-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, GXlSGpGXjzZzysssM2db60Xgxa7baLjjZgQtrG7WrLBgBfAySQ/qsvI2MggLLiEW 52iwR9bBcfSXJGH8SIPzdg== 0000950131-94-001281.txt : 19940817 0000950131-94-001281.hdr.sgml : 19940817 ACCESSION NUMBER: 0000950131-94-001281 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INLAND STEEL INDUSTRIES INC /DE/ CENTRAL INDEX KEY: 0000790528 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94542997 BUSINESS ADDRESS: STREET 1: 30 W MONROE ST CITY: CHICAGO STATE: IL ZIP: 60603 BUSINESS PHONE: 3128993917 MAIL ADDRESS: STREET 1: 30 WEST MONROE STREET STREET 2: 16TH FLOOR CITY: CHICAGO STATE: IL ZIP: 60603 10-Q 1 FORM 10-Q SECOND QUARTER - 1994 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 June 30, 1994 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 INLAND STEEL INDUSTRIES, INC. (a Delaware Corporation) 30 West Monroe Street Chicago, Illinois 60603 Telephone: (312) 346-0300 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: 44,332,484 shares of the Company's Common Stock ($1.00 par value per share) were outstanding as of August 8, 1994. PART I. FINANCIAL INFORMATION ------------------------------ ITEM 1. FINANCIAL STATEMENTS INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) ================================================================================
Dollars in Millions (except per share data) ------------------------------------------- Three Months Ended Six Months Ended June 30 June 30 ------------------ ------------------- 1994 1993 1994 1993 -------- ------ -------- -------- NET SALES $1,135.6 $996.4 $2,211.3 $1,937.9 -------- ------ -------- -------- OPERATING COSTS AND EXPENSES Cost of goods sold 977.0 892.4 1,934.1 1,775.8 Selling, general and administrative expenses 51.4 49.1 100.1 96.8 Depreciation 35.9 32.3 69.6 64.1 -------- ------ -------- -------- Total 1,064.3 973.8 2,103.8 1,936.7 -------- ------ -------- -------- OPERATING PROFIT 71.3 22.6 107.5 1.2 -------- ------ -------- -------- General corporate expense, net of income items 2.6 6.3 5.9 13.0 Interest and other expense on debt 18.5 20.1 36.8 39.5 -------- ------ -------- -------- INCOME (LOSS) BEFORE INCOME TAXES 50.2 (3.8) 64.8 (51.3) PROVISION FOR INCOME TAXES 18.6 1.3Cr. 24.0 17.4Cr. -------- ------ -------- -------- NET INCOME (LOSS) $ 31.6 $ (2.5) $ 40.8 $ (33.9) ======== ====== ======== ======== EARNINGS (LOSS) PER SHARE OF COMMON STOCK: PRIMARY $ .57 $ (.30) $ .60 $ (1.41) ======== ====== ======== ======== FULLY DILUTED $ .53 $ (.30) $ .56 $ (1.41) ======== ====== ======== ========
See notes to consolidated financial statements -1- INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) ================================================================================
Dollars in Millions ------------------------ Six Months Ended June 30 ------------------------ 1994 1993 ------- ------- OPERATING ACTIVITIES Net income (loss) $ 40.8 $(33.9) ------- ------ Adjustments to reconcile net income to net cash provided from operating activities: Depreciation 69.9 64.4 Deferred employee benefit cost 24.0 25.1 Deferred income taxes 20.2 (18.9) Change in: Receivables (37.6) (67.7) Inventories (48.3) 11.9 Accounts payable (17.3) 17.7 Accrued salaries and wages 8.5 (.6) Other accrued liabilities (5.1) 2.6 Other deferred items 16.9 8.9 ------- ------ Net adjustments 31.2 43.4 ------- ------ Net cash provided from operating activities 72.0 9.5 ------- ------ INVESTING ACTIVITIES Capital expenditures (108.2) (21.4) Investments in and advances to joint ventures, net 8.8 (33.1) Proceeds from sales of assets 2.1 2.1 ------- ------ Net cash used for investing activities (97.3) (52.4) ------- ------ FINANCING ACTIVITIES Long-term debt issued 19.7 39.3 Long-term debt retired (158.3) (57.8) Dividends paid (17.8) (17.8) Acquisition of treasury stock (1.5) (3.5) ------- ------ Net cash used for financing activities (157.9) (39.8) ------- ------ Net decrease in cash and cash equivalents (183.2) (82.7) Cash and cash equivalents - beginning of year 250.5 137.7 ------- ------ Cash and cash equivalents - end of period $ 67.3 $ 55.0 ======= ====== SUPPLEMENTAL DISCLOSURES Cash paid during the period for: Interest (net of amount capitalized) $ 37.4 $ 38.6 Income taxes, net 3.5 .7 Non-cash investing and financing activities: Long-term debt acquired in purchase of assets 63.3 -
