-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LVpd5pfKYscL+QSOT43m/ZDRvgyBFhARGVeFVg0k8pI8S1tNHxoUPUBmAuGB+7B3 YjnXpNNsqJEsAJ58YEBdZQ== 0000940180-01-500555.txt : 20020410 0000940180-01-500555.hdr.sgml : 20020410 ACCESSION NUMBER: 0000940180-01-500555 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RYERSON TULL INC /DE/ CENTRAL INDEX KEY: 0000790528 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 363425828 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09117 FILM NUMBER: 1781781 BUSINESS ADDRESS: STREET 1: 2621 WEST 15TH PLACE CITY: CHICAGO STATE: IL ZIP: 60608 BUSINESS PHONE: 7737622121 MAIL ADDRESS: STREET 1: 2621 WEST 15TH PLACE CITY: CHICAGO STATE: IL ZIP: 60608 FORMER COMPANY: FORMER CONFORMED NAME: INLAND STEEL INDUSTRIES INC /DE/ DATE OF NAME CHANGE: 19920703 10-Q 1 d10q.txt FORM 10-Q Third Quarter - 2001 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 period ended September 30, 2001 or [_] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from______ to ______ ____________________ Commission file number 1-9117 I.R.S. Employer Identification Number 36-3425828 RYERSON TULL, INC. (a Delaware Corporation) 2621 West 15th Place Chicago, Illinois 60608 Telephone: (773) 762-2121 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 ___ --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 24,788,188 shares of the Company's Common Stock ($1.00 par value per share) were outstanding as of November 7, 2001. PART I. FINANCIAL INFORMATION ----------------------------- Item 1. Financial Statements RYERSON TULL, INC. AND SUBSIDIARY COMPANIES Consolidated Statement of Operations (Unaudited) ================================================================================
Dollars in Millions (except per share data) ------------------------------------------- Three Months Ended Nine Months Ended September 30 September 30 --------------------- ----------------------- 2001 2000 2001 2000 ---------- -------- -------- -------- NET SALES $ 543.0 $ 695.6 $ 1,763.7 $ 2,242.7 Cost of materials sold 440.7 559.8 1,405.9 1,791.0 --------- -------- ---------- ---------- GROSS PROFIT 102.3 135.8 357.8 451.7 Operating expenses 106.6 123.6 337.3 382.3 Depreciation and amortization 8.0 8.3 24.2 25.0 Restructuring and plant closure costs -- -- -- 27.8 Write-off of investment in MetalSite, Inc. -- -- 1.0 -- Pension curtailment gain -- -- -- (4.4) Gain on sale of assets -- -- (1.3) -- --------- -------- ---------- ---------- OPERATING PROFIT (LOSS) (12.3) 3.9 (3.4) 21.0 Other revenue and expense, net (Note 4) (2.3) -- (4.7) 0.1 Interest and other expense on debt (3.5) (8.4) (16.0) (21.5) --------- -------- ---------- ---------- INCOME (LOSS) BEFORE INCOME TAXES (18.1) (4.5) (24.1) (0.4) PROVISION (BENEFIT) FOR INCOME TAXES (6.5) (0.9) (8.9) 5.8 --------- -------- ---------- ---------- NET INCOME (LOSS) $ (11.6) $ (3.6) $ (15.2) $ (6.2) ========= ======== ========== ==========
See notes to consolidated financial statements 1 RYERSON TULL, INC. AND SUBSIDIARY COMPANIES Consolidated Statement of Operations (Unaudited) ================================================================================
Dollars in Millions (except per share data) -------------------------------------------- Three Months Ended Nine Months Ended September 30 September 30 ---------------------- -------------------- 2001 2000 2001 2000 -------- -------- --------- -------- EARNINGS PER SHARE OF COMMON STOCK --------------- Basic $ (0.47) $ (0.15) $ (0.62) $ (0.26) ======= ======= ========= ======== Diluted $ (0.47) $ (0.15) $ (0.62) $ (0.26) ======= ======= ========= ======== STATEMENT OF COMPREHENSIVE INCOME - --------------------------------- NET INCOME (LOSS) $ (11.6) $ (3.6) $ (15.2) $ (6.2) OTHER COMPREHENSIVE INCOME (LOSS): Foreign currency translation adjustments (1.0) (0.3) (1.6) (1.4) ------- ------- --------- -------- COMPREHENSIVE INCOME (LOSS) $ (12.6) $ (3.9) $ (16.8) $ (7.6) ======= ======= ========= ======== OPERATING DATA - -------------- SHIPMENTS (Tons in Thousands) 687.1 806.4 2,189.0 2,601.0
See notes to consolidated financial statements 2 RYERSON TULL, INC. AND SUBSIDIARY COMPANIES Consolidated Statement of Cash Flows (Unaudited) ================================================================================
Dollars in Millions ------------------------------ Nine Months Ended September 30 ------------------------------ 2001 2000 --------- -------- OPERATING ACTIVITIES Net income (loss) $ (15.2) $ (6.2) --------- -------- Adjustments to reconcile net income to net cash provided from (used for) operating activities: Depreciation and amortization 24.2 25.0 Deferred employee benefit cost (1.6) (6.2) Deferred income taxes 30.9 (1.1) Gain from sale of assets (1.3) - Restructuring and plant closure costs - 27.8 Change in assets and liabilities: Receivables (Note 4) 161.5 (63.6) Inventories 107.2 (92.9) Other assets (1.2) 0.9 Accounts payable (13.2) 2.7 Accrued liabilities (43.0) (29.2) Other deferred items 0.2 0.0 --------- -------- Net adjustments 263.7 (136.6) --------- -------- Net cash provided from (used for) operating activities 248.5 (142.8) --------- -------- INVESTING ACTIVITIES Capital expenditures (10.6) (24.5) Investments in and advances to joint ventures, net 2.9 - Proceeds from sales of assets 5.1 3.1 --------- -------- Net cash used for investing activities (2.6) (21.4) --------- -------- FINANCING ACTIVITIES Debt retirement (142.2) (14.8) Net short-term borrowing (repayment) (Note 4) (97.0) 161.1 Dividends paid (3.9) (3.9) --------- -------- Net cash provided from (used for) financing activities (243.1) 142.4 --------- -------- Net increase (decrease) in cash and cash equivalents 2.8 (21.8) Cash and cash equivalents - beginning of year 23.8 39.5 --------- -------- Cash and cash equivalents - end of period $ 26.6 $ 17.7 ========= ======== SUPPLEMENTAL DISCLOSURES Cash paid (received) during the period for: Interest $ 23.3 $ 26.1 Income taxes, net (24.5) 9.5
