Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission file number 0-2389
ROANOKE ELECTRIC STEEL CORPORATION
(Exact name of Registrant as specified in its charter)
Virginia 54-0585263
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 13948, Roanoke, Virginia 24038-3948
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (540) 342-1831
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No Par Value
(Title of class)
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (x)
State the aggregate market value of the voting stock held by nonaffiliates
of the Registrant.
Aggregate market value at December 31, 1999: $163,992,449
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of December 31, 1999.
10,993,388 Shares outstanding
Portions of the following documents are incorporated by reference:
(1) 1999 Annual Report to Stockholders in Part II.
(2) Proxy Statement dated December 27, 1999 in Part III.
PART I
ITEM 1. BUSINESS
(a) General Development of Business.
During the fiscal year ended October 31, 1999, the Registrant
continued for the most part to operate its business as it has the past four
years by manufacturing merchant steel bar products, fabricating open-web
steel joists and concrete reinforcing steel, and extracting scrap steel and
other materials from junked automobiles. Roanoke Technical Treatment &
Services, Inc., a Roanoke, Virginia subsidiary, was formed in 1990 to
license a process for the treatment of electric arc furnace dust, and
currently is uncertain as to a specific time for start-up. During fiscal
year 1994, the Registrant's auto shredding subsidiary, Shredded Products
Corporation, completed construction of a modern facility in Rocky Mount,
Virginia, and in November 1994 began operations at this locality, at a
total investment in excess of $8,000,000 for plant and equipment. This
facility, with its own landfill, is providing considerable savings in waste
disposal costs. In addition, cost savings and better metal recoveries are
being achieved through the use of the more technologically advanced
equipment.
During the later part of 1996, the Registrant, at its main plant,
completed the installation of a new ladle refining furnace and the upgrade
of an electric arc furnace, for approximately $17,000,000. With this new
state-of-the-art equipment in operation, the Registrant has increased raw
steel production, improved quality, reduced production costs and improved
operating efficiencies. In January 1996, Socar, Inc. , a South Carolina
subsidiary, sold its long-time idle plant in Bucyrus, Ohio to the
unaffiliated manufacturer who had been leasing the facility for several
years under a lease-purchase agreement, for a final settlement price of
$130,000.
On December 16, 1998, the Registrant acquired all of the
outstanding common shares of Steel of West Virginia, Inc. ("SWVA"), a
Huntington, West Virginia steel manufacturer, upon completion of its cash
tender offer. The consideration given was approximately $117.1 million,
including the assumption of approximately $52.3 million of indebtedness,
which translates into $10.75 net per SWVA share, for approximately
6,028,000 shares on a fully-diluted basis. Upon merger, SWVA became a
wholly-owned subsidiary of Roanoke Electric Steel Corporation, and each
share of SWVA common stock not purchased in the offer (approximately 3.6%
of SWVA's outstanding shares) was converted, subject to appraisal rights,
into the right to receive $10.75 in cash, without interest. On the date of
acquisition the Registrant closed on $180,000,000 of secured credit
facilities with a syndicate of four banks. The facilities are comprised of
a $150,000,000 seven year term loan and a $30,000,000 five year revolver.
The term loan was used to purchase all of the outstanding capital stock of
SWVA, and refinance both the existing term debt of the Registrant and most
of SWVA's bank debt assumed through the merger. SWVA operates a mini-mill
in Huntington, West
PART I
(con'd.)
Virginia, and steel fabrication facilities in Huntington and Memphis,
Tennessee, while custom designing and manufacturing special steel products
principally for use in the construction of truck trailers, industrial lift
trucks, off-highway construction equipment (such as bulldozers and
graders), manufactured housing, guardrail posts and mining equipment. The
Registrant and SWVA do not generally compete as regards customers and
products. The acquisition was accounted for as a purchase. Accordingly,
the results of operations and cash flows were reflected in the consolidated
financial statements from the date of acquisition, and the acquired assets
and liabilities were included in the 1999 consolidated balance sheet at
values based on a purchase price allocation, rendered through appraisals
and other evaluations.
The other subsidiaries of the Registrant, John W. Hancock, Jr.,
Inc. and RESCO Steel Products Corporation, have had no material changes in
operations or in the mode of conducting their business for the past five
years. John W. Hancock, Jr. founded both the Hancock joist subsidiary and
its parent, Roanoke Electric Steel Corporation, and served on the
Registrant's Board of Directors as Chairman of the Executive Committee
until his death in March 1994.