See notes to consolidated financial statements -2- INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET ================================================================================
Dollars in Millions --------------------------------------- June 30, 1994 December 31, 1993 ------------------- ------------------ ASSETS (unaudited) - - ------ CURRENT ASSETS Cash and cash equivalents $ 67.3 $ 250.5 Receivables 464.9 427.3 Inventories - principally at LIFO In process and finished products $ 387.5 $ 331.9 Raw materials and supplies 37.7 425.2 45.0 376.9 -------- -------- Deferred income taxes 48.0 44.2 -------- -------- Total current assets 1,005.4 1,098.9 INVESTMENTS AND ADVANCES 205.3 221.0 PROPERTY, PLANT AND EQUIPMENT Valued on basis of cost 4,251.8 4,083.7 Less: Reserve for depreciation, amortization and depletion 2,535.2 2,467.6 Allowance for terminated facilities 108.4 1,608.2 108.4 1,507.7 -------- -------- DEFERRED INCOME TAXES 405.8 428.4 INTANGIBLE PENSION ASSET 122.1 122.1 OTHER ASSETS 57.3 57.7 -------- -------- Total Assets $3,404.1 $3,435.8 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - - ------------------------------------ CURRENT LIABILITIES Accounts payable $ 281.9 $ 300.9 Accrued liabilities 206.2 202.8 Long-term debt due within one year 73.8 98.8 -------- -------- Total current liabilities 561.9 602.5 LONG-TERM DEBT 727.1 777.1 DEFERRED EMPLOYEE BENEFITS 1,395.1 1,371.1 OTHER CREDITS 59.5 61.7 -------- -------- Total liabilities 2,743.6 2,812.4 REDEEMABLE PREFERRED STOCK 185.0 185.0 COMMON STOCK REPURCHASE COMMITMENT 39.8 40.8 STOCKHOLDERS' EQUITY (Schedule A) 435.7 397.6 -------- -------- Total Liabilities, Temporary Equity, and Stockholders' Equity $3,404.1 $3,435.8 ======== ========
See notes to consolidated financial statements -3- INLAND STEEL INDUSTRIES, 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 June 30, 1994 and for the three-month and six-month periods ended June 30, 1994 and 1993 are unaudited, but in the opinion of management include all 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 to Stockholders for the year ended December 31, 1993. NOTE 2/CAPITAL STOCK In the second quarter of 1994, as the result of the Company's call for redemption, shareholders converted the 1.5 million shares of Series G $4.625 Cumulative Convertible Exchangeable Preferred Stock outstanding into 2.7 million shares of the Company's common stock. NOTE 3/COMMITMENTS The total amount of firm commitments of the Company and its subsidiaries to contractors and suppliers, primarily in connection with additions to property, plant and equipment, increased to $56 million on June 30, 1994 from $15 million on December 31, 1993. -4- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - Comparison of Second Quarter 1994 to Second Quarter 1993 - - -------------------------------------------------------------------------------- The Company reported consolidated net income of $31.6 million, $0.57 per common share, in the 1994 second quarter, compared with a consolidated net loss of $2.5 million, $0.30 per common share, in the comparable 1993 quarter. A substantial improvement in operating profit at the Company's Integrated Steel segment and increased operating profit at the Steel Service Center segment were the principal factors in the year-to-year improvement. As market conditions continued to improve, consolidated net sales rose 14 percent in the current quarter to $1.14 billion, the result of higher volume and improved average selling price at