Algoma Steel Announces Results for the Quarter Ended Sept. 30, 1997.SAULT STE. MARIE Sault Sainte Marie — pronounced "Soo Saint Marie" (IPA /su seɪnt məˈɹi/) — is the name of two cities on the Saint Marys River, which forms part of the boundary between the United States and Canada. , Ontario--(BUSINESS WIRE)--Oct. 28, 1997--Algoma Steel Inc.(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). ALG ALG antilymphocyte globulin. ALG antilymphocyte globulin. ALG Antilymphocyte globulin, see there )(NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on ALGSF) Algoma Steel ''See also Algoma (Disambiguation) Algoma Steel Corporation (TSX: AGA) was founded in 1902 by Francis Clergue, an American entrepreneur who had settled in Sault Ste. Marie, Ontario. Tuesday Tuesday: see week. announced its financial results for the quarter ended Sept. 30, 1997 -0-
Financial Highlights
1996 1997
Q3 Q4 Q1 Q2 Q3
Sales (millions) $303.6 $305.1 $299.3 $318.3 $319.8
EBITDA(1) (millions) $46.9 $52.8 $43.7 $39.7 $42.1
Net income (millions) $17.8 $27.5(2)$16.3 $14.1 $14.6
Net income per share $0.39 $0.60 $0.33 $0.27 $0.28
Weighted average shares
outstanding (millions) 45.84 45.84 48.64 51.87 52.09
Per Ton Shipped
Revenue $594 $599 $600 $623 $620
EBITDA(1) $92 $104 $88 $78 $82
1. Earnings before interest, taxes, depreciation and amortization.
2. Includes after-tax effect of round caster sale of $4.8 million
or 10 cents per share.
Steel Shipments (000's of net tons)
1996 1997
Q3 Q4 Q1 Q2 Q3
Sheet 318 319 301 306 312
Plate 119 91 113 104 104
Structurals 46 59 50 60 55
Tubulars 28 40 35 41 45
Total 511 509 499 511 516
-0- Financial Net income in the quarter was $14.6 million or 28 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. compared to $14.1 million or 27 cents per share in the second quarter and $17.8 million or 39 cents per share in the third quarter of 1996. The average number of common shares outstanding was 52.1 million compared to 45.8 million in 1996. Income from operations increased to $27.8 million from $24.8 million in the second quarter but declined from the $32.9 million realized in the third quarter of 1996. Revenue per ton was little changed at $620 per ton compared to $623 per ton in the second quarter. The slabcaster and the hot strip mill operated more efficiently contributing to a decline in operating costs operating costs npl → gastos mpl operacionales . This productivity improvement led to increased raw steel production of 612,000 tons compared to 579,000 tons in the second quarter. A surplus of iron ore pellets caused a six-week shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down of the Tilden Til·den , Samuel Jones 1814-1886. American politician. The Democratic presidential nominee in 1876, he won the popular election but lost the presidency in an electoral college controversy that was settled by a Senate committee in favor of Rutherford Mine to reduce inventory levels. Idle plant expenses incurred as a result of this shutdown amounted to $2.5 million. There are no major facility shutdowns planned for the fourth quarter. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses before working capital was $42.0 million compared to $36.8 million in the second quarter. Pension funding declined to $7.5 million from $10.3 million in the second quarter. A payment of $6.6 million to the Pension Benefits Guarantee Fund was made in September with $5 million related to the election made in 1996 to defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. solvency The ability of an individual to pay his or her debts as they mature in the normal and ordinary course of business, or the financial condition of owning property of sufficient value to discharge all of one's debts. solvency n. deficiency payments. A total of 319,000 shares were issued to senior executives during the quarter pursuant to the corporation's share appreciation rights plan. Operations Raw steel production returned to planned levels in the third quarter due to the increased reliability and efficiency of the slabcaster. The productivity of the hot strip mill improved but did not meet planned levels due primarily to problems with the reheat Re`heat´ v. t. 1. To heat again. 