(b) Financial Information about Industry Segments.
The Registrant's business consists of one industry segment or
line of business, which is the extracting of scrap metal from discarded
automobiles and the manufacturing, fabricating and marketing of merchant
steel bar products, reinforcing bars, open-web steel joists and billets.
The industry segment consists of three classes of products - merchant steel
products, fabricated bar joists and reinforcing bars and billets.
PART I
(con'd.)
FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS
AND CLASSES OF PRODUCTS OR SERVICES
1999 1998 1997
Sales to Unaffiliated Customers:
Merchant Steel $205,420,966 $116,226,463 $113,588,649
Bar Joists & Rebar $125,854,046 $121,000,869 $115,017,371
Billets $ 41,687,938 $ 57,976,642 $ 36,502,619
Total Consolidated Sales $372,962,950 $295,203,974 $265,108,639
Net Earnings from Operations $ 22,647,918 $ 19,875,409 $ 16,883,068
Identifiable Assets $352,129,222 $189,210,889 $176,860,219
(c) Narrative Description of Business.
(1) (i) The Registrant manufactures merchant steel products
consisting of Angles, Plain Rounds, Flats, Channels and Reinforcing Bars of
various sizes and lengths. The principal markets for the Registrant's
products are steel fabricators and steel service centers. The products are
distributed directly to customers from orders solicited by a paid sales
staff of the Registrant.
The Registrant's subsidiary, Shredded Products Corporation, is
involved in the extraction of scrap iron and steel and other metals from
junked automobiles and other waste materials. Almost all of the ferrous
material is used by the Parent as raw materials. The non-ferrous metals
are sold to unrelated purchasers.
Two other subsidiaries, John W. Hancock, Jr., Inc. and Socar,
Inc., are engaged in the manufacturing of long- and short-span steel
joists. Joists are open-web steel horizontal supports for floors and
roofs, used primarily in the construction of commercial and industrial
buildings such as shopping centers, factories, warehouses, hospitals,
schools, office buildings, nursing homes, and the like. Joists are
cheaper and lighter than structural steel or reinforced concrete. The
joists are distributed by these subsidiaries to their customers from orders
solicited by manufacturer's representatives and pursuant to successful bids
placed directly by the companies.
PART I
(con'd.)
The Registrant's subsidiary, RESCO Steel Products Corporation,
fabricates concrete reinforcing steel by cutting and bending rebars to
contractors' specifications. The rebars are distributed to contractors
from orders solicited by a paid sales staff and pursuant to successful bids
placed directly by the subsidiary.
The Registrant's subsidiary, Steel of West Virginia, Inc.,
operates both a steel mini-mill which produces specialty steel sections,
and fabrication facilities which add finishing operations to create
custom-designed products placed directly into customers' assembly lines.
The niche markets supplied with these cross-member and sub-frame section of
products include truck trailers, industrial lift trucks, guardrail posts,
manufactured housing, off-highway construction equipment, and mining
equipment. These products are marketed by senior management and in-house
sales representatives of SWVA, whose sales efforts cover all of the
continental United States, and to a very small degree, certain foreign
markets.
(ii) The Registrant has not in fiscal 1999 introduced a new
product or begun to do business in a new industry segment that will require
the investment of a material amount of assets or that otherwise is
material.
(iii) The Registrant's main raw material, scrap steel, is
supplied for the most part by scrap dealers within a 250 mile radius of the
mill. This raw material is purchased through the David J. Joseph Company,
scrap brokers. The Shredded Products subsidiary supplies 10,000 to 15,000
tons of scrap per month. Although scrap is generally available to the
Registrant, the price of scrap steel is highly responsive to changes in
demand, including demand in foreign countries as well as in the United
States. The ability to maintain satisfactory profit margins in times when
scrap is relatively high priced is dependent upon the levels of steel
prices, which are determined by market forces. Alloys and other materials
needed for the melting process are provided by various domestic and foreign
companies.
Shredded Products Corporation often experiences difficulty in
purchasing scrap automobiles at a satisfactory level. Competition from an
increasing number of shredding operations and reluctance by dealers to sell
scrap automobiles due to market conditions are the main causes. High
offering prices generally increase the supply; however, the increased cost
to produce sometimes is very competitive with the price of similar scrap
that can be purchased on the outside.