both of the Company's business segments. The Integrated Steel segment reported an operating profit of $46.7 million in the quarter, compared with an operating profit of $7.4 million in the 1993 period. Net sales increased 14 percent to $643 million as steel mill shipments improved 5 percent to 1,339,000 tons. Average selling price rose 9 percent from the year-ago period reflecting the overall strength of the market and an improved mix of products sold. While revenue increased 14 percent from the previous year's quarter, operating costs were up 7 percent. Contributing to this increase in operating costs were higher volume, a richer product mix and higher raw materials costs. Steel Service Center segment net sales of $548 million in the 1994 second quarter were 14 percent higher than the similar 1993 quarter due to an 11 percent volume improvement and a 3 percent increase in average selling price per ton. Operating profit increased to $24.2 million from $15.1 million a year earlier due primarily to the improvement in volume. Comparison of First Six Months of 1994 to First Six Months of 1993 - - ------------------------------------------------------------------ The strong operating performance in both the first and second quarters of 1994 was the major factor contributing to the Company's reporting a consolidated net income of $40.8 million for the first six months of 1994, compared with a net loss of $33.9 million for the 1993 first half. Enhanced operating results at the Integrated Steel segment combined with continued favorable performance at the Steel Service Center segment accounted for the improvement. Consolidated net sales of $2.21 billion in the first six months were 14 percent higher than the comparable 1993 period due to higher volume and improved average selling price at both business segments. Integrated Steel segment net sales of $1.23 billion were 14 percent higher in the 1994 first half as improved average selling price accounted for 10 percent of the increase, while shipments increased 4 percent to 2,592,000 tons. Higher average selling price was the principal reason the reported operating profit of $60.3 million in the first half increased $89.6 million from the operating loss of $29.3 million in the comparable 1993 period. -5- The Steel Service Center segment continued its advancement posting net sales of $1.09 billion in the first half of 1994, a 15 percent improvement from the year earlier period. Volume rose 12 percent from the comparable 1993 period while average selling price increased 3 percent. Operating profit of $45.6 million in the 1994 first half continued its upward trend improving 51 percent from the comparable prior year period. The increase in volume was the primary factor accounting for the improvement. Liquidity and Financing - - ----------------------- The Company's cash and cash equivalents at June 30, 1994 were $67 million, as compared with $251 million at year-end 1993. There was no short-term borrowing at either date. During the first half of 1994, Inland Steel Company, a subsidiary, redeemed all $75 million of its outstanding Series O, P and Q First Mortgage Bonds and acquired the equity interest in the operating lease of the No. 2 Basic Oxygen Furnace Shop continuous casters for $83 million. In connection with this purchase, Inland Steel Company recorded $63 million of debt. Inland Steel Company also called and subsequently prepaid approximately $48 million of caster-related debt. In addition, in early May, Inland Steel Company called all remaining debt related to this continuous caster facility (approximately $48 million) for prepayment in November 1994. During the second quarter, Inland Steel Company redeemed $20 million principal amount of 8.125 percent Pollution Control Revenue bonds. The redemption was funded largely by the proceeds from the issuance of a like amount of Pollution Control Revenue bonds with a 7.125 percent coupon. The