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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996 COMMISSION FILE NUMBER: 33-22603
BAYOU STEEL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 72-1125783
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
138 HIGHWAY 3217
P.O. BOX 5000
RIVER ROAD
LAPLACE, LOUISIANA 70069
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (504) 652-4900
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EXCHANGE ON WHICH REGISTERED
Class A Common Stock, $.01 par value American Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
TITLE OF EACH CLASS
101/4% First Mortgage Notes due 2001
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 (or for such shorter period that the
registrant was required to file such report) 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|
The aggregate market value and the number of voting shares of the
registrant's common stock outstanding on October 31, 1996 was:
MARKET VALUE
TITLE OF EACH CLASS SHARES OUTSTANDING HELD BY HELD BY
OF COMMON STOCK AFFILIATES NON-AFFILIATES NON-AFFILIATES
------------------- ---------- --------- --------------
Class A, $.01 par value........ 1,301,512 9,311,868 $27,935,604
Class B, $.01 par value........ 2,271,127 0 N/A
Class C, $.01 par value........ 100 0 N/A
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive Proxy Statement for the 1997 Annual
Meeting of Stockholders are incorporated herein by reference in Part III and
portions of the registrant's 1996 Annual Report filed as an exhibit, are
incorporated herein by reference in Part II hereof.
BAYOU STEEL CORPORATION
TABLE OF CONTENTS
PAGE
PART I
ITEM 1. BUSINESS.................................................... 1
General.................................................. 1
Manufacturing Process and Facilities..................... 1
Products................................................. 2
Customers................................................ 3
Distribution............................................. 3
Markets and Sales........................................ 4
Strategy................................................. 4
Competition.............................................. 5
Raw Materials............................................ 6
Energy................................................... 7
Environmental Matters.................................... 7
Safety and Health Matters................................ 8
Strike/Corporate Campaign Impact Upon the Company........ 9
Employees................................................ 10
ITEM 2. PROPERTIES.................................................. 11
ITEM 3. LEGAL PROCEEDINGS........................................... 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......... 11
PART II
ITEM 5. MARKET FOR REGISTRANT'S CLASS A COMMON STOCK AND
RELATED STOCKHOLDER MATTERS............................... 12
ITEM 6. SELECTED FINANCIAL DATA..................................... 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS....................... 13
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................. 13
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE........ 13
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS............................ 14
ITEM 11. EXECUTIVE COMPENSATION...................................... 14
ITEM 12. OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................ 14
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 14
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.................................................. 14
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PART I
ITEM 1. BUSINESS
GENERAL
Bayou Steel Corporation (the "Company") owns and operates a steel minimill
located on the Mississippi River in LaPlace, Louisiana ("BSCL"), four stocking
locations along the inland waterway system and a rolling mill in Harriman,
Tennessee ("BSCT").
BSCL is a leading producer of light structural steel products. The Louisiana
minimill, constructed at a cost of $243 million in 1981, has an electric arc
furnace, a rolling mill, climate-controlled warehouse facilities, and a dock on
the Mississippi River. BSCL produces a variety of shapes, including angles,
flats, channels, standard beams, and wide flange beams at the Louisiana
facility. In addition, the Company operates an automobile shredder to produce
some of the scrap metal required by the electric arc furnace.
On April 28, 1995, the Company purchased substantially all of the assets of
Tennessee Valley Steel Corporation ("TVSC") located in Harriman, Tennessee, 37
miles west of Knoxville. The assets are owned by a wholly owned subsidiary named
"Bayou Steel Corporation (Tennessee)". BSCT's rolling mill produces merchant bar
shapes, including angles, flats, rounds, and squares. BSCT also has the
capability to produce rebar. The merchant bar product mix of BSCT extends and
complements BSCL's product line. BSCT began operation in July 1995.
The term "minimill" refers to a relatively low-cost steel production
facility which uses steel scrap, rather than iron ore, as its basic raw
material. In general, minimills recycle scrap using electric arc furnaces,
continuous casters, and rolling mills. BSCL's minimill, which was owned and
operated by Voest-Alpine A.G. until it was purchased by the Company in September
1986, includes a Krupp computer-controlled, electric arc furnace utilizing
water-cooled sidewalls and roof, two Voest-Alpine four-strand continuous
casters, a computer supervised, Italimpianti reheat furnace, and a 15-stand
Danieli rolling mill. The rolling mill at BSCT includes a computer supervised
reheat furnace, a 16-stand rolling mill, an automated straightening, continuous
cut-to-length, stacking and bundling equipment.
The Company sells its products to over 613 customers, most of which are
steel service centers, in 44 states, Canada, Mexico, and overseas. The Company
also sells excess billets (which have not been rolled into shapes at BSCL or
BSCT) on a worldwide basis to other steel producers for their own rolling or
forging applications.
In August 1988, the Company completed an initial public offering of its
Class A Common Stock, which shares are traded on the American Stock Exchange.
The Company was incorporated under the laws of the State of Louisiana in 1979
and was reincorporated in Delaware in 1988 in connection with its public
offering.
The address of the Company's principal place of business is 138 Highway
3217, P.O. Box 5000, LaPlace, Louisiana 70069 and its telephone number is (504)
652-4900.
MANUFACTURING PROCESS AND FACILITIES
In its production process, BSCL uses steel scrap which is received by barge,
rail, and truck, and then stored in a scrap receiving yard. With the use of a
newly installed automobile shredder, the Company is able to process
approximately 10% of its steel scrap requirements. The scrap is transported to
BSCL's melt shop by rail car or truck and loaded into its furnace. The steel
scrap is melted in an 80-ton capacity alternating current electric arc furnace
which heats the scrap to approximately 3100oF. During the scrap melting and
refining process, impurities are removed from the molten steel. After the scrap
reaches a molten state at a predetermined temperature, it is poured from the
furnace into ladles, where adjustments of alloying elements and carbon are made
to obtain the desired chemistry. The ladles of steel are then transported to one
of two four-strand continuous casters in which the molten steel is solidified in
water-cooled molds. The casters produce long strands of steel which are cut by
torch into billets (semi-finished product) and moved to a cooling bed and marked
for identification. After cooling, the billets are transferred to the Louisiana
rolling mill for further processing. Billets, in excess of BSCL's rolling mill
requirements, are either shipped to BSCT via rail or sold to other processors.
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In the Louisiana rolling mill, the billets are reheated in a walking beam
furnace with recuperative burners. Once the billets are heated to approximately
2000oF, they are rolled through up to fifteen mill stands which form the billets
into the dimensions and sizes of the finished products. The heated finished
shapes are stacked on a cooling bed and then straightened and cut into either
standard 40 foot lengths or specific customer lengths. The shapes are stacked
into 2 1/2 to 5-ton bundles, processed (if needed) through an off-line saw to 20
foot standard lengths, and placed in a climate-controlled warehouse where they
are subsequently shipped to the Company's climate-controlled stocking locations
via barge, or to customers directly via truck, rail, or barge.
The Tennessee rolling mill uses steel billets which will be received by
rail, truck, or barge and then stored in a billet yard. The billets are reheated
in a pusher reheat furnace with recuperative burners before being rolled. Once
the billets are heated to approximately 2000oF, they are rolled through up to 16
mill stands which form the billets into the dimensions and sizes of the finished
products. The heated finished shapes are placed on a cooling bed, and
straightened and cut into the appropriate customer lengths. The shapes are then
stacked into approximately 21/2 ton bundles and placed in a climate-controlled
warehouse where they are subsequently shipped to customers directly via truck or
rail.