Substantially all of John W. Hancock, Jr., Inc.'s steel
components are purchased from the Parent, which is located conveniently
nearby and, therefore such components are generally available to the
Company as needed.
PART I
(con'd.)
RESCO Steel Products Corporation purchases most of its steel
components from suppliers within its market area, determined mainly by
freight cost. Such components would be generally available to the Company,
since the Parent could produce and supply this raw material, as needed.
Socar, Inc. receives most of its raw steel material from the
Parent and other nearby suppliers, the determinant usually being freight
cost. The availability of raw materials is not of major concern to the
Company, since the Parent could supply most of its needs.
Steel of West Virginia, Inc., like the parent, uses scrap steel
as its main raw material. Even though the purchase of steel scrap is
subject to market conditions largely beyond its control, the Company is
located in a scrap surplus region, and therefore typically maintains less
than a one month supply of scrap, which keeps inventory costs to a minimum.
Although one scrap dealer supplies 25% to 30% of SWVA's requirements, the
Company believes that a number of adequate sources of scrap and other raw
materials that it uses are readily available. SWVA has historically been
successful in passing on scrap cost increases through price increases,
however, the effect of market price competition has limited the Company's
ability to increase prices.
(iv) The Registrant currently holds no patents, trade marks,
licenses, franchises or concessions that are material to its business
operations.
(v) The business of the Registrant is not seasonal.
(vi) The Registrant does not offer extended payment terms to its
customers nor is it normally required to carry significant amounts of
inventory to meet rapid delivery requirements of customers; although, at
times market conditions have required the stockpiling of popular bar
products for rapid delivery. Working capital practices generally remain
constant during the course of business except when the Registrant
determines it to be advantageous to stockpile raw materials due to price
considerations.
(vii) During fiscal year 1999, sales (tons) by the Registrant to
Steel of West Virginia, Inc., John W. Hancock, Jr., Inc., Socar, Inc. and
RESCO Steel Products Corporation, wholly-owned subsidiaries, were
approximately 5%, 10%, 6% and less than 1% of the Registrant's total sales
(tons), respectively. The largest nonaffiliated customer purchased
approximately 18% of total sales (tons) --- 6% of total sales (dollars).
Alternative marketing and production arrangements were available to the
Registrant, so that the loss of this nonaffiliate would not have had a
materially adverse effect on the Registrant and its subsidiaries taken as a
whole.
(viii) The Registrant is of the opinion that the amount of its
backlog is not generally material to an understanding of the business. All
backlog is shipped within the current fiscal year.
PART I
(con'd.)
(ix) None of the business of the Registrant is subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of the Government.
(x) The Registrant competes with steel-producing mills of
similar size operative within its market region and also larger mills
producing similar products. The market region in which the Registrant
sells its products mainly consists of the majority of states east of the
Mississippi River. Price, including transportation cost, is the major
determinant in securing business. Economic recession began to intensify
competition during 1990, as selling prices dropped due to a softening in
demand. This trend continued through most of 1991 with sharp declines in
selling prices due to poor demand and excess inventories and capacity at
most mills, although by year-end prices rose slightly. In comparison to
the 1991 recession lows, order rates in 1992 showed some improvement while
selling prices remained flat. In 1993, market conditions and demand
improved significantly, while industry-wide selling prices increased to
offset higher raw material costs. Demand in 1994 was fueled by continued
improvement in business conditions and economic growth, with higher raw
material costs again forcing selling prices upward, although some of the
increased selling prices were demand driven. Even though market conditions
and backlogs remained strong for much of 1995, shipments were flat due to
customers' inventory reductions, while improved selling prices were
attributable to higher raw material costs and rising demand, although by
year-end prices fell slightly. Demand and backlogs continued high through
1996, allowing for increased bar product shipments, in spite of increased
competition, which forced sharp reductions in selling prices throughout the
industry. As competition eased during 1997, bar product shipments
increased with higher demand, causing improvements in order levels,
backlogs and prices. Strong business conditions kept bar prices up during
fiscal 1998, in spite of the temporary drop in merchant bar shipments,
caused by excess inventories at steel service centers. On December 16,
1998, the Registrant acquired 100% of the capital stock of Steel of West
Virginia, Inc. ("SWVA"), a steel manufacturer, and 1999 results reflect the
operations of SWVA from the date of acquisition. The 1998 financial
statements have not been restated to include SWVA because the acquisition
was treated as a purchase for accounting purposes. Consequently, the
significant increase in 1999 sales was due, primarily, to the inclusion of
SWVA's revenues in consolidated sales. Increased competition from foreign
and domestic producers prompted industry-wide list price reductions for bar
products at the beginning of fiscal 1999, and prices had not fully
recovered by year end. Excess inventories at steel service centers and a
shortage of transportation equipment contributed to the slight reduction in
tons shipped of bar products as bar markets were generally good throughout
the year.
