Birmingham Steel Reports Strong Fourth-quarter and Fiscal 1999 Results for Its Core Mini-Mill and Scrap Operations.BIRMINGHAM, Ala.--(BUSINESS WIRE)--Sept. 15, 1999-- Net Loss for Quarter and Year Reflects $191.3 Million Charge for Discontinued Operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. and Write-off of West Coast Scrap Business "Our Core Mini-mill and Scrap Operations Are Highly Efficient and Solidly Profitable, Despite Record Imports and Reductions in Steel Prices and Margins," Says CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Robert A. Garvey Birmingham Steel Corporation (NYSE NYSE See: New York Stock Exchange : BIR BIR British Institute of Radiology BIR Bureau of Internal Revenue BIR Bureau of International Recycling BIR Baculovirus IAP Repeat BIR Biomedical Imaging Resource BIR Bureau of Intelligence and Research (US State Department) ) today announced that its core mini-mill and scrap operations achieved strong financial results for the fourth quarter and fiscal year ended June 30, 1999. The Company also reported a consolidated net loss for the fiscal fourth quarter and year, which was primarily attributable to its decision to divest its SBQ SBQ Sociedade Brasileira de Quimica (Portugese) SBQ Special Bar Quality (special bar quality) operations and to write-off the Company's 50% stake in its unprofitable Pacific Coast Recycling joint venture. -0-
Financial highlights for the quarter and year ended June 30, 1999
include:
Quarter Year
EPS from Core Operations (excluding
start-up expenses) $0.20 $1.19
EPS from Continuing Operations ($0.59) $0.11
EPS from Discontinued Operations ($6.31) ($7.72)
Reported EPS ($6.90) ($7.61)
CORE OPERATIONS Despite continued adverse industry conditions, including record-high import levels that constrained shipping levels and reduced selling prices, Birmingham Steel achieved strong fourth-quarter and full-year results throughout its core merchant and rebar re·bar n. 1. A rod or bar used for reinforcement in concrete or asphalt pourings. 2. A group of such rods forming a grid. [re(inforcing) bar.] businesses. The Company's core mini-mill operations, which together provide industrial customers a broad range of merchant and rebar products, include facilities in Kankakee, Illinois Kankakee is a city in Kankakee County, Illinois, in the United States. As of the 2000 census, the city population was 27,491. It is the county seat of Kankakee CountyGR6. It is included in the Combined Statistical Area for Chicago. ; Joliet, Illinois The city of Joliet is located 40 miles southwest of Chicago. It holds the county seat of Will County and is also incorporated in Kendall County. As of the 2000 census, the city had a total population of 106,221. ; Birmingham, Alabama Birmingham (pronounced [ˈbɝmɪŋˌhæm]) is the largest city in the U.S. state of Alabama and is the county seat of Jefferson County. ; Jackson, Mississippi Jackson is the capital and the most populous city of the U.S. State of Mississippi. It is one of the county seats of Hinds County; Raymond is the other county seat. As of the 2000 census Jackson's population was 184,256. ; Seattle, Washington  This page is protected from moves until disputes have been resolved on the .The reason for its protection is listed on the protection policy page. ; and Cartersville, Georgia Cartersville is a city in Bartow County, Georgia, in the United States. It was named after Col. Farrish Carter. As of the 2000 census, the city population was 15,925. Growth is evident as the community's population rose to 21,274 as of the 2005 census. . The Company's core businesses also include scrap operations in Jackson, Mississippi and Vancouver, British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography , and the Port Everglades Port Everglades, in Broward County, Florida, is one of the United States's top container ports with more than 5,400 ships at call in a year, a major petroleum storage and distribution hub, and a United States Navy liberty port. It is the deepest of all Florida ports. Steel sales and distribution business in Ft. Lauderdale, Florida. For the fourth quarter ended June 30, 1999, Birmingham Steel's core operations generated earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $15.7 million. EBITDA and operating income from core operations were $35.3 million and $18.7 million, respectively, in the fourth quarter last year. EBITDA and operating income from core operations in the fiscal 1999 fourth quarter also included $3.9 million of start-up expenses associated with the new