZ Selling Price (Total Sales) | | $ | 493 | | | $ | 351 | | | $ | 448 | | | $ | 494 | |
| Average Cost CMCZ Ferrous Scrap Utilized | | $ | 332 | | | $ | 206 | | | $ | 297 | | | $ | 266 | |
| CMCZ Mill Metal Margin | | $ | 161 | | | $ | 145 | | | $ | 151 | | | $ | 228 | |
| Average CMCZ Ferrous Scrap Purchase Price | | $ | 285 | | | $ | 165 | | | $ | 250 | | | $ | 210 | |
| | | | | | | | | | | | | | | | | |
| Fab Plant Rebar Shipments | | | 230 | | | | 236 | | | | 591 | | | | 766 | |
| Fab Plant Structural and Post Shipments | | | 51 | | | | 34 | | | | 116 | | | | 105 | |
| | | | | | | | | | | | | |
Total Fabrication Tons Shipped | | | 281 | | | | 270 | | | | 707 | | | | 871 | |
| | | | | | | | | | | | | | | | | |
| Average Fab Selling Price (Excluding Stock & Buyout Sales) | | $ | 768 | | | $ | 978 | | | $ | 764 | | | $ | 1,103 | |
| | | | | | | | | | | | | | | | | |
Domestic Scrap Metal Tons Processed and Shipped | | | 734 | | | | 424 | | | | 1,884 | | | | 1,463 | |
BUSINESS SEGMENTS
(in thousands)
| | | | | | | | | | | | | | | | | |
| | | Three months ended | | | Nine months ended | |
| | | 5/31/10 | | | 5/31/09 | | | 5/31/10 | | | 5/31/09 | |
| | | | | |
Net Sales | | | | | | | | | | | | | | | | |
| Americas Recycling | | $ | 431,849 | | | $ | 152,439 | | | $ | 1,036,078 | | | $ | 551,680 | |
| Americas Mills | | | 407,105 | | | | 276,827 | | | | 1,011,551 | | | | 945,601 | |
| Americas Fabrication | | | 326,089 | | | | 355,744 | | | | 820,850 | | | | 1,268,320 | |
| International Mills | | | 215,690 | | | | 171,418 | | | | 532,220 | | | | 563,361 | |
| International Marketing and Distribution | | | 641,093 | | | | 475,044 | | | | 1,743,390 | | | | 2,282,120 | |
| Corporate & Eliminations | | | (256,672 | ) | | | (173,235 | ) | | | (654,234 | ) | | | (613,155 | ) |
| | | |
| Total Net Sales | | $ | 1,765,154 | | | $ | 1,258,237 | | | $ | 4,489,855 | | | $ | 4,997,927 | |
| | | |
| | | | | | | | | | | | | | | | | |
Adjusted Operating Profit (Loss): | | | | | | | | | | | | | | | | |
| Americas Recycling | | $ | 15,806 | | | $ | (6,712 | ) | | $ | 6,929 | | | $ | (70,843 | ) |
| Americas Mills | | | 13,195 | | | | 42,066 | | | | (3,960 | ) | | | 233,851 | |
| Americas Fabrication | | | (24,452 | ) | | | 21,813 | | | | (90,685 | ) | | | 131,324 | |
| International Mills | | | (10,885 | ) | | | (20,385 | ) | | | (84,373 | ) | | | (76,696 | ) |
| International Marketing and Distribution | | | 30,941 | | | | (16,635 | ) | | | 62,158 | | | | (55,447 | ) |
| Corporate & Eliminations | | | (12,089 | ) | | | (1,655 | ) | | | (40,183 | ) | | | (60,949 | ) |
(more)
CMC Third Quarter Fiscal 2010 – Page 7)
COMMERCIAL METALS COMPANY
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands except share data)
| | | | | | | | | | | | | | | | | |
| | | Three months ended | | Nine months ended |
| | | 5/31/10 | | 5/31/09 | | 5/31/10 | | 5/31/09 |
| |
| Net Sales | | $ | 1,765,154 | | | $ | 1,258,237 | | | $ | 4,489,855 | | | $ | 4,997,927 | |
| | | | | | | | | | | | | | | | | |
| Costs and Expenses: | | | | | | | | | | | | | | | | |
| Cost of goods sold | | | 1,645,250 | | | | 1,078,854 | | | | 4,253,574 | | | | 4,449,146 | |
| Selling, general and administrative expenses | | | 108,509 | | | | 161,882 | | | | 389,182 | | | | 451,429 | |
| Interest expense | | | 18,184 | | | | 18,433 | | | | 57,871 | | | | 62,277 | |