See notes to consolidated financial statements 3 RYERSON TULL, INC. AND SUBSIDIARY COMPANIES Consolidated Balance Sheet ================================================================================
Dollars in Millions -------------------------------------------------------- ASSETS September 30, 2001 December 31, 2000 - ------ ------------------------ ------------------------- (unaudited) CURRENT ASSETS Cash and cash equivalents $ 26.6 $ 23.8 Receivables less provision for allowances, claims and doubtful accounts of $9.2 and $24.5, respectively (Note 4) 130.9 285.4 Inventories - principally at LIFO 463.4 567.8 ---------- --------- Total current assets 620.9 877.0 INVESTMENTS AND ADVANCES 5.9 22.3 PROPERTY, PLANT AND EQUIPMENT Valued on basis of cost $593.5 $596.7 Less accumulated depreciation 330.2 263.3 322.0 274.7 ------ ------ DEFERRED INCOME TAXES 39.0 69.4 PREPAID PENSION COSTS 24.2 23.5 EXCESS OF COST OVER NET ASSETS ACQUIRED 92.4 96.5 OTHER ASSETS 9.8 8.7 ---------- --------- Total Assets $ 1,055.5 $ 1,372.1 ========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES Accounts payable $ 124.4 $ 137.6 Accrued liabilities 39.1 81.6 Short-term borrowing - 97.0 Long-term debt due within one year - 142.5 ---------- --------- Total current liabilities 163.5 458.7 LONG-TERM DEBT 100.6 100.7 DEFERRED EMPLOYEE BENEFITS AND OTHER 150.1 151.0 ---------- --------- Total liabilities 414.2 710.4 COMMITMENTS & CONTINGENCIES - - STOCKHOLDERS' EQUITY (Schedule A) 641.3 661.7 ---------- --------- Total Liabilities and Stockholders' Equity $ 1,055.5 $ 1,372.1 ========== =========
See notes to consolidated financial statements 4 RYERSON TULL, INC. AND SUBSIDIARY COMPANIES Notes to Consolidated Financial Statements (Unaudited) ================================================================================ NOTE 1/FINANCIAL STATEMENTS Results of operations for any interim period are not necessarily indicative of results of any other periods or for the year. The financial statements as of September 30, 2001 and for the three-month and nine-month periods ended September 30, 2001 and 2000 are unaudited, but in the opinion of management include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results for such periods. These financial statements should be read in conjunction with the financial statements and related notes contained in the Annual Report on Form 10-K for the year ended December 31, 2000. NOTE 2/EARNINGS PER SHARE
Dollars and Shares In Millions (except per share data) --------------------------------------------------------- Three Months Ended Nine Months Ended September 30 September 30 ------------------------ ------------------------- 2001 2000 2001 2000 ---- ---- ---- ---- Basic earnings per share - ------------------------ Net income (loss) $ (11.6) $ (3.6) $ (15.2) $ (6.2) Less preferred stock dividends -- 0.1 0.1 0.2 ------ ------ ------ ------ Net income (loss) available to common stockholders $ (11.6) $ (3.7) $ (15.3) $ (6.4) ====== ====== ====== ====== Average shares of common stock outstanding 24.8 24.8 24.8 24.8 ====== ====== ====== ====== Basic earnings (loss) per share $ (.47) $ (.15) $ (.62) $ (.26) ====== ====== ====== ====== Diluted earnings per share - -------------------------- Net income (loss) available to common stockholders $ (11.6) $ (3.7) $ (15.3) $ (6.4) ====== ====== ====== ====== Average shares of common stock outstanding 24.8 24.8 24.8 24.8 Dilutive effect of stock options 0.3 -- 0.3 -- ------ ------ ------ ------ Shares outstanding for diluted earnings per share calculation 25.1 24.8 25.1 24.8 ====== ====== ====== ====== Diluted earnings (loss) per share $ (.47) $ (.15) $ (.62) $ (.26) ====== ====== ====== ======
5 NOTE 3/RESTRUCTURING CHARGE In the second quarter of 2000, the Company recorded a restructuring charge of $23.3 million. The charge is the result of realigning geographic divisions to improve responsiveness to local markets, exiting non-core businesses and centralizing administrative services to achieve economies of scale. Included in the charge is severance for 319 employees. There are no employees remaining to be separated from the Company as a result of the restructuring initiative. The balance related to employee costs at September 30, 2001 will be paid through mid-2002 pursuant to severance agreements with certain former employees. The balance related to tenancy costs will be paid through 2008. Details of the restructuring charge are as follows:
Restructuring Balance at (In millions) Charge Utilized September 30, 2001 - ----------------------------------------------------------------------------------- Write-down of long-lived assets $ 9.3 $ 9.3 $ - Employee costs 7.4 6.9 0.5 Tenancy costs and other 6.6 1.9 4.7 - ----------------------------------------------------------------------------------- $ 23.3 $ 18.1 $ 5.2