Cartersville rolling facility, which began start-up operations in March, 1999. In the same period last year, pre-operating expenses at Cartersville were $616,000. For the fiscal 1999 fourth quarter, earnings per share from core operations, excluding start-up expenses, were $0.20. Fiscal 1999 fourth-quarter shipments by the Company's core operations increased significantly from the immediately preceding quarter, reflecting a modest reduction in steel imports. Fourth-quarter net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight from core operations were $184.0 million, versus $214.2 million last year, as shipments fell to 642,000 tons from 678,000 tons in the same period last year. For the fiscal year ended June 30, 1999, core operations generated EBITDA of $106.9 million and operating income of $57.0 million. EBITDA and operating income from core operations in fiscal 1998 were $116.4 million and $66.0 million, respectively. Core operations EBITDA in fiscal 1999 also included pre-operating and start-up expenses at Cartersville of $12.9 million, versus $1.3 million in fiscal 1998. Earnings per share from core operations, excluding start-up expenses, were $1.19. Net sales from core operations in fiscal 1999 were $709.9 million, versus $836.9 million in the prior year. Shipments from core operations in fiscal 1999 were 2,389,000 tons, compared with 2,667,000 tons in the prior year. Robert A. Garvey, Chairman and Chief Executive Officer, said: "Our core mini-mill and scrap operations are highly efficient and solidly profitable, despite record imports and resulting reductions in steel prices and margins. Reflecting the strength of our core operations and with the restructuring charges behind us, we fully expect the Company to return to net profitability in the first quarter of fiscal 2000. I am confident, moreover, that once the Company's strategic restructuring is completed, we will be well-positioned to achieve increasingly strong operational and financial results, continue to reduce debt, increase our strategic and financial flexibility and, in turn, achieve our overriding objective of building shareholder value." Brian F. Hill, who joined the Company in June 1999 as 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. after 15 years in the steel and steel-related businesses with Cargill, Inc., including serving as Executive Vice President of Operations at North Star Steel, said: "Birmingham Steel has grown from what was essentially a one-product (rebar) company serving only one industry (construction), to a well-balanced, broadly based company providing a wide range of merchant and rebar products to multiple industries. While adverse market conditions and operational challenges in the Company's SBQ operations have masked the strength and progress of our core merchant, rebar and scrap businesses, I am confident that these core operations will provide the platform for the future growth and success of Birmingham Steel." NON-CORE OPERATIONS As announced on August 18TH, Birmingham Steel is pursuing a strategic restructuring in which the Company will focus on its strong and profitable core mini-mill and scrap operations. Accordingly, the Company announced that it will divest its SBQ operations, which originally became part of the Company when it acquired American Steel & Wire Corporation (AS&W) in 1993. The Company's decision to discontinue its SBQ operations, which include its Memphis and Cleveland facilities and the Company's 50% stake in American Iron Reduction, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ("AIR"), was attributable to continuing financial and operational challenges that have required a major and continuing commitment of management and financial resources and have masked the strength and success of the Company's core rebar, merchant and scrap businesses. Losses from the SBQ operations have also constrained the Company's financial flexibility by significantly increasing its debt level. Mr. Garvey said: "Questionable strategic and operational decisions made before 1996 led directly to the continuing challenges experienced by the SBQ operations and the adverse impact to shareholder value that has occurred over the past three years." Mr. Garvey continued: "Although the SBQ operations have made meaningful progress, we believe that the long-term interests of the Company's shareholders will be better served by building upon our core rebar, merchant and scrap operations. We intend to seek a buyer for the SBQ operations whose business strategy and operational