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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 1, 2005
RELIANCE STEEL & ALUMINUM CO.
(Exact name of registrant as specified in its charter)
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California |
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001-13122 |
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95-1142616 |
(State or other jurisdiction of
incorporation)
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(Commission File Number)
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(I.R.S. Employer
Identification Number) |
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350 S. Grand Ave., Suite 5100
Los Angeles, CA 90071 |
(Address of principal executive offices) |
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(213) 687-7700
(Registrants telephone number, including area code) |
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Not applicable.
(Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 2.01 Completion of Acquisition or Disposition of Assets.
On July 8, 2005, the Registrant filed a Current Report on Form 8-K with the Securities and
Exchange Commission to report the acquisition of all of the outstanding securities of Chapel Steel
Corp., a Pennsylvania corporation (Chapel Steel), as described below. At the time of the filing
certain financial statements were not available and, accordingly, were not filed with the Current
Report. The Registrant is filing this Amendment to include in the Current Report those financial
statements and the pro forma financial information required to be filed under Item 9.01.
Effective July 1, 2005, the Registrant, through its wholly-owned subsidiary RSAC Management
Corp., a California corporation (RSAC), acquired all of the outstanding securities of Chapel
Steel. Chapel Steel will be operated as a wholly-owned subsidiary of RSAC. RSAC paid an aggregate
purchase price of $94.2 million in cash to James R. Sutow, Jerry Sutow, as Trustee under the
Revocable Agreement of Trust of Jerry Sutow dated July 18, 2002, and Rita Sutow, as Trustee under
the Revocable Agreement of Trust of Rita Sutow dated July 18, 2002 (collectively, Sellers), and
assumed Chapel Steels debt of approximately $16.8 million. A portion of the purchase price will
be retained in escrow for a certain period of time in connection with the indemnification
provisions in the Stock Purchase Agreement dated as of May 31, 2005 by and among the Registrant,
RSAC, Sellers, and Chapel Steel.
Chapel Steel is headquartered in Springhouse (Philadelphia), Pennsylvania. Chapel Steel
processes and distributes carbon and alloy steel plate products from five (5) facilities in
Pottstown (Philadelphia), Pennsylvania; Bourbonnais (Chicago), Illinois; Houston, Texas;
Birmingham, Alabama; and Portland, Oregon. Chapel Steel also warehouses and distributes its
products in Cincinnati, Ohio and Hamilton, Ontario, Canada. Chapel Steels net sales for the
fiscal year ended December 31, 2004 were approximately $273 million. Chapel Steel will continue to
engage in the same business at the same locations as prior to the acquisition.
Prior to the closing of the acquisition, neither Sellers nor the officers or directors of
Chapel Steel were affiliated with or related to Registrant or RSAC in any way. The purchase price
was determined by negotiations between Registrant and RSAC, on the one hand, and Sellers and Chapel
Steel, on the other. To fund the purchase price and the repayment of debt, the Registrant and RSAC
drew on their syndicated bank revolving line of credit established June 22, 2005 with Bank of
America, N.A. as administrative agent, and 15 banks as lenders under this syndicated credit
facility. Sellers and/or the officers or directors of Chapel Steel, through various entities, own
a portion of the real property on which Chapel Steels facilities are located.
Item 9.01 Financial Statements and Exhibits.
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(a) |
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Financial Statements of Businesses Acquired. |
|
(1) |
|
Chapel Steel Corp. and Affiliates audited consolidated
balance sheet at December 31, 2004 and audited consolidated statements of
income and retained earnings, and cash flows for the year then ended and notes
thereto and Report of Independent Auditors attached as Exhibit 99.2 and
incorporated herein by reference. |
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(2) |
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Chapel Steel Corp. and Affiliates audited consolidated
balance sheet at June 30, 2005 and audited consolidated statements of
operations, changes in shareholders equity, members equity and partners
capital (deficit), and cash flows for the six months ended June 30, 2005 and
notes thereto and Report of Independent Auditors attached as Exhibit 99.3 and
incorporated herein by reference. |
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(b) |
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Pro Forma Financial Information. |
The following unaudited pro forma combined financial statements and related notes have been
prepared to illustrate the effect of the acquisition of Chapel Steel on the Registrants financial
statements.