PRODUCTS
The Louisiana facility produces a variety of light structural steel products
and the Tennessee facility produces a wide range of merchant bar shapes and
rebar.
SIZE RANGE (IN INCHES)
-------------------------
PROFILE TENNESSEE LOUISIANA
--------------------------------- ---------- -----------
Equal Angles 3/4-2 3-6
Flats 1-3 4-8
Channels (1) 1-3 3-8
Squares 1/2-1 1/2 N/A
Rounds 1/2-2 N/A
Unequal Angles N/A 4-7
Rebar (#3-#11) 3/8-1 3/8 N/A
Standard Beams N/A 3-6
Wide Flange Beams N/A 4-6
(1) Channels will be added in fiscal 1997.
The merchant bar shapes, rebar, and light structural shapes produced by the
Company have a wide range of commercial and industrial applications, including
the construction and maintenance of petrochemical plants, barges and light
ships, railcars, trucks and trailers, rack systems, tunnel and mine support
products, joists, sign and guardrail posts for highways, power and radio
transmission towers, and bridges. Rebar is used in highway and bridge
construction, concrete structures such as parking garages, and home construction
for driveways, sidewalks and swimming pools.
The Company plans to emphasize the merchant bar shapes and light structural
shapes. Shape margins are historically considerably higher than those of rebar.
BSCT will opportunistically produce rebar.
The Company's shapes are produced to various national specifications, such
as those set by the American Society for Testing and Materials ("ASTM"), or to
specific customer specifications which have more stringent quality criteria. In
addition, the Company is one of a few minimills that is approved by the American
Bureau of Shipping ("ABS") and is certified for nuclear applications. The
Company's products are also certified for state highway and bridge structures.
2
CUSTOMERS
The Company has over 613 customers in 44 states, Canada, Mexico, and
overseas. The majority of the Company's shape products (approximately 76% in
fiscal 1996) are sold to domestic steel service centers, while the remainder are
sold to original equipment manufacturers (approximately 14% in fiscal 1996) and
export customers (approximately 10% in fiscal 1996). Steel service centers
purchase nearly 30% of all carbon industrial steel products produced in the
United States. Steel service centers warehouse steel products from various
minimills and integrated mills and sell combinations of products from different
mills to their customers. Some steel service centers also provide additional
labor-intensive value-added services such as fabricating, cutting or selling
steel by the piece rather than by the bundle. Much of the merchant bar product
from the Tennessee rolling mill is sold to the Company's existing customer base.
Rebar, when produced, will be selectively sold to a few customers who are not
necessarily part of the existing customer base.
In fiscal 1996, the Company's top ten customers accounted for approximately
26% of total shipments. No single customer accounted for 10% of total sales. The
Company believes that it is not dependent on any customer and that it could,
over time, replace lost sales attributable to any one customer.
DISTRIBUTION
BSCL's steelmaking facility in Louisiana, which includes a deep-water dock,
is strategically located on the Mississippi River, which the Company believes
gives it flexibility in transportation because it can ship its product by barge,
normally the least costly method of transportation in the steel industry.
Furthermore, BSCL operates three inventory stocking warehouses in Chicago,
Tulsa, and Pittsburgh, which supplement its operations in Louisiana and
Tennessee. These facilities, each of which includes an inland waterway dock,
enable the Company to significantly increase its marketing territory by
providing storage capacity for its finished products in three additional markets
and by allowing the Company to meet customer demand far from its Louisiana
minimill and Tennessee rolling mill facilities on a timely basis. The Company
believes that the location of its minimill on the Mississippi River, and its
network of inland waterway warehouses, enable it to access markets for its
products that would otherwise be uneconomical to the Company.
BSCL's deep-water dock at its Louisiana manufacturing facility on the
Mississippi River enables the Company to load vessels or ocean-going barges for
overseas shipments, giving the Company low cost access to overseas markets.
(Additionally, the dock enables the Company to access scrap from the Caribbean
and South and Central America.) Since the minimill is only 35 miles from the
Port of New Orleans, smaller quantities of shapes or billets can be shipped
overseas on cargo ships from that port. Relative to its domestic competitors,
the Company believes it has a freight cost advantage over land-locked minimills
in serving the export market. This advantage permits the Company to compete with
foreign minimills in certain export markets. In addition, the Company makes rail
shipments to some customers, primarily those on the West Coast and in Mexico.
With the recent completion of a rail spur into the Louisiana warehouse, the
Company has expanded rail shipment.
BSCT's mill in east Tennessee fills a geographic void for the Company. BSCT
provides new access for the Company to the Appalachian states and the lower
midwest, plus additional access to the upper midwest, the southeast and the
mid-Atlantic. BSCT's product line can be distributed through the Company's
LaPlace facility or through its distribution centers in Chicago, Pittsburgh, and
Tulsa. Currently, BSCT is only using the Chicago stocking location. BSCT's
location is accessible by all forms of transportation; the plant is in close
proximity to two major interstate highways, four miles from a barge dock, and is
situated on the main line of Norfolk Southern Railroad.
The Company believes that the elimination of current duties in Canada and
Mexico as a result of the passage of the North American Free Trade Agreement
("NAFTA") will increase the competitiveness of the Company's products compared
to locally produced products in such countries. During fiscal 1996, 1995, and
1994, 9.0%, 10.3% and 7.6% respectively, of the Company's tons shipped were
exported to Canada and Mexico. There can be no assurance, however, that there
will be an increase in the Company's shipments to Canada and Mexico as a result
of the passage of NAFTA.
3
MARKETS AND SALES
According to the American Iron and Steel Institute, the domestic market
demand for all structural steel shape products in 1995 was 5.7 million tons
while the market for bar mill products was 5.1 million tons. The Company
estimates that its share of the total domestic shapes market was approximately
8.8% in 1995. The Company believes that its share of the light structural steel
shapes market (the primary market in which the Company competes) is much higher,
and that it is one of the five largest producers in this market of light
structural steel shapes in the U.S. The Company is marketing BSCT's merchant bar
shapes mainly through its existing steel service center customer base and is
expanding to new customers, such as OEM's and fabricators.
The Company's products are sold domestically and in Canada, Mexico, and
overseas on the basis of availability, quality, service, and price. The Company
maintains a real-time computer information system, which tracks prices offered
by competitors, as well as freight rates from its customers to both the
Company's stocking locations and the nearest competitive facilities. A new
system that allows the customer to manage its inventory needs at the Company was
recently implemented. This system interfaces with the customer's system which
results in less clerical effort and increases sales for the Company. The system
also provides the customer with just-in-time inventory capabilities. The Company
feels that this system gives it a competitive advantage.
Although sales of shapes tend to be slower during the winter months due to
the impact of winter weather on construction and transportation, and during the
late summer due to planned plant shutdowns of end-users, seasonality has not
been a material factor in the Company's business. The Company's backlog of
unfilled cancelable orders for shapes, which typically are filled in
approximately three months, totaled $62.6 million as of September 30, 1996 and
$40.9 million as of September 30, 1995. As of October 31, 1996, the Company's
backlog totaled $68.4 million.