resources are more aligned with those operations, and who is prepared to help the SBQ operations realize their full potential. We believe the SBQ operations have significant potential in a consolidating industry. Meanwhile, we plan to support the SBQ operations to enhance their ability to achieve continued operational and financial progress." Also as previously announced, the Company is exploring its options with regard to its investment in Pacific Coast Recycling, LLC, a West Coast scrap joint venture. Because the activities of PCR PCR polymerase chain reaction. PCR abbr. polymerase chain reaction Polymerase chain reaction (PCR) are not strategic to the Company's core operations, and also because of continued economic distress in the Asian export market for scrap, the Company has decided to write-off its investment in PCR. REPORTED CONSOLIDATED RESULTS FOR FISCAL 1999 FOURTH-QUARTER AND FULL-YEAR In the financial statements for the fourth quarter and fiscal year ended June 30, 1999, the Memphis, Cleveland and AIR operations have been presented as Discontinued Operations. In accordance with the provisions of generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "), losses in fiscal 1999 associated with PCR have been included in the Company's results from Continuing Operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the . However, as a result of the write-down of the PCR investment in the fiscal 1999 fourth quarter, future losses at PCR are not expected to adversely affect the Company's financial results. On a consolidated basis, the Company's net loss for the fourth quarter of fiscal 1999 from all operations, including Continuing Operations and Discontinued Operations, was $204.7 million, or $6.90 per share. For the fiscal year ended June 30, 1999, the Company reported a consolidated net loss of $224.2 million, or $7.61 per share. The consolidated net loss in the fourth quarter of the prior fiscal year was $4.2 million, or $0.14 per share. Net income for the fiscal year ended June 30, 1998 was $1.6 million, or $0.05 per share. Financial Results from Continuing Operations For the fourth quarter of fiscal 1999, the Company reported a net loss from Continuing Operations of $17.4 million, or $0.59 per share. Because of the special income tax treatment afforded to capital loss transactions, which the Company's write-off of its investment in PCR is considered, the Company's effective tax rate for Continuing Operations for fiscal year 1999 was 81.9%. The fourth-quarter results include a pre-tax charge of $19.3 million related to the write-off of the Company's 50% stake in PCR and $3.9 million of start-up expenses associated with the new Cartersville rolling mill rolling mill: see steel. . Excluding losses associated with PCR and start-up expenses, earnings per share from Continuing Operations for the fourth quarter were $0.20. For the year-ended June 30, 1999, the Company's Continuing Operations recorded net income of $3.3 million, or $0.11 per share. Excluding losses associated with PCR and start-up expenses related to Cartersville, earnings per share from Continuing Operations were $1.19. Financial Results from Discontinued Operations For the fourth quarter of fiscal 1999, the Company recorded a net loss from Discontinued Operations of $187.3 million, or $6.31 per share. Losses from Discontinued Operations included: (1) the fiscal 1999 fourth-quarter loss of $14.1 million for these operations; and (2) a $173.2 million provision for the estimated losses to be incurred in connection with the disposition of the SBQ operations. For the fiscal year ended June 30, 1999, the net loss from Discontinued Operations was $227.5 million, or $7.72 per share. OTHER MATTERS The Company's total debt outstanding at June 30, 1999 was $521.5 million, down from a peak of $617.2 million in August 1998. Total debt at June 30, 1998 was $568.9 million. The Company is currently in discussions with its lenders concerning the terms of appropriate modifications of its various debt agreements, including the terms of an appropriate collateral package, to ensure availability of funds under the Company's outstanding debt facilities. The Company expects to complete these discussions prior to the filing of its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . Credit Suisse First Boston Credit Suisse First Boston was originally the trading name of the Financière Crédit Suisse-First Boston, a London-based 50-50 investment banking joint venture formed in 1978 between the First Boston Corporation and Credit