2
The unaudited pro forma combined balance sheet assumes that the acquisition was completed as
of June 30, 2005 and the unaudited pro forma combined statements of income as of June 30, 2005 and
December 31, 2004 assume that the acquisition was completed at the beginning of each respective
period. The pro forma information is based upon the historical consolidated financial statements
of the Registrant and the historical consolidated financial statements of Chapel Steel, giving
effect to the acquisition under the purchase method of accounting and the assumptions, estimates
and adjustments described in the notes to the unaudited pro forma combined financial statements.
The assumptions, estimates and adjustments are preliminary and have been made solely for the
purposes of developing such pro forma information.
The unaudited pro forma financial statements are presented for illustrative purposes only and
are not necessarily indicative of the consolidated financial position or consolidated results of
operations of the Registrant that would have been reported had the acquisition occurred on the date
indicated, nor do they represent a forecast of the consolidated financial position of the
Registrant at any future date or the consolidated results of operations of the Registrant for any
future period. Furthermore, no effect has been given in the unaudited pro forma combined
statements of income for operating benefits that may be realized through the combination of the
entities. Amounts allocated to the assets and liabilities of Chapel Steel are based on their
estimated fair market values as of the acquisition closing date. The purchase price allocation for
this acquisition has not been finalized, pending completion of valuations of real and personal
property and intangibles. The unaudited pro forma combined financial statements, including the
notes thereto, should be read in conjunction with the historical consolidated financial statements,
including the notes thereto, and managements discussion and analysis of financial condition and
results of operations of the Registrant included in the Registrants Annual Report on Form 10-K for
the year ended December 31, 2004 and in the Registrants Form 10-Q for the three and six months
ended March 31, 2005 and June 30, 2005, respectively, all filed with the Securities and Exchange
Commission, and the historical financial statements, including the notes thereto, of Chapel Steel
Corp. and Affiliates, included herein as Exhibits 99.2 and 99.3. In addition, consideration should
be given to those risk factors discussed in the Registrants Annual Report on Form 10-K which could
affect the Registrants results and over which the Registrant has no control.
3
Reliance Steel & Aluminum Co.
Unaudited Pro Forma Combined Balance Sheet
As of June 30, 2005
(In thousands)
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Pro Forma Adjustments |
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Reliance Steel & |
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Chapel Steel Corp. |
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Net Assets not |
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Pro Forma |
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Total |
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Pro Forma |
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Aluminum Co. |
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& Affiliates |
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Purchased |
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Adjustments |
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Adjustments |
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Combined |
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A |
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B |
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Assets |
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Cash and cash equivalents |
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$ |
16,210 |
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$ |
589 |
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$ |
(588 |
)(1) |
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$ |
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$ |
(588 |
) |
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$ |
16,211 |
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Accounts receivable, net |
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362,030 |
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24,550 |
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386,580 |
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Inventories |
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369,665 |
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26,261 |
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395,926 |
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Prepaids and other current assets |
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15,183 |
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|
605 |
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(35 |
)(1) |
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(35 |
) |
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15,753 |
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Deferred income taxes |
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24,592 |
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24,592 |
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Total current assets |
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787,680 |
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52,005 |
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(623 |
) |
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(623 |
) |
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839,062 |
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Property, plant and equipment |
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Land |
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58,887 |
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1,400 |
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(1,400 |
)(1) |
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(1,400 |
) |
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58,887 |
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Buildings |
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262,917 |