The restructuring actions were substantially completed by December 31, 2000. NOTE 4/ACCOUNTS RECEIVABLE SECURITIZATION On March 29, 2001, the Company and certain of its subsidiaries completed arrangements for a $250 million 364-day trade receivables securitization facility with a group of financial institutions. The Company formed a special-purpose, wholly-owned, bankruptcy-remote subsidiary (Ryerson Tull Receivables LLC) for the sole purpose of buying receivables of certain subsidiaries of the Company and selling an undivided interest in all eligible trade accounts receivable to certain commercial paper conduits. This securitization facility includes substantially all of the Company's accounts receivable. Fundings under the facility are limited to the lesser of a funding base, comprised of eligible receivables, or $250 million. Sales of accounts receivable are reflected as a reduction of "receivables less provisions for allowances, claims and doubtful accounts" in the Consolidated Balance Sheet and the proceeds received are included in cash flows from operating activities in the Consolidated Statement of Cash Flows. Sales proceeds from the receivables are less than the face amount of accounts receivable sold by an amount equal to a discount on sale that approximates the conduits' financing cost of issuing their own commercial paper, which is backed by their ownership interests in the accounts receivable sold by the special purpose subsidiary, plus an agreed upon margin. These costs are charged to "other revenue and expense, net" in the Consolidated Statement of Operations. Generally, the facility provides that as payments are collected from the sold accounts receivable, the special purpose vehicle may elect to have the commercial paper conduits reinvest the proceeds in new accounts receivable. The commercial paper conduits, in addition to their rights to collect payments from that portion of the interests in the accounts receivable owned by them, also have rights to collect payments from that portion of the ownership interest in the accounts receivable that is owned by the special purpose vehicle. In calculating the fair market value of the Company's retained interest in the receivables, the book value of the receivables represents the best estimate of the fair market value due to 6 the current nature of these receivables. The facility, which expires March 28, 2002, requires the Company to comply with various affirmative or negative covenants and requires early amortization if the special-purpose subsidiary does not maintain a minimum equity requirement. The facility also terminates on the occurrence and failure to cure certain events, including, among other things, any failure of the special-purpose subsidiary to maintain certain ratios related to the collectability of the receivables, or the Company's failure to maintain long-term unsecured debt ratings of at least B by Standard and Poor's and B2 by Moody's. The table below summarizes certain cash flows from and paid to securitization trusts ($ in millions): Nine Months Ended September 30, 2001 ------------------ Proceeds from new securitizations $200 Proceeds from collections reinvested $792 During the third quarter and the first nine months of 2001, the Company incurred costs of $2.6 million and $7.1 million, respectively, on the sale of its receivables. These costs are included in "other revenue and expense, net" in the Consolidated Statement of Operations. NOTE 5/DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS The Company adopted Financial Accounting Standards Board ("FASB") Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities," in the first quarter of 2001. The Company currently is not involved with derivative instruments or hedging activity as addressed in the Statement. In the past the Company had only limited involvement with hedges and did not use derivative financial instruments for speculative or trading purposes. NOTE 6/ISC/ISPAT SALE CONTINGENCIES On May 29, 2001, the Company settled a number of disputes with Ispat that had arisen under the May 27, 1998 Merger Agreement among Ispat International N.V., Inland Merger Sub, Inc., Inland Steel Industries (the predecessor of the Company and the former owner of Ispat Inland), and Inland Steel Company (the predecessor of Ispat Inland). The settled disputes included Ispat's claim against the Company for indemnification in connection with the resolution of a federal lawsuit and investigation relating to the sale of polymer-coated steel by Ispat Inland to a culvert fabricator for use in highway construction projects in Louisiana and other claims, but excluded environmental claims, for which Ispat may make claims until July 2003. Pursuant to the May 29, 2001 settlement, the Company paid $7.5 million to Ispat and the parties released certain claims each had against the other. At year-end 2000, the Company recorded a $7.5 million pretax charge for the potential exposure related to the Louisiana proceedings. 7 NOTE 7/BORROWING ARRANGEMENTS In July 2001, the Company amended its $150 million bank revolving credit facility, increasing the amount to $175 million and extending the maturity to July 19, 2004. The line remains secured by inventory. At September 30, 2001, $40 million dollars of the facility was not available for borrowing. Of that $40 million, $15 million will become available if the Company meets certain financial ratios and the remainder will become available upon consent of all the lenders. At September 30, 2001, the Company had $61 million of letters of credit outstanding and no other short-term borrowings outstanding under this $175 million revolving credit facility. On July 16, 2001, the Company paid the $142 million outstanding balance of its 8-1/2% Notes that matured on that date. NOTE 8/INVESTMENTS IN JOINT VENTURES In March 2000, the