UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q/A
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
_________ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 33-22603
BAYOU STEEL CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 72-1125783
- ------------------------ ----------------------------
(State of incorporation) (I.R.S. Employer
Identification No.)
River Road, P.O. Box 5000, LaPlace, Louisiana 70069
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(Address of principal executive offices)
(Zip Code)
(504) 652-4900
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(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS SHARES OUTSTANDING AT MARCH 31, 1995
- -------------------------------------- ------------------------------------
Class A Common Stock, $.01 par value 10,613,380
Class B Common Stock, $.01 par value 2,271,127
Class C Common Stock, $.01 par value 100
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12,884,607
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PART I - FINANCIAL INFORMATION
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Item 1. FINANCIAL STATEMENTS
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BAYOU STEEL CORPORATION
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BALANCE SHEETS
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ASSETS
------
(UNAUDITED) (AUDITED)
MARCH 31, SEPTEMBER 30,
1995 1994
------------- --------------
CURRENT ASSETS:
Cash and temporary cash investments $ 8,340,679 $ 8,903,413
Trade receivables 20,426,403 18,781,222
Other receivables 640,601 375,185
Inventories 61,717,542 57,145,550
Prepaid expenses 1,899,499 188,452
------------ ------------
Total current assets 93,024,724 85,393,822
------------ ------------
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements 4,333,542 4,333,542
Machinery and equipment 75,867,385 75,855,608
Plant and office building 13,125,589 13,125,589
Construction in progress 7,530,819 2,462,312
Less-Accumulated depreciation (31,065,818) (28,504,307)
------------ ------------
Net property, plant and equipment 69,791,517 67,272,744
------------ ------------
OTHER ASSETS 3,590,000 3,401,103
------------ ------------
Total assets $166,406,241 $156,067,669
============ ============
The accompanying notes are an integral part of these financial statements.
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BAYOU STEEL CORPORATION
-----------------------
BALANCE SHEETS
--------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
(UNAUDITED) (AUDITED)
MARCH 31, SEPTEMBER 30,
1995 1994
------------- --------------
CURRENT LIABILITIES:
Accounts payable $ 18,364,454 $ 16,540,005
Accrued liabilities 4,720,865 3,327,480
Current maturities of long-term debt 344,890 340,232
------------ ------------
Total current liabilities 23,430,209 20,207,717
------------ ------------
LONG-TERM DEBT:
Senior secured notes 75,000,000 75,000,000
Notes payable 587,104 735,924
------------ ------------
Total long-term debt 75,587,104 75,735,924
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value -
Class A 106,134 106,134
Class B 22,711 22,711
Class C 1 1
------------ ------------
Total common stock 128,846 128,846
Paid-in capital 44,890,554 44,890,554
Retained earnings 22,369,528 15,104,628
------------ ------------
Total stockholders' equity 67,388,928 60,124,028
------------ ------------
Total liabilities & stockholders'
equity $166,406,241 $156,067,669
============ ============
The accompanying notes are an integral part of these financial statements.
