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 quarterly period ended June 30, 2006
OR
o	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)

 

 

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 o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (see definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act).

(Check one):        Large accelerated filer  x         Accelerated filer   o        Non-accelerated filer   o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes o     No x

As of August 4, 2006, Registrant had 50,590,118 outstanding shares of Common Stock.

STEEL DYNAMICS, INC.
Table of Contents

 

PART I.  Financial Information
Item 1.		Financial Statements:
		Consolidated Balance Sheets as of June 30, 2006 (unaudited) and December 31, 2005
		Consolidated Statements of Income for the three and six-month periods ended June 30, 2006 and 2005 (unaudited)
		Consolidated Statements of Cash Flows for the three and six-month periods ended June 30, 2006 and 2005 (unaudited)
		Notes to Consolidated Financial Statements
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.		Quantitative and Qualitative Disclosures about Market Risk
Item 4.		Controls and Procedures
PART II. Other Information
Item 1.		Legal Proceedings
Item 1A.		Risk Factors
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.		Defaults Upon Senior Securities
Item 4.		Submission of Matters to a Vote of Security Holders
Item 5.		Other Information
Item 6.		Exhibits
		Signatures

 

STEEL DYNAMICS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

 

		June 30, 2006			December 31, 2005
		(Unaudited)
Assets
Current assets:
Cash and equivalents		$	53,948		$	65,518
Accounts receivable, net		322,478			202,878
Accounts receivable-related parties		31,813			38,830
Inventories		528,683			398,684
Deferred taxes		17,346			6,516
Other current assets		21,853			13,307
Total current assets		976,121			725,733
Property, plant and equipment, net		1,113,709			999,969
Restricted cash		4,535			1,588
Intangible assets		12,335			—
Goodwill		30,720			1,925
Other assets		27,053			28,472
Total assets		$	2,164,473		$	1,757,687
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	167,920		$	111,067
Accounts payable-related parties		1,766			4,475
Accrued interest		9,810			8,952
Accrued profit sharing		20,752			23,030
Other accrued expenses		72,349			57,497
Current maturities of long-term debt		649			2,156
Total current liabilities		273,246			207,177
Long-term debt
Senior unsecured 9 ½% notes		300,000			300,000
Subordinated convertible 4.0% notes		79,995			115,000
Other long-term debt		17,887			17,960
Unamortized bond premium		4,615			5,459
		402,497			438,419
Deferred taxes		262,047			231,105
Minority interest		1,747			1,118
Commitments and contingencies
Stockholders’ equity:
Common stock voting, $.01 par value; 100,000,000 shares authorized; 53,796,151 and 53,055,720 shares issued, and 50,556,030 and 43,183,989 shares outstanding, as of June 30, 2006 and December 31, 2005, respectively		536			529
Treasury stock, at cost; 3,240,121 and 9,871,731 shares, at June 30, 2006 and December 31, 2005, respectively		(88,914		)	(270,905		)
Additional paid-in capital		414,792			405,900
Retained earnings		898,522			744,344
Total stockholders’ equity		1,224,936			879,868
Total liabilities and stockholders’ equity		$	2,164,473		$	1,757,687

 

See notes to consolidated financial statements.

1

STEEL DYNAMICS, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share data)

 

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2006			2005			2006			2005
Net sales
Unrelated parties		$	758,186		$	482,550		$	1,366,804		$	983,396
Related parties		63,061			63,276			120,321			133,136
Total net sales		821,247			545,826			1,487,125			1,116,532
Costs of goods sold		624,692			434,642			1,131,083			876,571
Gross profit		196,555			111,184			356,042			239,961
Selling, general and administrative expenses		42,407			20,081			70,782			42,535
Operating income		154,148			91,103			285,260			197,426
Interest expense		8,025			8,898			16,161			16,975
Other (income) expense, net		(1,275		)	(175		)	(1,956		)	(753		)
Income before income taxes		147,398			82,380			271,055			181,204
Income taxes		50,529			31,717			98,137			69,764
Net income		$	96,869		$	50,663		$	172,918		$	111,440
Basic earnings per share		$	2.01		$	1.14		$	3.77		$	2.42
Weighted average common shares outstanding		48,231			44,510			45,874			46,106
Diluted earnings per share, including effect of assumed conversions		$	1.78		$	1.00		$	3.31		$	2.12
Weighted average common shares and share equivalents outstanding		54,883			51,472			52,609			53,150
Dividends declared per share		$	.20		$	.10		$	.40		$	.20

 

See notes to consolidated financial statements.

