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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the period ended September 30, 2003
OR
|_| Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 0-21719
Steel Dynamics, Inc.
(Exact name of registrant as specified in its charter)
Indiana 35-1929476
(State or other jurisdiction of incorporation or organization)
(I.R.S. employer Identification No.)
6714 Pointe Inverness Way, Suite 200, Fort Wayne, IN 46804
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (260) 459-3553
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 reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2. Yes |X| No |_|
As of October 29 2003, Registrant had 48,107,134 outstanding shares of Common
Stock.
STEEL DYNAMICS, INC.
Table of Contents
PART I. Financial Information
Item 1. Consolidated Financial Information:
Page
----
Consolidated Balance Sheets as of September 30, 2003
(unaudited) and December 31, 2002......................... 1
Consolidated Statements of Income for the three and
nine-month periods ended September 30, 2003 and 2002
(unaudited)............................................... 2
Consolidated Statements of Cash Flows for the three
and nine-month periods ended September 30, 2003
and 2002 (unaudited)...................................... 3
Notes to Consolidated Financial Statements.................. 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 10
Item 3. Quantitative and Qualitative Disclosures about Market Risk.. 13
Item 4. Controls and Procedures..................................... 13
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K............................ 14
Signature................................................... 15
STEEL DYNAMICS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
September 30, December 31,
2003 2002
------------- ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents............................................................... $ 21,584 $ 24,218
Accounts receivable, net................................................................ 93,609 83,779
Accounts receivable-related parties..................................................... 23,509 34,700
Inventories............................................................................. 171,381 153,204
Deferred taxes.......................................................................... 9,425 6,680
Other current assets.................................................................... 11,433 8,322
---------- ----------
Total current assets........................................................... 330,941 310,903
Property, plant, and equipment, net.......................................................... 971,536 929,338
Restricted cash.............................................................................. 2,632 2,616
Other assets................................................................................. 35,207 32,839
---------- ----------
Total assets................................................................... $1,340,316 $1,275,696
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable........................................................................ $ 37,808 $ 27,390
Accounts payable-related parties........................................................ 32,738 18,827
Accrued interest........................................................................ 4,935 10,665
Other accrued expenses.................................................................. 42,132 44,755
Current maturities of long-term debt.................................................... 14,889 11,913
---------- ----------
Total current liabilities...................................................... 132,502 113,550
Long-term debt, less current maturities...................................................... 532,209 543,537
Deferred taxes............................................................................... 93,996 70,330
Other long-term contingent liabilities....................................................... 21,987 21,987
Minority interest............................................................................ 1,140 4,632
Commitments and contingencies
Stockholders' equity:
Common stock voting, $.01 par value; 100,000,000 shares authorized;
50,298,093 and 49,966,590 shares issued; and 47,898,925 and 47,580,676 shares
outstanding, as of September 30, 2003 and December 31, 2002, respectively........... 502 499
Treasury stock, at cost; 2,399,168 and 2,385,914 shares, at September 30, 2003
and December 31, 2002, respectively................................................. (29,065) (28,889)
Additional paid-in capital.............................................................. 351,462 347,050
Retained earnings....................................................................... 240,505 210,106
Other accumulated comprehensive loss.................................................... (4,922) (7,106)
---------- ----------
Total stockholders' equity..................................................... 558,482 521,660
---------- ----------
Total liabilities and stockholders' equity..................................... $1,340,316 $1,275,696
========== ==========
See notes to consolidated financial statements.
1
STEEL DYNAMICS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net sales:
Unrelated parties................................... $ 223,594 $ 203,137 $ 613,082 $ 521,848
Related parties..................................... 30,358 37,560 95,006 99,491
----------- ----------- ----------- -----------
Total net sales................................. 253,952 240,697 708,088 621,339
Cost of goods sold....................................... 215,097 167,942 587,790 468,167
----------- ----------- ----------- -----------
Gross profit.................................... 38,855 72,755 120,298 153,172
Selling, general and administrative expenses............. 16,010 15,679 45,667 51,790
----------- ----------- ----------- -----------
Operating income................................ 22,845 57,076 74,631 101,382
Interest expense......................................... 8,251 10,580 26,355 19,875
Other (income) expense, net.............................. (112) (113) (362) 3,909
----------- ----------- ------------ -----------
Income before income taxes...................... 14,706 46,609 48,638 77,598
Income taxes ............................................ 5,515 17,478 18,239 29,099
----------- ----------- ----------- -----------
Net income...................................... $ 9,191 $ 29,131 $ 30,399 $ 48,499
=========== =========== =========== ===========
Basic earnings per share................................. $ .19 $ .61 $ .64 $ 1.03
=========== ============ =========== ==========
Weighted average number of shares outstanding............ 47,797 47,545 47,683 47,005
=========== =========== =========== ===========
Diluted earnings per share............................... $ .19 $ .61 $ .63 $ 1.02
=========== ============ =========== ==========
Weighted average number of shares and share
equivalents outstanding............................. 48,122 47,854 47,920 47,354
=========== =========== =========== ===========
See notes to consolidated financial statements.