Company called for redemption all outstanding shares of Series G $4.625 Cumulative Convertible Exchangeable Preferred Stock during the second quarter. The call resulted in conversion of 1.5 million shares of Series G Preferred Stock outstanding, increasing the number of shares of common stock outstanding by 2.7 million shares. This will reduce ongoing preferred dividends by approximately $7 million on an annual basis. Cash flow from operating activities during the first six months of 1994 was a positive $72 million, compared with $10 million in the year-earlier period. Net income of $41 million, combined with non-cash expenses of $114 million related to depreciation, deferred employee benefit cost, and deferred income taxes more than offset cash required for increased inventories and receivables. -6- PART II. OTHER INFORMATION --------------------------- ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) A meeting of stockholders was held on May 25, 1994 and was an annual meeting. (b) No answer is required. (c) The election of eleven nominees for director of the Company was voted upon at the meeting. The number of affirmative votes and the number of votes withheld with respect to such approval is as follows: Nominee Affirmative Votes Votes Withheld ------- ----------------- -------------- [S] [C] [C] A Robert Abboud 43,175,885 546,192 James W. Cozad 43,355,457 366,619 Robert J. Darnall 43,247,709 474,367 James A. Henderson 43,361,837 360,239 Emerson Kampen 43,343,434 378,643 Robert B. McKersie 43,342,386 379,690 Donald S. Perkins 43,332,698 389,379 Joshua I. Smith 43,348,919 373,157 Nancy H. Teeters 43,338,923 383,154 Raymond C. Tower 43,323,524 398,553 Arnold R. Weber 43,342,675 379,402 The results of the voting for approval of the Inland Steel Industries, Inc. Annual Incentive Plan (the "AIP Plan") are as follows: For Against Abstain Broker Non-Votes --- --------- ------- ---------------- 39,747,734 2,473,800 275,156 1,225,386 The results of the voting for the election of Price Waterhouse to audit the accounts of the Company and its subsidiaries for 1994 are as follows: For Against Abstain --- ------- ------- 43,350,736 208,692 162,648 There were no matters voted upon at the meeting, other than approval of the AIP Plan, to which broker non-votes applied. (d) Not applicable. -7- ITEM 5. OTHER INFORMATION Consolidated financial statements for Inland Materials Distribution Group, Inc. are set forth in Appendix A to this Quarterly Report on Form 10-Q. Separate consolidated financial statements for Inland Steel Company are set forth in Inland Steel Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. 3(i) Copy of Certificate of Incorporation, as amended, of the Company. (Filed as Exhibit 4-A to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1991, and incorporated by reference herein.) 3(ii) Copy of By-laws, as amended, of the Company. (Filed as Exhibit 3-B to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, and incorporated by reference herein.) 4.A Copy of Certificate of Designations, Preferences and Rights of Series A $2.40 Cumulative Convertible Preferred Stock of the Company. (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, and incorporated by reference herein.) 4.B Copy of Certificate of Designation, Preferences and Rights of Series D Junior Participating Preferred Stock of the Company. (Filed as Exhibit 4-D to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1987, and incorporated by reference herein.) 4.C Copy of Rights Agreement, dated as of November 25, 1987, as amended and restated as of May 24, 1989, between the Company and The First National Bank of Chicago, as Rights Agent (Harris Trust and Savings Bank, as successor Rights Agent). (Filed as Exhibit 1 to the Company's Current Report on Form 8-K filed on May 24, 1989, and incorporated by reference herein.) 