2

STEEL DYNAMICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)

 

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2006			2005			2006			2005
Operating activities:
Net income		$	96,869		$	50,663		$	172,918		$	111,440
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		30,438			21,579			55,355			43,409
Intangible asset amortization		2,165			—			2,165			—
Deferred income taxes		(5,862		)	1,435			(5,734		)	14,468
(Gain) loss on disposal of property, plant and equipment		(58		)	522			(11		)	522
Minority interest		389			(1,552		)	628			(1,434		)
Changes in certain assets and liabilities:
Accounts receivable		(10,797		)	28,426			(29,984		)	14,494
Inventories		(30,993		)	(26,259		)	(13,814		)	(40,405		)
Other assets		(11,166		)	(7,860		)	(8,148		)	2,660
Accounts payable		(60,298		)	(59,029		)	(220		)	(48,186		)
Accrued expenses		11,417			11,202			(15,019		)	(22,867		)
Net cash provided by operating activities		22,104			19,127			158,136			74,101
Investing activities:
Purchase of property, plant and equipment		(33,882		)	(17,146		)	(48,467		)	(36,287		)
Acquisition of business, net of cash acquired		(89,106		)	—			(89,106		)	—
Purchase of short-term investments		—			—			(14,075		)	—
Maturities of short-term investments		4,700			—			14,075			—
Net cash used in investing activities		(118,288		)	(17,146		)	(137,573		)	(36,287		)
Financing activities:
Issuance of long-term debt		—			176,297			—			237,605
Repayment of long-term debt		(45,488		)	(72,061		)	(47,146		)	(112,571		)
Issuance of common stock (net of expenses) and proceeds and tax benefits from exercise of stock options		8,534			472			27,356			12,836
Issuance (purchase) of treasury stock		193			(103,724		)	788			(180,424		)
Dividends paid		(8,812		)	(4,721		)	(13,131		)	(9,603		)
Debt issuance costs		—			(346		)	—			(346		)
Net cash used in financing activities		(45,573		)	(4,083		)	(32,133		)	(52,503		)
Decrease in cash and equivalents		(141,757		)	(2,102		)	(11,570		)	(14,689		)
Cash and equivalents at beginning of period		195,705			3,747			65,518			16,334
Cash and equivalents at end of period		$	53,948		$	1,645		$	53,948		$	1,645
Supplemental disclosure information:
Cash paid for interest		$	2,171		$	2,961		$	16,439		$	17,018
Cash paid for federal and state income taxes		$	94,365		$	54,607		$	95,541		$	54,777

 

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 after elimination of significant intercompany accounts and transactions.  Minority interest represents the minority shareholders’ proportionate share in the equity or income of the company’s consolidated subsidiaries.

The company previously had two reporting segments:  steel operations and steel scrap substitute operations.  With the addition of three joist fabrication facilities acquired with the Roanoke Electric Steel Corporation (Roanoke Electric) merger in April 2006, the company added a third reporting segment:  Steel Fabrication.  With the addition of two steel scrap processing locations pursuant to the merger, the company changed the steel scrap substitute operations segment to steel scrap and scrap substitute operations.

Use of Estimates.  These financial statements are prepared in conformity with accounting principles generally accepted in the United States and, accordingly, include amounts that require management to make estimates and assumptions that affect the amounts reported in the financial statements and in the notes thereto.  Significant items subject to such estimates and assumptions include the carrying value of property, plant and equipment, intangible assets, and goodwill; valuation allowances for trade receivables, inventories and deferred income tax assets; potential environmental liabilities, litigation claims and settlements.  Actual results may differ from these estimates and assumptions.

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 Annual Report on Form 10-K for the year ended December 31, 2005.