2
STEEL DYNAMICS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Operating activities:
Net income.......................................... $ 9,191 $ 29,131 $ 30,399 $ 48,499
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................... 17,472 15,716 50,391 43,796
Deferred income taxes........................... 9,491 7,427 20,921 14,118
Minority interest............................... 86 (193) (541) 37
Changes in certain assets and liabilities:
Accounts receivable........................ (4,879) (3,031) 1,361 (10,774)
Inventories................................ 2,043 (20,731) (18,177) (17,118)
Other assets............................... (3,124) 1,510 (4,920) (539)
Accounts payable........................... 8,649 12,396 24,329 16,638
Accrued expenses........................... 524 1,289 (5,966) 14,486
----------- ----------- ------------ -----------
Net cash provided by operating activities....... 39,453 43,514 97,797 109,143
----------- ----------- ----------- -----------
Investing activities:
Purchases of property, plant, and equipment......... (28,883) (65,890) (89,988) (125,087)
Other investing activities.......................... - - (8,283) -
----------- ----------- ----------- -----------
Net cash used in investing activities........... (28,883) (65,890) (98,271) (125,087)
------------ ------------ ----------- -----------
Financing activities:
Issuance of long-term debt.......................... 11,343 8,298 59,823 494,213
Repayments of long-term debt........................ (14,588) (10,235) (64,488) (522,399)
Issuance of common stock, net of expenses and proceeds
and tax benefits from exercise of stock options... 2,744 549 4,414 4,757
Purchase of treasury stock.......................... - - (176) -
Debt issuance costs................................. (413) (810) (1,733) (14,695)
----------- ----------- ----------- -----------
Net cash used in financing activities........... (914) (2,198) (2,160) (38,124)
------------ ----------- ----------- -----------
Increase (decrease) in cash and cash equivalents......... 9,656 (24,574) (2,634) (54,068)
Cash and cash equivalents at beginning of period......... 11,928 48,747 24,218 78,241
----------- ----------- ----------- -----------
Cash and cash equivalents at end of period............... $ 21,584 $ 24,173 $ 21,584 $ 24,173
=========== =========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest.............................. $ 14,662 $ 15,691 $ 37,346 $ 27,920
=========== =========== =========== ===========
Cash paid for federal and state income taxes........ $ - $ 2,647 $ 7,474 $ 6,882
=========== =========== =========== ===========
Issuance of common stock from treasury to
extinguish portion of long-term debt.............. $ - $ - $ - $ 22,000
=========== =========== =========== ===========
See notes to consolidated financial statements.
3
STEEL DYNAMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Accounting Policies
Principles of Consolidation. The consolidated financial statements include the
accounts of Steel Dynamics, Inc. (SDI), together with its subsidiaries,
including New Millennium Building Systems LLC (NMBS), after elimination of the
significant intercompany accounts and transactions. Minority interest represents
the minority shareholders' proportionate share in the equity or income of the
company's consolidated subsidiaries. During the first quarter of 2003, the
company increased its ownership interest in NMBS from 46.6% to 100%.
Use of Estimates. These financial statements are prepared in conformity with
accounting principles generally accepted in the United States and, accordingly,
include amounts that are based on management's estimates and assumptions that
affect the amounts reported in the financial statements and in the notes
thereto. Actual results may differ from these estimates.
In the opinion of management, these financial statements reflect all normal
recurring adjustments necessary for a fair presentation of the interim period
results. These financial statements and notes should be read in conjunction with
the audited financial statements included in the company's 2002 Annual Report on
Form 10-K.
Prior Year Reclassifications. In accordance with the Financial Accounting and
Standards Board (FASB) Statement No. 145 (FAS 145), "Rescission of FASB
Statements No. 4, 44, 64, Amendment of FASB Statement No. 13, and Technical
Corrections," the company has reclassified its extraordinary loss on
extinguishment of debt of $3.2 million, recorded in March 2002, as selling,
general and administrative expense and the corresponding income tax effect. This
reclassification had no effect on net income as previously reported.
Stock-Based Compensation. In December 2002, the FASB issued Statement No. 148
(FAS 148), "Accounting for Stock-Based Compensation Transition and Disclosure,"
which amends FASB Statement No. 123 (FAS 123), "Accounting for Stock-Based
Compensation." FAS 148 is effective for fiscal years ending after December 15,
2002, and gives further guidance regarding methods of transition for a voluntary
change to the fair-value-based method of accounting for stock-based employee
compensation and regarding disclosure requirements as previously defined in FAS
123. At September 30, 2003, the company had three incentive stock option plans
and accounted for these plans under the recognition and measurement principles
of Accounting and Standards Board APB Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations. Under APB 25, no stock-based
employee compensation cost related to the incentive stock option plans is
reflected in net income, as all options granted under those plans had an
exercise price equal to the market value of the underlying common stock on the
date of grant.
The following table illustrates the effect on net income and earnings per share
if the company had applied the fair value recognition provisions of FAS 123 to
its stock-based employee compensation for the respective periods ended September
30 (in thousands, except per share data):
Three Months Ended Nine Months Ended
-------------------------- --------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net income, as reported.................................. $ 9,191 $ 29,131 $ 30,399 $ 48,499
Total stock-based employee compensation expense using
the fair value based method, net of related tax
effects................................................ 447 649 1,574 1,650
----------- ----------- ----------- -----------
Pro forma net income.................................... $ 8,744 $ 28,482 $ 28,825 $ 46,849
=========== =========== =========== ===========
Basic earnings per share:
As reported.......................................... $ .19 $ .61 $ .64 $ 1.03
Pro forma............................................ .18 .60 .60 1.00
Diluted earnings per share:
As reported......................................... $ .19 $ .61 $ .63 $ 1.02
Pro forma........................................... .18 .60 .60 .99
4
STEEL DYNAMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2. Earnings Per Share
The company computes and presents earnings per common share in accordance with
FASB Statement No. 128, "Earnings Per Share". Basic earnings per share is based
on the weighted average shares of common stock outstanding during the period.
Diluted earnings per share assumes, in addition to the above, the weighted
average dilutive effect of common share equivalents outstanding during the
period. Common share equivalents represent dilutive stock options and dilutive
convertible subordinated debt and are excluded from the computation in periods
in which they have an anti-dilutive effect. The difference between the company's
basic and diluted earnings per share is solely attributable to stock options.
The following table presents the common share equivalents that were excluded
from the company's dilutive earnings per share calculation because they were
anti-dilutive at September 30 (in thousands):
2003 2002
----------- -----------
Stock options............................................ 624 822
Convertible subordinated debt............................ 6,763 -
----------- -----------
Total anti-dilutive share equivalents............... 7,387 822
=========== ===========
Note 3. Comprehensive Income
The following table presents the company's components of comprehensive income,
net of related tax, for the respective periods ended September 30 (in
thousands):
Three Months Ended Nine Months Ended
-------------------------- --------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net income available to common shareholders.............. $ 9,191 $ 29,131 $ 30,399 $ 48,499
Unrealized gain (loss) on derivative instruments.... 957 (966) 1,932 (1,548)
Unrealized gain on available-for-sale securities.... 195 - 252 -
----------- ----------- ----------- -----------
Comprehensive income........................ $ 10,343 $ 28,165 $ 32,583 $ 46,951
=========== =========== =========== ===========
The company recorded no gain or loss from hedging activities during the three
months ended September 30, 2003, and no cumulative effect to earnings for the
nine months ended September 30, 2003. The company recorded no gain or loss from
hedging activities during the three months ended September 30, 2002, and a
cumulative gain of approximately $45,000 for the nine months ended September 30,
2002.