4.D Copy of Certificate of Designations, Preferences and Rights of Series E ESOP Convertible Preferred Stock of the Company. (Filed as Exhibit 4-F to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1989, and incorporated by reference herein.) 4.E Copy of Certificate of Designations, Preferences and Rights of Series F Exchangeable Preferred Stock of the Company. (Filed as Exhibit 4(b) to the Company's Current Report on Form 8-K filed on December 18, 1989, and incorporated by reference herein.) 4.F Copy of Certificate of Designations of Series G $4.625 Cumulative Convertible Exchangeable Preferred Stock of the Company. (Filed as Exhibit 2.8 to the Company's Registration Statement on Form 8-A filed on March 25, 1991, and incorporated by reference herein.) 4.G Copy of Indenture dated as of December 15, 1992, between the Company and Harris Trust and Savings Bank, as Trustee, respecting the Company's $150,000,000 12-3/4% Notes due December 15, 2002. (Filed as Exhibit 4-G to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, and incorporated by reference herein.) -8- 4.H Copy of First Mortgage Indenture, dated April 1, 1928, between Inland Steel Company (the "Steel Company") and First Trust and Savings Bank and Melvin A. Traylor, as Trustees, and of supplemental indentures thereto, to and including the Thirty-Second Supplemental Indenture, incorporated by reference from the following Exhibits: (i) Exhibits B-1(a), B-1(b), B-1(c), B-1(d) and B-1(e), filed with Steel Company's Registration Statement on Form A-2 (No. 2-1855); (ii) Exhibits D-1(f) and D-1(g), filed with Steel Company's Registration Statement on Form E-1 (No. 2-2182); (iii) Exhibit B-1(h), filed with Steel Company's Current Report on Form 8-K dated January 18, 1937; (iv) Exhibit B-1(i), filed with Steel Company's Current Report on Form 8-K, dated February 8, 1937; (v) Exhibits B-1(j) and B-1(k), filed with Steel Company's Current Report on Form 8-K for the month of April, 1940; (vi) Exhibit B-2, filed with Steel Company's Registration Statement on Form A-2 (No. 2-4357); (vii) Exhibit B-1(l), filed with Steel Company's Current Report on Form 8-K for the month of January, 1945; (viii) Exhibit 1, filed with Steel Company's Current Report on Form 8-K for the month of November, 1946; (ix) Exhibit 1, filed with Steel Company's Current Report on Form 8-K for the months of July and August, 1948; (x) Exhibits B and C, filed with Steel Company's Current Report on Form 8-K for the month of March, 1952; (xi) Exhibit A, filed with Steel Company's Current Report on Form 8-K for the month of July, 1956; (xii) Exhibit A, filed with Steel Company's Current Report on Form 8-K for the month of July, 1957; (xiii) Exhibit B, filed with Steel Company's Current Report on Form 8-K for the month of January, 1959; (xiv) the Exhibit filed with Steel Company's Current Report on Form 8-K for the month of December, 1967; (xv) the Exhibit filed with Steel Company's Current Report on Form 8-K for the month of April, 1969; (xvi) the Exhibit filed with Steel Company's Current Report on Form 8-K for the month of July, 1970; (xvii) the Exhibit filed with the amendment on Form 8 to Steel Company's Current Report on Form 8-K for the month of April, 1974; (xviii) Exhibit B, filed with Steel Company's Current Report on Form 8-K for the month of September, 1975; (xix) Exhibit B, filed with Steel Company's Current Report on Form 8-K for the month of January, 1977; (xx) Exhibit C, filed with Steel Company's Current Report on Form 8-K for the month of February, 1977; (xxi) Exhibit B, filed with Steel Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1978; (xxii) Exhibit B, filed with Steel Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1980; (xxiii) Exhibit 4-D, filed with Steel Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1980; (xxiv) Exhibit 4-D, filed with Steel Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1982; (xxv) Exhibit 4-E, filed with Steel Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1983; (xxvi) Exhibit 4(i) filed with the Steel Company's Registration Statement on Form S-2 (No. 33-43393); and (xxvii) Exhibit 4 filed with Steel Company's Current Report on Form 8-K dated June 23, 1993. 