SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): October 19, 1998
Universal Stainless & Alloy Products, Inc.
(Exact name of registrant as specified in charter)
Delaware 0-25032 25-1724540
(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification no.)
600 Mayer Street 15017
Bridgeville, Pennsylvania (Zip code)
(Address of principal executive offices)
Registrant's telephone number, including
area code: (412) 257-7600
Item 5. Other Events.
On October 19, 1998, Universal Stainless & Alloy Products, Inc. (the
"Company") announced that it had entered into a letter of intent to acquire AL
Tech Specialty Steel Corporation ("AL Tech"), a subsidiary of Sammi Steel Co.,
Ltd. of Korea, in a transaction valued at approximately $38 million. The
transaction is subject to a number of conditions, including the completion of
due diligence procedures, the execution of a definitive purchase agreement,
successful negotiation of USWA labor and utility contracts, Hart-Scott-Rodino
review, and the approval of AL Tech's plan of reorganization by the United
States Bankruptcy Court for the Western District of New York. AL Tech filed a
voluntary petition for reorganization under Chapter 11 of the Federal Bankruptcy
Code on December 31, 1997 related to the earlier bankruptcy filing of its parent
Sammi Steel Co., Ltd. under Korean insolvency laws. A copy of the Company's
press release describing the proposed transaction is attached hereto as Exhibit
99.01 and is incorporated by reference herein in its entirety.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.01 Press Release of Universal Stainless & Alloy Products, Inc.
dated October 19, 1998.
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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.
UNIVERSAL STAINLESS & ALLOY
PRODUCTS, INC.
Date: October 19, 1998 By: /s/ Clarence M. McAnnich
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Name: Clarence M. McAnnich
Title: President and Chief
Executive Officer
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EXHIBIT INDEX
EXHIBIT NO. DOCUMENT
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99.01 Press Release of Universal Stainless & Alloy Products, Inc. dated
October 19, 1998.
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FOR: UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
APPROVED BY: Clarence "Mac" McAninch
President & CEO
(412) 257-7600
FOR IMMEDIATE RELEASE
CONTACT: Morgen-Walke Associates
June Filingeri, Eric Boyriven
Media contact: Brian Maddox,
Estelle Bieber
(212) 850-5600
UNIVERSAL STAINLESS ANNOUNCES THIRD QUARTER RESULTS;
SIGNS LETTER OF INTENT TO ACQUIRE AL TECH SPECIALTY STEEL;
ANNOUNCES SHARE REPURCHASE PROGRAM
BRIDGEVILLE, PA, October 19, 1998 -- Universal Stainless & Alloy Products,
Inc. (Nasdaq:USAP) today announced results for the third quarter and nine-month
period ending September 30, 1998. The Company also announced that it has signed
a letter of intent to acquire the assets of AL Tech Specialty Steel Corporation.
Additionally, the Company announced that it is initiating an open market share
repurchase program.
For the 1998 third quarter, net income was $982,000, or $0.16 per diluted
share, compared with $2,053,000, or $0.32 per diluted share in the third quarter
of 1997. Net sales for the third quarter of 1998 totaled $15,977,000 compared
with $22,081,000 in the year ago period.
For the 1998 nine month period, net income was $4,328,000, or $0.68 per
diluted share, versus net income of $5,611,000, or $0.88 per diluted share, in
the same period last year. Net sales for the nine month period were $59,489,000
versus $61,661,000 a year ago.
Mac McAninch, President and Chief Executive Officer of Universal Stainless
stated, "We are pleased with the solid results we posted in the third quarter,
which were achieved despite difficult market conditions. Pricing and demand in
many of the markets for our stainless and tool steel products have been affected
by the economic crisis in Asia and the resulting influx of low priced imports
into the US. This was somewhat offset by shipments of products from our new bar
mill,
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USAP Announces Third Quarter Results; Signs Letter of Intent;
Announces Buyback Page 2
which we expect to increase after the completion of our new bar finishing
facility this quarter."
Mr. McAninch continued, "Although we expect current industry conditions to
continue, we have begun to see an increase in orders from the power generation
and aerospace markets, and expect demand from our service center customers to
slowly improve based on current inventory levels. Despite this difficult
environment, we are confident that we will be solidly profitable in the fourth
quarter. Based on early indications, we expect earnings per diluted share to be
in the range of 10 to 12 cents."
Separately, the Company announced that it has signed a letter of intent to
acquire the assets of AL Tech Specialty Steel Corporation in a transaction
valued at approximately $38 million, of which approximately $24 million is
related to the acquisition of accounts receivable and inventory. Funding for the
transaction will consist of a note approximating $17 million, assumed
liabilities of $8 to $10 million, and cash between $11 and $13 million. AL Tech,
headquartered in Dunkirk, New York, is a producer of finished specialty steel
products including bar, rod and wire, with sales of $84 million for the twelve
months ended September 30, 1998. Universal, a producer of semi-finished and
certain finished specialty steels, had net sales of approximately $79 million
for the same period. AL Tech filed a voluntary petition for reorganization under
Chapter 11 of the Federal Bankruptcy Code on December 31, 1997 related to the
earlier bankruptcy filing of its parent, Sammi Steel Co., Ltd. of Korea, under
Korean insolvency laws.