| | | |
| | | | 1,771,943 | | | | 1,259,169 | | | | 4,700,627 | | | | 4,962,852 | |
| | | | | | | | | | | | | | | | | |
| Earnings (Loss) from Continuing Operations Before Taxes | | | (6,789 | ) | | | (932 | ) | | | (210,772 | ) | | | 35,075 | |
| Income Taxes (Benefit) | | | 3,952 | | | | 13,368 | | | | (36,101 | ) | | | 41,813 | |
| | | |
| Loss from Continuing Operations | | | (10,741 | ) | | | (14,300 | ) | | | (174,671 | ) | | | (6,738 | ) |
| Earnings (Loss) from Discontinued Operations Before Taxes | | | 4,001 | | | | 1,065 | | | | (62,513 | ) | | | 32,636 | |
| Income Taxes (Benefit) | | | 1,723 | | | | 212 | | | | (24,117 | ) | | | 12,763 | |
| | | |
| Earnings (Loss) from Discontinued Operations | | | 2,278 | | | | 853 | | | | (38,396 | ) | | | 19,873 | |
| | | |
| Net Earnings (Loss) | | | (8,463 | ) | | | (13,447 | ) | | | (213,067 | ) | | | 13,135 | |
| Less Net Earnings (Loss) Attributable to Noncontrolling Interests | | | 363 | | | | (370 | ) | | | 278 | | | | (487 | ) |
| | | |
| Net Earnings (Loss) Attributable to CMC | | $ | (8,826 | ) | | $ | (13,077 | ) | | $ | (213,345 | ) | | $ | 13,622 | |
| | | |
| | | | | | | | | | | | | | | | | |
| Basic Earnings (Loss) per Share | | | | | | | | | | | | | | | | |
| Loss from Continuing Operations | | $ | (0.10 | ) | | $ | (0.13 | ) | | $ | (1.54 | ) | | $ | (0.06 | ) |
| Earnings (Loss) from Discontinued Operations | | $ | 0.02 | | | $ | 0.01 | | | $ | (0.34 | ) | | $ | 0.18 | |
| | | |
| Net Earnings (Loss) | | $ | (0.08 | ) | | $ | (0.12 | ) | | $ | (1.88 | ) | | $ | 0.12 | |
| | | | | | | | | | | | | | | | | |
| Diluted Earnings (Loss) per Share | | | | | | | | | | | | | | | | |
| Loss from Continuing Operations | | $ | (0.10 | ) | | $ | (0.13 | ) | | $ | (1.54 | ) | | $ | (0.06 | ) |
| Earnings (Loss) from Discontinued Operations | | $ | 0.02 | | | $ | 0.01 | | | $ | (0.34 | ) | | $ | 0.18 | |
| | | |
| Net Earnings (Loss) | | $ | (0.08 | ) | | $ | (0.12 | ) | | $ | (1.88 | ) | | $ | 0.12 | |
| | | | | | | | | | | | | | | | | |
| Cash dividends per share | | $ | 0.12 | | | $ | 0.12 | | | $ | 0.36 | | | $ | 0.36 | |
| | | | | | | | | | | | | | | | | |
| Average basic shares outstanding | | | 114,067,149 | | | | 112,191,349 | | | | 113,279,301 | | | | 112,398,000 | |
| Average diluted shares outstanding | | | 114,067,149 | | | | 112,191,349 | | | | 113,279,301 | | | | 112,398,000 | |
(more)
(CMC Third Quarter Fiscal 2010 – Page 8)
COMMERCIAL METALS COMPANY
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
| | | | | | | | | |
| | | May 31, | | August 31, |
| | | 2010 | | 2009 |
| | | |
Assets: | | | | | | | | |
| Current Assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 289,630 | | | $ | 405,603 | |
| Accounts receivable, net | | | 791,487 | | | | 731,282 | |
| Inventories | | | 652,992 | | | | 678,541 | |
| Other | | | 293,591 | | | | 182,126 | |
| | | |
| Total Current Assets | | | 2,027,700 | | | | 1,997,552 | |
| | | | | | | | | |
| Net Property, Plant and Equipment | | | 1,253,092 | | | | 1,351,389 | |
| | | | | | | | | |
| Goodwill | | | 71,053 | | | | 74,236 | |
| | | | | | | | | |
| Other Assets | | | 212,655 | | | | 264,379 | |
| | | |
| | | $ | 3,564,500 | | | $ | 3,687,556 | |
| | | |
| | | | | | | | | |
Liabilities and Stockholders’ Equity: | | | | | | | | |