The level of billet sales to third parties is dependent on the Company's
billet requirements at BSCL and BSCT, and worldwide market conditions, which may
vary greatly from year to year. In the past three fiscal years, shipments of
billets to third parties have ranged from 2% to 13% of the Company's total
tonnage sales.
STRATEGY
The Company's strategy is to improve operating efficiencies and to reduce
costs through improved processes, utilization, and capital at BSCL and to bring
BSCT to full capacity operating rate within 18 months. The Company will also
consider strategic acquisitions, such as the acquisition of the assets of TVSC,
which complement or expand the Company's current operations, and/or captures
finished goods or raw material capacity.
A. BSCL
The Company's principal operating strategy for BSCL is to improve
operating results by continuing to increase productivity and reduce costs,
including labor cost per ton, and increasing sales of higher margin shape
products.
OPERATING EFFICIENCIES. BSCL has lowered its labor cost per ton by $18
since fiscal 1992. The Company believes that it can continue to lower its
labor costs per ton from fiscal 1996 levels by increasing productivity and
shipments, reducing overtime, and implementing the new labor contract.
The Company continues its commitment to developing a high performance
work culture. Through extensive training and individual development efforts,
the Company will further reinforce its basic values of employee improvement,
teamwork, and increased individual accountability. The Company believes that
the workforce, through this program, will have an impact in achieving
operational and productivity improvements.
CAPITAL IMPROVEMENTS. The Company wants to increase billet production so
as to supply most of BSCT's billet requirements. In fiscal 1996, BSCL
produced 594,780 tons of billets. In fiscal 1997, as part of its short-term
strategy, the Company is committing approximately $2 million in capital to
improve melt shop operations. The Company is currently evaluating options
for its long-term strategy. In order to increase annual capacity to 800,000
tons, the Company would have to commit approximately $20 million over 24
months. Both fixed cost per ton and variable cost per ton could be reduced
by employing this increased capacity strategy.
4
B. BSCT
OPERATING CAPACITY. The Company's operating strategy for the rolling
mill at BSCT is to expand its merchant bar shape production. In fiscal 1996,
BSCT produced 95,815 tons. BSCT's production is expected to reach above
150,000 tons in 1997. However, this projection can vary and will depend on
market demand and new sections to be introduced during the fiscal year. The
total annual capacity of the plant is estimated at 250,000 tons depending on
the actual product mix.
BSCT produced only merchant bar shapes and customer specific sections
in fiscal 1996. BSCT also has the ability to produce rebar. However, bar
shape products have historically higher profit margins than rebar and the
shapes produced at BSCT complement and enhance the Company's existing range
of light structural shapes.
CAPITAL IMPROVEMENTS. The Company expects to commit approximately $3
million on various capital projects at the Tennessee facility in fiscal 1997
on operations to reduce costs and increase productivity. As of September 30,
1996, there were 126 employees and contractors at the Tennessee operation.
The Company plans to reduce the required workforce at BSCT by 10% by the end
of fiscal 1997 through capital improvements and facilitated primarily
through attrition.
C. ACQUISITION PROGRAM AND TAX BENEFITS
The Company may, from time to time, seek strategic acquisitions, such as
the acquisition of the rolling mill from TVSC, in order to accelerate its
growth, focusing on businesses which complement or expand the Company's
current operations, such as businesses in the metals field or involving
recycling operations. The Company is not presently engaged in negotiations
with respect to any acquisition. As of September 30, 1996, the Company had
approximately $329 million of regular net operating loss carryforwards which
could be used to offset taxable earnings of the Company, including the
earnings of acquired entities, subject to certain limitations imposed by the
Internal Revenue Code of 1986.
Since the estimated operating cost savings from the Company's expected
operating efficiencies and planned capital improvements are based upon a number
of assumptions, estimated operating cost savings are not necessarily indicative
of the Company's expected financial performance since increases in the cost of
raw materials and other conversion costs may offset any operating cost savings
to cause actual results to vary significantly. Although the Company believes its
assumptions with respect to its planned capital expenditure program to be
reasonable, there can be no assurance that the estimated production cost savings
of the Company's capital expenditure program will actually be achieved or
sufficient demand for structural steel products will exist for the additional
capacity.
COMPETITION
The Company does not currently compete with minimill flat rolled or most
domestic integrated steel producers.
STEEL STRUCTURAL SHAPES. BSCL's location on the Mississippi River, as well
as its stocking locations in three additional regions of the country, provide it
with access to vast markets in the eastern, midwestern, southern, and central
portions of the United States. As a result, the Company competes in the light
structural shape market with several major domestic minimills in each of these
regions. Depending on the region and product, the Company competes with
primarily Nucor Corporation, Structural Metals, Inc., North Star Steel Co.,
Northwestern Steel and Wire Company, and Lake Ontario Steel Corporation, among
others.
BAR SHAPES. In fiscal 1997, the Company expects to sell BSCT's yearly
production of bar shape products in a market that has ranged between 5.1 and 8.6
million tons during the last 10 years. Competitors in the region are Ameri
Steel, Structural Metals, Inc., Nucor Corporation, Birmingham Steel, Roanoke
Electric, North Star Steel Co., and SMI/Owen Steel.
REBAR. BSCT will produce rebar in varying quantities depending on economic
and market trends. BSCT's main competitor will be Ameri Steel in Knoxville, TN.
Ameri Steel, however, fabricates a large portion of its rebar in competition
with independent fabricators would be the target customers of BSCT. Independent
fabricators opting not
5
to buy from a competitor may create a significant niche for BSCT's rebar. Other
competitors include SMI/Owen Steel, Birmingham Steel, Nucor Corporation, and New
Jersey Steel.
Foreign steel producers historically have not competed significantly with
the Company in the domestic market for shape sales due to higher freight costs
in the relatively low priced shape market. Foreign competition could increase,
however, as a result of changes in currency exchange rates and increased steel
subsidies by foreign governments.
RAW MATERIALS
The Company's major raw material is steel scrap, which is generated
principally from industrial, automotive, demolition, railroad, and other scrap
sources and is primarily purchased directly by the Company in the open market
through a large number of steel scrap dealers. The Company is able to
efficiently transport scrap from suppliers throughout the inland waterway system
and through the Gulf of Mexico, permitting it to take advantage of scrap
purchasing opportunities far from its minimill, and to protect itself from
supply imbalances that develop from time to time in specific local markets. In
addition, unlike many other minimills, the Company, through its own scrap
purchasing staff, buys scrap directly from scrap dealers and contractors rather
than through brokers. The Company believes that its enhanced knowledge of scrap
market conditions gained by being directly involved in scrap procurement on a
daily basis, coupled with management's long experience in metals recycling
markets, gives the Company a competitive advantage. The Company does not
currently depend upon any single supplier for its scrap. No single vendor
supplies more than 10% of the Company's scrap needs. The Company, on average,
maintains a 25-day inventory of steel scrap.
The Company has a program of buying directly from local scrap dealers and
small peddlers for cash. Through this program, the Company has procured
approximately 20% of its scrap at prices lower than those of large scrap
dealers. The Company has also installed an automobile shredder, which is located
at a site adjacent to the plant, to produce shredded steel scrap, one of several
types used by the Company. Mississippi River Recycling ("MRR"), a division of
the Company, began operating the automobile shredder in late fiscal 1995. It is
the Company's intention to expand MRR's business activities to processing other
types of unprepared scrap which could be used by the Company or sold to other
consumers of prepared scrap metal, generating additional revenues.