Note 4. Inventories
Inventories are stated at lower of cost (principally standard cost which
approximates actual cost on a first-in, first-out basis) or market. Inventory
consisted of the following (in thousands):
September 30, December 31,
2003 2002
------------- -----------
Raw materials............................................ $ 42,707 $ 53,532
Supplies................................................. 57,358 52,815
Work-in-progress......................................... 12,533 14,835
Finished goods........................................... 58,783 32,022
----------- -----------
Total inventories................................... $ 171,381 $ 153,204
=========== ===========
Note 5. Segment Information
The company has two reportable segments: steel operations and steel scrap
substitute operations. The steel operations segment includes the company's Flat
Roll Division, Structural and Rail Division, and Bar Products Division. The Flat
Roll Division sells a broad range of hot-rolled, cold-rolled and coated steel
products, including a large variety of specialty products such as thinner gauge
hot-rolled products and galvanized products. The Flat Roll Division sells
directly to end-users and service centers, including Heidtman, located primarily
in the Midwestern United States and these products are used in numerous industry
sectors, including the automotive, construction and commercial industries. The
company began significant construction of its Structural and Rail Division in
May 2001, with structural steel production commencing in the third quarter of
2002. Initial trials to produce rail commenced in late October 2003. This
facility produces and sells structural steel beams, pilings, and other steel
components directly to end-users and service centers for the construction,
transportation and industrial machinery markets. This facility is also designed
to produce and sell a variety of standard and premium-grade rail for the
railroad industry. During the fourth quarter of 2003, the company anticipates
supplying standard rail to potential rail customers to begin the evaluation
process. On September 9, 2002, the company purchased the special bar quality
mini-mill assets of Qualitech Steel SBQ, LLC. The company plans to convert the
facility to the production of merchant bars and shapes and reinforcing bar
products, while retaining the ability to produce special bar quality steel. The
facility's anticipated annual production capacity is between 500,000 and 600,000
tons. The company anticipates initial production will begin during the first
quarter of 2004 and anticipates marketing the bar products directly to end-users
and to service centers for the construction, transportation and industrial
machinery markets.
5
STEEL DYNAMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Steel scrap substitute operations include the revenues and expenses associated
with the company's wholly owned subsidiary, Iron Dynamics. From the time
operations were halted in 2001 through the fourth quarter of 2002, the costs
incurred at IDI were composed of those expenses required to maintain the
facility and further evaluate the project and its related benefits. During the
fourth quarter of 2002, IDI successfully completed certain operating trials
which may significantly reduce the eventual per-unit cost of liquid pig iron
production. Additional modifications and refinements required to implement this
modified production process have been substantially completed. The company is in
the process of restarting IDI and anticipates a limited amount of liquid pig
iron to be produced during the fourth quarter of 2003. Revenues included in the
category "All Other" are from two subsidiary operations that are below the
quantitative thresholds required for reportable segments. These revenues are
from the fabrication of trusses, girders, steel joists and steel decking for the
non-residential construction industry; from the further processing, or slitting,
and sale of certain steel products; and from the resale of certain secondary and
excess steel products. In addition, "All Other" also includes certain
unallocated corporate accounts, such as the company's senior secured credit
facilities, senior unsecured notes, convertible subordinated notes and certain
other investments.
The company's operations are primarily organized and managed by operating
segment. Operating segment performance and resource allocations are primarily
based on operating results before income taxes. The accounting policies of the
reportable segments are consistent with those described in Note 1 to the
financial statements. Certain amounts in 2002 have been reclassified as a result
of the company's compliance with FAS 145 as discussed in Note 1. Intersegment
sales and any related profits are eliminated in consolidation. The external net
sales of the company's steel operations include sales to non-U.S. companies of
$7.4 million and $2.7 million for the three months ended September 30, 2003 and
2002, respectively, and $60.1 million and $6.7 million for nine months ended
September 30, 2003 and 2002, respectively. The company's segment results are as
follows (in thousands):
Three Months Ended Nine Months Ended
------------------------------- -------------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Steel Operations
Net sales
External $ 231,276 $ 221,312 $ 647,114 $ 558,816
Other segments 14,374 12,710 37,179 37,947
Operating income 24,536 63,311 87,839 120,737
Assets 1,106,122 1,021,477 1,106,122 1,021,477
- ------------------------------------------------------------------------------------------------------------------------
Steel Scrap Substitute Operations
Net sales
External $ - $ - $ - $ -
Other segments 9 - 11 -
Operating loss (2,951) (2,271) (7,339) (7,086)
Assets 157,486 151,404 157,486 151,404
- ------------------------------------------------------------------------------------------------------------------------
All Other
Net sales
External $ 22,676 $ 19,385 $ 60,974 $ 62,523
Other segments 252 162 508 488
Operating income (loss) 1,655 (4,293) (6,458) (11,192)
Assets 182,289 160,150 182,289 160,150
- ------------------------------------------------------------------------------------------------------------------------
Eliminations
Net sales
External $ - $ - $ - $ -
Other segments (14,635) (12,872) (37,698) (38,435)
Operating income (loss) (395) 329 589 (1,077)
Assets (105,581) (101,016) (105,581) (101,016)
- ------------------------------------------------------------------------------------------------------------------------
Consolidated
Net sales $ 253,952 $ 240,697 $ 708,088 $ 621,339
Operating income 22,845 57,076 74,631 101,382
Assets 1,340,316 1,232,015 1,340,316 1,232,015
- ------------------------------------------------------------------------------------------------------------------------
6
STEEL DYNAMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6. Condensed Consolidating Information
Certain 100%-owned subsidiaries of SDI have fully and unconditionally guaranteed
all of the indebtedness relating to the issuance of $200 million of senior notes
due 2009. Following are condensed consolidating financial statements of the
company, including the guarantors. The following condensed consolidating
financial statements present the financial position, results of operations and
cash flows of (i) SDI (in each case, reflecting investments in its consolidated
subsidiaries under the equity method of accounting), (ii) the guarantor
subsidiaries of SDI, (iii) the non-guarantor subsidiaries of SDI, and (iv) the
eliminations necessary to arrive at the information for the company on a
consolidated basis.