Company and Altos Hornos de Mexico, S.A. de C.V. ("AHMSA") entered into an agreement to sell the Company's 50 percent interest in their joint venture to AHMSA for $15 million, with payment due in July 2000. Upon finalizing the terms of payment for the sale, the Company exchanged its ownership in the joint venture for inventory and the joint venture's Guadalajara facility. Cash received from the sale of inventory, $2.8 million in the quarter, is accounted for as cash inflow from operating activities. This transaction had no impact on the net earnings for the period. During the third quarter of 2001, the Company and The MacSteel Group dissolved their joint venture, IMF Steel International, Inc. As a result of the dissolution, the Company received $2.9 million, which is accounted for as a cash inflow from investing activities. This transaction had no impact on the net earnings for the period NOTE 9/RECENT ACCOUNTING PRONOUNCEMENTS In June 2001, the Financial Accounting Standards Board issued SFAS 141 "Business Combinations" and SFAS 142 "Goodwill and Other Intangible Assets." SFAS 141 requires that all business combinations initiated after June 30, 2001 be accounted for under the purchase method. With the adoption of SFAS 142, goodwill is no longer subject to amortization over its estimated useful life. Instead, goodwill will be subject to at least an annual assessment for impairment by applying a fair-value-based test. Similarly, goodwill associated with equity method investments is no longer amortized. Equity-method goodwill is not, however, subject to the new impairment rules; the impairment guidance in existing pronouncements for equity-method investments will continue to apply. In addition, under the new rules, acquired intangible assets will be separately recognized if the benefit of the intangible asset is obtained through contractual or other legal rights, or if the intangible asset can be sold, transferred, licensed, rented or exchanged, regardless of the acquirer's intent to do so. The provisions of Statement 142 must be applied with fiscal years beginning after December 15, 2001. The Company will adopt SFAS No. 142 beginning January 1, 2002. Management is currently assessing the implementation guidance being provided by the FASB and other regulatory bodies and has not determined the effect, if any, the new rules will have on the financial position or results of operations. Any adjustments arising from the initial impairment assessment would be reported as the cumulative effect of a change in accounting principle. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - Comparison of Third Quarter 2001 to Third Quarter 2000 - ------------------------------------------------------------------------------ For the third quarter of 2001, the Company reported a consolidated net loss of $11.6 million, or 47 cents per diluted share, as compared with a consolidated net loss of $3.6 million, or 15 cents per diluted share, in the year-ago quarter. Net sales for the third quarter of 2001 decreased 22 percent to $543.0 million from the same period a year ago due to the continuation of the slowdown in the metal-using sector of the economy that started in the second half of 2000. Volume decreased 15 percent while average selling price decreased 8 percent. Gross profit per ton declined to $149 in the third quarter of 2001 from $169 in the year-ago quarter due to the decline in average selling price and a reduction in inventory levels which caused the inclusion of older, higher-cost materials in the cost of goods sold. Expenses, defined as operating expenses plus depreciation and amortization, increased to $167 per ton in the third quarter of 2001 from $164 per ton in the third quarter of 2000 due to the decline in volume. Reflecting weakness in volume and selling price, operating loss per ton for the third quarter of 2001 was $18 per ton versus an operating profit of $5 per ton a year ago. In the quarter, the operating loss of $12.3 million was a decrease of $16.2 million from an operating profit of $3.9 million in the year-ago period. Results of Operations - Comparison of First Nine Months 2001 to First Nine - -------------------------------------------------------------------------- Months 2000 - ----------- For the first nine months of 2001, the Company reported a consolidated net loss of $15.2 million, or 62 cents per diluted share, as compared with a net loss of $6.2 million, or 26 cents per diluted share, in the year-ago period. Included in the first nine months of 2001 results was a pretax loss of $1.0 million for the write-off of the Company's investment in MetalSite, Inc. and a pretax gain of $1.3 million on the sale of a facility in Minneapolis, Minnesota. Net loss in the year-ago period included restructuring and plant closure charges of $27.8 million and a $4.4 million pretax pension curtailment gain. Net sales of $1.8 billion decreased 21 percent from the first nine months of 2000 as volume decreased 16 percent and selling prices decreased 6 percent. Excluding the MetalSite write-off and the gain on sale in 2001 and the restructuring and plant closure costs and the pension curtailment gain in 2000, the operating loss of $3.7 million was a decrease of $48.1 million from an operating profit of $44.4 million in the year-ago period. The decline in operating profit is primarily due to the decrease in volume and selling prices. Liquidity and Financing - ----------------------- The Company had cash and cash equivalents at September 30, 2001 of $26.6 million, compared