4.I Copy of consolidated reprint of First Mortgage Indenture, dated April 1, 1928, between Inland Steel Company and First Trust and Savings Bank and Melvin A. Traylor, as Trustees, as amended and supplemented by all supplemental indentures thereto, to and including the Thirteenth Supplemental Indenture. (Filed as Exhibit 4-E to Form S-1 Registration Statement No. 2-9443, and incorporated by reference herein.) 11 Statement of Earnings per Share of Common Stock. (b) Reports on Form 8-K. The Company did not file any reports on Form 8-K during the quarter ended June 30, 1994. -9- 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. INLAND STEEL INDUSTRIES, INC. By Olivia M. Thompson -------------------------------------- Olivia M. Thompson Controller and Chief Accounting Officer Date: August 10, 1994 -10- Part I -- Schedule A -------------------- INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES SUMMARY OF STOCKHOLDERS' EQUITY ================================================================================
Dollars in Millions ------------------------------------------------------------- June 30, 1994 December 31, 1993 ------------------------- ----------------------- (unaudited) STOCKHOLDERS' EQUITY - - -------------------- Series A preferred stock ($1 par value) - 96,354 shares and 96,589 shares issued and outstanding as of June 30, 1994 and December 31, 1993, respectively $ .1 $ .1 Series E preferred stock ($1 par value) - 3,103,373 shares and 3,114,568 shares issued and outstanding as of June 30, 1994 and December 31, 1993, respectively 3.1 3.1 Series G preferred stock ($1 par value) - 1,500,000 shares issued and outstanding as of December 31, 1993 - 1.5 Common stock ($1 par value) - 50,556,350 shares and 47,854,208 shares issued as of June 30, 1994 and December 31, 1993 50.6 47.9 Capital in excess of par value 1,106.4 1,113.7 Accumulated deficit Balance beginning of year $(371.9) $(302.3) Net income (loss) 40.8 (37.6) Dividends Series A preferred stock - $1.20 per share in 1994 and $2.40 per share in 1993 (.1) (.2) Series E preferred stock - $1.7615 per share in 1994 and $3.523 per share in 1993 (5.5) (11.0) Income tax benefit - Series E dividend 1.4 3.6 Series F preferred stock - $47.40 per share in 1994 and $94.80 per share in 1993 (8.8) (17.5) Series G preferred stock - $1.54165 per share in 1994 and $4.625 per share in 1993 (1.7) (345.8) (6.9) (371.9) ------- ------ Unearned compensation related to ESOP (107.2) (112.2) Common stock repurchase commitment (39.8) (40.8) Investment valuation allowance (4.0) (5.2) Unearned restricted stock award compensation (3.1) (2.1) Treasury stock, at cost - 6,515,967 shares and 6,767,139 shares as of June 30, 1994 and December 31, 1993, respectively (224.6) (236.5) -------- -------- Total Stockholders' Equity $ 435.7 $ 397.6 ======== ========
-11- Part I -- Schedule B -------------------- INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES SUMMARY FINANCIAL INFORMATION FOR BUSINESS SEGMENTS (UNAUDITED) ================================================================================
Dollars in Millions ------------------------------------------ Three Months Ended Six Months Ended June 30 June 30 ------------------ ------------------- 1994 1993 1994 1993 -------- ------ -------- -------- NET SALES - - --------- Integrated Steel Operations $ 643.2 $566.2 $1,234.0 $1,086.9 Steel Service Center Operations 548.1 481.2 1,086.6 948.1 Eliminations and adjustments (55.7) (51.0) (109.3) (97.1) -------- ------ -------- -------- Total Net Sales $1,135.6 $996.4 $2,211.3 $1,937.9 ======== ====== ======== ======== OPERATING PROFIT (LOSS) - - ----------------------- Integrated Steel Operations $46.7 $ 7.4 $ 60.3 $(29.3) Steel Service Center Operations 24.2 15.1 45.6 30.1 Eliminations and adjustments .4 .1 1.6 .4 ----- ----- ------ ------ Total Operating Profit $71.3 $22.6 $107.5 $ 1.2 ===== ===== ====== ======