The joist business is highly competitive. Due to similarity of
product, relatively small price differences are often determinative in
placing business. Ability to meet the customer's time requirements for
delivery also
PART I
(con'd.)
is important in securing business. Competing successfully becomes more
difficult with the distance to point of delivery due to transportation
costs. In 1990, selling prices and order rates declined as a result of a
weakened construction industry, causing increased competition. The
severely depressed activity in the construction industry, due to
overbuilding, again in 1991 resulted in drastic declines in selling prices
and demand. In spite of depressed conditions, 1992 brought improved
shipments due mainly to successful job bidding; however, in order to book a
higher percentage of quotations, selling prices consequently suffered.
Again in 1993, successful job bidding resulted in improved shipment levels,
while higher raw material costs pushed selling prices upward, even though
the construction industry remained depressed and highly competitive. In
1994, an easing of competitive conditions within the construction industry
led to increased shipment levels, while selling prices were again forced
upward by higher raw material costs. Reduced competition and increased
activity in 1995 again led to higher shipment levels within the
construction industry, as demand and increased raw material costs forced
selling prices higher. Generally strong business conditions within the
commercial construction industry continued during 1996 to bring
improvements to selling prices for fabricated products, while shipment
levels were relatively flat, as weather related construction delays offset
otherwise strong demand. Even though market conditions continued to be
favorable during 1997, competition within the industry forced lower selling
prices for fabricated products, and also kept shipment levels flat.
Continued favorable market conditions in the construction industry during
fiscal 1998 led to the increased shipments and level selling prices for
fabricated products. Competitive conditions within the commercial
construction industry generally impact selling prices and shipment levels
of fabricated products and were relatively favorable during 1999 as
reflected in the higher selling prices. The reduced shipments were caused
by minor factors other than competition as business conditions continued
strong and backlogs remained high.
Billets are semi-finished products used by the Registrant, and the
SWVA subsidiary, in their rolling mill processes to manufacture various
merchant bar products and specialty steel sections. With the addition of
new casting equipment in recent years, and the current year acquisition of
SWVA, the Registrant has anticipated a growing billet market of both
nonaffiliated customers and SWVA who further fabricate the billets for
various end uses. Competition within the industry caused a drop in selling
prices in 1990, with demand slowing. In 1991, selling prices trended
further downward, while order rates fell due to the sagging economy.
Billet sales improved significantly in 1992 as a result of increased
domestic demand and entry into the much more competitive export markets,
although selling prices still continued to slump. Again in 1993, increased
export business and improved domestic demand resulted in significantly
higher billet shipments. Selling prices also rose in reaction to higher
scrap steel costs. Shipments of billets declined slightly in 1994 due to a
lack of export
PART I
(con'd.)
shipments, although domestic shipments improved significantly. While the
export markets were much more competitive, domestic demand improved
dramatically. Higher billet prices were also driven by higher scrap steel
costs, but the increased domestic billet shipments, which bring a higher
price, also contributed. Improved market conditions and increased domestic
demand resulted in improved 1995 billet shipments, as export markets
remained highly competitive. Higher scrap steel costs and improved product
mix together caused billet selling prices to climb. A planned melt shop
shutdown during 1996 to install a new ladle furnace and upgrade an electric
arc furnace was unexpectedly prolonged due to problems with construction
and installation, resulting in a sharp decline in billet production and
causing a significant reduction in billet shipments for the year, while the
highly competitive export market remained in effect. Billet selling prices
declined with a downward trend in scrap prices. Increased billet shipments
for 1997 resulted both from increased production, which hampered shipments
last year, and improved domestic demand, as export markets remained very
competitive. Lower scrap prices continued to keep billet prices down. The
significant increase in billet shipments for fiscal 1998 was attributable
to record raw steel production, coupled with unprecedented demand. Billet
prices were flat due to relatively unchanged scrap prices. A dramatic
change in our market for billets during 1999 brought diminished demand and
a significant decline in tons shipped. Billet selling prices declined with
sharp reductions in scrap prices.