Note 2.  Roanoke Electric Merger

The company completed its previously announced merger with Roanoke Electric on April 11, 2006, immediately following approval of the transaction by Roanoke Electric stockholders.  Pursuant to the merger, Roanoke Electric stockholders received $9.75 in cash and 0.4 shares of the company’s common stock for each share of Roanoke Electric stock outstanding at the effective date of the merger. Based on 11,360,901 shares of Roanoke Electric stock outstanding prior to the close of the transaction, the company paid $110.8 million in cash, issued 4,544,360 shares of registered Steel Dynamics common stock valued at $127.7 million, incurred transaction costs of $4.9 million and assumed $44.7 million in debt, which the company retired on April 12, 2006.  The cash portion of the purchase price was funded from the company’s cash on hand.  The company valued the common stock issued at $28.11 per share based on the average stock price of the company’s common stock during the two days before and after the date that the merger agreement was agreed to and announced (October 17, 2005).

The company purchased Roanoke Electric to further diversify its product offerings, provide additional penetration of the joist, truss and girder markets and to broaden its geographic presence.  Roanoke Electric has steel manufacturing facilities in Roanoke, Virginia and Huntington, West Virginia.  These facilities produce angles, rounds, flats, channels, beams, special sections and billets, which are sold to steel service centers, fabricators, original equipment manufacturers and other steel producers.  The operating results from these two facilities are included in the company’s consolidated statements within the steel operations reporting segment.  Roanoke Electric also has certain subsidiaries involved in steel fabrication including bar joist and truck trailer beams, and has two steel scrap processing locations.  The operating results of the bar joist facilities are included in the company’s consolidated statements within the steel fabrication reporting segment while operating results of the two steel scrap processing locations are included with the steel scrap and scrap substitute operations.

Goodwill and intangible assets of $28.8 million and $14.5 million, respectively, were recorded as a result of the merger.  The goodwill is not expected to be deductible for tax purposes.  The intangible assets consisted of the following (dollars in thousands):

 

The related aggregate amortization expense recognized during the three and six-month periods ended June 30, 2006 was $2.2 million.  The estimated intangible asset amortization expense for the next five years follows (dollars in thousands):

 

4

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The aggregate purchase price of $243.4 million was allocated to the opening balance sheet of Roanoke Electric at April 11, 2006, the date of the merger.  The following allocation is still preliminary and subject to adjustment based on further determination of actual acquisition costs and the fair value and lives of the acquired assets, assumed liabilities, and identifiable intangible assets (in thousands):

 

Unaudited Pro Forma Results

Roanoke Electric’s operating results have been reflected in the company’s financial statements since the effective date of the merger, April 12, 2006.  The following unaudited pro forma information is presented below as if the merger of Roanoke Electric was completed as of the beginning of each period presented, or January 1, 2005 and 2006, (in thousands, except per share amounts):

		Three Months Ended June 30,						Six Months Ended June 30,
		2006			2005			2006			2005
Net Sales		$	821,247		$	683,695		$	1,636,357		$	1,385,711
Net Income		100,187			55,987			181,819			121,843
Basic Earnings Per Share		2.05			1.14			3.75			2.41
Diluted Earnings Per Share		1.82			1.01			3.32			2.13

 

The information presented above is for information purposes only and is not necessarily indicative of the actual results that would have occurred had the merger been consummated at the beginning of the respective period, nor are they necessarily indicative of future operating results of the combined companies under the ownership and management of the company.  The 2005 pro forma results reflect Roanoke Electric operations for the three and six-month periods ended April 30, 2005.  The three-month 2006 pro forma results reflect Roanoke Electric operations for the period between the effective date of the merger, April 12, 2006 and June 30, 2006; and the six-month 2006 pro forma results reflect Roanoke Electric operations for that same period and for the three-month period ended January 31, 2005. As the unaudited pro forma information is presented as if the merger had occurred on each of January 1, 2005 and 2006, the step-up in inventory of $3.7 million and the valuation of backlog of $2.0 million are reflected as expense during the first quarter of both 2005 and 2006. Therefore, the effect of these items are included in the six-month periods unaudited pro forma results presented above, but not the three-month periods.

Note 3.  Stock-Based Compensation

The company has several stock-based employee compensation plans which are more fully described in Notes 1 and 6 of the company’s 2005 Annual Report on Form 10-K.  Prior to January 1, 2006, the company accounted for awards granted under those plans following the recognition and measurement principles of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” (APB 25) and related interpretations.