The cost of steel scrap is subject to market forces, including demand by
other steel producers. The cost of steel scrap to the Company can vary
significantly, and product prices generally cannot be adjusted in the short-term
to recover large increases in steel scrap costs. Over longer periods of time,
however, product prices and steel scrap prices have tended to move in the same
direction.
The long-term demand for steel scrap and its importance to the domestic
steel industry may be expected to increase as steel makers continue to expand
scrap-based electric arc furnace capacity. For the foreseeable future, however,
the Company believes that supplies of steel scrap will continue to be available
in sufficient quantities at competitive prices. In addition, a number of
technologies exist for the processing of iron ore into forms which may be
substituted for steel scrap in electric arc furnace-based steelmaking. Such
forms include direct-reduced iron, iron carbide, and hot-briquetted iron. While
such forms may not be cost competitive with steel scrap at present, a sustained
increase in the price of steel scrap could result in increased implementation of
these alternative technologies.
In addition to steel scrap, BSCL consumes smaller quantities of additives,
alloys and flux ("AAF"). AAF cost increased in fiscal 1996 by 12.0% compared to
fiscal 1995, mainly due to price. AAF prices have recently increased
significantly due to reduced product availability which was caused by an
anti-dumping suit against foreign producers utilized by BSCL and its
competitors. This caused high duties on imported AAF making it more costly to
import AAF. Also contributing to the higher prices is the increase in domestic
demand due to the high steel-making capacity utilization. This is a general
market condition. The Company does not currently depend upon a single supplier
for its AAF requirements.
BSCT currently purchases billets on the open market to supply part of its
billet requirements. The Company currently has competitive billet supply
contracts with several vendors which expire on December 31, 1996. The Company
currently is negotiating with several suppliers for calendar year 1997. The
Company does not anticipate a problem with securing competitively priced billet
contracts.
6
The Company has not experienced any shortages or significant delays in
delivery of these materials. The Company believes that an adequate supply of raw
materials will continue to be available.
ENERGY
The Company's manufacturing process at BSCL consumes large amounts of
electrical energy. The Company purchases its electrical service needs from
Entergy pursuant to a contract originally executed in 1980 and extended in 1995
for a six year period. The base contract is supplemented to provide lower cost
off-peak power and known maximums in higher cost firm demand power. In addition,
the Company receives discounted peak power rates in return for Entergy's right
to periodically curtail service during periods of peak demand. These
curtailments are generally limited to a few hours and, during prior years, have
had negligible impact on operations; however, BSCL experienced an unusual number
and duration of power curtailments in the fourth quarter of fiscal 1996 due to
generating and transmission failures at Entergy. BSCL's contract with Entergy
contains a fuel adjustment clause which allows them to pass on to their
customers any increases in price they must pay for the various fuels used in
generating electrical power. This fuel adjustment applies to all of Entergy
consumers. Due to the effect of a fuel adjustment provision in the contract with
Entergy, BSCL's energy expense could increase. Energy expense increased by $1.9
million in fiscal 1996 compared to fiscal 1995 primarily due to increases in the
fuel adjustment rate. The Company believes that its utility rates at BSCL are
very competitive in the domestic minimill steel industry. As one of Entergy's
largest customers, the Company has been able to obtain competitive rates from
Entergy. To a lesser extent, BSCL's manufacturing facility consumes quantities
of natural gas via two separate pipelines serving the facility. BSCL purchases
its natural gas on a month-to-month basis from a variety of suppliers. Natural
gas expense increased by $1.1 million in fiscal 1996 compared to fiscal 1995
primarily due to price increases. Historically, BSCL has been adequately
supplied with electricity and natural gas and does not anticipate any
significant curtailments in its operations resulting from energy shortages.
BSCT's manufacturing process consumes electrical energy. BSCT purchases its
electricity from Tennessee Valley Authority ("TVA"). Historically, TVA has had
one of the lowest power rates in the country. The Company has negotiated a
favorable rate with TVA and has no reason to believe that a similar contract
will not be renewed upon similar terms. The Harriman, Tennessee area is served
by only two gas pipelines, (Tennessee Pipeline and East Tennessee Pipeline),
both belonging to Tenneco. Currently, BSCT does not have a direct interconnect
with either pipeline so all gas for the plant must be purchased from a Local
Distribution Company ("LDC"). Thus, BSCT must pay the wellhead price plus
transportation charges and the LDC mark up. The Company believes this premium
adds approximately $1 per ton to BSCT's cost structure. (This is not an uncommon
arrangement throughout the industry.) In fiscal 1996, BSCT had to curtail
operations on several occasions because no firm transportation was available
from East Tennessee Pipeline. BSCT has now secured the firm transportation
needed to avoid any significant curtailments.
ENVIRONMENTAL MATTERS
The Company is subject to various Federal, state and local laws and
regulations, including, among others, the Clean Air Act, the 1990 amendments to
the Clean Air Act (the "1990 Amendments"), the Resource Conservation and
Recovery Act, the Clean Water Act and the Louisiana Environmental Quality Act,
and the regulations promulgated in connection therewith, concerning the
discharge of contaminants which may be emitted into the air and discharged into
the waterways, and the disposal of solid and/or hazardous waste such as electric
arc furnace dust.
In the event of a release or discharge of a hazardous substance to certain
environmental media, the Company could be responsible for the costs of
remediating the contamination caused by such a release or discharge. In the last
five (5) years, the only environmental penalty assessed to the Company was a
$2,500 fine levied in 1996 in conjunction with an Air Quality Notice of
Violation issued by the Louisiana Department of Environmental Quality (the
"LDEQ"). At this time, the Company believes it is in compliance in all material
respects with applicable environmental requirements. The Company has a full-time
compliance manager who is responsible for monitoring the Company's procedures
for compliance with such rules and regulations. The Company does not anticipate
any substantial increase in its costs for environmental remediation or that such
costs will have a material adverse effect on the Company's competitive position,
operations, or financial condition.
7
The U.S. Public Interest Research Group ("USPIRG") filed a lawsuit in
Louisiana against the Company for alleged violations of air quality regulations.
The Company believes it has meritorious defenses to these charges and has asked
the court to dismiss USPIRG's lawsuit on various grounds.
The Company plans to close two storm-water retention ponds at the BSCL's
minimill. The Company has conducted limited analysis of the effluents running
into and out of the ponds. This analysis confirms there is little potential for
contamination. Based on this preliminary analysis, the Company does not believe
that future clean-up costs, if any, will be material. The Company has proposed a
sampling plan to the LDEQ to analyze the contents of the pond sediments. The
results of such sampling could indicate a greater level of contaminants than
suggested by the Company's limited testing. In such case, the costs of clean up
could be higher than the Company now believes. Until such sampling is completed,
however, it is impossible to estimate such costs.
The Company's minimill is classified, in the same manner as similar steel
mills in the industry, as generating hazardous waste due to the production of
dust that contains lead, cadmium, and chromium. The Resource Conservation and
Recovery Act regulates the management of such emission dust from electric arc
furnaces. The Company currently collects the dust resulting from its melting
operation through an emissions control system and manages it through an approved
waste recycling firm. The dust management costs were approximately $1.5 million
in fiscal 1994, $2.0 million in fiscal 1995 and $2.1 million in fiscal 1996. The
increase in cost is due primarily to increases in recycling costs and increases
in steel production. It is anticipated that recycling costs will decline in
fiscal 1997 due to increases in recycling competition and implementation of a
new dust recycling contract. In fiscal 1990, a small quantity of dust containing
very low concentrations of radioactive material inadvertently entered the scrap
stream on one occasion. All of the dust containing such material was captured by
the emissions control system and is being held pending a decision as to its
appropriate disposal. The Company has estimated that the ultimate cost of
disposal of such dust will be approximately $500,000.