to $23.8 million at December 31, 2000. At September 30, 2001, the Company had $170 million in outstanding fundings under its $250 million trade receivables facility. The availability of funds under this facility is based on the level of the Company's receivables, which would have allowed $22 million of additional 9 funding at September 30, 2001. At September 30, 2001, the Company had $61 million of letters of credit outstanding and no other short-term borrowings outstanding under its $175 million revolving credit facility. In July 2001, the Company amended its $150 million bank revolving credit facility increasing the amount to $175 million and extending the maturity to July 19, 2004. The facility remains secured by inventory. At September 30, 2001, $40 million dollars of the facility was not available for borrowing. Of that $40 million, $15 million will become available if the Company meets certain financial ratios and the remainder will become available upon consent of all the lenders. Letters of credit can be issued under the facility and reduce the amount available for borrowing. The facility contains covenants that, among other things, restrict the payment of dividends, the amount of capital stock repurchases, the creation of certain kinds of secured indebtedness and of certain kinds of subsidiary debt, take or pay contracts, transactions with affiliates, mergers and consolidations, and sales of assets. The facility also contains certain financial covenants, including covenants regarding net worth and the Company's debt-to-capital ratio. As a condition of completing the ISC/Ispat Transaction, Ispat, ISC and the Company entered into an agreement with the Pension Benefit Guaranty Corporation ("PBGC") to provide certain financial commitments to reduce the underfunding of the ISC Pension Plan on a termination basis. These obligations include a guaranty of $50 million to the PBGC in the event of a distress or involuntary termination of the ISC Pension Plan (now the Ispat Inland, Inc. Pension Plan). The agreement also required the Company to provide collateral for its guarantee in the event of a downgrade of the Company's unsecured debt rating below specified levels. On May 1, 2001, Moody's Investors Services reduced its rating on such unsecured debt to Ba3. In July 2001, the Company provided a letter of credit to the PBGC under the amended revolving credit facility discussed above. The Company has a 364-day $250 million trade receivables securitization facility, in connection with which it formed a special-purpose subsidiary for the sole purpose of buying receivables of certain subsidiaries of the Company and selling an undivided interest in all eligible receivables to certain commercial paper conduits. Fundings under the facility are limited to the lesser of a funding base, comprised of eligible receivables, or $250 million. The facility, which expires March 28, 2002, requires the Company to comply with various affirmative and negative covenants. The facility requires early amortization if the special-purpose subsidiary does not maintain a minimum equity requirement and terminates on the occurrence and failure to cure certain events, including, among other things, any failure of the special-purpose subsidiary to maintain certain ratios related to the collectability of the receivables and the Company's failure to maintain long-term unsecured debt ratings of at least B by Standard and Poor's and B2 by Moody's. On October 3, 2001, the Company's unsecured debt rating was lowered to B+ by Standard & Poor's. The indenture under which $250 million of debt was issued in 1996 ("RT Notes") contains covenants limiting, among other things, the creation of certain types of secured indebtedness, sale and leaseback transactions, the repurchase of capital stock, transactions with affiliates and mergers, consolidations and certain sales of assets. In addition, the RT Notes restrict the payment of dividends, although to a lesser extent than the credit facility described above. On July 16, 2001, the Company paid the $142 million outstanding balance of its 8-1/2% Notes that matured on that date. $100 million of the Company's 9-1/8% Notes due July 15, 2006 remain outstanding. 10 At September 30, 2001, under the most restrictive covenants contained in these loan agreements, the Company could have paid a maximum $8 million in dividends or repurchased $3 million in stock. ISC/Ispat Sale Contingencies - ---------------------------- On May 29, 2001, the Company settled a number of disputes with Ispat that had arisen under the May 27, 1998 Merger Agreement among Ispat International N.V., Inland Merger Sub, Inc., Inland Steel Industries (the predecessor of the Company and the former owner of Ispat Inland), and Inland Steel Company (the predecessor of Ispat Inland). The settled disputes included Ispat's claim against the Company for indemnification in connection with the resolution of a federal lawsuit and investigation relating to the sale of polymer-coated steel by Ispat Inland to a culvert fabricator for use in highway construction projects in Louisiana and other claims, but excluded environmental claims, for which Ispat may make claims until July 2003. Pursuant to the May 29, 2001 settlement, the Company paid $7.5 million to Ispat and the parties released certain claims each had against the other. At year-end 2000, the Company recorded a $7.5 million pretax charge for the potential exposure related to the Louisiana proceedings. Other Matters - ------------- In March 2000, the Company