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BAYOU STEEL CORPORATION
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STATEMENTS OF INCOME (LOSS)
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(UNAUDITED)
-----------
SECOND QUARTER ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
1995 1994 1995 1994
------------- ------------- ------------- -------------
NET SALES $49,521,950 $37,432,807 $93,373,735 $74,211,296
COST OF SALES 42,578,342 33,857,736 79,801,414 68,416,060
----------- ----------- ----------- -----------
GROSS PROFIT 6,943,608 3,575,071 13,572,321 5,795,236
SELLING, GENERAL
& ADMINISTRATIVE
EXPENSES 1,140,446 989,127 2,310,580 1,878,976
NON-PRODUCTION
STRIKE EXPENSES 291,183 238,064 550,200 637,245
----------- ----------- ----------- -----------
OPERATING INCOME 5,511,979 2,347,880 10,711,541 3,279,015
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Interest expense (1,853,518) (1,935,521) (3,770,878) (3,820,135)
Interest income 144,902 130,936 264,503 151,383
Miscellaneous 78,389 (30,313) 133,116 (70,212)
----------- ----------- ----------- -----------
(1,630,227) (1,834,898) (3,373,259) (3,738,964)
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
TAXES & EXTRAORDINARY
ITEMS 3,881,752 512,982 7,338,282 (459,949)
PROVISION FOR
INCOME TAXES 38,817 -- 73,382 --
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEMS 3,842,935 512,982 7,264,900 (459,949)
EXTRAORDINARY (LOSS),
NET OF APPLICABLE
INCOME TAX -- (5,468,216) -- (5,468,216)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 3,842,935 $(4,955,234) $ 7,264,900 $(5,928,165)
=========== =========== =========== ===========
AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 12,884,607 12,884,607 12,884,607 12,884,607
=========== =========== =========== ===========
INCOME (LOSS) PER
COMMON SHARE:
Income (loss) before
extraordinary
items $.30 $ .04 $.56 $ (.04)
Extraordinary
(loss) -- (.42) -- (.42)
----------- ----------- ----------- -----------
Income (loss) per
common share $.30 $ (.38) $.56 $ (.46)
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
5
BAYOU STEEL CORPORATION
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STATEMENTS OF CASH FLOWS
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(UNAUDITED)
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SIX MONTHS ENDED
MARCH 31,
1995 1994
------------ -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 7,264,900 $ (5,928,165)
Extraordinary loss 5,468,216
Depreciation and amortization 2,885,380 2,572,331
Provision for losses on accounts
receivable 94,769 218,949
Changes in working capital:
(Increase) decrease in receivables (2,005,366) 1,941,975
(Increase) in inventories (4,571,992) (9,986,371)
(Increase) in prepaid expenses (1,711,047) (331,674)
Increase (decrease) in accounts payable 1,824,449 (4,279,318)
Increase in accrued liabilities 1,393,385 1,403,890
----------- ------------
Net cash provided by operations 5,174,478 (8,920,167)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Addition of property, plant
and equipment (5,080,284) (915,835)
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CASH FLOWS FROM FINANCING ACTIVITIES:
(Payments) under line of credit -- (4,000,000)
(Payments) of long-term debt (144,162) (49,548,878)
(Increase) in other assets (512,766)
Proceeds from issuance of long-term debt -- 75,000,000
Refinancing cost -- (8,278,825)
----------- -----------
Net cash (used in) provided by
financing activities (656,928) 13,172,297
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NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (562,734) 3,336,295
CASH AND CASH EQUIVALENTS,
beginning balance 8,903,413 517,900
----------- ------------
CASH AND CASH EQUIVALENTS,
ending balance $ 8,340,679 $ 3,854,195
=========== ============
The accompanying notes are an integral part of these financial statements.
6
BAYOU STEEL CORPORATION
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NOTES TO FINANCIAL STATEMENTS
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MARCH 31, 1995
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(UNAUDITED)
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1) BASIS OF PRESENTATION
---------------------
The accompanying unaudited interim financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
(SEC). Certain information and note disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to those rules and
regulations. Although Bayou Steel Corporation (the Company) believes that
disclosures made are adequate to ensure that information presented is not
misleading, it is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's latest annual report, Form 10-K, filed with the SEC on December 6,
1994 under File Number 33-22603.
In the opinion of the Company, the accompanying unaudited financial
statements present fairly the Company's financial position as of March 31, 1995
and September 30, 1994 and the results of its operations for the six-month
periods ended March 31, 1995 and 1994 and the cash flow statements for the six-
month periods ended March 31, 1995 and 1994.
The results of operations for the six-month periods ended March 31, 1995
and 1994 are not necessarily indicative of the results for the full year.