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9,171 |
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(2,296 |
)(1) |
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(1,714 |
)(1) |
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(4,010 |
) |
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268,078 |
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Machinery & equipment |
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383,521 |
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5,682 |
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(559 |
)(1) |
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|
(1,214 |
)(1) |
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(1,773 |
) |
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|
387,430 |
|
Accumulated depreciation |
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|
(247,383 |
) |
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|
(4,767 |
) |
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|
656 |
(1) |
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|
4,111 |
(1) |
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|
4,767 |
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(247,383 |
) |
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457,942 |
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|
11,486 |
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(3,599 |
) |
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|
1,183 |
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|
(2,416 |
) |
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|
467,012 |
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Goodwill |
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341,780 |
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|
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|
73,301 |
(2) |
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73,301 |
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|
415,081 |
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Other assets |
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29,670 |
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|
302 |
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|
(124 |
)(1) |
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1,100 |
(3) |
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|
976 |
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|
30,948 |
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Total assets |
|
$ |
1,617,072 |
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|
$ |
63,793 |
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|
$ |
(4,346 |
) |
|
$ |
75,584 |
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|
$ |
71,238 |
|
|
$ |
1,752,103 |
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Liabilities & Shareholders Equity |
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|
|
|
|
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Accounts payable |
|
$ |
157,446 |
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|
$ |
15,622 |
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|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
173,068 |
|
Accrued expenses |
|
|
19,066 |
|
|
|
2,122 |
|
|
|
(30 |
)(1) |
|
|
|
|
|
|
(30 |
) |
|
|
21,158 |
|
Accrued compensation and retirement costs |
|
|
36,922 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,922 |
|
Accrued insurance costs |
|
|
24,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,502 |
|
Deferred income taxes |
|
|
138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
138 |
|
Current maturities of long-term debt |
|
|
48,525 |
|
|
|
17,745 |
|
|
|
(975 |
)(1) |
|
|
(16,770 |
)(4) |
|
|
(17,745 |
) |
|
|
48,525 |
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|
|
|
|
|
|
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|
|
|
|
|
|
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Total current liabilities |
|
|
286,599 |
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|
|
35,489 |
|
|
|
(1,005 |
) |
|
|
(16,770 |
) |
|
|
(17,775 |
) |
|
|
304,313 |
|
Long-term debt |
|
|
325,475 |
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|
|
7,582 |
|
|
|
(7,582 |
)(1) |
|
|
110,970 |
(4) |
|
|
103,388 |
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|
|
436,445 |
|
Capital lease obligations |
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|
|
|
|
|
|
|
|
|
6,347 |
(1) |
|
|
|
|
|
|
6,347 |
|
|
|
6,347 |
|
Other long-term liabilities |
|
|
15,435 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,435 |
|
Deferred income taxes |
|
|
55,613 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,613 |
|
Minority interest |
|
|
13,882 |
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|
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|
|
|
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|
|
|
|
|
|
|
|
|
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|
13,882 |
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Commitments
and contingencies |
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Common stock |
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|
320,402 |
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|
1 |
|
|
|
|
|
|
|
(1 |
)(5) |
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|
(1 |
) |
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|
320,402 |
|
Additional paid-in capital |
|
|
|
|
|
|
207 |
|
|
|
|
|
|
|
(207 |
)(5) |
|
|
(207 |
) |
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|
|
|
Treasury stock, at cost |
|
|
|
|
|
|
(121 |
) |
|
|
|
|
|
|
121 |
(5) |
|
|
121 |
|
|
|
|
|
Members equity |
|
|
|
|
|
|
802 |
|
|
|
(802 |
)(1) |
|
|
|
|
|
|
(802 |
) |
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|
|
|
Partners capital |
|
|
|
|
|
|
562 |
|
|
|
(562 |
)(1) |
|
|
|
|
|
|
(562 |
) |
|
|
|
|
Retained earnings |
|
|
599,145 |
|
|
|
19,271 |
|
|
|
(742 |
)(1) |
|
|
(18,529 |
)(5) |
|
|
(19,271 |
) |
|
|
599,145 |
|
Accumulated other comprehensive income |
|
|
521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity |
|
|
920,068 |
|
|
|
20,722 |
|
|
|
(2,106 |
) |
|
|
(18,616 |
) |
|
|
(20,722 |
) |
|
|
920,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity |
|
$ |
1,617,072 |
|
|
$ |
63,793 |
|
|
$ |
(4,346 |
) |
|
$ |
75,584 |
|
|
$ |
71,238 |
|
|
$ |
1,752,103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
Reliance Steel & Aluminum Co.