and Altos Hornos de Mexico, S.A. de C.V. ("AHMSA") entered into an agreement to sell the Company's 50 percent interest in their joint venture to AHMSA for $15 million, with payment due in July 2000. Upon finalizing the terms of payment for the sale, the Company exchanged its ownership in the joint venture for inventory and the joint venture's Guadalajara facility. Cash received from the sale of inventory, $2.8 million in the quarter, is accounted for as cash inflow from operating activities. This transaction had no impact on the net earnings for the period. During the third quarter of 2001, the Company and The MacSteel Group dissolved their joint venture, IMF Steel International, Inc. As a result of the dissolution, the Company received $2.9 million, which is accounted for as a cash inflow from investing activities. This transaction had no impact on the net earnings for the period. 11 PART II. OTHER INFORMATION -------------------------- Item 6. Exhibits and Report on Form 8-K (a) Exhibits. The exhibits required to be filed by Item 601 of Regulation S-K are listed in the "Exhibit Index," which is attached hereto and incorporated by reference herein. (b) Reports on Form 8-K. No reports on Form 8-K were filed during the third quarter of 2001. 12 SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. RYERSON TULL, INC. By: /s/ Lily L. May ------------------------ Lily L. May Controller and Chief Accounting Officer Date: November 13, 2001 13 Part I -- Schedule A RYERSON TULL, INC. AND SUBSIDIARY COMPANIES SUMMARY OF STOCKHOLDERS' EQUITY
========================================================================================================================== Dollars in Millions ------------------- September 30, 2001 December 31, 2000 -------------------- -------------------------- (unaudited) STOCKHOLDERS' EQUITY - -------------------- Series A preferred stock ($1 par value) - 80,334 shares and 80,506 shares issued and outstanding as of September 30, 2001 $ 0.1 $ 0.1 and December 31, 2000, respectively Common stock ($1 par value) - 50,556,350 shares issued as of September 30, 2001 and December 31, 2000 50.6 50.6 Capital in excess of par value 862.5 862.8 Retained earnings Balance beginning of year $506.8 $ 541.8 Net income (15.2) (29.9) Dividends Series A preferred stock - $1.80 per share in 2001 and $2.40 per share in 2000 (0.1) (0.2) Common Stock - $ .15 per share in 2001 and $ .20 per share in 2000 (3.8) 487.8 (4.9) 506.8 ------ --------- Restricted stock awards (0.1) (0.2) Treasury stock, at cost - 25,768,162 as of September 30, 2001 and 25,782,477 as of December 31, 2000 (753.7) (754.1) Accumulated other comprehensive income (5.9) (4.3) ------- ------- Total Stockholders' Equity $ 641.3 $ 661.7 ======= =======
14 EXHIBIT INDEX Exhibit Number Description - ------ ----------- 3.1 Copy of Certificate of Incorporation, as amended, of Ryerson Tull. (Filed as Exhibit 3.(I) to the Company's Annual Report on Form 10-K for the year ended December 31, 1995 (File No. 1-9117), and incorporated by reference herein.) 3.2 By-Laws, as amended. (Filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-9117), and incorporated by reference herein.) 4.1 Certificate of Designations, Preferences and Rights of Series A $2.40 Cumulative Convertible Preferred Stock of Ryerson Tull. (Filed as part of Exhibit B to the definitive Proxy Statement of Inland Steel Company dated March 21, 1986 that was furnished to stockholders in connection with the annual meeting held April 23, 1986 (File No. 1-2438), and incorporated by reference herein.) 4.2 Certificate of Designation, Preferences and Rights of Series D Junior Participating Preferred Stock of Ryerson Tull. (Filed as Exhibit 4-D to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1987 (File No. 1-9117), and incorporated by reference herein.) 4.3 Rights Agreement, dated as of November 25, 1997, as amended and restated as of September 22, 1999, between Ryerson Tull and Harris Trust and Savings Bank, as Rights Agent. (Filed as Exhibit 4.1 to the Company's amended Registration Statement on Form 8-A/A-2 filed on October 6, 1999 (File No. 1-9117), and incorporated by reference herein.) 4.4 Indenture, dated as of July 1, 1996, between Pre-merger Ryerson Tull and The Bank of New York. (Filed as Exhibit 4.1 to Pre-merger Ryerson Tull's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996 (File No. 1-11767), and incorporated by reference herein.) 4.5 First Supplemental Indenture, dated as of February 25, 1999, between Ryerson Tull and The Bank of New York. (Filed as Exhibit 4.5 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-9117), and incorporated by reference herein.) 4.6 Specimen of 9 1/8% Notes due July 15, 2006. (Filed as Exhibit 4.7 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-9117), and incorporated by reference herein.) [The registrant hereby agrees to provide a copy of any other agreement relating to long-term debt at the request of the Commission.] 10.1* Ryerson Tull Annual Incentive Plan, as amended. (Filed as Exhibit 10.18 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000 (File No. 1-9117), and incorporated by reference herein.) 10.2* Ryerson Tull 1999 Incentive Stock Plan, as amended. (Filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 (File No. 1-9117), and incorporated by reference herein.) 10.3* Ryerson Tull 1996 Incentive Stock Plan, as amended. (Filed as Exhibit 10.14 to Pre-merger Ryerson Tull Annual Report on Form 10-K for the year ended December 31, 1997 (File No. 1-11767), and incorporated by reference herein.) 