Condensed Consolidating Balance Sheets (in thousands)
As of September 30, 2003 Combined Consolidating Total
Parent Guarantors non-guarantors adjustments consolidated
----------- ----------- -------------- ------------- ------------
Cash.................................. $ 20,917 $ 327 $ 340 $ - $ 21,584
Accounts receivable................... 112,648 - 13,022 (8,552) 117,118
Inventories........................... 155,034 630 16,154 (437) 171,381
Other current assets.................. 21,756 3 123 (1,024) 20,858
----------- ----------- ----------- ----------- -----------
Total current assets............... 310,355 960 29,639 (10,013) 330,941
Property, plant and equipment, net.... 761,189 63,562 146,901 (116) 971,536
Other assets.......................... 215,889 55,586 357 (233,993) 37,839
----------- ----------- ----------- ----------- -----------
Total assets....................... $ 1,287,433 $ 120,108 $ 176,897 $ (244,122) $ 1,340,316
=========== =========== =========== =========== ===========
Accounts payable...................... $ 62,891 $ 2,940 $ 13,267 $ (8,552) $ 70,546
Accrued expenses...................... 43,206 586 4,102 (827) 47,067
Current maturities of long-term debt.. 10,541 - 4,367 (19) 14,889
----------- ----------- ----------- ----------- -----------
Total current liabilities.......... 116,638 3,526 21,736 (9,398) 132,502
Other liabilities..................... 95,498 42,574 (5,013) (17,076) 115,983
Long-term debt........................ 517,321 - 23,740 (8,852) 532,209
Minority interest..................... 628 - - 512 1,140
Common stock.......................... 502 46,481 183,155 (229,636) 502
Treasury stock........................ (29,065) - - - (29,065)
Additional paid in capital............ 351,462 16 - (16) 351,462
Retained earnings..................... 239,199 27,511 (46,549) 20,344 240,505
Other accumulated comprehensive loss.. (4,750) - (172) - (4,922)
----------- ----------- ----------- ----------- -----------
Total stockholders' equity......... 557,348 74,008 136,434 (209,308) 558,482
----------- ----------- ----------- ----------- -----------
Total liabilities and stockholders'
equity........................... $ 1,287,433 $ 120,108 $ 176,897 $ (244,122) $ 1,340,316
=========== =========== =========== =========== ===========
As of December 31, 2002
Cash.................................. $ 22,530 $ 282 $ 1,406 $ - $ 24,218
Accounts receivable................... 117,001 - 9,403 (7,925) 118,479
Inventories........................... 137,072 - 16,868 (736) 153,204
Other current assets.................. 15,209 50 99 (356) 15,002
----------- ----------- ----------- ----------- -----------
Total current assets............... 291,812 332 27,776 (9,017) 310,903
Property, plant and equipment, net.... 742,202 46,139 141,107 (110) 929,338
Other assets.......................... 189,807 28,454 330 (183,136) 35,455
----------- ----------- ----------- ----------- -----------
Total assets....................... $ 1,223,821 $ 74,925 $ 169,213 $ (192,263) $ 1,275,696
=========== =========== =========== =========== ===========
Accounts payable...................... $ 44,608 $ - $ 9,533 $ (7,924) $ 46,217
Accrued expenses...................... 52,537 - 3,030 (147) 55,420
Current maturities of long-term debt.. 7,292 - 4,639 (18) 11,913
----------- ----------- ----------- ----------- -----------
Total current liabilities.......... 104,437 - 17,202 (8,089) 113,550
Other liabilities..................... 72,959 22,926 (2,188) (1,380) 92,317
Long-term debt........................ 524,733 - 22,496 (3,692) 543,537
Minority interest..................... 622 - - 4,010 4,632
Common stock.......................... 499 45,361 172,196 (217,557) 499
Treasury stock........................ (28,889) - - - (28,889)
Additional paid in capital............ 347,050 16 - (16) 347,050
Retained earnings..................... 209,299 6,622 (40,276) 34,461 210,106
Other accumulated comprehensive loss.. (6,889) - (217) - (7,106)
----------- ----------- ----------- ----------- -----------
Total stockholders' equity......... 521,070 51,999 131,703 (183,112) 521,660
----------- ----------- ----------- ----------- -----------
Total liabilities and stockholders'
equity........................... $ 1,223,821 $ 74,925 $ 169,213 $ (192,263) $ 1,275,696
=========== =========== =========== =========== ===========
7
STEEL DYNAMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidating Statements of Income (in thousands)
For the Three Months Ended,
September 30, 2003
Combined Consolidating Total
Parent Guarantors non-guarantors adjustments consolidated
----------- ----------- -------------- ------------- ------------
Net sales............................. $ 245,650 $ - $ 22,938 $ (14,636) $ 253,952
Cost of good sold..................... 206,871 - 22,600 (14,374) 215,097
----------- ----------- ----------- ----------- -----------
Gross profit (loss)................ 38,779 - 338 (262) 38,855
Selling, general and administration... 11,702 1,821 2,354 133 16,010
----------- ----------- ----------- ----------- -----------
Operating income (loss)............... 27,077 (1,821) (2,016) (395) 22,845
Interest expense...................... 8,362 (333) 395 (173) 8,251
Other (income) expense................ 14,942 (15,237) (20) 203 (112)
----------- ----------- ----------- ----------- ------------
Income (loss) before income taxes and
equity in net loss of subsidiaries. 3,773 13,749 (2,391) (425) 14,706
Income taxes.......................... 1,621 4,790 (896) - 5,515
----------- ----------- ----------- ----------- -----------
2,152 8,959 (1,495) (425) 9,191
Equity in net income of subsidiaries.. 7,464 - - (7,464) -
----------- ----------- ----------- ----------- -----------
Net income (loss)..................... $ 9,616 $ 8,959 $ (1,495) $ (7,889) $ 9,191
=========== =========== =========== =========== ===========
For the Three Months Ended,
September 30, 2002
Combined Consolidating Total
Parent Guarantors non-guarantors adjustments consolidated
----------- ----------- -------------- ------------- ------------
Net sales............................. $ 234,022 $ - $ 19,547 $ (12,872) $ 240,697
Cost of good sold..................... 161,246 - 19,576 (12,880) 167,942