The potential acquisition of AL Tech is consistent with Universal's
strategy to expand upon its product capabilities, maximize the use of its core
assets, which include its primary melt shop, electro slag and vacuum arc
remelting facilities and universal rolling mill, and increase its manufacture of
finished products. Upon completion of the acquisition, Universal's revenues will
nearly double, and finish specialty steel products will represent more than 50%
of its revenue mix compared with 9% year to date. The addition of AL Tech also
will substantially broaden
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USAP Announces third Quarter Results; Signs Letter of Intent;
Announces Buyback Page 3
Universal's customer base.
The transaction is subject to a number of conditions, including the
completion of due diligence procedures, the execution of a definitive purchase
agreement, successful negotiation of utility and USWA labor contracts,
Hart-Scott-Rodino review, final approval by the Boards of Directors of both
Universal Stainless and AL Tech, and the approval of AL Tech's plan of
reorganization by the United States Bankruptcy Court for the Western District of
New York.
Commenting on this development, Mr. McAninch stated, "This transaction, if
completed, would be highly complementary to both companies, and represents an
important opportunity to strengthen our competitive position in the specialty
steel industry. Universal will be able to supply 100% of AL Tech's billet needs.
While AL Tech's management team has made many operational improvements during
the bankruptcy period, we are confident that the application of Universal's
strategy and discipline to AL Tech's operations will enable us to achieve
substantial synergies and provide significant opportunity for growth.
Specifically, we expect the transaction to be non-dilutive to our 1999 results
and accretive beginning in 2000. We intend to be in a position to complete the
transaction by December 31, 1998, pending Federal Bankruptcy Court approval."
The Company also announced that its has received approval from its Board of
Directors to repurchase up to 315,000 shares, or approximately 5% of the
Company's common stock. These purchases will be made in open market transactions
at market prices. The share repurchase program may be implemented or
discontinued at any time by the Company.
Mr. McAninch concluded, "The Company remains proactive in response to
current market conditions. This operating philosophy, which has enabled us to
produce solid operating results since inception, allows us to be highly
confident about our future."
Universal Stainless & Alloy Products, Inc., headquartered in Bridgeville,
Pa., manufactures and markets semi-finished and finished specialty steels,
including stainless steel, tool steel and certain other alloyed steels. The
Company's products are sold to rerollers, forgers, service centers and original
equipment manufacturers, which primarily include the power generation and
aerospace industries.
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USAP Announces Third Quarter Results; Signs Letter of Intent;
Announces Buyback Page 4
Except for historical information contained herein, the statements in this
release are forward-looking statements that are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties
which may cause the Company's actual results in future periods to differ
materially from forecasted results. Those risks include, among others, risks
associated with the receipt and timing of future customer orders, risks
associated with the manufacturing process and production yields, risks related
to plant and equipment additions and maintenance, and risks related to the
potential acquisition described in this release. Certain of these risks and
other risks are described in the Company's filings with Securities and Exchange
Commission (SEC) over the last 12 months, copies of which are available from the
SEC or may be obtained upon request from the Company.
-FINANCIAL TABLES FOLLOW-
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
FINANCIAL HIGHLIGHTS
(Dollars in thousands except per share information)
(Unaudited)
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
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1998 1997 1998 1997
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Net sales $15,977 $22,081 $59,489 $61,661
Cost of products sold 13,141 17,539 48,940 49,012
Selling and administrative expenses 1,149 1,223 3,625 3,665
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Operating income 1,687 3,319 6,924 8,984
Other income (expense) (129) (61) (54) (77)
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Income before taxes 1,558 3,258 6,870 8,907
Income taxes 576 1,205 2,542 3,296
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Net income $ 982 $ 2,053 $ 4,328 $ 5,611
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Earnings per share - Basic $ 0.16 $ 0.33 $ 0.69 $ 0.89
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Earnings per share - Diluted $ 0.16 $ 0.32 $ 0.68 $ 0.88
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Shares outstanding - Basic 6,315,450 6,287,290 6,307,387 6,284,932
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Shares outstanding - Diluted 6,315,450 6,479,825 6,375,624 6,386,414
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Tons shipped 10,625 14,783 38,854 41,651
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BALANCE SHEET DATA
September 30, December 31,
1998 1997
Current assets $30,816 $31,045
Net property, plant & equipment 34,867 24,887
Other assets 262 219
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$65,945 $56,151
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Current liabilities $ 7,629 $10,959
Long-term debt 12,870 5,441
Other liabilities 3,108 1,983
Stockholders' equity 42,338 37,768
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$65,945 $56,151
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