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The following is an excerpt from a 6-K SEC Filing, filed by GERDAU AMERISTEEL CORP on 4/13/2004.
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GERDAU AMERISTEEL CORP - 6-K - 20040413 - NOTES_TO_FINANCIAL_STATEMENT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(United States Dollars in thousands, except per share amounts)

NOTE 1 -- BASIS OF PRESENTATION

The 2002 consolidated financial statements include the results and accounts of companies controlled by Gerdau Ameristeel Corporation, a Canadian corporation, whose ultimate parent is Gerdau S.A., a Brazilian Company. The financial statements include the accounts of Gerdau Ameristeel Cambridge Inc. and Gerdau MRM Holdings Inc. and their consolidated subsidiaries Gerdau Ameristeel MRM Special Sections Inc., Gerdau MRM America Holding Corp., Porter Bros. Corporation, GUSAP Partners, Mandak Car Crusher Inc., MFT Acquisition Corp., 3038482 Nova Scotia Company, PASUG Inc., (combined, referred to as Gerdau Canada Group), and Gerdau USA, Inc. and its consolidated subsidiaries FLS Holdings Inc., AmeriSteel Corporation and AmeriSteel Bright Bar, Inc. ("GUSA"), collectively, the "Gerdau North America Group". All significant intercompany transactions and accounts have been eliminated in consolidation.

On October 23, 2002, the ultimate parent company of the Gerdau North America Group entered into a transaction agreement with Co-Steel Inc. ("Co-Steel"), a Canadian public company. This transaction agreement resulted in Co -Steel acquiring all of the issued and outstanding shares of the companies included in the Gerdau North America Group, in exchange for Co-Steel common shares representing approximately 74% of Co-Steel's total common shares. As part of this transaction, certain related party loans payable of the Gerdau North America Group were converted into equity in October 2002. The transaction was accounted for using the reverse-take-over method of purchase accounting. The Gerdau North America Group is deemed to be the acquirer and is assumed to be purchasing the assets and liabilities of Co-Steel, since the original shareholder of the Gerdau North America Group became owner of more than 50 percent of the voting shares of Co-Steel on a fully-diluted basis following the transaction. As a result, the Gerdau North America Group's historical accounts became the historical accounts of Co-Steel for all periods prior to the date of merger. In connection with the merger, Co-Steel's name was changed to Gerdau Ameristeel Corporation (the "Company" or "Gerdau Ameristeel").

On March 31, 2003, under the terms of the Transaction Agreement relating to the acquisition of Co-Steel, the Company completed an exchange of minority shares of AmeriSteel for shares of Gerdau Ameristeel. Minority shareholders of AmeriSteel, mostly executives and employees, exchanged 1,395,041 shares of AmeriSteel for 13,198,501 shares of Gerdau Ameristeel, an exchange ratio of 9.4617 to one. As a result, AmeriSteel became a wholly owned subsidiary of Gerdau Ameristeel.

The Company operates steel mini-mills, producing primarily steel bars and special sections for commercial and industrial building construction and original equipment manufacturers. Its principal market area is the eastern United States and Canada. Principal suppliers to the Company include scrap metal producers and electric utilities.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions for interim period reports and, therefore, do not include all the information or footnotes necessary for a complete presentation of financial condition, results of operations and cash flows in conformity with generally accepted accounting principles. However all adjustments which, in the opinion of management, are necessary for a fair presentation have been included. Such adjustments consisted of only normally recurring items.

These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report. The results of the three months ended March 31, 2003 and 2002 are not necessarily indicative of the results to be expected for future periods.

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NOTE 2 -- INVENTORIES

Inventories consist of the following ($000s):

                                                            AT MARCH 31,   AT DECEMBER 31,
                                                                 2003           2002
-----------------------------------------------------------------------------------------
Ferrous and non-ferrous scrap                                 $ 45,727        $ 40,983
Work in -process                                                33,919          33,701
Finished goods                                                 186,902         195,893
Raw materials (excluding scrap) and operating supplies          83,041          80,823
-----------------------------------------------------------------------------------------
                                                              $349,589        $351,400

NOTE 3 -- PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following ($000s):

                                                                       AT MARCH 31, 2003
-------------------------------------------------------------------------------------------------
                                                                    ACCUMULATED           NET
                                                      COST          DEPRECIATION       BOOK VALUE
-------------------------------------------------------------------------------------------------
Land and improvements                              $   67,287        $    2,775        $   64,512
Buildings and improvements                            154,174            24,417           129,757
Machinery and equipment                               907,252           219,886           687,366
Construction in progress                               20,158                              20,158
Property, plant and equipment held for sale             6,222                 -             6,222
-------------------------------------------------------------------------------------------------
                                                   $1,155,093        $  247,078        $  908,015

NOTE 4 -- JOINT VENTURES

The Company's investments in Gallatin Steel Company, Bradley Steel Processors and SSS/MRM Guide Rail are 50% joint ventures. The Company's interests in the joint ventures have been accounted for using the proportional consolidation method under which the Company's proportionate share of assets, liabilities, revenues and expenses of the joint ventures have been included in these consolidated financial statements.

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The Company's interest in the joint ventures is as follows ($000s):

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