----------- ----------- ----------- ----------- -----------
Gross profit (loss)................ 72,776 - (29) 8 72,755
Selling, general and administration... 13,518 97 2,385 (321) 15,679
----------- ----------- ----------- ------------ -----------
Operating income (loss)............... 59,258 (97) (2,414) 329 57,076
Interest expense...................... 10,209 - 440 (69) 10,580
Other (income) expense................ 13,883 (14,092) (7) 103 (113)
----------- ----------- ----------- ----------- ------------
Income (loss) before income taxes and
equity in net loss of subsidiaries. 35,166 13,995 (2,847) 295 46,609
Income taxes.......................... 13,298 5,248 (1,068) - 17,478
----------- ----------- ----------- ----------- -----------
21,868 8,747 (1,779) 295 29,131
Equity in net income of subsidiaries.. 7,017 - - (7,017) -
----------- ----------- ----------- ----------- -----------
Net income (loss)..................... $ 28,885 $ 8,747 $ (1,779) $ (6,722) $ 29,131
=========== =========== =========== =========== ===========
For the Nine Months Ended,
September 30, 2003 Combined Consolidating Total
Parent Guarantors non-guarantors adjustments consolidated
----------- ---------- -------------- ------------- ------------
Net sales............................. $ 684,293 $ - $ 61,493 $ (37,698) $ 708,088
Cost of good sold..................... 563,616 - 62,165 (37,991) 587,790
----------- ----------- ----------- ------------ -----------
Gross profit (loss)................ 120,677 - (672) 293 120,298
Selling, general and administration... 35,917 3,276 6,770 (296) 45,667
----------- ----------- ----------- ------------ -----------
Operating income (loss)............... 84,760 (3,276) (7,442) 589 74,631
Interest expense...................... 26,430 (853) 1,280 (502) 26,355
Other (income) expense................ 41,294 (42,226) (22) 592 (362)
----------- ----------- ----------- ----------- ------------
Income (loss) before income taxes and
equity in net loss of subsidiaries. 17,036 39,803 (8,700) 499 48,638
Income taxes.......................... 7,587 13,914 (3,262) - 18,239
----------- ----------- ------------ ----------- -----------
9,449 25,889 (5,438) 499 30,399
Equity in net income of subsidiaries.. 20,451 - - (20,451) -
----------- ----------- ----------- ----------- -----------
Net income (loss)..................... $ 29,900 $ 25,889 $ (5,438) $ (19,952) $ 30,399
=========== =========== =========== =========== ===========
8
STEEL DYNAMICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Nine Months Ended,
September 30, 2002
Combined Consolidating Total
Parent Guarantor non-guarantors adjustments consolidated
----------- --------- -------------- ------------- ------------
Net sales............................. $ 596,764 $ - $ 63,010 $ (38,435) $ 621,339
Cost of good sold..................... 443,867 - 61,513 (37,213) 468,167
----------- ----------- ----------- ----------- -----------
Gross profit....................... 152,897 - 1,497 (1,222) 153,172
Selling, general and administration... 44,018 104 7,812 (144) 51,790
----------- ----------- ----------- ----------- -----------
Operating income (loss)............... 108,879 (104) (6,315) (1,078) 101,382
Interest expense...................... 18,330 - 1,627 (82) 19,875
Other (income) expense................ 39,819 (36,063) (17) 170 3,909
----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes and
equity in net loss of subsidiaries. 50,730 35,959 (7,925) (1,166) 77,598
Income taxes.......................... 18,842 13,257 (3,000) - 29,099
----------- ----------- ------------ ----------- -----------
31,888 22,702 (4,925) (1,166) 48,499
Equity in net income of subsidiaries.. 17,826 - - (17,826) -
----------- ----------- ----------- ----------- -----------
Net income (loss)..................... $ 49,714 $ 22,702 $ (4,925) $ (18,992) $ 48,499
=========== =========== =========== =========== ===========
Condensed Consolidating Statements of Cash Flows (in thousands)
For the Nine Months Ended
September 30, 2003
Combined Consolidating Total
Parent Guarantors non-guarantors Adjustments consolidated
----------- ----------- -------------- ------------- -------------
Net cash provided by (used in)
operations.......................... $ 89,088 $ 5,700 $ (2,377) $ 5,386 $ 97,797
Net cash used in investing activities. (61,781) (17,433) (10,973) (8,084) (98,271)
Net cash provided by (used in)
financing activities................ (28,920) 11,778 12,284 2,698 (2,160)
----------- ----------- ----------- ----------- -----------
Increase (decrease) in cash and
cash equivalents............... (1,613) 45 (1,066) - (2,634)
Cash and cash equivalents at
beginning of year.............. 22,530 282 1,406 - 24,218
----------- ----------- ----------- ----------- ----------
Cash and cash equivalents at
end of year.................... $ 20,917 $ 327 $ 340 $ - $ 21,584
=========== =========== =========== =========== ==========
For the Nine Months Ended
September 30, 2002
Combined Consolidating Total
Parent Guarantors non-guarantors Adjustments consolidated
----------- ----------- -------------- ------------- ------------
Net cash provided by operations....... $ 103,972 $ 131 $ 2,576 $ 2,464 $ 109,143
Net cash provided by (used in)
investing activities................ (129,070) - 3,982 1 (125,087)
Net Cash used in financing activities. (32,760) - (2,899) (2,465) (38,124)
----------- ----------- ------------ ----------- ----------
Increase (decrease) in cash and
cash equivalents............... (57,858) 131 3,659 - (54,068)
Cash and cash equivalents at
beginning of year.............. 77,407 83 751 - 78,241
----------- ----------- ----------- ----------- ----------
Cash and cash equivalents at
end of year...................... $ 19,549 $ 214 $ 4,410 $ - $ 24,173
=========== =========== =========== =========== ==========
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-Looking Statements
Statements made in this report that are not statements of historical
fact are "forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
Forward-looking statements include, without limitation, any statements that may
project, indicate or imply future results, events, performance or achievements.