Suisse. is the Company's principal financial advisor on matters related to the restructuring, and will be assisted by Banc of America Securities LLC. Birmingham Steel operates in the mini-mill sector of the steel industry and conducts operations at facilities located across the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The common stock of Birmingham Steel Corporation is traded on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol "BIR." Notice: except for historical information, the matters described in this press release are forward-looking statements within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including economic conditions, market demand factors, equipment breakdowns or failures, Birmingham Steel's success in implementing the restructuring plan, as well as other risks described from time to time in the Company's periodic and special filings with Securities and Exchange Commission. Any forward-looking statements contained in this document speak only as of the date hereof, and the Company disclaims any intent or obligation to update such forward-looking statements. Birmingham Steel Corporation (the "Company") and certain other persons named below may be deemed to be participants in the solicitation of proxies in connection with the 1999 annual meeting of shareholders. The participants in this solicitation may include the directors of the Company (William J. Cabaniss William J. Cabaniss, Jr. was the ambassador from the United States to the Czech Republic from 2004 until 2006. He is a business man from Birmingham, Alabama who also served in the Alabama House of Representatives from 1978 to 1982 and the Alabama State Senate from 1982 to 1990. , Jr., C. Stephen Clegg, Alfred C. DeCrane, Jr., E. Mandell de Windt, Robert A. Garvey, E. Bradley Jones This article is about the football player. For the racing driver, see Brad Jones. Bradley Jones (born March 19, 1982 in Armadale, Australia) is an Australian football player. , Robert D. Kennedy, Richard de J. Osborne and John H. Roberts) and the following executive officers, members of management and employees of the Company: Robert A. Garvey (Chairman and Chief Executive Officer), Brian F. Hill (Chief Operating Officer), Kevin E. Walsh (Executive Vice President - Chief Financial Officer), William R. Lucas William R. Lucas (born March 1, 1922) was the fourth Director of the NASA Marshall Space Flight Center. He served as director from June 15, 1974 to July 3, 1986; when he was forced to resign as a result of the Challenger tragedy. , Jr. (Managing Director - Southern Region), Jack R. Wheeler (Managing Director - Northern Region), Raymond J. Lepp (Managing Director - Western Region), J. Daniel Garrett (Vice President - Finance & Control). Catherine W. Pecher (Vice President - Administration & Corporate Secretary), Charles E. Richardson, III (General Counsel), Philip L. Oakes (Vice President - Human Resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. ), W. Joel White Joel White, the son of author E. B. White and New Yorker Magazine editor Katharine Sergeant Angell White was a renowned U.S. naval architect known for his classic and beautiful designs including the W-Class of boats. (Vice President - Information Technology) and Robert G. Wilson (Vice President - Business Development). As of the date of this communication, none of the foregoing participants individually owned in excess of 1 percent of the Company's common stock or in the aggregate in excess of 3 percent of the Company's common stock. The Company has retained Credit Suisse First Boston Corporation ("CSFB CSFB Credit Suisse First Boston CSFB Cyclically Shifted Filter Bank ") and Banc of America Securities LLC ("BAS BAS abbr. 1. Bachelor of Agricultural Science 2. Bachelor of Applied Science ") to act as its financial advisors, for which CSFB and BAS will receive customary fees, as well as reimbursement of reasonable out-of-pocket expenses out-of-pocket expenses n. moneys paid directly for necessary items by a contractor, trustee, executor, administrator or any person responsible to cover expenses not detailed by agreement. . In addition, the Company has agreed to indemnify To compensate for loss or damage; to provide security for financial reimbursement to an individual in case of a specified loss incurred by the person. Insurance companies indemnify their policyholders against damage caused by such things as fire, theft, and flooding, which CSFB, BAS and certain related persons against certain liabilities, including liabilities under federal securities laws, arising out of their engagement. Each of CSFB and BAS are investment banking firms that provide a full range of financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. for institutional and individual clients. Neither CSFB nor BAS admit that it or any of its directors, officers or employees is a "participant," as defined in Schedule 14A promulgated prom·ul·gate tr.v. prom·ul·gat·ed, prom·ul·gat·ing, prom·ul·gates 1. To make known (a decree, for example) by public declaration; announce officially. See Synonyms at announce. 