-12-
Exhibit 11 ---------- INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK (UNAUDITED) =========================================================================================================== Dollars and Shares in Millions (except per share data) ----------------------------------------- Three Months Ended Six Months Ended June 30 June 30 ------------------ ----------------- 1994 1993 1994 1993 ------ ------ ------ ------ PRIMARY EARNINGS PER SHARE OF COMMON STOCK Shares of common stock Average shares outstanding 42.4 35.3 41.8 35.3 Dilutive effect of stock options .4 - .4 - ----- ------ ----- ------ 42.8 35.3 42.2 35.3 ===== ====== ===== ====== Net income (loss) $31.6 $ (2.5) $40.8 $(33.9) Dividends on preferred stock, net of tax benefit on dividends applicable to leveraged Series E Preferred Stock held by the ESOP 7.3 8.0 15.3 16.0 ----- ------ ----- ------ Net income (loss) applicable $24.3 $(10.5) $25.5 $(49.9) ===== ====== ===== ====== Primary earnings (loss) per share of common stock $ .57 $ (.30) $ .60 $(1.41) ===== ====== ===== ====== FULLY DILUTED EARNINGS PER SHARE OF COMMON STOCK Shares of common stock Average shares outstanding 42.4 35.3 41.8 35.3 Assumed conversion of Series E Preferred Stock 3.0 - 3.0 - Dilutive effect of stock options .4 - .4 - ----- ------ ----- ------ 45.8 35.3 45.2 35.3 ===== ====== ===== ====== Net income (loss) $31.6 $(2.5) $40.8 $(33.9) Dividends on antidilutive preferred stock, net of tax benefit on dividends applicable to leveraged Series E Preferred Stock held by the ESOP 5.1 8.0 11.4 16.0 Additional ESOP funding required on conversion of leveraged Series E Preferred Stock, net of tax benefit 2.2 - 3.9 - ----- ------ ----- ------ Net income (loss) applicable $24.3 $(10.5) $25.5 $(49.9) ===== ====== ===== ====== Fully diluted earnings (loss) per share of common stock $ .53 $ (.30) $ .56 $(1.41) ===== ====== ===== ======
NOTE: Series G Preferred Stock was converted to common stock as the result of a redemption call in May 1994. In the three-month and six-month periods ended June 30, 1994, the assumed conversion of Series A, non-leveraged Series E, and Series G Preferred Stock were antidilutive. In the three-month and six-month periods ended June 30, 1993, the assumed conversions of Series A, Series E, and Series G Preferred Stock were antidilutive. -13- APPENDIX A INLAND MATERIALS DISTRIBUTION GROUP, INC. AND SUBSIDIARY COMPANIES (A wholly owned subsidiary of Inland Steel Industries, Inc.) CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) ================================================================================
Dollars in Millions ------------------------------------------ Three Months Ended Six Months Ended June 30 June 30 ------------------ ------------------ 1994 1993 1994 1993 ------ ------ -------- ------ NET SALES $548.1 $481.2 $1,086.6 $948.1 ------ ------ -------- ------ OPERATING COSTS AND EXPENSES Cost of goods sold 480.1 424.0 954.0 833.8 Selling, general and administrative expenses 38.5 37.0 76.3 73.9 Depreciation and amortization 5.3 5.1 10.7 10.3 ------ ------ -------- ------ Total 523.9 466.1 1,041.0 918.0 ------ ------ -------- ------ OPERATING PROFIT 24.2 15.1 45.6 30.1 General corporate expense 1.8 1.9 3.6 3.7 Interest expense, net of interest income .9 2.8 1.7 5.4 ------ ------ -------- ------ INCOME BEFORE INCOME TAXES 21.5 10.4 40.3 21.0 PROVISION FOR INCOME TAXES 10.5 2.9 16.5 5.8 ------ ------ -------- ------ NET INCOME $ 11.0 $ 7.5 $ 23.8 $ 15.2 ====== ====== ======== ======
See notes to consolidated financial statements A-1 INLAND MATERIALS DISTRIBUTION GROUP, INC. AND SUBSIDIARY COMPANIES (A wholly owned subsidiary of Inland Steel Industries, Inc.) CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