We refer you, however, to the section denominated "Forward-Looking Statements"
in our Annual Report on Form 10-K for the year ended December 31, 2002, which we
incorporate herein by reference, for a more detailed discussion of some of the
many factors, variables, risks and uncertainties that could cause actual results
to differ materially from those we may have expected or anticipated. We caution
that any forward-looking statement reflects only our reasonable belief at the
time the statement is made.
Income Statement Classification
Net Sales. Our total net sales are a factor of net tons shipped,
product mix and related pricing. Our net sales are determined by subtracting
product returns, sales discounts, return allowances and claims from total sales.
We charge premium prices for certain grades of steel, dimensions of product, or
certain smaller volumes, based on our cost of production. We also charge
marginally higher prices for our value-added products from our cold mill. These
products include hot-rolled and cold-rolled galvanized products and cold-rolled
products.
Cost of Goods Sold. Our cost of goods sold represents all direct and
indirect costs associated with the manufacture of our products. The principal
elements of these costs are steel scrap and scrap substitutes, alloys, natural
gas, argon, direct and indirect labor benefits, electricity, oxygen, electrodes,
depreciation and freight. Our metallic raw materials, steel scrap and scrap
substitutes, represent the most significant component of our cost of goods sold.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses consist of all costs associated with our sales, finance
and accounting, materials and transportation, and administrative departments.
These costs include labor and benefits, professional services, financing cost
amortization, property taxes, profit-sharing expense and start-up costs
associated with new projects.
Interest Expense. Interest expense consists of interest associated with
our senior credit facilities and other debt agreements as described in the notes
to our financial statements set forth in our most recent Form 10-K, net of
capitalized interest costs that are related to construction expenditures during
the construction period of capital projects.
Other (Income) Expense. Other income consists of interest income earned
on our cash balances and any other non-operating income activity, including
insurance proceeds from litigation efforts. Other expense consists of any
non-operating costs, including permanent impairments of reported investments and
settlement costs from litigation efforts.
Consolidated Results of Operations
Three Months Ended September 30, 2003 Compared with Three Months Ended
September 30, 2002
Net Sales. Our net sales were $254.0 million, with total shipments of
745,000 net tons during the third quarter of 2003, as compared to net sales of
$240.7 million, with total shipments of 598,000 net tons during the third
quarter of 2002, an increase in net sales of $13.3 million, or 6%, and an
increase in total shipments of 147,000 net tons, or 25%. During the first six
months of 2003, prices of domestic flat-rolled steel, which accounted for 85% of
our consolidated net sales during that period, softened from peaks achieved
during the fourth quarter of 2002, and we experienced a slight increase during
the third quarter of 2003. In comparison to the second quarter of 2003, our
average consolidated selling price per ton increased $6, or 2%, during the third
quarter of 2003. However, in comparison to the peak of $403 per ton achieved in
the fourth quarter of 2002, our third quarter 2003 average consolidated selling
price per ton decreased approximately $62, or 15%, to $341 per ton. We believe
this weakened steel market was primarily caused by the weakened United States
economy which severely depressed the domestic commercial construction industry.
We are cautiously optimistic, however, that with a domestic economic recovery,
pricing and order levels will increase during the fourth quarter of 2003. We
have already experienced a strengthening in our flat-rolled steel and structural
steel pricing and order levels.
10
Cost of Goods Sold. Cost of goods sold was $215.1 million during the
third quarter of 2003, as compared to $167.9 million during the third quarter of
2002, an increase of $47.2 million, or 28%, which was primarily due to a 25%
increase in steel operation shipments and increases in metallic raw materials
costs. As a percentage of net sales, cost of goods sold represented
approximately 85% and 70% during the third quarter of 2003 and 2002,
respectively. Our metallic raw materials represented 51% of our cost of goods
sold during the third quarter of 2003 and 2002. Our average consolidated
metallic raw material cost per net ton charged was $11, or 10%, higher during
the third quarter of 2003 than during the same period in 2002 and $7 per ton, or
5%, higher when compared to the first six months of 2003. We anticipate a
further increase in our metallic raw materials costs during the fourth quarter
of 2003 due to increased demand of scrap resources. During 2002, our gross
margin strengthened from the severely depressed levels experienced during the
weak steel markets of 2001. Our average product pricing increased by a greater
degree than our average metallic raw material costs and we realized greater
operating efficiencies through increased production. Our gross margin percentage
was 15% during the third quarter of 2003, and a decrease of 15% from our peak of
30% achieved during the third and fourth quarters of 2002. This decrease was the
result of further decreased selling values of primarily flat-rolled steel
products experienced during the second quarter of 2003 and increasing metallic
raw materials costs.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $16.0 million during the third quarter of 2003, as
compared to $15.7 million during the same period in 2002, an increase of
331,000, or 2%. As a percentage of net sales, selling, general and
administrative expenses represented approximately 6% and 7% during the third
quarter of 2003 and 2002, respectively.