The Company's future expenditures for installation of environmental control
facilities are difficult to predict. Environmental legislation, regulations and
related administrative policies are constantly changing. Environmental issues
are also subject to differing interpretations by the regulated community, the
regulating authorities and the courts. Consequently, it is difficult to forecast
expenditures needed to comply with future regulations. Therefore, at this time,
the Company cannot estimate those costs associated with compliance and the
effect the upcoming regulations will have on the Company's competitive position,
operations, or financial condition. In fiscal 1996, the Company spent
approximately $200,000 on various environmental capital projects. In fiscal
1997, the Company intends to spend approximately $1 million on various
environmental capital projects, including those related to the 1990 Clean Air
Act Amendments.
TVSC, the prior owners of the BSCT facility, had entered into a Consent
Agreement and Order (the "Voluntary Consent Order") under the Tennessee
Department of Environment and Conservation's voluntary clean-up program. The
Company, in acquiring the assets of TVSC, has entered into a similar Voluntary
Consent Order. The ultimate remedy and clean-up goals will be dictated by the
results of human health and ecological risk assessment which are components of a
required, structured investigative, remedial, and assessment process. The
definitive asset purchase agreement between the Company and TVSC provided for
$2.0 million of the purchase price to be held in escrow and applied to costs
incurred by the Company for activities pursuant to the Voluntary Consent Order
(with an additional $1.0 million to be held for one year for such costs and
other costs resulting from a breach of TVSC's representations and warranties in
the agreement). As of September 30, 1996, investigative, remedial, and risk
assessment activities have resulted in expenses of approximately $1.0 million.
At this time, the Company does not expect the costs of resolution of the
Voluntary Consent Order to exceed monies provided by escrow agreement.
SAFETY AND HEALTH MATTERS
The Company is subject to various regulations and standards promulgated
under the Occupational Safety and Health Act, which are administered by the
Occupational Safety and Health Administration ("OSHA"). These regulations and
standards are minimum requirements for employee protection and health. It is the
Company's policy to meet or exceed these minimum requirements in all of the
Company's safety and health policies, programs, and procedures.
8
As a result of an inspection initiated by the United Steelworkers of America
and conducted at the LaPlace, Louisiana facility in October and November of 1994
by OSHA, the Company received various citations and was fined $34,000. OSHA
officials stated that none of what was found "showed blatant disregard for
safety" and that none of the violations were deemed "willful".
The Company knows of no other material safety or health issues.
STRIKE/CORPORATE CAMPAIGN IMPACT UPON THE COMPANY
GENERAL. On March 21, 1993, the Union initiated a strike after the parties
failed to reach agreement on a new labor contract due to differences on economic
issues. As a result of a strategic contingency plan, the Company was able to
avoid complete suspension of operations by operating the minimill with fewer
workers and by utilizing a combination of temporary replacement workers,
strikers who returned to work, and salaried employees. As a result of such
measures, the Company operated at full capacity during most of the strike; and,
since October 1993, overall production and productivity have exceeded pre-strike
levels. On September 23, 1996, the Company and Union entered into a settlement
agreement which, among other issues, resulted in a new labor contract.
CONTRACT TERMS. The Company and Union entered into a six year contract on
September 27, 1996. The Company considers the contract terms to be favorable to
the Company. The key terms are:
- There will be no increases in base pay during the life of the
contract.
- The Company implemented a productivity incentive plan which pays for
increased performance.
- The Company implemented a discretionary profit sharing plan.
- The Company will implement a managed care health care plan and
require employee contributions toward the cost of the plan. The
Company estimates that this will save over $0.5 million annually.
All future cost increases will be shared with the employees paying
33%.
- The Company has improved flexibility in contracting out work,
combining jobs, and utilizing all available resources to accomplish
a job.
SETTLEMENT AGREEMENT. Besides specifying the contract terms, the settlement
agreement covered five significant items.
VACATION. As vacation is not carried forward from year to year, and even
though the striking employees were not entitled to any vacation in 1996 and
1997 under the terms of the contract, the Company offered one week in 1997
to be taken during a planned shutdown.
PERFORMANCE BONUS. The Company agreed to pay each eligible striking
employee $425.00; this is related to a performance bonus paid in 1995 to
employees. This one-time settlement issue cost approximately $100,000.
STRIKE DISCIPLINE. The Company has maintained that it has a right to
impose disciplinary action, including termination, on picketers who have
engaged in strike-related misconduct. The Company and Union agreed to use a
special standard focusing only on the action committed. A special
arbitration process was negotiated to resolve any disagreements relating to
this discipline.
RETURN TO WORK PROTOCOL. The Company agreed to a protocol for striking
workers to return to work. The protocol addresses physical examinations,
drug tests, and training before the employees enter the plant. The Company
believes this will help to minimize the anticipated difficulties in making a
transition to a workforce composed of workers who crossed the picket line,
replacement workers who will be retained, and returning strikers. The
Company estimates that approximately 100 of the 210 employees who were on
strike will return.
9
UNFAIR LABOR PRACTICE CHARGES. In connection with the strike, the Union
filed numerous unfair labor practice charges against the Company with the
National Labor Relations Board (the "NLRB"). All, except one, were withdrawn
by the Union or discharged by the NLRB. The one remaining charge revolves
around a lawsuit the Company has against the Union. See the following
discussion on "Corporate Campaign".
IMPACT. The settlement will have a short-term adverse impact upon the
Company. The Company will incur some one-time expenditures, such as the
performance bonus, employment physical and drug tests, training for returning
workers and existing workers, extra security, and legal expenses for arbitration
cases related to disciplinary action. Back-pay may be required for any
arbitration cases for which the arbitrators decide that the discipline was
inappropriate for the misconduct. These one-time expenditures are estimated to
be $0.5 to $1.0 million. In addition, the transition of placing returning
workers in jobs will disrupt operations for a time and impact productivity until
all workers become familiar with new equipment and new jobs responsibilities.
The Company is unable to estimate the impact; although, the introduction of the
productivity incentive plan should shorten this process.
Besides the benefits of the new contract, the Company expects out-of-pocket
costs for security, legal matters, and other services to decrease; although,
legal expenses for two ongoing lawsuits related to the corporate campaign will
continue. The Company incurred non-production strike and corporate campaign
expenses of $3.2 million in fiscal year 1993, $1.0 million in each of fiscal
years 1994 and 1995, and $1.8 million in fiscal year 1996.
CORPORATE CAMPAIGN. In August 1993, the Union announced a corporate campaign
designed to bring pressure on the Company from individuals and institutions with
direct financial or other interests in the Company. The impact of the corporate
campaign has been significant. The Company has filed a lawsuit in federal court
in Delaware under the Racketeer Influenced Corrupt Organizations Act (RICO)
against the Union for their conduct in connection with this campaign. The
Company seeks both an end to the illegal activities used in the Corporate
Campaign and recovery of damages.