2. under the Securities Exchange Act of 1934, as amended, in the solicitation, or that Schedule 14A requires the disclosure of certain information concerning CSFB or BAS. In connection with their role as financial advisors to the Company, each of CSFB and BAS, and the following investment banking employees of CSFB or BAS, as the case may be, may communicate in person, by telephone or otherwise with a limited number of institutions, brokers or other persons who are stockholders of the Company: Peter R. Matt, William C. Sharpstone and Murari S. Rajan of CSFB; and Gidon Y. Cohen cohen or kohen (Hebrew: “priest”) Jewish priest descended from Zadok (a descendant of Aaron), priest at the First Temple of Jerusalem. The biblical priesthood was hereditary and male. , Shawn B. Welch and Sumner T. Farren of BAS. In the normal course of their business, both CSFB and BAS regularly buy and sell securities issued by the Company for their own account and for the accounts of their respective customers, which transactions may result in CSFB, BAS or their respective associates having a net "long" or net "short" position in the Company's securities, or option contracts or other derivatives in or relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc such securities. As of September 3, 1999, CSFB had a net long position of 14,200 shares of the Company's common stock and as of September 8, 1999, BAS had a net long position of 264,224 shares of the Company's common stock. -0-
BIRMINGHAM STEEL CORPORATION
Financial Highlights
(In thousands except for per share date)
Three Months Ended June 30,
1999 1998
Revenues $ 183,967 $ 214,208
Net income (loss) from
continuing operations (17,378) 5,780
Loss from discontinued
operations (187,285) (10,025)
Net Loss (204,663) (4,245)
Earnings per share:
From continuing operations $ (0.59) $ 0.19
From discontinued operations $ (6.31) $ (0.33)
Net Loss $ (6.90) $ (0.14)
From core operations
(excluding start-up costs) $ 0.20 $ 0.51
Average shares outstanding 29,673,678 29,646,728
Twelve Months Ended June 30,
1999 1998
Revenues $ 709,876 $ 836,875
Net income from
continuing operations 3,284 27,945
Loss from discontinued
operations (227,520) (26,316)
Net Income (Loss) (224,236) 1,629
Earnings per share:
From continuing operations $ 0.11 $ 0.94
From discontinued operations $ (7.72) $ (0.89)
Net Income (Loss) $ (7.61) $ 0.05
From core operations
(excluding start-up costs) $ 1.19 $ 1.37
Average shares outstanding 29,481,185 29,674,081
BIRMINGHAM STEEL CORPORATION
CONSOLIDATED INCOME STATEMENTS
(In thousands, expect number of shares and per share information)
Three Months Ended Year Ended
June 30, June 30,
1999 1998 1999 1998
Net sales $ 183,967 $ 214,208 $ 709,876 $ 836,875
Cost of sales:
Other than depreciation
and amortization 143,901 172,575 568,688 689,347
Depreciation and
amortization 10,887 9,544 40,227 37,954
Gross profit 29,179 32,089 100,961 109,574
Provision for loss on mill
modernization program,
pre-operating/start-up
costs and unusual items 3,923 616 12,854 1,305
Selling, general and
administrative 11,287 13,148 36,625 44,214
Interest 9,396 2,231 24,248 17,261
Minority Interest 1,771 400 5,496 1,643
6,344 16,494 32,730 48,437
Other income, net (7) 6,966 9,931 12,794
Loss from equity
investments (20,027) (14,268) (24,563) (18,326)
Income (loss) from
continuing operations
before income taxes (13,690) 9,192 18,098 42,905
Provision for (benefit
from) income taxes 3,688 3,412 14,814 14,960
Income (loss) from
continuing operations $ (17,378) $ 5,780 $ 3,284 $ 27,945
Discontinued operations:
Loss from operation of
SBQ division
(net of income tax
benefit) (14,102) (10,025) (54,337) (26,316)
Loss on disposal of SBQ
division, including
provision for estimated
operating losses during
phase-out period (net of
income tax benefit) (173,183) - (173,183) -
Net income (loss) $ (204,663)$ (4,245) $(224,236) $ 1,629
Weighted average shares
outstanding 26,673,678 29,646,728 29,481,185 29,674,081
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