Interest Expense. Interest expense was $8.3 million during the third
quarter of 2003, as compared to $10.6 million during the third quarter of 2002,
a decrease of 2.3 million, or 22%. During the third quarter of 2003, gross
interest expense decreased 7% to $10.3 million and capitalized interest
increased approximately $1.6 million to $2.1 million, as compared to the same
period in 2002. During August of 2003, we received an amendment from our senior
secured lending group to decrease the pricing of our Term Loan B facility from
LIBOR plus 375 basis points to LIBOR plus 300 basis points. The interest
capitalization that occurred during the third quarter of 2003 primarily resulted
from the interest required to be capitalized with respect to construction
activities at our Bar Products Division and Structural and Rail Division.
Other (Income) Expense. Other income was $112,000 during the third
quarter of 2003, as compared to $113,000 during the third quarter of 2002,
primarily representing interest income earned on cash balances.
Income Taxes. During the third quarter of 2003 and 2002, respectively,
our income tax provision was $5.5 million and $17.5 million and our effective
tax rate was 37.5%. During 2001, we recorded a $1.9 million deferred tax asset
valuation allowance related to foreign tax credits that may not be fully
realized. This allowance is still outstanding at September 30, 2003.
Nine Months Ended September 30, 2003 Compared with Nine Months Ended
September 30, 2002
Net Sales. Our net sales were $708.1 million, with total shipments of
2.0 million net tons during the nine months ended September 30, 2003, as
compared to net sales of $621.3 million, with total shipments of 1.8 million net
tons during the same period of 2002, an increase in net sales of $86.8 million,
or 14%, and an increase in total shipments of 258,000 net tons, or 14%. In
comparison to the first nine months of 2002, our average consolidated selling
price per ton remained relatively flat during the first nine months of 2003.
Sales of domestic flat-rolled steel accounted for approximately 82% and 95% of
our net sales during the nine months ended September 30, 2003 and 2002,
respectively.
Cost of Goods Sold. Cost of goods sold was $587.8 million during the
nine months ended September 30, 2003, as compared to $468.2 million during the
same period of 2002, an increase of $119.6 million, or 26%. As a percentage of
net sales, cost of goods sold represented approximately 83% and 75% during the
nine months ended September 30, 2003 and 2002, respectively. Metallic raw
materials was the largest single component of our cost of goods sold,
representing 52% and 46% of these costs during the nine months ended September
30, 2003 and 2002, respectively. Our average consolidated metallic raw material
cost per net ton charged was $20, or 19%, higher during this period of 2003 than
during the same period in 2002. The increasing cost of our metallic raw
materials was the primary driver of the reduction in our gross margin to 17%
during the first nine months of 2003 compared to 25% in the same period of 2002.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $45.7 million during the nine months ended
September 30, 2003, as compared to $51.8 million during the same period in 2002,
a decrease of $6.1 million, or 12%. As a percentage of net sales, selling,
general and administrative expenses represented approximately 6% and 8% during
the nine months ended September 30, 2003 and 2002, respectively. Approximately
$3.9 million of this decrease in selling, general and administrative expenses
was related to the decrease in expenses classified as start-up costs which were
associated with our Structural and Rail Division and were included in selling,
general and administrative expenses rather than cost of goods sold until
commercial operations commenced during the third quarter of 2002. In addition,
in accordance with FAS 145, we also reclassified $3.2 million of extraordinary
loss from the extinguishment of debt recorded in the first quarter of 2002, as
selling, general and administrative expense. This reclassification had no effect
on net income as previously reported.
Interest Expense. Interest expense was $26.4 million during the nine
months ended September 30, 2003, as compared to $19.9 million during the same
period of 2002, an increase of $6.5 million, or 33%. During the nine months
ended September 30, 2003, gross interest expense increased 3% to $31.6 million
and capitalized interest decreased 51% to $5.3 million, as compared to the same
period in 2002. The increase in our gross interest expense, despite the slight
decrease in our total debt, was due to an increase in our average interest rate
caused by the March 2002 refinancing, in which we accessed traditionally
higher-priced public debt markets. The decrease in our capitalized interest
resulted from the reduction of interest required to be capitalized with respect
to our Structural and Rail Division since construction was substantially
complete at June 30, 2002. As we increase our construction activities at our Bar
Products Division during the remainder of 2003 and into the first quarter of
2004, we anticipate increased levels of capitalized interest.
11
Other (Income) Expense. Other income was $362,000 during the nine
months ended September 30, 2003, and other expense was $3.9 million during the
nine months ended September 30, 2002, a decrease of $4.3 million, resulting from
a $4.5 million settlement cost recorded in the first quarter of 2002 for the
final remaining lawsuit associated with the Nakornthai Strip Mill Public Co.
Limited litigation.
Income Taxes. During the nine months ended September 30, 2003 and 2002,
respectively, our income tax provision was $18.2 million and $29.1 million, and
our effective tax rate was 37.5%. During 2001, we recorded a $1.9 million
deferred tax asset valuation allowance related to foreign tax credits that may
not be fully realized. This allowance is still outstanding at September 30,
2003.
Liquidity and Capital Resources
Our business is capital intensive and requires substantial expenditures
for, among other things, the purchase and maintenance of equipment used in our
steelmaking and finishing operations and to remain in compliance with
environmental laws. Our short-term and long-term liquidity needs arise primarily
from capital expenditures, working capital requirements and principal and
interest payments related to our outstanding indebtedness. We have met these
liquidity requirements with cash provided by operations, equity, long-term
borrowings, state and local grants and capital cost reimbursements.