Effective January 1, 2006, the company adopted the fair value recognition provisions of Financial Accounting Standard (FAS) No. 123R, “Share-Based Payments,” (FAS 123R) using the modified prospective application method. Under this transition method, compensation cost recognized in the quarters ended March 31, 2006 and June 30, 2006 includes the applicable amounts of compensation cost of all stock-based payments granted prior to, but not yet vested as of January 1, 2006 (based on the grant-date fair value estimated in accordance with the original provisions of FAS 123 and previously presented in the pro forma footnote disclosures). Compensation cost includes all stock-based payments granted subsequent to January 1, 2006 (based on the grant-date fair value estimated in accordance with the new provisions of FAS 123R). Results for prior periods have not been restated. Prior to the adoption of FAS 123R, no compensation cost was reflected in net income for stock options as all options granted had an exercise price equal to the market value of the underlying common stock on the date of grant. In accordance with FAS 123R, compensation expense for stock options is now recorded over the vesting period using the fair value on the date of grant, as calculated using the Black-Scholes model.

5

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Total share-based compensation expense, related to all of the company’s share-based awards, primarily incentive stock options,  recognized for the three and six-month periods ended June 30, 2006 was comprised as follows (in thousands, except per share data):

 

Under the modified prospective application method, results for prior periods have not been restated to reflect the effects of implementing FAS 123R.

Pro Forma Information: FAS 123 for Periods Prior to 2006

Prior to adopting the provisions of FAS 123R, the company recorded estimated compensation expense for employee stock options based upon their intrinsic value on the date of grant pursuant to APB 25 and provided the required pro forma disclosures of FAS 123. Because the company established the exercise price based on the fair market value of the company’s stock at the date of grant, the stock options had no intrinsic value upon grant, and therefore no estimated expense was recorded prior to adopting FAS 123R. Each accounting period, the company reported the potential dilutive impact of stock options in its diluted earnings per common share using the treasury-stock method. Out-of-the-money stock options (i.e., the average stock price during the period was below the strike price of the stock option) were not included in diluted earnings per common share as their effect was anti-dilutive.

For purposes of pro forma disclosures under FAS 123 for the three and six-month periods ended June 30, 2005, the estimated fair value of the stock options was assumed to be amortized to expense over the stock options’ vesting periods. The pro forma effects of recognizing estimated compensation expense under the fair value method on net income and earnings per common share for the three and six-month periods ended June 30, 2005 were as follows (in thousands, except per share data):

 

The disclosures related to the effect of share-based compensation expense for the three and six-month periods ended June 30, 2006 and the pro forma effect as if FAS 123 had been applied to the three and six-month periods ended June 30, 2005, are based on the fair value of stock option awards estimated on the date of grant using the Black-Scholes option valuation model with the following assumptions:

(1)             The volatility is based on the historical volatility of the company’s stock.

(2)             The risk-free interest rate is based on the U.S. Treasury strip rate for the expected life of the option.

(3)             The dividend yield is based on the company’s latest annualized dividend rate and the current market price of the underlying common stock at the date of grant.

(4)             The expected life in years is determined primarily from historical stock option exercise data.

Note 4.  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 shares related to the company’s convertible subordinated debt and are excluded from the computation in periods in which they have an anti-dilutive effect.  No options were excluded from the calculation for the three and six-month periods ended June 30, 2006.  For the three and six-month periods ended June 30, 2005, options to purchase 213,000 shares were excluded from the diluted earnings per share calculation because the options were anti-dilutive.

6

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The following table presents a reconciliation of the numerators and the denominators of the company’s basic and diluted earnings per share computations for net income for the three and six-month periods ended June 30 (in thousands, except per share data):

		Three Months Ended
		2006								2005
		Net Income (Numerator)			Shares (Denominator)		Per Share Amount			Net Income (Numerator)			Shares (Denominator)		Per Share Amount
Basic earnings per share		$	96,869		48,231		$	2.01		$	50,663		44,510		$	1.14
Dilutive stock option effect		—			313					—			199
4.0% convertible subordinated notes		609			6,339					666			6,763
Diluted earnings per share		$	97,478		54,883		$	1.78		$	51,329		51,472		$	1.00

 

		Six Months Ended
		2006								2005
		Net Income (Numerator)			Shares (Denominator)		Per Share Amount			Net Income (Numerator)			Shares (Denominator)		Per Share Amount
Basic earnings per share		$	172,918		45,874		$	3.77		$	111,440		46,106		$	2.42
Dilutive stock option effect		—			297					—			281
4.0% convertible subordinated notes		1,274			6,438					1,330			6,763
Diluted earnings per share		$	174,192		52,609		$	3.31		$	112,770		53,150		$	2.12

 

During the six months ended June 30, 2006, holders of the company’s 4.0% convertible subordinated notes converted $35.0 million of the notes to Steel Dynamics common stock, resulting in the issuance of 2.1 million shares from the company’s treasury stock reserves.  There are currently 4.7 million shares still available for conversion pursuant to these notes.