(xi) During the last three fiscal years, the Registrant was not
involved in any material research and development activities.
(xii) The Registrant and SWVA are subject to federal, state and
local environmental laws and regulations concerning, among other matters,
wastewater discharge, air emissions and furnace dust disposal. As with
similar mills in the industry, the Registrant's, and SWVA's, furnaces are
classified as generating hazardous waste because they produce certain types
of dust containing lead, zinc and cadmium. Near the end of fiscal year
1996, the Registrant began treating a portion of its electric arc furnace
dust, a hazardous substance, utilizing its own stabilization process.
Significant savings are being realized as this process replaces off-site
and more expensive treatment methods that had been used through a contract
with an approved waste disposal firm. SWVA currently collects and handles
its furnace waste through contracts with a company which reclaims, from the
waste dust, certain materials and recycles or disposes of the remainder.
The Registrant believes it is in substantial compliance with applicable
federal, state and local regulations. However, future changes in
regulations may require expenditures which could adversely affect earnings
in subsequent years.
The Registrant has constructed over the years pollution control
equipment at a net aggregate cost of over $9,800,000. Annual operating
expenses and depreciation of all pollution control equipment and waste
disposal
PART I
(con'd.)
costs are in excess of $3,700,000 in the aggregate. The Registrant is
expected to spend less than $1,000,000 for additional pollution control and
waste disposal equipment and facilities during subsequent fiscal years.
Adoption of the Clean Air Act Amendments of 1990, or any other
environmental concerns, is not anticipated to have a materially adverse
effect on the Registrant's operations, capital resources or liquidity, nor
should any incremental increase in capital expenditures occur due to the
Act.
See Note 7, "Commitments and Contingent Liabilities", in Notes
to Consolidated Financial Statements contained in the Registrant's 1999
Annual Report to Stockholders, filed as an Exhibit to this Form 10-K.
(xiii) At October 31, 1999, the Registrant employed 534 persons
at its Roanoke plant, with no employment at its Salem division, idle since
mid-1991. The Registrant's subsidiaries, Steel of West Virginia, Inc.,
John W. Hancock, Jr., Inc., Socar, Inc., Shredded Products Corporation and
RESCO Steel Products Corporation employed 582, 328, 276, 63 and 43 persons,
respectively.
(d) Financial Information about Foreign and Domestic Operations and
Export Sales.
When the Registrant's billet production exceeds its required
needs, this semi-finished product is offered for sale. During past years,
a portion of the excess billets has been sold to brokers who represent
foreign purchasers. During fiscal years 1997, 1998 and 1999, the
Registrant did not make any foreign sales of excess billets, however, the
SWVA subsidiary sold a small percentage of its products to foreign markets
during these years. The information required by this paragraph by
geographical area, as to foreign and domestic operations, is not provided
since it is identical to the table in paragraph (b) with virtually all
information pertaining to the United States.
ITEM 2. PROPERTIES
The Registrant owns 72 acres situated in the City of Roanoke,
Virginia, which comprises its main plant, of which 25 acres are used to
provide 345,000 square feet of manufacturing space with an annual billet
capacity of approximately 650,000 tons and rolling mill capacity of 400,000
tons. A 30 acre site is owned in Salem, Virginia, of which 10 acres were
used to provide 51,355 square feet of manufacturing space, until March
1991, when the plant was idled. The Registrant acquired in 1991 a 447 acre
tract of land in Franklin County, Virginia, 100 acres of which was
transferred to Shredded Products Corporation in a move of shredding
operations from its Montvale location. Part of this new Shredded Products
property is being used as an approved industrial landfill. The remaining
337 acres of this land, 113 acres of which was sold in 1995, 1997, 1998 and
1999, will be marketed as an industrial park for Franklin County.
PART I
(con'd.)
Shredded Products Corporation operates in both Montvale and Rocky
Mount, Virginia. The Montvale plant is situated on a 75 acre site owned by
the Registrant, approximately 20 acres of which are regularly used in its
scrap processing operation, with an annual production capacity of
approximately 24,000 tons. The Rocky Mount facility is located on a 100
acre site owned by Shredded Products Corporation, partially consisting of a
25 acre industrial landfill used for the disposal of its auto fluff, and
another 25 acres of which are regularly used in its shredding operation,
with an annual production capacity of approximately 150,000 tons.