Cash Flows. Our cash flows from operating activities primarily result
from sales of flat-rolled and structural steel products, and to a lesser extent,
from revenues related to the fabrication of various steel products for the
non-residential construction industry. For the nine months ended September 30,
2003, cash provided by operating activities was $97.8 million, as compared to
$109.1 million for the nine months ended September 30, 2002, a decrease of $11.3
million, or 10%. This decrease was primarily driven by reduced earnings caused
by comparatively higher scrap costs and weaker flat rolled product pricing. Cash
used in investing activities, which primarily represented capital investments,
was $98.3 million and $125.1 million for the nine months ended September 30,
2003 and 2002, respectively. During 2003, we purchased the remaining 54%
minority-owned interest of New Millennium Building Systems for $8.3 million, and
we purchased a galvanizing facility in Jeffersonville, Indiana, for
approximately $19.0 million. In addition, we expended $17.2 million in
connection with the completion of our Structural and Rail Division, $17.4
million in connection with our Bar Products Division and $21.6 million in
connection with the addition of a coil-coating facility at our Flat Roll
Division. Cash used in financing activities was $2.2 million and $38.1 million
for the nine months ended September 30, 2003 and 2002, respectively. The
decrease in funds due to financing activities during 2002 was the result of our
change in capital structure after the first quarter refinancing activities and
the result of a decrease in debt associated with Iron Dynamics due to an
agreement with the Iron Dynamics lenders to extinguish the debt under the Iron
Dynamics credit agreement at the end of March 2002.
On January 28, 2002, we entered into an agreement with the Iron
Dynamics lenders to extinguish the debt under the Iron Dynamics credit agreement
at the end of March 2002. We complied with each of the settlement requirements,
thus constituting full and final settlement of all of Iron Dynamics' obligations
and our guarantees under the IDI credit agreement, causing the IDI credit
agreement to terminate. In meeting the requirements of the settlement agreement,
we paid $15.0 million in cash and issued an aggregate of $22.0 million, or 1.5
million shares of our common stock during March 2002. In addition, if IDI
resumes operations by January 27, 2007, and generates positive cash flow (as
defined in the settlement agreement), we are required to make contingent future
payments in an aggregate amount not to exceed $22.0 million.
Liquidity. We believe the principal indicators of our liquidity are our
cash position, remaining availability under our bank credit facilities and
excess working capital. During the nine months ended September 30, 2003, our
cash position decreased $2.6 million to $21.6 million and our working capital
position increased $1.1 million to $198.4 million, as compared to December 31,
2002. As of September 30, 2003, $75.0 million under our senior secured revolving
credit facility remained undrawn and available. Our ability to draw down the
revolver is dependent upon continued compliance with the financial covenants and
other covenants contained in our senior secured credit agreement.
Our ability to meet our debt service obligations and reduce our total
debt will depend upon our future performance, which in turn, will depend upon
general economic, financial and business conditions, along with competition,
legislation and regulation, factors that are largely beyond our control. In
addition, we cannot assure you that our operating results, cash flow and capital
resources will be sufficient for repayment of our indebtedness in the future.
We believe that based upon current levels of operations and anticipated
growth, cash flow from operations, together with other available sources of
funds, including additional borrowings under our senior secured credit
agreement, will be adequate for the next twelve months for making required
payments of principal and interest on our indebtedness and for funding
anticipated capital expenditures and working capital requirements. We assess our
capital spending at least quarterly and reevaluate our requirements based upon,
among other things, our current and expected operating results. We anticipate
our fiscal 2003 capital requirements to be approximately $134 million, of which
$90 million was expended during the first nine months of 2003, and the remaining
$44 million is expected to be spent as follows:
o approximately $29 million at our Bar Products Division to broaden
its operational capabilities to include the production of merchant
shapes and reinforcing bars, as well as retain its ability to
produce special-bar-quality products;
o approximately $5 million at our Flat Roll Division, primarily for
the completion of an on-site coil-coating facility, commencing
production in November 2003;
13
o approximately $6 million at our Structural and Rail Division,
primarily to allow for rail production & welding; and
o approximately $4 million at our Iron Dynamics facility for its
completion.
Other Matters
Inflation. We believe that inflation has not had a material effect on
our results of operations.
Environmental and Other Contingencies. We have incurred, and in the
future will continue to incur, capital expenditures and operating expenses for
matters relating to environmental control, remediation, monitoring and
compliance. We believe, apart from our dependence on environmental construction
and operating permits for our existing and proposed manufacturing facilities,
that compliance with current environmental laws and regulations is not likely to
have a material adverse effect on our financial condition, results of operations
or liquidity; however, environmental laws and regulations have changed rapidly
in recent years and we may become subject to more stringent environmental laws
and regulations in the future.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk. In the normal course of business our market risk is
limited to changes in interest rates. We utilize long-term debt as a primary
source of capital. A portion of our debt has an interest component that resets
on a periodic basis to reflect current market conditions. We manage exposure to
fluctuations in interest rates through the use of interest rate swaps. We agree
to exchange, at specific intervals, the difference between fixed rate and
floating rate interest amounts calculated on an agreed upon notional amount.
This interest differential paid or received is recognized in the consolidated
statements of income as a component of interest expense. At September 30, 2003,
no material changes had occurred related to our interest rate risk from the
information disclosed in the Annual Report of Steel Dynamics, Inc. and on Form
10-K for the year ended December 31, 2002.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures. With the participation of our Chief
Executive Officer and Chief Financial Officer, we have evaluated the
effectiveness of our disclosure controls and procedures (as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), as of the end of the period covered by this
report. Based upon such evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that, as of the end of such period, our
disclosure controls and procedures were effective in recording, processing,
summarizing and reporting, on a timely basis, the information we are required to
disclose in the reports that we file or submit under the Exchange Act.
Internal Control Over Financial Reporting. There have not been any
changes in our internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.
13
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -
31.1 Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer pursuant to
18 U.S.C. ss. 1350
32.2 Certification of Principal Financial Officer pursuant to
18 U.S.C. ss. 1350
(b) Reports on Form 8-K for the quarter ended September 30, 2003:
o Report filed July 21, 2003, relating to the issuance on July
21, 2003 of a press release regarding the company's second
quarter 2003 earnings results and to the company's web cast
earnings conference call on July 22, 2003 in connection
therewith.
- --------------------------------------------------------------------------------
Items 1 through 5 of Part II are not applicable for this reporting period and
have been omitted.
14
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of Securities
Exchange Act of 1934, Steel Dynamics, Inc. has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
November 10, 2003
STEEL DYNAMICS, INC.
By: /s/ TRACY L. SHELLABARGER
--------------------------------------------
Tracy L. Shellabarger
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer
and Duly Authorized Officer)
15