10.4* Ryerson Tull 1995 Incentive Stock Plan, as amended. (Filed as Exhibit 10.E to the Company's Annual Report on Form 10-K for the year ended December 31, 1997 (File No. 1-9117), and incorporated by reference herein.) 15 Exhibit Number Description - ------ ----------- 10.5* Ryerson Tull 1992 Incentive Stock Plan, as amended. (Filed as Exhibit 10.C to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 (File No. 1-9117), and incorporated by reference herein.) 10.6* Ryerson Tull Supplemental Retirement Plan for Covered Employees, as amended. (Filed as Exhibit 10.1 to Pre-merger Ryerson Tull's Form 10-Q for the quarter ended September 30, 1997 (File No. 1-11767), and incorporated by reference herein.) 10.7* Ryerson Tull Nonqualified Savings Plan, effective January 1, 1998. (Filed as Exhibit 10.S.(2) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 1-9117), and incorporated by reference herein.) 10.8* Outside Directors Accident Insurance Policy, with endorsement........ 10.9* Ryerson Tull Directors' 1999 Stock Option Plan. (Filed as Exhibit 10.19 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-9117), and incorporated by reference herein.) 10.10* Ryerson Tull Directors' Compensation Plan, as amended. (Filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K for the year ended December 31, 2000 (File No. 1-9117), and incorporate by reference herein.) 10.11* Form of Severance Agreement, dated January 28, 1998, between the Company and each of the four executive officers of the Company identified on the exhibit relating to terms and conditions of termination of employment following a change in control of the Company. (Filed as Exhibit 10.R to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 1-9117), and incorporated by reference herein.) 10.12* Amendment dated November 6, 1998 to the Severance Agreement dated January 28, 1998 referred to in Exhibit 10.11 above between the Company and Jay M. Gratz. (Filed as Exhibit 10.23 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-9117), and incorporated by reference herein.) 10.13* Amendment dated June 30, 2000 to the Severance Agreement dated January 28, 1998 referred to in Exhibit 10.11 between the Company and Jay M. Gratz. (Filed as Exhibit 10.14 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000 (File No. 1-9117), and incorporated by reference herein.) 10.14* Form of Change in Control Agreement between the Company and the parties listed on the schedule thereto. (Filed as Exhibit 10.25 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-9117), and incorporated by reference herein.) 10.15* Form of Change in Control Agreement between the Company and the party listed on the schedule thereto. (Filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-9117), and is incorporated by reference herein.) 10.16* Schedule to Change in Control Agreement as referred to in Exhibit 10.15 (Filed as Exhibit 10.18 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000 (File No. 1-9117), and incorporated by reference herein.) 10.17* Employment Agreement dated September 1, 1999 between the Company and Jay M. Gratz. (Filed as Exhibit 10.22 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 (File No. 1-9117), and incorporated by reference herein.) 10.18* Employment Agreement dated September 1, 1999 between the Company and Gary J. Niederpruem. (Filed as Exhibit 10.23 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 (File No. 1-9117), and incorporated by reference herein.) 16 Exhibit Number Description - ------ ----------- 10.19* Employment Agreement dated December 1, 1999 between the Company and Neil S. Novich. (Filed as Exhibit 10.19 to the Company's Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-9117), and incorporated by reference herein.) 10.20* Confidentiality and Non-Competition Agreement dated July 1, 1999 between the Company and Stephen E. Makarewicz. (Filed as Exhibit 10.24 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 (File No. 1-9117), and incorporated by reference herein.) 10.21* Employment Agreement dated as of May 29, 2000 between the Company and Thomas S. Cygan. (Filed as Exhibit 10.25 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000 (File No. 1-9117), and incorporated by reference herein.) _________________ * Management contract or compensatory plan or arrangement required to be filed as an exhibit to the Company's Annual Report on Form 10-K. 17 EX-10.8 3 dex108.txt OUTSID DIRECTORS ACCIDENT INSURANCE POLICY [LOGO] CHUBB Blanket Accident Insurance EXHIBIT 10.8 - -------------------------------------------------------------------------------- Declarations Chubb Group of Insurance Companies 15 Mountain View Road Warren, NJ 07059 Policyholder's Name and Mailing Address Policy Number 6404-48-82 RYERSON TULL, INC. 2621 WEST 15TH PLACE Effective Date JANUARY 1, 2001 CHICAGO, IL 60608 Issued by the stock insurance company indicated below. FEDERAL INSURANCE COMPANY Producer No. 0012211 Incorporated under the laws of INDIANA Producer WILLIS OF ILLINOIS, INC. 10 S. LASALLE STREET CHICAGO, IL 60603-0000 ================================================================================ Section I - Policy Period From: JANUARY 1, 200l To: JANUARY 1, 2002 12:01 A.M. standard time at the Policyholder's mailing address shown above. ================================================================================ Section II - Persons Insured The following are the Persons Insured under this policy: Class Description ----- ----------- 1 ALL NON-EMPLOYEE DIRECTORS OF INLAND STEEL