Bayou Steel Corporation Reports Third Quarter Results.Business Editors LAPLACE, La.--(BUSINESS WIRE)--Aug. 13, 2002 Bayou bayou (bī`ō, bī`  ) [Louisiana Fr.; from Choctaw bayuk=small stream], term used mainly in U.S. Steel Corporation (AMEX AMEXSee: American Stock Exchange :BYX) reported a loss of $22.2 million for the third quarter of fiscal 2002, of which $14.3 million was for two non-cash accounting charges, and a loss of $33.0 million for the nine months ended June 30, 2002. During the quarter, the Company took a $7.7 million accounting charge to fully reserve any potential future tax benefit that it may derive from its $130 million in net operating loss carryforwards Net operating loss carryforwards Application of losses to offset earnings in future years. (NOLs). The Company still has up to 20 years to use portions of these NOLs to offset future taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. . Additionally, responding to an accounting standard coupled with poor current market conditions, the Company recorded a $6.6 million charge for the write down of certain operating assets Operating Assets Another term for working capital. . Each charge is considered to be nonrecurring and did not impact cash or liquidity. Excluding these two non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. , the loss would have been $7.9 million for the third quarter of fiscal 2002 compared to a $7.5 million loss for the prior year comparable quarter and a $18.7 million loss for the nine months ended June 30, 2002 compared to a $26.7 million loss for the comparable prior year period. "As of June 30 we had $30 million in availability remaining on our revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. We do not anticipate any constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. in availability despite near-term loss projections," stated President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. Jerry Pitts. Pitts added, "Looking at the trend this year, shipments have improved each quarter and, as a result, we have been able to increase production which has resulted in decreasing conversion cost in our first two quarters. In our second quarter the average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. fell to an all time low for Bayou and scrap prices began an upward trend. Throughout Bayou's third quarter, the increase in scrap cost outpaced the increase in selling price as both the domestic and export markets for scrap strengthened. We expect that the surge in scrap cost peaked in July and will remain stable in the fourth quarter." Addressing selling price Pitts commented, "Since the record low selling price experienced in our second quarter, Bayou has had one selling price increase take effect in May; one in mid-July; and an additional increase announced for late September. Collectively, the announced increases total $45 per ton of which we expect to realize at least $35 per ton by the end of our fourth quarter." Excluding non-cash accounting charges, losses from operations for the third quarter were somewhat consistent with those of the prior year quarter despite a selling price decrease of $9 per ton and a scrap cost increase of $16 per ton. "Favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. fuel prices along with our successful efforts to secure tax benefits have helped offset a $25 per ton margin squeeze in the quarter. Comparing the year to date results with those of last year excluding the non-cash accounting charges, Bayou's net loss was $8 million less than the comparable prior year period despite a $13 per ton margin decrease. This improvement was a result of aggressive cost reduction and efficiency enhancement initiatives as well as better fuel prices," Pitts said. "Looking ahead, shipments are expected to continue the favorable trend providing the opportunity to increase production and decrease cost. Our fiscal fourth quarter will see two price increases providing much needed relief to margins. Our biggest immediate challenge is to improve operating efficiencies and control cost to maximize the positive effects of the pending price increases," Pitts concluded. This release contains various "forward-looking" statements which represent the Company's expectation or belief concerning future events. The Company cautions that a number of important factors could, individually or in the aggregate, cause actual results to differ materially from those included in the forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Any forward looking statements contained in this document speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" , and the Company disclaims any intent or obligation to update such forward looking statements. Bayou Steel Corporation manufacturers light structural and merchant bar products in LaPlace, Louisiana LaPlace is a unincorporated community in the Greater New Orleans metropolitan area and a census-designated place in St. John the Baptist Parish, Louisiana, on the East Bank of the Mississippi River. [1] [2] The population was 27,684 at the 2000 census. and Harriman, Tennessee Tennessee, state, United States Tennessee (tĕn`əsē', tĕn'əsē`), state in the south-central United States. . The Company also operates three stocking locations along the inland waterway waterway, natural or artificial navigable inland body of water, or system of interconnected bodies of water, used for transportation, may include a lake, river, canal, or any combination of these. system near Pittsburgh, Chicago, and Tulsa.
FINANCIAL HIGHLIGHTS
(In Thousands, Except Per Share Data, Shipments and Selling Price)
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
--------------------- --------------------
2002 2001 2002 2001
---------- --------- --------- ---------
Net sales $ 38,864 $ 32,581 $ 104,037 $ 106,154
Gross margin (3,250) (2,826) (5,056) (13,569)
SG&A (1,760) (1,811) (5,072) (5,135)
Impairment loss (6,603) -- (6,603) --
--------- --------- --------- ---------
Operating loss (11,613) (4,637) (16,731) (18,704)
Interest and other (2,922) (2,827) (8,552) (7,961)
--------- --------- --------- ---------
Loss before income tax (14,535) (7,464) (25,283) (26,665)
Provision for income tax (7,682) -- (7,682) --
--------- --------- --------- ---------
Net loss $ (22,217) $ (7,464) $ (32,965) $ (26,665)
Net loss per share (1.72) (0.58) (2.56) (2.07)
Shipment tons 140,951 115,421 382,213 375,980
Average selling price
per ton $ 271 $ 280 $ 268 $ 279
June 30, September 30,
2002 2001
------------- --------------
Working Capital $ 52,867 $ 63,393
Debt to Equity 4.4 to 1 1.9 to 1
Liquidity (1) $ 30,000 $ 41,000
(1) Liquidity is defined as cash plus availability under the line of
credit facility.
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