Unaudited Pro Forma Combined Statement of Income
For the Six Months Ended June 30, 2005
(In thousands except share and per share amounts)
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Adjustments |
|
|
|
|
|
|
Reliance Steel |
|
|
Chapel Steel |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
& Aluminum |
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Corp. & |
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Net Assets not |
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|
Pro Forma |
|
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Total |
|
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Pro Forma |
|
|
|
Co. |
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Affiliates |
|
|
Purchased |
|
|
Adjustments |
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|
Adjustments |
|
|
Combined |
|
|
|
|
|
|
|
|
|
|
|
A |
|
|
B |
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
1,628,249 |
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|
$ |
136,953 |
|
|
$ |
(245 |
) (1) |
|
$ |
|
|
|
$ |
(245 |
) |
|
$ |
1,764,957 |
|
Other income, net |
|
|
1,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,629,613 |
|
|
|
136,953 |
|
|
|
(245 |
) |
|
|
|
|
|
|
(245 |
) |
|
|
1,766,321 |
|
|
|
|
|
|
|
|
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|
|
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|
|
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|
|
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|
|
|
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|
|
Costs and expenses: |
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|
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|
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|
|
|
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|
|
|
Cost of sales (exclusive of depreciation and
amortization shown below) |
|
|
1,190,078 |
|
|
|
110,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,300,276 |
|
Warehouse, delivery, selling, general and administrative |
|
|
245,353 |
|
|
|
11,453 |
|
|
|
535 |
(1) |
|
|
|
|
|
|
535 |
|
|
|
257,341 |
|
Compensation programs related to sale |
|
|
|
|
|
|
20,887 |
|
|
|
|
|
|
|
(20,887 |
) (6) |
|
|
(20,887 |
) |
|
|
|
|
Depreciation and amortization |
|
|
23,269 |
|
|
|
433 |
|
|
|
3 |
(1) |
|
|
157 |
(7)&(8) |
|
|
160 |
|
|
|
23,862 |
|
Interest expense |
|
|
12,507 |
|
|
|
330 |
|
|
|
14 |
(1) |
|
|
2,031 |
(9) |
|
|
2,045 |
|
|
|
14,882 |
|
Gain on sale of property |
|
|
|
|
|
|
(320 |
) |
|
|
320 |
(1) |
|
|
|
|
|
|
320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,471,207 |
|
|
|
142,981 |
|
|
|
872 |
|
|
|
(18,699 |
) |
|
|
(17,827 |
) |
|
|
1,596,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before minority interest and income taxes |
|
|
158,406 |
|
|
|
(6,028 |
) |
|
|
(1,117 |
) |
|
|
18,699 |
|
|
|
17,582 |
|
|
|
169,960 |
|
Minority interest |
|
|
(4,516 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,516 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes |
|
|
153,890 |
|
|
|
(6,028 |
) |
|
|
(1,117 |
) |
|
|
18,699 |
|
|
|
17,582 |
|
|
|
165,444 |
|
Provision for income taxes |
|
|
58,478 |
|
|
|
|
|
|
|
|
|
|
|
4,391 |
(10) |
|
|
4,391 |
|
|
|
62,869 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
95,412 |
|
|
$ |
(6,028 |
) |
|
$ |
(1,117 |
) |
|
$ |
14,308 |
|
|
$ |
13,191 |
|
|
$ |
102,575 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations diluted |
|
$ |
2.89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3.11 |
(11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding diluted |
|
|
33,023,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,023,552 |
(11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations basic |
|
$ |
2.90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3.12 |
(11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding basic |
|
|
32,848,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,848,990 |
(11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
Reliance Steel & Aluminum Co.
Unaudited Pro Forma Combined Statement of Income
For the Year Ended December 31, 2004
(In thousands except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reliance Steel & |
|
|
Chapel Steel |
|
|
Pro Forma |
|
|
Pro Forma |
|
|
|
Aluminum Co. |
|
|
Corp. & Affiliate |
|
|
Adjustments |
|
|
Combined |
|
Net sales |
|
$ |
2,943,034 |
|
|
$ |
273,469 |
|
|
$ |
|
|
|
$ |
3,216,503 |
|
Other income, net |
|
|
4,168 |
|
|
|
|
|
|
|
|
|
|
|
4,168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,947,202 |
|
|
|
273,469 |
|
|
|
|
|
|
|
3,220,671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (exclusive of depreciation and
amortization shown below) |
|
|
2,110,848 |
|
|
|
177,041 |
|
|
|
|
|
|
|
2,287,889 |
|
Warehouse, delivery, selling, general and administrative |
|
|
483,887 |
|
|
|
36,530 |
|
|
|
|
|
|
|
520,417 |
|
Depreciation and amortization |
|
|
44,627 |
|
|
|
969 |
|
|
|
315 |
(7)&(8) |
|
|
45,911 |
|
Interest expense |
|
|
28,690 |
|
|
|
681 |
|
|
|
3,429 |
(9) |
|
|
32,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,668,052 |
|
|
|
215,221 |
|
|
|
3,744 |
|
|
|
2,887,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before minority interest and income taxes |
|
|
279,150 |
|
|
|
58,248 |
|
|
|
(3,744 |
) |
|
|
333,654 |
|
Minority interest |
|
|
(9,182 |
) |
|
|
|
|
|
|
|
|
|
|
(9,182 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes |
|
|
269,968 |
|
|
|
58,248 |
|
|
|
(3,744 |
) |
|
|
324,472 |
|
Provision for income taxes |
|
|
100,240 |
|
|
|
|
|
|
|
20,221 |
(10) |
|
|
120,461 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
169,728 |
|
|
$ |
58,248 |
|
|
$ |
(23,965 |
) |
|
$ |
204,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations diluted |
|
$ |
5.19 |
|
|
|
|
|
|
|
|
|
|
$ |
6.24 |
(11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding diluted |
|
|
32,675,379 |
|
|
|
|
|
|
|
|
|
|
|
32,675,379 |
(11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations basic |
|
$ |
5.23 |
|
|
|
|
|
|
|
|
|
|
$ |
6.28 |
(11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding basic |
|
|
32,480,101 |
|
|
|
|
|
|
|
|
|
|
|
32,480,101 |
(11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
Reliance Steel & Aluminum Co.