2. To revive; to cheer; to cherish. Verb 1. reheat - heat again; "Please reheat the food from last night" furnaces. The production shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. on the hot strip mill has resulted in a significant increase in slab inventories over the past two quarters. These excess inventories are expected to be eliminated over the next six months. The tube mill operated at a reduced level in July and August due to a shortage of tube rounds and a decision to reduce the inventory of finished tubulars. The mill returned to a 10-turn operation in September and is expected to remain at that level for the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. A three-month blast furnace blast furnace, structure used chiefly in smelting. The principle involved in this means of extracting metals is that of the reduction of the ores by the action of carbon monoxide, i.e., the removal of oxygen from the metal oxide in order to obtain the metal. trial was completed using a full pellet pel·let n. 1. A small pill; a pilule. 2. A small rod-shaped or ovoid mass, as of compressed steroid hormones, intended for subcutaneous implantation in body tissues to provide timed release over an extended period of time. burden. The trial has demonstrated the capability of the furnace furnace, enclosed space for the burning of fuel. There are many kinds of furnaces, the type depending upon the fuel and the use to which the heat produced within it is put. Most familiar are the furnaces used in the heating of buildings. to operate efficiently without Algoma Ore Division sinter sinter Mineral deposit with a porous or vesicular texture (having small cavities). Siliceous sinter is a deposit of opaline or amorphous silica that occurs as an incrustation around hot springs and geysers and sometimes forms conical mounds (geyser cones) or terraces. . The corporation's Iron Ore Sourcing Task Force has concluded that there will be a significant annual cost penalty associated with the continued sourcing of iron units from the Algoma Ore Division in Wawa. Management is preparing a recommendation to the board of directors respecting the future sourcing of the corporation's iron ore requirements. This recommendation is to be tabled with the board by year-end. Capital expenditures increased to $61.4 million in the third quarter compared to $55.7 million in the second quarter. Spending on the DSPC DSPC distearoylphosphatidylcholine DSPC Direct Shell Production Casting DSPC Direct Strip Production Complex DSPC Director Strategic Planning Coordination DSPC Digital Studio Picture Control amounted to $35.6 million (including $11.3 million of capitalized interest Capitalized interest Interest that is not immediately expensed, but rather is considered as an asset and is then amortized through the income statement over time. In the context of project financing, interest that is paid by additional borrowing. ). Other major expenditures include $6.5 million on the coke ovens and $5.4 million on environmental projects for secondary emission controls The selective and controlled use of electromagnetic, acoustic, or other emitters to optimize command and control capabilities while minimizing, for operations security: a. detection by enemy sensors; b. mutual interference among friendly systems; and/or c. in the basic oxygen steelmaking Basic oxygen steelmaking (BOS, BOF, Linz-Donawitz-Verfahren, LD-converter) is a method of steelmaking in which carbon-rich molten iron is made into steel. The process is an improvement over the historically important Bessemer process. shop and a blast furnace water recirculation Noun 1. recirculation - circulation again circulation - the spread or transmission of something (as news or money) to a wider group or area system. Direct Strip Production Complex (DSPC) The DSPC continues to be on schedule with the first slab cast on Aug. 23 and the first coil rolled on Oct. 7. Commissioning and the ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale to full commercial production is proceeding as planned. Operating levels will be gradually increased with full commercial production of 1.6 million tons per year scheduled for mid- mid- pref. Middle: midbrain. 