TENNESSEE LABOR RELATIONS. In conjunction with the acquisition of the assets
of TVSC while it was in Chapter 11, the Union filed a charge with the NLRB
alleging that the Company violated the National Labor Relations Act. The Union
asserts that the Company refused to hire, at BSCT, certain individuals who were
former employees of TVSC. On August 16, 1996, the Company reached a settlement
with the Union which was approved by the NLRB. The Company agreed to recognize
the Union as the bargaining agent for the employees, pay the former employees
who applied for work but were not employed a settlement amount, and to put these
individuals on a preferential hiring list. In return, the Company maintained the
current trained work force. The settlement amount involves approximately 135
applicants for employment, each of whom would receive 25% of lost wages, less
interim earnings. Until interim earnings for 1996 are known for each applicant,
the liability cannot be determined. Based on assumptions of earnings, the
Company estimates that the settlement could cost between $136,000 and $500,000.
A final determination will be forthcoming through the NLRB. A labor contract is
in the process of being negotiated for the Tennessee facility and the Company
does not expect any material changes from current terms of employment.
EMPLOYEES
As of September 30, 1996, the Company had 550 non-striking employees, of
whom 152 were salaried office, supervisory, sales personnel and non-exempt
workers, and 398 were hourly employees. Approximately 380 are or will be covered
by labor contracts. As of September 30, 1996, there were 206 employees who were
on strike at the time of the settlement but have not yet returned to work.
During the later part of October and early November, the Company began the
process of bringing back the eligible employees that were previously on strike.
As of November 30, 1996, there were 85 former strikers who were eligible and
returned to work. There were approximately 68 employees involved in arbitration
over their status. The total employment numbers will fluctuate until the current
and returning workers settle into the workforce.
10
ITEM 2. PROPERTIES
The Company's principal operating properties are listed in the table below.
The Company believes that its properties and warehouse facilities are suitable
and adequate to meet its needs and that the size of its warehouse facilities is
sufficient to store the level of inventory necessary to support its level of
distribution.
LOCATION PROPERTY
-------- --------
LaPlace, Louisiana Approximately 287 acres of land, including a melt
shop, rolling mill, related equipment, a new 75,000
square foot warehouse, and dock facilities situated on
state-leased waterbottom in the Mississippi River.
Harriman, Tennessee Approximately 198 acres of land, 175,000 square feet
of steel mill buildings, including a melt shop (which
the Company does not intend to use), warehouse, a
rolling mill, and related equipment.
Chicago, Illinois Approximately 7 acres of land, a dock on the Calumet
River and buildings, including a recently renovated
100,000 square foot warehouse.
Tulsa, Oklahoma 63,500 square foot warehouse facility with a dock on
the Arkansas River system. Located on land under a
long-term lease. The original term of the lease is
from April 1, 1989 through March 31, 1999; the Company
has two 10-year renewal options through March 31,
2019.
Pittsburgh, Pennsylvania 112,000 square foot leased warehouse facility with a
dock on the Ohio River. The original term of the lease
was from January 1, 1987 through June 30, 1992; the
Company is in the first of three 5-year renewal
options through June 30, 2007.
Louden County, Tennessee Approximately 25 acres of undeveloped land along the
Tennessee River, available for future use as a
stocking location.
ITEM 3. LEGAL PROCEEDINGS
See "Business--Strike and Impact Upon the Company" for a description of the
NLRB proceedings, "Business Environmental Matters" for a description of
environmental issues and "Business - Safety and Health Matters" for a
description of safety and health issues. The Company is not involved in any
pending legal proceedings which involve claims for damages exceeding 10% of its
current assets. The Company is not a party to any material pending litigation
which, if decided adversely, would have a significant impact on the business,
income, assets, or operation of the Company, and the Company is not aware of any
material threatened litigation which might involve the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal year ended September 30, 1996.
11
PART II
ITEM 5. MARKET FOR REGISTRANT'S CLASS A COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
MARKET INFORMATION AND STOCK PRICE
The Class A Common Stock of the Company is traded on the American Stock
Exchange (AMEX) under the symbol BYX. The approximate number of stockholders of
record on October 31, 1996 was 404. In addition, there are approximately 3,500
shareholders whose stock is held in street name. The stock has been trading
since July 27, 1988. The closing price per share on October 31, 1996 was $3.00.
The following tables set forth the high and low prices for the periods
indicated.
SALES PRICE PER SHARE
-------------------------------------
FISCAL YEAR 1996 FISCAL YEAR 1995
---------------- ----------------
HIGH LOW HIGH LOW
------ ------ ------ ------
October-December........................ $5.375 $3.813 $4.375 $3.250
January-March........................... 4.750 3.875 4.500 4.000
April-June.............................. 4.500 3.625 6.250 3.875
July-September.......................... 4.000 2.750 7.500 4.750
There is no public trading market for the Class B Common Stock and the Class
C Common Stock.
DIVIDENDS
The Company's ability to pay dividends to Class A Common Stock stockholders
is subject to restrictive covenants under the Indenture pursuant to which the
Company's 10 1/4% First Mortgage Notes due 2001 (the "10 1/4% Notes") were
issued, the Preferred Stock and Warrant Purchase Agreement, and the Company's
line of credit. See "Notes 6, 14, and 15 of the Consolidated Financial
Statements" section of the 1996 Annual Report.
12
ITEM 6. SELECTED FINANCIAL DATA
Set forth below is summary consolidated financial information for the
Company since 1992.
SUMMARY FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
AS OF AND FOR YEARS ENDED SEPTEMBER 30,
-------------------------------------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
INCOME STATEMENT DATA:
Net Sales .................................. $ 204,426 $ 185,772 $ 160,823 $ 136,008 $ 119,772
Cost of Sales .............................. 188,453 162,158 144,314 128,033 109,116
--------- --------- --------- --------- ---------
Gross Profit ............................... 15,973 23,614 16,509 7,975 10,656
Selling, General and Administrative ........ 6,273 5,312 3,925 3,986 4,071
Non-Production Strike and
Corporate Campaign Expenses ............... 1,768 1,000 996 3,162 --
--------- --------- --------- --------- ---------
Operating Income ........................... 7,932 17,302 11,588 827 6,585
Interest Expense ........................... (8,635) (7,821) (7,670) (8,261) (8,977)
Interest Income ............................ 147 543 280 193 486
Miscellaneous .............................. 871 431 162 502 554
--------- --------- --------- --------- ---------
Income (Loss) Before Taxes ................. 315 10,455 4,361 (6,739) (1,352)
Provision for Taxes ........................ 0 118 -- -- --
--------- --------- --------- --------- ---------
Income (Loss) Before Cumulative
Effect of Accounting Change
and Extraordinary Items .................. 315 10,337 4,361 (6,739) (1,352)
Extraordinary Items ........................ -- -- (5,468) 585 --
--------- --------- --------- --------- ---------
Net Income (Loss) .......................... $ 315(1) $ 10,337(1) $ (1,107) $ (6,154) $ (1,352)
========= ========= ========= ========= =========
BALANCE SHEET DATA:
Working Capital ............................ $ 70,090 $ 73,301 $ 65,186 $ 32,389 $ 57,167
Total Assets ............................... 199,272 197,076 156,068 138,280 149,381
Total Debt ................................. 85,142 85,751 76,076 54,817 62,057
Preferred Stock ............................ 10,489 12,239 -- -- --
Common Stockholders' Equity ................ $ 70,328 $ 72,605 $ 60,124 $ 61,231 $ 67,385
(1) In fiscal 1995 and 1996, income (loss) applicable to common shares after
dividends accrued and accretion on Preferred Stock was $9.6 and ($2.3)
million, respectively.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS AND ANALYSIS OF FINANCIAL CONDITION
The requirements to satisfy these items are incorporated by reference to the
"Management's Discussion and Analysis" section of the 1996 Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statement and supplementary data information required by this
item is incorporated by reference to the "Consolidated Financial Statements" and
"Footnotes to Consolidated Financial Statements" sections of the 1996 Annual
Report.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
NONE.