Notes to Unaudited Pro Forma Combined Financial Statements
A. |
|
To adjust the Chapel Steel consolidated financial statements for partnerships not purchased
by the Registrant: |
(1) Prior to the Registrants acquisition of Chapel Steel, four partnership entities were
consolidated in Chapel Steels financial statements in accordance with the provisions of
Financial Accounting Standards Board Interpretation No. 46R, Consolidation of Variable Interest
Entities (FIN 46R). These partnerships were controlled by the majority shareholder of Chapel
Steel and certain of its employees. The partnerships own real property that is leased to
Chapel Steel and other third parties. The partnerships were not part of the net assets
acquired. However, the capital leases related to these partnerships were acquired. The
Registrant does not expect to consolidate the partnerships going forward and therefore, has
eliminated the partnership assets, liabilities and the results of their operations and included
the related capital lease assets and obligations along with the income statement effects of
these capital leases in the pro forma financial statements.
The Statement of Income of Chapel Steel for the year ended December 31, 2004 consolidated only
one of these four entities. Because the impact of this consolidation was immaterial to the
Chapel Steel Statement of Income for the year ended December 31, 2004, no adjusting entries
were made to the Pro Forma Combined Statement of Income for this period.
B. |
|
To reflect all other pro forma adjustments for the acquisition of Chapel Steel: |
(1) To record the estimated fair values of real and personal property based upon preliminary
estimates. The values of these assets are subject to adjustments upon completion of third party
valuations. The Registrant does not expect the impact of such valuation adjustments to be
significant. Any change in values of these assets will offset the estimated goodwill amount in
Note 2 and will impact the estimated pro forma depreciation expense in Note 7.
(2) To record the estimated excess purchase price over the fair value of assets acquired and
liabilities assumed as goodwill. Goodwill is not amortized but is tested for impairment at
least annually. The goodwill amount will be adjusted for any changes in asset or liability
fair values or other adjustments from purchase accounting.
(3) To record the estimated fair values of identifiable intangible assets relating to certain
customer relationships or other intangible assets from the acquisition based upon preliminary
estimates. The values of these assets are subject to adjustments upon completion of a third
party valuation. The Registrant does not expect the impact of such valuation adjustments to be
significant. Any change in values of these assets will offset the estimated goodwill amount in
Note 2 and will impact the estimated pro forma amortization expense in Note 8.
(4) To reflect the borrowings under the Registrants Credit Agreement to fund the purchase
price of $94.2 million and the payoff of Chapel Steels revolving credit facility balance of
$16.8 million on July 1, 2005. The Credit Agreement matures June 22, 2010.
(5) To eliminate the equity of the business acquired as of the date of acquisition.
(6) To adjust for the pro forma effect of bonuses paid to key executives of Chapel Steel
resulting from its acquisition by Reliance. The purchase of 100% of Chapel Steels stock
triggered a change of ownership control provision as defined in the executive compensation plan
adopted by Chapel Steel on May 25, 2005.