2) INVENTORIES
-----------
Inventories as of March 31, 1995 and September 30, 1994 consisted of the
following:
(UNAUDITED) (AUDITED)
MARCH 31, SEPTEMBER 30,
1995 1994
------------- --------------
Scrap steel $ 4,328,048 $ 3,811,616
Billets 2,702,134 1,854,211
Finished product 40,841,100 35,651,158
LIFO adjustments (2,834,687) (931,213)
----------- -----------
$45,036,595 $40,385,772
Mill rolls, operating
supplies and other 16,680,947 16,759,778
----------- -----------
$61,717,542 $57,145,550
=========== ===========
7
The inventory valuations are based on LIFO estimates of year-end levels and
prices. The actual LIFO inventories will not be known until year-end quantities
and indices are determined. Shapes, billets, scrap steel, and certain
production supplies are pledged as collateral against the Company's revolving
line of credit.
3) PROPERTY, PLANT AND EQUIPMENT
-----------------------------
Capital expenditures totaled $5.1 million and $.9 million during the six-
month periods ended March 31, 1995 and 1994, respectively. As of March 31,
1995, the estimated costs to complete authorized projects under construction or
contract amounted to $4.7 million.
Betterments, improvements, and additions to property, plant and equipment
are capitalized at cost. Interest during construction of significant additions
is capitalized. Interest of $122,000 and $38,000 was capitalized during the
six-month periods ended March 31, 1995 and 1994, respectively. Interest of
$69,000 was capitalized during the fiscal year ended September 30, 1994.
4) OTHER ASSETS
------------
Other assets consist of costs associated with the issuance of the 10.25%
First Mortgage Notes (the "10.25% Notes") and the Company's revolving line of
credit (see Notes 5 and 6) which are being amortized over the respective lives
of the related debt. In addition, costs associated with financing and
organizing Bayou Steel Corporation (Tennessee) are being capitalized. In the
second quarter of fiscal 1994, the Company wrote off $953,000 of other assets
related to the 14.75% Senior Secured Notes ("the 14.75% Notes") and capitalized
$3,268,000 of deferred financing cost related to the 10.25% Notes. Amortization
expense was $324,000 and $143,000 for the six-month periods ended March 31, 1995
and 1994. Amortization expense was $553,000 for the fiscal year ended September
30, 1994.
5) LONG-TERM DEBT
--------------
On March 3, 1994, the Company issued $75 million of the 10.25% Notes. The
proceeds were used to redeem and defease the Company's 14.75% Notes and to repay
the borrowings under the new revolving line of credit. The remaining proceeds
were used to implement a two year capital expenditure program directed toward
cost reduction and general working capital purposes.
6) SHORT-TERM DEBT
---------------
On November 23, 1993, the Company entered into an amendment and
restatement of its revolving line of credit agreement. The terms of the amended
and restated agreement call for available borrowings up to $30 million including
outstanding letters of
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credit. The agreement is secured by inventory and accounts receivable at
interest rates of prime plus 1% or LIBOR plus 2%.
There were no outstanding borrowings under the line of credit as of March 31,
1995 and for the six-months of fiscal 1995.
7) TAXES
-----
As of September 30, 1994, for tax purposes, the Company had net operating
loss carryforwards ("NOLs") of approximately $319.0 million and $292.9 million
available to offset against regular tax and alternative minimum tax,
respectively.
The NOLs will expire in varying amounts through fiscal 2009. A substantial
portion of the available NOLs, approximately $203 million, expires by fiscal
2000. In addition, the Company has $22.0 million of future tax benefits
attributable to its tax benefit lease which expires in 1996 and which may, to
the extent of taxable income in the year such tax benefit is produced, be
utilized prior to the NOLs. The current provision for income taxes for the six-
month period ended March 31, 1995 represents the alternative minimum tax
estimated to be due based on the current quarter's income.
8) MISCELLANEOUS
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Miscellaneous for the six-month periods ended March 31, 1995 and 1994
included the following:
MARCH 1995 MARCH 1994
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Discounts earned $ 51,513 $ 118,139
Provision for bad debts (94,769) (218,948)
Other 176,372 30,597
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$ 133,116 $ (75,127)
========= =========
9) COMMON STOCKHOLDERS' EQUITY
---------------------------
Common Stock as of March 31, 1995 and 1994 consisted of:
Class A Class B Class C
------- ------- -------
Authorized 24,271,127 4,302,347 100
Outstanding, at end of
quarter 10,613,380 2,271,127 100
Average outstanding for
quarter 10,613,380 2,271,127 100
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10) COMMITMENTS AND CONTINGENCIES
-----------------------------
STRIKE
On March 21, 1993, the United Steelworkers of America Local 9121 (the
"Union") initiated a strike against the Company. The strike is ongoing. There
have been no formal negotiations on a new contract since March 1994.