13
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
Information regarding Directors and Executive Officers is incorporated by
reference to the "Information with respect to Board of Directors" section of the
Company's Proxy Statement for the 1997 Annual Meeting of Stockholders.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive compensation is incorporated by reference to
the "Executive Compensation" section of the Company's Proxy Statement for the
1997 Annual Meeting of Stockholders.
ITEM 12. OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The beneficial ownership of the Company's common stock as of October 31,
1996, by persons, other than Directors and Officers, known to the Company to be
beneficial owners of more than 5% of the outstanding common stock is
incorporated by reference to the "Security Ownership of Certain Beneficial
Owners" section of the Company's Proxy Statement for the 1997 Annual Meeting of
Stockholders.
SECURITY OWNERSHIP OF MANAGEMENT AND DIRECTORS
The beneficial ownership of the Company's common stock of all Directors and
Executive Officers is incorporated by reference to the "Information with respect
to Board of Directors" section of the Company's Proxy Statement for the 1997
Annual Meeting of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Additional information regarding certain relationships and related
transactions is incorporated by reference to the "Certain Transaction" section
of the Company's Proxy Statement for the 1997 Annual Meeting of Stockholders and
to the "Notes to Consolidated Financial Statements" section of the 1996 Annual
Report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) (I) FINANCIAL STATEMENTS
The Consolidated Financial Statements are incorporated herein by reference
to the Company's 1996 Annual Report to Stockholders and the Accountant's Report
relating to the Consolidated Financial Statements and Notes thereto.
(II) FINANCIAL STATEMENT SCHEDULES 10-K PAGE
Auditor's Opinion Relating to Schedules........................... 18
Schedule II Valuation and Qualifying Accounts for the three years
ended September 30, 1996......................................... 20
Schedules not listed above are omitted because of the absence of conditions
under which they are required or because the required information is included in
the Consolidated Financial Statements submitted.
14
(B) REPORTS ON FORM 8-K
No reports were filed on Form 8-K by the Registrant during the fourth quarter of
fiscal year 1996.
LIST OF EXHIBITS
NUMBER EXHIBIT
- ------ -------
3.1 Third Restated Certificate of Incorporation of the Company
(incorporated by reference herein to Post-Effective Amendment No. 1 to
Registration Statement on Form S-1 (No. 33-10745)).
3.2 Restated By-laws of the Company (incorporated herein by reference to
Registration Statement on Form S-1 (No. 33-10745)).
4.1 Specimen Certificate for Class A Common Stock (incorporated herein by
reference to Registration Statement on Form S-1 (No. 33-10745)).
4.1A Form of Indenture (including form of First Mortgage Note) between the
Company and First National Bank of Commerce as trustee (the "Trustee")
(incorporated herein by reference to Amendment No. 4 to Registration
Statement on Form S-1 (No 33-72-486)).
4.2 Form of Mortgage granted by the Company and Subsidiary Guarantors to
the Trustee (Louisiana) (incorporated herein by reference to Amendment
No. 1 to Registration Statement on Form S-1 (No. 33- 72486)).
4.3 Form of Mortgage, Assignment of Rents and Leases and Security Agreement
from the Company to the Trustee (Non-Louisiana) (incorporated herein by
reference to Amendment No. 1 to Registration Statement on Form S-1 (No.
33-72486)).
4.4 Form of Mortgage, Assignment of Rents and Leases and Security Agreement
from Subsidiary Guarantors to the Trustee (Non-Louisiana) (incorporated
herein by reference to Amendment No. 1 to this Registration Statement
on Form S-1 (No. 33-72486)).
4.5 Form of Security Agreement between the Company and the Trustee
(incorporated herein by reference to Amendment No. 1 to Registration
Statement on Form S-1 (No 33-72486)).
4.6 Form of Subsidiary Security Agreement between Subsidiary Guarantors and
the Trustee (incorporated herein by reference to Amendment No. 1 to
Registration Statement on Form S-1 (No. 33-72486)).
4.7 Form of Intercreditor Agreement between the Trustee and Chemical Bank,
as agent under the Credit Agreement (incorporated herein by reference
to Amendment No. 1g to Registration Statement on Form S-1 (No.
33-72486)).
4.8 Form of Subsidiary Guarantee between each recourse subsidiary of the
Company and the Trustee (incorporated herein by reference to Amendment
No. 1 to Registration Statement on Form S-1 (No 33- 72486)).
4.9 Form of Release of Federal Income Tax Ownership and Agreement between
the Trustee and the Company, Voest-Alpine A.G. and Howard M. Meyers
(incorporated by reference to Amendment No. 1 to Registration Statement
on Form S-1 (No. 33-72486)).
4.21 Stock Purchase Agreement dated August 28, 1986, between BSAC and the
purchasers of the Company's Class A Common Stock and Preferred Stock
(incorporated herein by reference to Post-Effective Amendment No. 1 to
Registration Statement on Form S-1 (No. 33-10745)).
4.22 Stock Purchase Agreement dated August 28, 1986, between BSAC and RSR,
the sole purchaser of the Company's Class B Common Stock (incorporate
herein by reference to Registration Statement on Form S-1 (No.
33-22603)).
4.23 Stock Purchase Agreement dated August 28, 1986, between BSAC and Allen
& Company, Incorporated (incorporated herein by reference to
Registration Statement on Form S-1 (No. 33-22603)).
4.24 Agreement between the Company and the holders of Preferred Stock dated
as of July 26, 1988 (incorporated herein by reference to Post-Effective
Amendment No. 1 to Registration Statement on Form S-1 (No.
33-10745)).
15
NUMBER EXHIBIT
- ------ -------
10.1 Employment Letter dated July 26, 1988, between Howard M. Meyers and the
Company (incorporated herein by reference to Post-Effective Amendment
No. 1 to Registration Statement on Form S-1 (No. 33-10745)).
10.2 (i) Agreement dated November 11, 1981, between Amoco Tax Leasing I
Corporation ("Amoco") and the Company, (ii) letter dated December 7,
1981 from Voest-Alpine A.G. ("VA") and Voest-Alpine International
Corporation ("VAIC") to Amoco, and (iii) letter dated November 11, 1981
from VAIC, Honen Investissements SARL, Barzel Investissements SARL,
Anku Foundation, Raphaely Steel Investments, N.V., Landotal Properties,
Inc., Canota Investments, Ltd., S.A. and Beruga Establishment and VA to
Amoco (incorporated herein by reference to Registration Statement on
Form S-1 (No. 33-10745)).
10.5 Letter Agreement dated May 28, 1987 between the Company and Allen &
Company Incorporated relating to investment banking services
(incorporated herein by reference to Registration Statement on Form S-1
(No.
33-10745)).