INDUSTRIES AND ALL NON-EMPLOYEE DIRECTORS OF RYERSON-TULL. If an Insured Person is included in more than one Class, the Insured Person will be covered for only the Benefit Amount applicable to one Class. The Insured Person will be considered a member of the applicable Class that provides the Insured Person the largest Benefit Amount for the particular Accident and Loss that has occurred. An Insured Person is added for coverage as a Class member at any time during the policy period that the Insured Person fits the Class description. An Insured Person will be deleted from a Class and coverage ends at any time the Insured Person no longer fits the Class description. All premium adjustments will be made according to the terms of this policy. ================================================================================ Section III - Hazards The following are the Hazards during which coverage applies: Hazards Form Number ------- ----------- BUSINESS TRAVEL 44-02-0897 (01/95) continued - -------------------------------------------------------------------------------- Form 44-02-0893(Ed. 1-95) Declarations Page 01 - -------------------------------------------------------------------------------- (continued) ================================================================================ Section IV - Benefits BENEFIT AMOUNTS - --------------- Accidental Loss of Life and Scheduled Benefits ---------------------------------------------- The following are Loss of Life Benefit Amounts for each Class and corresponding Hazards: Class Benefit Amounts ----- --------------- BUSINESS TRAVEL 1 $500,000. [_] Multiple of salary/compensation applies, refer to the Supplemental Benefit Amounts Declarations. ================================================================================ The following are Losses covered and the corresponding Scheduled Benefit Amounts. Accidental Loss of Percent of Loss of Life ------------------ ----------------------- Benefit Amount -------------- Life 100% Speech and Hearing 100% Speech and one of: Hand, Foot or Sight of One Eye 100% Hearing and one of: Hand, Foot or Sight of One Eye 100% Both Hands, Both Feet or Sight of Both Eyes or a Combination of a Hand, a Foot or Sight of One Eye 100% One Hand or One Foot or Sight of One Eye 50% Speech or Hearing 50% Thumb and Index Finger of the same Hand 25% ================================================================================ PERMANENT TOTAL DISABILITY MONTHLY BENEFIT ------------------------------------------ The following are Permanent Total Disability Benefit Amounts for each Class. The same Hazards apply as stated above for Accidental Loss of Life. Class Benefit Amount Elimination Period ----- -------------- ------------------ 1 $500,000. 12 MONTHS If an Insured Person has multiple Losses as the result of one Accident, we will pay only the single largest Benefit Amount applicable to the Losses suffered. ================================================================================ SEAT BELT --------- 10 percent of the Accidental Loss of Life Benefit Amount. continued - -------------------------------------------------------------------------------- Form 44-02-0893(Ed. 1-95) Declarations Page 02 [LOGO] Blanket Accident Insurance CHUBB - -------------------------------------------------------------------------------- Declarations Effective Date JANUARY 01, 2001 Policy Number 6404-48-82 ================================================================================ (continued) ================================================================================ Section V - Maximum Limit Of Insurance The following are the maximum amounts we will pay: Limit of Insurance ------------------ $5,000,000. per ACCIDENT If more than one (1) Insured Person suffers a Loss in the same Accident, we will not pay more than the maximum Limit of Insurance shown above. If an Accident results in Benefit Amounts becoming payable, which when totalled, exceed the applicable Limit of Insurance shown above, the maximum Limit of Insurance will be divided proportionally among the Insured Persons, based on each applicable Benefit Amount. ================================================================================ Coverage only applies for the Classes, Hazards, Benefit Amounts and Losses that are specifically indicated as covered. last page - -------------------------------------------------------------------------------- Form 44-02-0893 (Ed. 1-95) Declarations Page 03 [LOGO] Blanket Accident Insurance CHUBB - -------------------------------------------------------------------------------- Endorsement Policy Period JANUARY 1, 200l TO JANUARY 1, 2002 Effective Date JANUARY 01, 2001 Policy Number 6404-48-82 Policyholder RYERSON TULL, INC. Name of Company FEDERAL INSURANCE COMPANY Date Issued FEBRUARY 9, 2001 ================================================================================ The following amends the Blanket Accident Insurance Contract: ENDORSEMENT #2 TO AMEND CLASS 1 DESCRIPTION THE POLICY IS HEREBY AMENDED AS FOLLOWS: EFFECTIVE JANAUARY 1, 2001, THE FOLLOWING AMENDS THE CLASS DESCRIPTION SHOWN IN SECTION II OF THE DECLARATIONS TO: CLASS 1 ALL NON-EMPLOYEE DIRECTORS OF THE POLICYHOLDER. All other terms and conditions remain unchanged. Authorized Representative /s/ Robert Hamburger ----------------------------------------------------- last page - -------------------------------------------------------------------------------- Form 44-02-0926(Ed. 1-95) Endorsement Page 1 -----END PRIVACY-ENHANCED MESSAGE-----