1998. Training and start-up Start-up The earliest stage of a new business venture. costs increased to $2.6 million versus $1.2 million in the second quarter. Some additional costs are expected over the next nine months due to the operation of two casters casters the small rubber wheels on surgical trolleys, patient stretchers, mobile equipment. conductive casters the casters are impregnated with carbon to facilitate the dispersal of static electricity from equipment. and two hot rolling The metallurgical process of Hot rolling, used mainly to produce sheet metal or simple cross sections from billets describes the method of when industrial metal is passed or deformed between a set of work rolls and the temperature of the metal is generally above its mills (existing and the DSPC) during the start-up period. Trade Revenue Canada's investigation into the alleged dumping dumping, selling goods at less than the normal price, usually as exports in international trade. It may be done by a producer, a group of producers, or a nation. of plate in Canada has established the following final dumping margins: China 27.3 percent, Russia 25.2 percent, South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. 18.1 percent and Mexico 26.2 percent. The Canadian International Trade Tribunal The Canadian International Trade Tribunal is an independent quasi-judicial group operating in Canada's trade remedy system. The administrative tribunal, which considers cases of dumping and subsidizing, reports to Parliament through the Minister of Finance. found that imports from these countries threaten injury to the domestic industry and therefore any further dumping will be subject to anti-dumping duties. The preliminary determination in the third administrative review by the U.S. Department of Commerce on plate covering sales to the U.S. by Algoma from August, 1995 to July, 1996 established a minimal margin of 0.37 percent. The final determination is expected in early January, 1998. A fourth administrative review by the U.S. Department of Commerce on plate covering sales to the U.S. from August, 1996 to July, 1997 commenced and is expected to be completed next year. Imports of plate and sheet into Canada have increased dramatically in 1997. The company continues to monitor this situation. Outlook Market demand for all major product lines remains generally strong. Sheet pricing is expected to be relatively stable through the fourth quarter although there are concerns about the effect of increased industry capacity. An improvement in the selling prices for structurals and tubulars is projected in the fourth quarter. -0- A. ADAM Adam, the first man, in the Bible Adam (ăd`əm), [Heb.,=man], in the Bible, the first man. In the Book of Genesis, God creates humankind in his image as a species of male and female, giving them dominion over other life. PRESIDENT AND CHIEF EXECUTIVE OFFICER H. EARL JOUDRIE CHAIRMAN OF THE BOARD Sault Ste. Marie, Ontario For the city of Sault Ste. Marie in Michigan, or the Canadian federal and provincial electoral districts of the same name, see: Sault Ste. Marie. Sault Ste. Marie (nicknamed "the Sault" or "the Soo") is a city on the St. Marys River in Ontario, Canada. Oct. 28, 1997 -0-
Algoma Steel Inc.
1997 Third Quarter Report
Unaudited - Expressed in Canadian dollars
Consolidated statements of income and retained earnings
Three months ended Nine months ended
September 30 September 30
1997 1996 1997 1996
----- ----- ---- ----
(millions of dollars)
Sales $319.8 $303.6 $937.4 $922.8
------ ----- ----- -----
Cost of sales 268.0 247.7 783.0 772.5
Administrative and
selling expense 9.7 9.0 28.9 27.7
Depreciation and amortization 14.3 14.0 43.8 40.7
------ ----- ----- -----
292.0 270.7 855.7 840.9
------ ----- ----- -----
Income from operations 27.8 32.9 81.7 81.9
Net financial expense 5.7 7.9 18.0 27.1
------ ----- ----- -----
Income before income taxes 22.1 25.0 63.7 54.8
------ ----- ----- -----
Provision for income taxes
- current 1.1 5.3 6.7 13.4
- deferred 6.4 1.9 12.0 1.1
------ ------ ------ -----
7.5 7.2 18.7 14.5
------ ------ ------ -----
Net income $14.6 $17.8 $45.0 $40.3
------ ------ ------ -----
------ ------ ------ -----
Net income per common share $0.28 $0.39 $0.88 $0.88
------ ------ ------ -----
------ ------ ------ -----
Weighted average common shares
outstanding - millions 52.09 45.84 50.88 45.84
------ ------ ------ -----
------ ------ ------ -----
Retained earnings
Balance, beginning of period $268.1 $192.4 $237.7 $169.9
Net income 14.6 17.8 45.0 40.3
------ ------ ------ -----
Balance, end of period $282.7 $210.2 $282.7 $210.2
------ ------ ------ -----
Operations
(thousands of net tons)
Raw steel production 612 582 1,776 1,756
------ ------ ------ -----
Steel shipments 516 511 1,527 1,593
------ ------ ------ -----
Algoma Steel Inc.