John W. Hancock, Jr., Inc. is located in Roanoke County near
Salem, Virginia. The plant is situated on a 37 acre site owned by Hancock,
Inc., 17 acres of which are regularly used in its operations. Buildings on
the site contain 131,614 square feet of floor space.
Socar, Inc. and its subsidiary are located in Florence, South
Carolina, and in Continental, Ohio. The Florence facility is located on a
28 acre site owned by Socar, Inc., 16 acres of which are regularly used in
its operations. Buildings on the site contain 93,359 square feet of floor
space. The plant located on a 32 acre site in Continental, Ohio, owned by
Socar, Inc., has 86,400 square feet of floor space in manufacturing
buildings, situated on 8 acres regularly used in its operations.
RESCO Steel Products Corporation operates from a building
containing 43,340 square feet of floor space, located in Salem, Virginia,
on a 7 acre site owned by RESCO.
Steel of West Virginia, Inc. and its subsidiary are located in
Huntington, West Virginia and in Memphis, Tennessee. The Huntington
facility is located on a 42 acre site owned by SWVA, most of which are
regularly used in its operations. Buildings on the site contain 558,175
square feet of manufacturing space with an annual billet capacity of
approximately 280,000 tons and rolling mill capacity of 300,000 tons. The
plant located in Memphis, Tennessee owned by SWVA operates in 41,000 square
feet of manufacturing space on approximately 4 acres.
The various buildings are of modern design, well-maintained, and
suitable and adequate for the requirements of the business.
ITEM 3. LEGAL PROCEEDINGS
None.
See Note 7, "Commitments and Contingent Liabilities", in Notes
to Consolidated Financial Statements contained in the Registrant's 1999
Annual Report to Stockholders, filed as an Exhibit to this Form 10-K.
PART I
(con'd.)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of stockholders during
the fourth quarter of the fiscal year covered.
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction G(3) of Form 10-K, the following
list is included as an unnumbered Item in Part I of this report in lieu of
being included in the Proxy Statement for the Annual Meeting of
Shareholders to be held on February 15, 2000.
The names, ages and positions of all of the executive officers of
the Registrant as of October 31, 1999 are listed below with their business
experience with the Registrant for the past five years. Officers are
elected annually by the Board of Directors at the first meeting of
directors following the annual meeting of shareholders. There are no family
relationships among these officers, nor any agreement or understanding
between any officer and any other person pursuant to which the officer was
selected.
Thomas J. Crawford, 44, has served as Secretary of the Registrant
since January 1985 and as Vice President-Administration since February
1998; prior thereto, he had served as Assistant Vice President
since January 1993, as Manager of Inside Sales since 1984 and as a Sales
Representative since 1977. He has 22 years of service with the Registrant.
Timothy R. Duke, 48, has served as President and Chief Executive
Officer of Steel of West Virginia, Inc. ("SWVA"), a wholly-owned subsidiary
of the Registrant, since July 1997; prior thereto, he had served as
President and Chief Operating Officer of SWVA since October 1996 and as
Vice President, Treasurer and Chief Financial Officer of SWVA since
February 1988. He has 12 years of service with SWVA.
Donald R. Higgins, 54, has served as Vice President - Sales of
the Registrant since January 1986; prior thereto, he had served as General
Sales Manager since 1984 and Assistant Sales Manager since 1978. He has 34
years of service with the Registrant.
John E. Morris, 58, has served as Vice President - Finance of the
Registrant since October 1988 and as Assistant Treasurer since 1985; prior
thereto, he had served as Controller since 1971. He has 28 years of
service with the Registrant.
Donald G. Smith, 64, has served as Chairman of the Board of the
Registrant since February 1989, as Chief Executive Officer since November
1986, as President and Treasurer since January 1985 and as Director of the
Registrant since April 1984; prior thereto, he had served as Vice President
- - Administration since September 1980 and as Secretary since January 1967.
He has 42 years of service with the Registrant.
PART I
(con'd.)
FORWARD-LOOKING STATEMENTS
From time to time, the Company may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products, research and
development activities and similar matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. In order to comply with the terms of the safe harbor, the
Company notes that a variety of factors could cause the Company's actual
results and experience to differ materially from the anticipated results or
other expectations expressed in the Company's forward-looking statements.