(7) To reflect the pro forma effect on depreciation expense of the write-up of plant and
equipment to their estimated fair market value at the date of the acquisition. The amount of
this adjustment may change as the values of the underlying third-party asset valuations are
finalized. The Registrant does not expect the impact of such adjustments to be significant.
7
(8) To reflect the pro forma amortization of identifiable intangible assets related to certain
customer relationships or intangible assets over the life of the asset. The estimated life is
five years. The amount of this adjustment may change as the values of the underlying asset
valuations are finalized. The Registrant does not expect the impact of such adjustments to be
significant.
(9) To reflect the pro forma effect on interest expense of the financing required to fund the
acquisition. The weighted average interest rate under the Registrants revolving line of credit
in effect during the respective periods was applied to the total borrowings of $111 million.
(10) To reflect the pro forma effect on consolidated income tax expense. The Registrants
effective income tax rates in effect during the respective periods were applied to the Pro
Forma Combined pretax income. Please note that Chapel Steel was historically taxed as an
SCorp.
(11) The pro forma combined income from operations per share information is based on the
weighted average number of common and common equivalent shares of the Registrant, as
appropriate.
8
|
|
|
|
|
|
|
|
|
Exhibit No. |
|
Description |
|
|
2.1* |
|
|
|
Stock Purchase Agreement dated as of
May 31, 2005 by and among the
Registrant, RSAC Management Corp.,
Chapel Steel Corp., James R. Sutow,
Jerry Sutow as Trustee under the
Revocable Agreement of Trust for Jerry
Sutow dated July 18, 2002 and Rita Sutow, as
Trustee under the Revocable Agreement
of Trust for Rita Sutow dated July 18, 2002. |
|
|
|
|
|
|
|
|
|
23.1 |
|
|
|
Consent of Kreischer Miller. |
|
|
|
|
|
|
|
|
|
99.1* |
|
|
|
Press Release dated July 5, 2005. |
|
|
|
|
|
|
|
|
|
99.2 |
|
|
|
Chapel Steel Corp. and Affiliates
audited consolidated balance sheet at
December 31, 2004 and audited
consolidated statements of income and
retained earnings, and cash flows for
the year then ended and notes thereto
and Report of Independent Auditors.
|
|
|
|
|
|
|
|
|
|
99.3 |
|
|
|
Chapel Steel Corp. and Affiliates
audited consolidated balance sheet at
June 30, 2005 and audited consolidated
statements of operations, changes in
shareholders equity, members equity
and partners capital (deficit), and
cash flows for the six months ended
June 30, 2005 and notes thereto and Report of Independent Auditors. |
|
|
|
* |
|
Filed on July 8, 2005 with initial Form 8-K. |
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
|
RELIANCE STEEL & ALUMINUM CO. |
|
|
|
|
|
Dated: September 16, 2005
|
|
By
|
|
/s/ Karla Lewis |
|
|
|
|
|
|
|
|
|
Karla Lewis |
|
|
|
|
Executive Vice President and
Chief Financial Officer |
10
RELIANCE STEEL & ALUMINUM CO.
FORM 8K/A
INDEX TO EXHIBITS
|
|
|
Exhibit No. |
|
Description |
2.1*
|
|
Stock Purchase Agreement dated as of
May 31, 2005 by and among the
Registrant, RSAC Management Corp.,
Chapel Steel Corp., James R. Sutow,
Jerry Sutow as Trustee under the
Revocable Agreement of Trust for Jerry
Sutow dated July 18, 2002 and Rita Sutow, as
Trustee under the Revocable Agreement
of Trust for Rita Sutow dated July 18, 2002. |
|
|
|
23.1
|
|
Consent of Kreischer Miller. |
|
|
|
99.1*
|
|
Press Release dated July 5, 2005. |
|
|
|
99.2
|
|
Chapel Steel Corp. and Affiliates
audited consolidated balance sheet at
December 31, 2004 and audited
consolidated statements of income and
retained earnings, and cash flows for
the year then ended and notes thereto
and Report of Independent Auditors.
|
|
|
|
99.3
|
|
Chapel Steel Corp. and Affiliates
audited consolidated balance sheet at
June 30, 2005 and audited consolidated
statements of operations, changes in
shareholders equity, members equity
and partners capital (deficit), and
cash flows for the six months ended
June 30, 2005 and notes thereto and Report of Independent Auditors. |
|
|
|
* |
|
Filed on July 8, 2005 with initial Form 8-K. |
11