1997 Third Quarter Report
Unaudited - Expressed in Canadian dollars
Consolidated statements of financial position
As at September 30
---------------------
1997 1996
--------- ----------
(millions of dollars) (note 1)
Current assets
Cash $ - $ 8.1
Accounts receivable 188.5 181.7
Inventories 350.3 358.1
Prepaid expenses 8.8 8.4
--------- ----------
547.6 556.3
--------- ----------
Other assets
Deposits in escrow 39.6 73.2
Fixed assets, net 808.6 607.7
Unamortized blast furnace lining 43.9 52.9
Deferred charges 25.9 23.3
--------- ----------
918.0 757.1
--------- ----------
Total assets 1,465.6 1,313.4
--------- ----------
--------- ----------
Current liabilities
Bank indebtedness 30.1 22.5
Accounts payable and accrued
liabilities 160.4 163.5
Construction holdbacks - DSPC 16.1 10.6
Contingent value rights - 6.7
Current portion of long-term debt 3.3 3.3
--------- ----------
222.4 237.3
--------- ----------
Other liabilities
Long-term debt 451.0 442.1
Accrual for pensions and other
post-employment benefits 351.5 339.1
Deferred income taxes 47.1 29.1
Other long-term liabilities 7.2 6.0
--------- ----------
856.8 816.3
--------- ----------
Shareholders' equity
Common shares 184.8 130.7
Shareholders' deficiency on
restructuring (81.1) (81.1)
Retained earnings 282.7 210.2
--------- ----------
386.4 259.8
--------- ----------
Total liabilities and shareholders'
equity $1,465.6 $1,313.4
--------- ----------
--------- ----------
Note 1. Certain comparative figures have been reclassified to
conform to the presentation adopted in the current period.
Algoma Steel Inc.
1997 Third Quarter Report
Unaudited - Expressed in Canadian dollars
Consolidated statements of cash flow
Three months ended Nine months ended
September 30 September 30
1997 1996 1997 1996
------ ------- ------- -------
(millions of dollars) (note 1) (note 1)
Cash provided by (used in)
Operating activities
Cash from operations $42.0 $35.0 $118.0 $93.9
Increase in operating working
capital (60.2) (35.2) (40.1) (46.3)
------ ------- ------- -------
(18.2) (0.2) 77.9 47.6
------ ------- ------- -------
Investing activities
Net additions to fixed assets
- Direct strip production
complex (24.3) (34.8) (102.3) (156.1)
- Capitalized interest on DSPC(11.3) (6.4) (31.2) (13.8)
- Other (25.8) (12.1) (47.0) (43.0)
Deposits in escrow 6.0 31.1 18.3 103.3
------ ------- ------- -------
(55.4) (22.2) (162.2) (109.6)
------ ------- ------- -------
Financing activities
Repayment of long-term debt (0.8) (0.9) (2.4) (2.3)
Proceeds from long-term debt - 9.7 - 54.7
Financing expenses - (0.3) (0.1) (1.3)
Proceeds from common share issue3.1 - 53.6 -
Increase (decrease) in bank
indebtedness 30.1 17.4 30.1 (0.2)
------ ------- ------- -------
32.4 25.9 81.2 50.9
------ ------- ------- -------
Cash
Change during period (41.2) 3.5 (3.1) (11.1)
Balance, beginning of period 41.2 4.6 3.1 19.2
------ ------- ------- -------
Balance, end of period $ - $8.1 $ - $8.1
------ ------- ------- -------
------ ------- ------- -------
Note 1. Certain comparative figures have been reclassified to
conform to the presentation adopted in the current period.
CONTACT: Algoma Steel Inc. Glen Manchester, 705/945-2400 705/945-2412 (FAX) |
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