Differences have thus far precluded an agreement. The Company cannot predict
the impact that a new collective bargaining contract will have on the Company's
results. However, the Company believes a new contract will not have a negative
material effect on the Company's results.
The Union has filed charges with the National Labor Relations Board (the
"NLRB") alleging that the Company has violated the National Labor Relations Act
relating to its bargaining conduct. The Company believes it has meritorious
defenses to these charges, has responded timely to all charges, and believes
that it has negotiated in good faith with the Union. The General Counsel's
Office of Appeals of the NLRB has upheld the decision of the NLRB to dismiss
many of the allegations filed by the Union for unfair bargaining. The Union has
filed for reconsideration of the decision with the General Counsel's Office of
Appeals, which will continue to delay the NLRB's final decision on the charges.
The Company is still faced with other allegations of unfair bargaining initiated
by the USWA. The Company has proposed a settlement offer with the Regional
Office of the NLRB on the remaining outstanding charges. An unfavorable
decision by the NLRB, however, should not materially affect the Company.
The Union has initiated two inspections of the Company's facilities and
records by the Environmental Protection Agency (the "EPA"), which were completed
in June of 1994 and February of 1995. The EPA has issued its report to the
Louisiana Department of Environmental Quality which initially requested the
assistance of the EPA. The EPA did not find any evidence of buried hazardous
waste as the Union alleged.
The Union also initiated a wall-to-wall inspection of the Company's
facilities by the Occupational & Safety Health Administration (the "OSHA"),
which was completed in November of 1994. The OSHA report was recently received
and the Company received various citations and was fined $160,500; the Company
has contested the citations. In the report, it was stated that none of what was
found "showed blatant disregard for safety" and that none of the violations were
deemed "willful". The Company accrued a loss contingency for its estimate of
the ultimate liability arising from these inspections as of March 31, 1995.
ENVIRONMENTAL
The Company is subject to various Federal, state and local laws and
regulations concerning the discharge of contaminants
10
which may be emitted into the air, discharged into waterways, and the disposal
of solids and/or hazardous wastes such as electric arc furnace dust. In
addition, in the event of a release of a hazardous substance generated by the
Company, the Company could be potentially responsible for the remediation of
contamination associated with such a release. In the past, the Company's
operations in some respects have not met all of the applicable standards
promulgated pursuant to such laws and regulations. At this time, the Company
believes that it is in compliance in all material respects with applicable
environmental requirements and that the cost of such continuing compliance under
current operations will not have a material adverse effect on the Company's
competitive position, operations or financial condition, or cause a material
increase in currently anticipated capital expenditures. Under a full two furnace
operation, the Company may be required to make an additional capital investment
to upgrade the air pollution control equipment in order to maintain compliance
with current and future regulations. The Company currently has no mandated
expenditures to address previously contaminated sites and does not anticipate
any infrequent or non-recurring clean-up expenditures. Also, the Company is not
designated as a Potential Responsible Party ("PRP") under the Superfund
legislation. At March 31, 1995, the Company has accrued a loss contingency for
environmental matters.
OTHER
The Company does not provide any post-employment or post-retirement benefits
to its employees.
There are various claims and legal proceedings arising in the ordinary
course of business pending against or involving the Company wherein monetary
damages are sought. It is management's opinion that the Company's liability, if
any, under such claims or proceedings would not materially effect its financial
position.
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SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BAYOU STEEL CORPORATION
By /s/ Richard J. Gonzalez
--------------------------------------
Richard J. Gonzalez
Vice President, Chief Financial Officer,
Treasurer, and Secretary
Date: May 16, 1995
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