Note 5.  Inventories

Inventories are stated at lower of cost or market.  Cost is determined principally on a first-in, first-our basis.  Inventory consisted of the following (in thousands):

 

Note 6.  Segment Information

The company has three segments: steel, steel fabrication and steel scrap and scrap substitute operations.

The company previously had two reporting segments:  steel operations and steel scrap substitute operations.  With the addition of three joist fabrication facilities acquired with the Roanoke Electric merger in April 2006, the company added a third reporting segment:  Steel Fabrication.  With the addition of two steel scrap processing locations pursuant to the merger, the company changed the steel scrap substitute operations segment to steel scrap and scrap substitute operations.

Steel operations include the company’s Flat Roll Division, Structural and Rail Division, Engineered Bar Products Division, newly acquired Roanoke Bar Division and newly acquired Steel of West Virginia operations.  These operations consist of mini-mills, producing steel from steel scrap, using electric arc furnaces, continuous casting and automated rolling mills.

Steel fabrication operations include the company’s five New Millennium Building System’s plants located in Butler, Indiana; Continental, Ohio (newly acquired); Salem, Virginia (newly acquired); Florence, South Carolina (newly acquired); and Lake City, Florida.  Revenues from these plants are generated from the fabrication of trusses, girders, steel joists and steel decking.  Prior to June 30, 2006, the revenues associated with these operations were included in “All Other”, as the operations were below the quantitative thresholds required for reportable segments. Accordingly, the company has reclassified these revenues from prior periods to conform to the current presentation.

The steel scrap and scrap substitute operations include the revenues and expenses associated with the company’s two newly acquired steel scrap processing locations and from the company’s scrap substitute manufacturing facility, Iron Dynamics.

Revenues included in the category “All Other” are from a subsidiary operation that is below the quantitative thresholds required for reportable segments.  These revenues are from the further processing and resale of certain secondary and excess flat rolled 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, certain other investments and profit sharing expenses.

7

The company’s operations are organized and managed as operating segments.  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.  Refer to the company’s Annual Report on Form10-K for the year ended December 31, 2005, for more information related to the company’s segment reporting.  Inter-segment sales and any related profits are eliminated in consolidation.  The operations from the newly acquired Roanoke Electric facilities are included in the company’s results from the effective date of the merger, April 12, 2006 through June 30, 2006.  The company’s segment results for the three and six-month periods ended June 30 are as follows (in thousands):

				Three Months Ended										Six Months Ended
				2006					2005					2006					2005
Steel Operations
Net sales
External				$	733,532				$	498,006				$	1,338,487				$	1,032,567
Other segments				62,873					23,400					90,922					42,869
Operating income				169,403					101,875					315,876					218,657
Assets				1,778,855					1,448,627					1,778,855					1,448,627
Steel Fabrication Operations
Net sales
External				$	66,969				$	34,535				$	107,820				$	57,502
Other segments				1,097					28					1,117					29
Operating income (loss)				(2,608			)		1,990					620					2,379
Assets				160,245					96,448					160,245					96,448
Steel Scrap and Scrap Substitute Operations
Net sales
External				$	3,572				$	—				$	3,572				$	—
Other segments				25,118					9,336					36,370					23,912
Operating income (loss)				2,316					(4,127			)		(4,249			)		(3,965				)
Assets				135,530					134,006					135,530					134,006
All Other
Net sales
External				$	17,173				$	13,285				$	37,246				$	26,463
Other segments				220					180					439					329
Operating loss				(13,743			)		(9,801			)		(26,833			)		(19,805			)
Assets				425,239					101,815					425,239					101,815
Eliminations
Net sales
External				$	—				$	—				$	—				$	—
Other segments				(89,307					(32,944			)		(128,848			)		(67,139			)
Operating income (loss)				(1,220			)		1,166					(153			)		160
Assets				(335,396			)		(44,935			)		(335,396			)		(44,935			)
Consolidated
Net sales				$	821,247				$	545,826				$	1,487,125				$	1,116,532
Operating income			154,148					91,103					285,260					197,426
Assets			2,164,473					1,735,961					2,164,473					1,735,961
Net sales to non-US companies			19,967					16,766					35,679					41,776

