Rouge Steel Company Reports Q2 Results
23 July 1997
Rouge Steel Company Posts $10.6 Million Second Quarter Net Income
DEARBORN, Mich., July 23 -- Rouge Steel Company
reported net income of $10.6 million for the second quarter 1997, up $1.3
million or 14% from the first quarter of 1997. Second quarter 1997 net income
was down $1.2 million or 10% from the second quarter of 1996. Earnings per
share in the second quarter 1997 were $0.48. Steel product shipments totaled
803,000 tons, 37,000 tons or 5% higher than the same period a year ago,
reflecting continued sales strength and growth. Raw steel production totaled
732,000 tons, an increase of 27,000 tons over production in the second quarter
1996. This production was supplemented with the purchase of 170,000 tons of
slabs to meet customer demand and to build inventory for the outage of the
Company's "B" blast furnace which is scheduled to be relined beginning in
September 1997.
"We are continuing to make progress on balancing our operations at higher
production levels that will support our productivity and cost targets," said
Carl L. Valdiserri, chairman and chief executive officer. "Completion of our
blast furnace relines and raw material handling feeder system will complete
the major elements of our $275 million capital improvement program. This
quarter's results were adversely affected by labor disruptions at two of the
Company's major automotive customers causing a lower mix of value-added
shipments. In addition, the launch phase of our cold reduction mill
modernization was more extensive than planned. Our order book remains very
strong and we expect it to continue through the balance of the year."
The Company has contracted for 275,000 tons of slabs to be delivered in
the second half of 1997 to ensure an uninterrupted supply of product to its
customers during the 70-day blast furnace outage. Construction of the
Company's hot dipped galvanizing facility, Spartan Steel Coating, a joint
venture company with Worthington Industries, is ahead of schedule and is
expected to begin operating in the second quarter of 1998.
Rouge Steel Company is a fully integrated producer of premium-quality flat
rolled sheet steel with approximately 3,200 employees at its single site
manufacturing facilities and corporate offices located in Dearborn, Michigan.
It principally serves the automotive, converter and service center markets.
ROUGE STEEL COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(Unaudited)
June 30 December 31
1997 1996
Assets
Current Assets
Cash, Cash Equivalents
and Marketable Securities $ 40,222 $ 26,953
Accounts Receivable 143,134 112,588
Inventories 226,554 267,877
Other Current Assets 557 7,483
Total Current Assets 410,467 414,901
Net Property, Plant, and
Equipment 232,014 209,162
Investment in Unconsolidated
Subsidiaries 36,150 15,590
Deferred Charges and Other 38,378 42,300
Total Assets $717,009 $681,953
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $178,554 $162,526
Accrued Liabilities 34,780 35,744
Total Current Liabilities 213,334 198,270
Other Liabilities 53,159 49,342
Excess of Net Assets Acquired
Over Cost 14,178 17,076
Stockholders' Equity 436,338 417,265
Total Liabilities and
Stockholders' Equity $717,009 $681,953
ROUGE STEEL COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except per share amounts)
Unaudited
For the
For the Quarter Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
Total Sales $355,205 $348,967 $689,377 $669,152
Costs and Expenses
Costs of Goods Sold 332,810 324,883 646,413 630,909
Depreciation and
Amortization 3,671 3,327 7,218 6,068
Selling and
Administrative
Expenses 6,197 6,559 11,782 12,433
Amortization of
Excess of Net
Assets Acquired
Over Cost (1,449) (1,449) (2,898) (2,898)
Total Costs and
Expenses 341,229 333,320 662,515 646,512
Operating Income 13,976 15,647 26,862 22,640
Net Interest Income 473 1,360 764 2,732
Other - Net 335 75 705 473
Income Before Income
Taxes, Minority
Interest and Equity
in Loss of
Unconsolidated
Subsidiaries 14,784 17,082 28,331 25,845
Income Tax Provision (3,638) (5,075) (7,718) (7,609)
Minority Interest in
Consolidated Subsidiary - (202) - 237
Equity in Loss of
Unconsolidated
Subsidiaries (524) - (707) -
Net Income $10,622 $11,805 $19,906 $18,473
Earnings Per Share $0.48 $O.54 $0.91 $0.85
Weighted Average Shares
Outstanding (000) 21,922 21,834 21,918 21,822
Shipments (000)NT 803 766 1,547 1,468
Raw Steel Production
(000)NT 732 705 1,479 1,359
SOURCE Rouge Steel Company