The risks and uncertainties that may affect the operations, performance,
development and results of the Company's business include economic and
industry conditions, availability and prices of supplies, prices of steel
products, competition, governmental regulations, interest rates, inflation,
labor relations, environmental concerns, and others.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The specified information required by this item is incorporated by
reference to the information under the heading "Stock Activity" in the 1999
Annual Report to Stockholders. The Registrant did not during fiscal year
1999 make any sale of securities not registered under the Securities Act of
1933.
ITEM 6. SELECTED FINANCIAL DATA
The specified information required by this item is incorporated
by reference to the information under the heading "Selected Financial Data"
in the 1999 Annual Report to Stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The specified information, including Year 2000 compliance issues,
required by this item is incorporated by reference to the information under
the heading "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the 1999 Annual Report to Stockholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The specific information required by this item is incorporated
by reference to the information under the headings "Notes to Consolidated
Financial Statements" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the 1999 Annual Report to
Stockholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The specified information required by this item is incorporated
by reference to the information under the headings "Independent Auditors'
Report", "Consolidated Financial Statements" and "Notes to Consolidated
Financial Statements" in the 1999 Annual Report to Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The specified information required by this item is incorporated
by reference to the information under the heading "Information Concerning
Directors and Nominees" in the Proxy Statement dated December 27, 1999, as
filed with the Commission, or is included under the heading "Executive
Officers of the Registrant" in Part I of this 10-K filing. The disclosure
required by Item 405 of Regulation S-K is not applicable.
ITEM 11. EXECUTIVE COMPENSATION
The specified information required by this item is incorporated
by reference to the information under the headings "Executive
Compensation", "Compensation and Stock Option Committee Report on Executive
Compensation", "Performance Graph" and "Board of Directors and Committees
- -- Director Compensation" in the Proxy Statement dated December 27, 1999,
as filed with the Commission.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The specified information required by this item is incorporated
by reference to the information under the headings "Security Ownership of
Certain Beneficial Owners" and "Security Ownership of Management" in the
Proxy Statement dated December 27, 1999, as filed with the Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
(1) The following financial statements filed as part of the
1999 Annual Report to Stockholders are incorporated herein by reference:
(a) Consolidated Balance Sheets
(b) Consolidated Statements of Stockholders' Equity
(c) Consolidated Statements of Earnings
(d) Consolidated Statements of Cash Flows
(e) Notes to Consolidated Financial Statements
(f) Independent Auditors' Report
Individual financial statements of the Registrant are not being
filed because the Registrant is primarily an operating company and its
subsidiaries do not have minority equity interests and/or long-term
indebtedness (including current portions) to any person outside the
consolidated group (excluding long-term indebtedness which is
collateralized by the Registrant by guarantee, pledge, assignment or
otherwise), in amounts which together exceed 5 percent of the total
consolidated assets.
PART IV
(con'd.)
(2) Pursuant to Regulation S-K the following Exhibit Index is
added immediately preceding the exhibits filed as part of the subject Form
10-K:
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT PAGE
(3) (a) Articles of Incorporation, as amended 21
Incorporated by
Reference
(b) By-Laws, as amended 22
Incorporated by
Reference
(4) Instruments Defining the Rights
of Security Holders 23
(10) * (a) Executive Officer Incentive Arrangement 24
* (b) Roanoke Electric Steel Corporation
Employees' Stock Option Plan 24
Incorporated by
Reference
* (c) Roanoke Electric Steel Corporation
Non-Employee Directors' Stock Option Plan 24
Incorporated by
Reference
* (d) Roanoke Electric Steel Corporation
Severance Agreements 24
Incorporated by
Reference
* (e) SWVA Collective Bargaining Agreement 24
Incorporated by
Reference
* (f) SWVA Employee Agreement with Timothy R. Duke 24
Incorporated by
Reference
(13) 1999 Annual Report to Stockholders 25
(21) Subsidiaries of the Registrant 26
(23) Independent Auditors' Consent 27
(27) Financial Data Schedule 28
PART IV
(con'd.)
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed by the Registrant during
the last quarter of the fiscal period covered by the Annual Report.
* Management contract, or compensatory plan or agreement, required to be
filed as an Exhibit to this
Form 10-K pursuant to Item 14 (c).