 

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Note 7.  Condensed Consolidating Information

Certain 100%-owned subsidiaries of SDI have fully and unconditionally guaranteed all of the indebtedness relating to the issuance of $300.0 million of senior notes due March 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.  The following condensed consolidating financial statements (presented dollars in thousands) should be read in conjunction with the accompanying consolidated financial statements and the company’s Annual Report on Form 10-K for the year ended December 31, 2005.

Condensed Consolidating Balance Sheets

As of June 30, 2006		Parent			Guarantors			Combined Non-Guarantors			Consolidating Adjustments			Total Consolidated
Cash		$	28,393		$	24,260		$	1,295		$	—		$	53,948
Accounts receivable		232,615			315,649			1,532			(195,505		)	354,291
Inventories		393,221			122,713			22,083			(9,334		)	528,683
Other current assets		(46,588		)	85,351			459			(23		)	39,199
Total current assets		607,641			547,973			25,369			(204,862		)	976,121
Property, plant and equipment, net		935,652			120,551			57,344			162			1,113,709
Other assets		404,553			(135,893		)	(8,277		)	(185,740		)	74,643
Total assets		$	1,947,846		$	532,631		$	74,436		$	(390,440	)	$	2,164,473
Accounts payable		$	116,970		$	75,899		$	10,400		$	(33,583	)	$	169,686
Accrued expenses		72,377			26,600			5,206			(1,272		)	102,911
Current maturities of long-term debt		628			21			2,107			(2,107		)	649
Total current liabilities		189,975			102,520			17,713			(36,962		)	273,246
Other liabilities		153,057			101,808			37,968			(30,786		)	262,047
Long-term debt		402,343			154			812			(812		)	402,497
Minority interest		(22		)	—			—			1,769			1,747
Common stock		536			716			17,323			(18,039		)	536
Treasury stock		(88,914		)	818			—			(818		)	(88,914		)
Additional paid in capital		414,792			117,001			—			(117,001		)	414,792
Retained earnings		876,079			209,614			620			(187,791		)	898,522
Total stockholders’ equity		1,202,493			328,149			17,943			(323,649		)	1,224,936
Total liabilities and stockholders’ equity		$	1,947,846		$	532,631		$	74,436		$	(390,440	)	$	2,164,473

 

 

As of December 31, 2005		Parent			Guarantors			Combined Non-Guarantors			Consolidating Adjustments			Total Consolidated
Cash		$	62,842		$	59		$	2,617		$	—		$	65,518
Accounts receivable		220,320			147,574			29,612			(155,798		)	241,708
Inventories		361,064			—			41,684			(4,064		)	398,684
Other current assets		19,580			—			279			(36		)	19,823
Total current assets		663,806			147,633			74,192			(159,898		)	725,733
Property, plant and equipment, net		941,996			—			58,091			(118		)	999,969
Other assets		69,214			108,615			650			(146,494		)	31,985
Total assets		$	1,675,016		$	256,248		$	132,933		$	(306,510	)	$	1,757,687
Accounts payable		$	113,461		$	(8,640	)	$	10,305		$	416		$	115,542
Accrued expenses		84,547			1,162			4,968			(1,197		)	89,479
Current maturities of long-term debt		2,136			—			5,877			(5,857		)	2,156
Total current liabilities		200,144			(7,478		)	21,150			(6,638		)	207,177
Other liabilities		184,421			38,584			87,213			(79,113		)	231,105
Long-term debt		438,419			—			—			—			438,419
Minority interest		—			—			—			1,118			1,118
Common stock		529			2			17,322			(17,324		)	529
Treasury stock		(270,905		)	—			—			—			(270,905		)
Additional paid in capital		405,900			116,868			—			(116,868		)	405,900
Retained earnings		716,508			108,273			7,248			(87,685		)	744,344
Total stockholders’ equity		852,032			225,143			24,570			(221,877		)	879,868
Total liabilities and stockholders’ equity		$	1,675,016		$	256,248		$	132,933		$	(306,510	)	$	1,757,687

 

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