| Current Liabilities: | | | | | | | | |
| Accounts payable – trade | | $ | 507,196 | | | $ | 344,355 | |
| Accounts payable – documentary letters of credit | | | 76,326 | | | | 109,210 | |
| Accrued expenses and other payables | | | 333,701 | | | | 327,212 | |
| Notes payable | | | 53,126 | | | | 1,759 | |
| Commercial paper | | | 10,000 | | | | — | |
| Current maturities of long-term debt | | | 28,634 | | | | 32,802 | |
| | | |
| Total Current Liabilities | | | 1,008,983 | | | | 815,338 | |
| | | | | | | | | |
| Deferred Income Taxes | | | 46,298 | | | | 44,564 | |
| Other Long-Term Liabilities | | | 106,339 | | | | 113,850 | |
| Long-Term Debt | | | 1,175,834 | | | | 1,181,740 | |
| | | |
| Total Liabilities | | | 2,337,454 | | | | 2,155,492 | |
| Stockholders’ Equity Attributable to CMC | | | 1,224,366 | | | | 1,529,693 | |
| Stockholders’ Equity Attributable to Noncontrolling Interests | | | 2,680 | | | | 2,371 | |
| | | |
| | | $ | 3,564,500 | | | $ | 3,687,556 | |
| | | |
(more)
(CMC Third Quarter Fiscal 2010 – Page 9)
COMMERCIAL METALS COMPANY
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
| | | | | | | | | |
| | | Nine months ended |
| | | 5/31/10 | | 5/31/09 |
Cash Flows From (Used by) Operating Activities: | | | | | | | | |
| Net earnings (loss) | | $ | (213,067 | ) | | $ | 13,135 | |
| Adjustments to reconcile net earnings (loss) to cash from (used by) operating activities: | | | | | | | | |
| Depreciation and amortization | | | 128,393 | | | | 116,045 | |
| Provision for losses (recoveries) on receivables | | | (1,831 | ) | | | 33,615 | |
| Share-based compensation | | | 5,590 | | | | 12,369 | |
| Net (gain) loss on sale of assets and other | | | (529 | ) | | | 388 | |
| Writedown of inventory | | | 44,680 | | | | 110,411 | |
| Asset impairment | | | 32,613 | | | | 5,051 | |
| Contract losses (gains) | | | 71,887 | | | | (14,645 | ) |
| | | | | | | | | |
Changes in Operating Assets and Liabilities, Net of Acquisitions: | | | | | | | | |
| Accounts receivable | | | (107,275 | ) | | | 677,602 | |
| Accounts receivable sold (repurchased), net | | | 29,322 | | | | (107,978 | ) |
| Inventories | | | (41,880 | ) | | | 473,423 | |
| Other assets | | | 10,647 | | | | 64,683 | |
| Accounts payable, accrued expenses, other payables and income taxes | | | 137,554 | | | | (701,934 | ) |
| Deferred income taxes | | | (72,304 | ) | | | (4,099 | ) |
| Other long-term liabilities | | | (6,305 | ) | | | (9,242 | ) |
| | | |
| Net Cash Flows From Operating Activities | | | 17,495 | | | | 668,824 | |
| | | | | | | | | |
Cash Flows From (Used by) Investing Activities: | | | | | | | | |
| Capital expenditures | | | (109,464 | ) | | | (290,318 | ) |
| Proceeds from the sale of property, plant and equipment & other | | | 5,287 | | | | 2,292 | |
| Acquisitions, net of cash acquired | | | (2,448 | ) | | | (906 | ) |
| Deposit for letters of credit | | | (27,238 | ) | | | — | |
| | | |
| Net Cash Flows Used By Investing Activities | | | (133,863 | ) | | | (288,932 | ) |
| | | | | | | | | |
Cash Flows From (Used by) Financing Activities: | | | | | | | | |
| Decrease in documentary letters of credit | | | (32,884 | ) | | | (2,491 | ) |
| Short-term borrowings, net change | | | 61,317 | | | | (25,611 | ) |
| Repayments on long-term debt | | | (19,914 | ) | | | (102,804 | ) |