10.6 Agreement dated June 20, 1991 among the Company, MMG Patricof & Co.,
Inc., and MMG Placement Corp. relating to investment banking services
(incorporated herein by reference to Post-Effective Amendment No. 4 to
Registration Statement on Form S-1 (No. 33-10745)).
10.8 Warehouse (Stocking Location) Leases.
(i) Leetsdale, Pennsylvania (incorporated herein by reference to
Registration Statement on Form S-1 (No. 33-10745)).
(ii) Catoosa, Oklahoma (incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1989).
10.9 Tax Abatement Agreement dated July 10, 1985 between the Company and the
Louisiana Board of Commerce and Industry (incorporated herein by
reference to Registration Statement on Form S-1 (No. 33-22603)).
10.12 Security Agreement dated as of June 28, 1989, as amended and restated
through November 23, 1993, among the Company, the Lenders named in the
Credit Agreement, and Chemical Bank, as agent (incorporated herein by
reference to Registration Statement on Form S-1 (No. 33-72486)).
10.13 Intercreditor Agreement dated as of November 23, 1993 between First
National Bank of Commerce and Chemical Bank as agent under the Credit
Agreement (incorporated herein by reference to Registration Statement
on Form S-1 (No. 33-72486)).
10.15 First Amendment dated as of November 22, 1993 to the Loan Agreement
dated as of January 9, 1991 between the Company and Hibernia National
Bank (incorporated herein by reference to Registration Statement on
Form S-1 (No. 72486)).
10.17 First Amendment dated as of November 22, 1993 to Mortgage, Security
Agreement and Financing Statement dated as of January 9, 1991 by the
Company in favor of Hibernia National Bank (incorporated herein by
reference to Registration Statement on Form S-1 (No. 33-72486)).
10.18 Intercreditor Agreement dated as of November 23, 1993 between Chemical
Bank and Hibernia National Bank (incorporated herein by reference to
Registration Statement on Form S-1 (No. 33-72486)).
10.19 Security Agreement dated as of November 22, 1993 between the Company
and Hibernia National Bank (incorporated herein by reference to
Registration Statement on Form S-1 (No. 33-72486)).
10.21 Incentive Compensation Plan for Key Employees dated March 3, 1988
(incorporated herein by reference to the Company's Annual Report on
Form 10-K for the year ended September 30, 1991).
10.22 1991 Employees' Stock Option Plan dated April 18, 1991 with technical
amendments (incorporated herein by reference to Post-Effective
Amendment No. 4 to Registration Statement on Form S-1 (No. 33-10745)).
10.23 Pension Plan for Bargained Employees and the Employees Retirement Plan
(incorporated herein by reference to Post-Effective Amendment No. 5 to
the Company's Registration Statement on Form S-1 (No. 33-10745)).
10.24 Amendment among the Company, Bayou Scrap Corporation River Road Realty
Corporation, the Lenders named in the Credit Agreement and Chemical
Bank, as agent (incorporated herein by reference to Amendment No. 4 to
Registration Statement on Form S-1 (No. 33-72486)).
10.25 Asset purchase Agreement, dated as of January 30, 1995, among Tennessee
Valley Steel Corporation, TV Acquisition Corp., Bayou steel
Corporation, BT Commercial Corporation and NationsBank N.A. (Carolinas)
(incorporated herein by reference to Form 8-K dated March 8, 1995 (No.
33-22603)).
10.26 Amendment No. 1 to the Preferred Stock and Warrant Purchase Agreement,
dated as of June 13, 1995, by and between the Company and Rice Partners
II, L.P. (incorporated herein by reference to the Company's quarterly
report on Form 10-Q for the quarter ending June 30, 1996 (No.
33-22603)).
16
NUMBER EXHIBIT
- ------ -------
10.27 Shareholder Agreement, dated as of June 13, 1995, by and among the
Company, Bayou Steel Properties Limited, Howard M. Meyers and Rice
Partners II, L.P. (incorporated herein by reference to Form 8-K dated
June 20, 1995 (No. 33-22603)).
10.28 Credit Agreement dated as of June 28, 1989, as amended and restated
through June 1, 1995, among the Company, the Lenders named therein, and
Chemical Bank, as agent ("the Credit Agreement") (incorporated herein
by reference to Form 8-K dated June 20, 1995 (No. 33-22603)).
10.29 Term Loan Agreement, dated as of June 1, 1995, among Bayou Steel
Corporation (Tennessee), the several term loan lenders from time to
time parties thereto, and Chemical Bank, as agent (incorporated herein
by reference to Form 8-K dated June 20, 1995 (No. 33-22603)).
13.1 Annual Report filed with this report.
18.1 Letter from Arthur Andersen LLP regarding change in accounting method
from first-in, first-out (FIFO) to last-in, first-out (LIFO) method of
accounting for inventories (incorporated herein by reference to the
Annual Report on Form 10-K for the year ended September 30, 1989).
18.2 Letter from Arthur Andersen LLP regarding change in method of
accounting for interest from the effective interest method to another
acceptable method (incorporated herein by reference to the Annual
Report on Form 10-K for the year ended September 30, 1990).
17
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
Bayou Steel Corporation
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements included in Bayou Steel Corporation's
annual report to stockholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated November 22, 1996. Our audit was made for
the purpose of forming an opinion on the consolidated financial statements taken
as a whole. The schedules listed in the index above are presented for purposes
of complying with the Securities and Exchange Commission's rules and are not
part of the consolidated financial statements. The schedules have been subjected
to the auditing procedures applied in the audit of the consolidated financial
statements and, in our opinion, fairly state in all material respects the
financial data required to be set forth therein in relation to the consolidated
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana
November 22, 1996
18
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.
BAYOU STEEL CORPORATION
By /s/ HOWARD M. MEYERS
Howard M. Meyers
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ HOWARD M. MEYERS Chairman of the Board, Chief
Howard M. Meyers Executive Officer and Director December 18, 1996
/s/ JERRY M. PITTS President, Chief Operating December 18, 1996
Jerry M. Pitts Officer and Director
/s/ RICHARD J. GONZALEZ Vice President, Chief Financial December 18, 1996
Richard J. Gonzalez Officer, Treasurer and Secretary
/s/ LAWRENCE E. GOLUB Director December 18, 1996
Lawrence E. Golub
/s/ MELVYN N. KLEIN Director December 18, 1996
Melvyn N. Klein
/s/ ALBERT P. LOSPINOSO Director December 18, 1996
Albert P. Lospinoso
/s/ STANLEY S. SHUMAN Director December 18, 1996
Stanley S. Shuman
/s/ JEFFREY P. SANGALIS Director December 18, 1996
Jeffrey P. Sangalis
19
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995, AND 1994
BALANCE AT ADDITIONS BALANCE
BEGINNING OF CHARGED TO AT END OF
DESCRIPTION PERIOD EXPENSES DEDUCTIONS(1) PERIOD
--------- --------- --------- ---------
September 30, 1996
Allowance for doubtful accounts ...... $ 567,970 $(208,928) $ (6,077) $ 352,965
--------- --------- --------- ---------
September 30, 1995
Allowance for doubtful accounts ...... $ 617,497 $ (49,527) $ -- $ 567,970
--------- --------- --------- ---------
September 30, 1994
Allowance for doubtful accounts ...... $ 542,725 $ 186,560 $(111,788) $ 617,497
--------- --------- --------- ---------
(1) Write-off of uncollectible accounts.
20