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ROANOKE ELECTRIC STEEL CORPORATION
Registrant
By: Donald G. Smith
Donald G. Smith, Chairman,President,
Treasurer and Chief Executive Officer
(Principal Executive Officer, Principal
Financial Officer and Director)
Date: January 18, 2000
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
Name and Title Date
Donald G. Smith January 18, 2000
Donald G. Smith, Chairman, President,
Treasurer and Chief Executive Officer
(Principal Executive Officer, Principal
Financial Officer and Director)
John E. Morris January 18, 2000
John E. Morris, Vice President - Finance
and Assistant Treasurer (Principal
Accounting Officer)
George B. Cartledge, Jr. January 18, 2000
George B. Cartledge, Jr. Director
Thomas L. Robertson January 18, 2000
Thomas L. Robertson Director
Charles I. Lunsford, II January 18, 2000
Charles I. Lunsford, II Director
Paul E. Torgersen January 18, 2000
Paul E. Torgersen Director
EXHIBIT NO. 3 (a)
ARTICLES OF INCORPORATION, AS AMENDED
Incorporated by reference to the previously filed Form 10-K for
October 31, 1996 on file in the Commission office.
EXHIBIT NO. 3 (b)
BY-LAWS, AS AMENDED
Incorporated by reference to the previously filed Form 10-Q for
January 31, 1999 on file in the Commission office.
EXHIBIT NO. 4
INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS
Pursuant to Item 601(b) (4) (iii) of Regulation S-K, the
Registrant hereby undertakes to furnish to the Commission, upon request,
copies of the instruments defining the rights of holders of the long-term
debt of Roanoke Electric Steel Corporation and its subsidiaries described
in its 1999 Annual Report to Stockholders and Form 10-K.
EXHIBIT NO. 10
* (a)
EXECUTIVE OFFICER INCENTIVE ARRANGEMENT
The Company has an executive officer incentive arrangement,
pursuant to which up to an aggregate of 9% of the consolidated monthly
gross profits (before profit sharing and taxes) of the Company or of John
W. Hancock, Jr., Inc. ("Hancock") may be distributed to officers of the
Company or officers of Hancock, respectively. The percentage of incentive
compensation to be received by each officer, if any, is determined annually
by the Company's Board of Directors.
* (b)
ROANOKE ELECTRIC STEEL CORPORATION
EMPLOYEES' STOCK OPTION PLAN
Incorporated by reference to the previously filed Form 10-K for
October 31, 1998 on file in the Commission office.
* (c)
ROANOKE ELECTRIC STEEL CORPORATION
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
Incorporated by reference to the previously filed Form 10-K for
October 31, 1997 on file in the Commission office.
* (d)
ROANOKE ELECTRIC STEEL CORPORATION SEVERANCE AGREEMENTS
Incorporated by reference to the previously filed Form 10-K for
October 31, 1996 on file in the Commission office.
(e)
SWVA COLLECTIVE BARGAINING AGREEMENT
Incorporated by reference to the previously filed Form 10-Q for
July 31, 1999 on file in the Commission office.
(f)
SWVA EMPLOYMENT AGREEMENT WITH TIMOTHY R. DUKE
Incorporated by reference to the previously filed Form 10-Q for
January 31, 1999 on file in the Commission office.
* Management contract, or compensatory plan or agreement, required to
be filed as an Exhibit to this Form 10-K pursuant to Item 14 (c).
EXHIBIT NO. 13
1999 ANNUAL REPORT TO STOCKHOLDERS
EXHIBIT NO. 21
SUBSIDIARIES OF THE REGISTRANT
Registrant: Roanoke Electric Steel Corporation
Organized Under
Subsidiary of Registrant Jurisdiction of
Shredded Products Corporation Virginia
John W. Hancock, Jr., Inc. Virginia
Socar, Incorporated South Carolina
RESCO Steel Products Corporation Virginia
Roanoke Technical Treatment and Services, Inc. Virginia
Steel of West Virginia, Inc. Delaware
EXHIBIT NO. 23
INDEPENDENT AUDITORS' CONSENT
Roanoke Electric Steel Corporation:
We consent to the incorporation by reference in Registration Statement Nos.
33-27359, 33-35243 and 333-25299 of Roanoke Electric Steel Corporation on
Form S-8 of our report dated November 19, 1999, incorporated by reference
in the Annual Report on Form 10-K of Roanoke Electric Steel Corporation for
the year ended October 31, 1999.
Deloitte & Touche LLP
Winston-Salem, North Carolina
January 18, 2000
EXHIBIT NO. 27
FINANCIAL DATA SCHEDULE