| Proceeds from issuance of long term debt | | | 22,437 | | | | 36,365 | |
| Stock issued under incentive and purchase plans | | | 10,355 | | | | 1,095 | |
| Treasury stock acquired | | | — | | | | (18,514 | ) |
| Cash dividends | | | (40,773 | ) | | | (40,636 | ) |
| Tax benefits from stock plans | | | 3,204 | | | | 1,472 | |
| | | |
| Net Cash Flows From (Used By) Financing Activities | | | 3,742 | | | | (151,124 | ) |
| Effect of Exchange Rate Changes on Cash | | | (3,347 | ) | | | (6,405 | ) |
| | | |
| | | | | | | | | |
| Increase (Decrease) in Cash and Cash Equivalents | | | (115,973 | ) | | | 222,363 | |
| Cash and Cash Equivalents at Beginning of Year | | | 405,603 | | | | 219,026 | |
| | | |
| Cash and Cash Equivalents at End of Period | | $ | 289,630 | | | $ | 441,389 | |
| | | |
(more)
(CMC Third Quarter Fiscal 2010 – Page 10)
COMMERCIAL METALS COMPANY
Non-GAAP Financial Measures (Unaudited)
(dollars in thousands)
This press release uses financial statement measures not derived in accordance with generally accepted accounting principles (GAAP). Reconciliations to the most comparable GAAP measures are provided below.
Adjusted EBITDA:
Earnings before interest expense, income taxes, depreciation and amortization, and impairment charges.
Adjusted EBITDAis a non-GAAP liquidity measure. It excludes Commercial Metals Company’s largest recurring non-cash charge, depreciation and amortization, including impairment charges. As a measure of cash flow before interest expense, it is one guideline used to assess the Company’s ability to pay its current debt obligations as they mature and a tool to calculate possible future levels of leverage capacity. Adjusted EBITDA to interest is a covenant test in certain of the Company’s note agreements.
| | | | | | | | | |
| | | Three Months | | | Nine Months | |
| | | Ended | | | Ended | |
| | | 5/31/10 | | | 5/31/10 | |
| | | |
| Net loss attributable to CMC | | $ | (8,826 | ) | | $ | (213,345 | ) |
| Interest expense | | | 18,184 | | | | 57,871 | |
| Income taxes (benefit) | | | 5,675 | | | | (60,218 | ) |
| Depreciation and amortization | | | 40,259 | | | | 161,006 | |
| |
| Adjusted EBITDA | | $ | 55,292 | | | $ | (54,686 | ) |
| |
Adjusted EBITDA to interest coverage
for the quarter ended May 31, 2010:
$55,292 / 18,184 = 3.0
Total Capitalization:
Total capitalizationis the sum of long-term debt, deferred income taxes, and stockholders’ equity. The ratio of debt to total capitalization is a measure of current debt leverage. The following reconciles total capitalization at May 31, 2010 to the nearest GAAP measure, stockholders’ equity:
| | | | | | | | | |
|
| Stockholders’ equity attributable to CMC | | $ | 1,224,366 | | | | | |
| Long-term debt | | | 1,175,834 | | | | | |
| Deferred income taxes | | | 46,298 | | | | | |
| |
| Total capitalization | | $ | 2,446,498 | | | | | |
Other Financial Information
Long-term debt to cap ratio as of May 31, 2010:
Debt divided by capitalization
$1,175,834 / 2,446,498 = 48.1%
Total debt to cap plus short-term debt plus notes payable ratio as of May 31, 2010:
(1,175,834 + 28,634 + 63,126) / (2,446,498 +28,634 +63,126) = 49.9%
Current ratio as of May 31, 2010:
Current assets divided by current liabilities
$2,027,700 /1,008,983 = 2.0
-(END)-
| | |
| Contact: | | Debbie Okle
Director, Public Relations
214.689.4354 |
2010-14
