ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, February 21, 1996 TAG: 9602210027
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
Roanoke Electric Steel Corp. on Tuesday told its shareholders of record sales and record earnings in its 1995 fiscal year.
Also highlighting the company's annual meeting, the stockowners approved a measure making a hostile takeover of the company harder to accomplish.
Donald G. Smith, the company's chairman and chief executive officer, told shareholders meeting at American Electric Power Co.'s auditorium in downtown Roanoke that four consecutive years of "significant earnings and sales growth" should be followed by another good year in 1996 despite softer prices for the company's products and a slower rate of business growth.
In line with that prediction, the company reported earnings for its first 1996 fiscal quarter, showing a 3 percent increase over the same period a year ago.
The company's shareholders elected a new nine-member board of directors and approved a change in Roanoke Electric Steel's articles of incorporation to allow board members to serve staggered three-year terms. In the past, shareholders have voted on all board members annually.
The board proposed staggering of the terms, with three board members to be elected each year after a phase-in period. Having only one-third of the board up for re-election each year makes it impossible for a hostile party to quickly grab control of the board.
The company explained in its proxy statement that the change in terms will give the board "more time to evaluate any takeover proposal and thus enable it to better protect the interest of the company and the remaining shareholders."
T. Joe Crawford, the company's corporate secretary, explained after the meeting that the change was not proposed as the result of any recent takeover attempt but as a way to insure against such an attempt in the future. Most of the company's competitors already have boards whose members serve staggered terms, he said.
Roanoke Electric Steel, which just completed its 40th year in business, earlier reported net earnings of $20.3 million in the 1995 fiscal year ended Oct. 31, an increase of 131 percent over the $8.8 million earned in the previous fiscal year and 58.8 percent higher than the previous record in 1989. Sales were $260 million last year, an increase of 20.5 percent over the previous record of $215.8 million set in 1994.
Strong demand for the company's products continued throughout 1995 as steady economic growth benefited the steel and construction industries, Smith said. Strong demand and a healthy economy made for good selling prices and higher shipment levels of the company's products, he said. The company's shipments increased by 6.4 percent last year to their highest level on record.
Price decreases for some products this year should not have a major effect on the company's performance because they will be offset by increased sales of the company's steel building joists, Smith said.
The company's new automobile shredding facility in Franklin County also contributed to improved earnings last year with savings in waste disposal and better metal recovery, Smith said.
During the period from 1985 to 1995, the company spent in excess of $97 million on capital improvements and over $21 million on acquisitions, without which last year's record results couldn't have been obtained, Smith said. Similarly, orders last year for an upgrade of the company's electric arc furnace and an addition of a ladle furnace to its melt-shop operations will contribute to the company's future performance, Smith said.
Roanoke Electric Steel provided a 24.9 percent return on stockholders' equity last year and increased stockholder's equity by $17.6 million to a record $90 million while reducing long-term debt.
Roanoke Electric Steel and its subsidiaries produce finished steel products and semi-finished steel, which is sold to other steel producers, at plants in Roanoke; Salem; Florence, S.C.; and Continental, Ohio.
LENGTH: Medium: 73 lines ILLUSTRATION: GRAPHIC: Roanoke Electric Steel Corp. color.by CNB