========================================================================================================== Dollars in Millions ------------------- Six Months Ended June 30 ------------------ 1994 1993 ------ ------ OPERATING ACTIVITIES Net income $ 23.8 $ 15.2 ------ ------ Adjustments to reconcile net income to net cash provided from (used for) operating activities: Depreciation and amortization 10.7 10.3 Deferred employee benefit cost (.4) 1.5 Deferred income taxes 4.9 (4.7) Change in: Receivables (46.4) (39.6) Inventories (28.6) (24.1) Accounts payable 42.6 (11.1) Payables to related companies 7.4 8.2 Accrued liabilities (1.1) (.3) ------ ------ Net adjustments (10.9) (59.8) ------ ------ Net cash provided from (used for) operating activities 12.9 (44.6) ------ ------ INVESTING ACTIVITIES Capital expenditures (6.2) (3.0) Proceeds from sales of assets .3 .8 ------ ------ Net cash used for investing activities (5.9) (2.2) ------ ------ FINANCING ACTIVITIES Long-term debt retired (.6) (1.0) Change in notes receivable from/payable to related companies (35.9) 50.2 ------ ------ Net cash provided from (used for) financing activities (36.5) 49.2 ------ ------ Net increase (decrease) in cash and cash equivalents (29.5) 2.4 Cash and cash equivalents - beginning of year 29.5 - ------ ------ Cash and cash equivalents - end of period $ - $ 2.4 ====== ====== SUPPLEMENTAL DISCLOSURES Cash paid during the period for: Interest (net of amount capitalized) $ 1.7 $ 5.4 Income taxes, net 9.9 7.7
See notes to consolidated financial statements A-2
INLAND MATERIALS DISTRIBUTION GROUP, INC. AND SUBSIDIARY COMPANIES (A wholly owned subsidiary of Inland Steel Industries, Inc.) CONSOLIDATED BALANCE SHEET ================================================================================================== Dollars in Millions ---------------------------------------- ASSETS June 30, 1994 December 31, 1993 - - ------ ------------------- ----------------- (unaudited) CURRENT ASSETS Cash and cash equivalents $ - $ 29.5 Receivables 242.4 196.0 Inventories - principally at LIFO 307.5 278.9 Notes receivable from related companies 6.3 - Deferred income taxes 13.8 11.8 ------ ------ Total current assets 570.0 516.2 PROPERTY, PLANT AND EQUIPMENT Valued on basis of cost $458.7 $455.2 Less accumulated depreciation 205.6 253.1 198.0 257.2 ------ ------ DEFERRED INCOME TAXES 21.6 28.5 EXCESS OF COST OVER NET ASSETS ACQUIRED 25.7 26.4 ------ ------ Total Assets $870.4 $828.3 ====== ====== LIABILITIES AND STOCKHOLDER'S EQUITY - - ------------------------------------ CURRENT LIABILITIES Accounts payable $119.8 $ 77.2 Payables to related companies Notes - 29.6 Other 16.4 9.0 Accrued liabilities 27.5 28.6 Long-term debt due within one year 5.0 5.0 ------ ------ Total current liabilities 168.7 149.4 LONG-TERM DEBT 27.6 28.2 DEFERRED EMPLOYEE BENEFITS AND OTHER 123.6 124.0 ------ ------ Total liabilities 319.9 301.6 STOCKHOLDER'S EQUITY 550.5 526.7 ------ ------ Total Liabilities and Stockholder's Equity $870.4 $828.3 ====== ======
See notes to consolidated financial statements A-3 INLAND MATERIALS DISTRIBUTION GROUP, INC. AND SUBSIDIARY COMPANIES (A wholly owned subsidiary of Inland Steel Industries, Inc.) 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 June 30, 1994 and for the three-month and six-month periods ended June 30, 1994 and 1993 are unaudited, but in the opinion of management include all 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 Appendix A of Inland Steel Industries, Inc. Annual Report on Form 10-K for the year ended December 31, 1993. NOTE 2/RELATED PARTY TRANSACTIONS The Company has agreed to procedures established by Inland Steel Industries, Inc. ("Industries") for charging Industries' administrative expenses to the operating companies owned by it. Pursuant to these procedures, the Company was charged $3.6 million and $3.7 million by Industries for the first six months of 1994 and 1993, respectively, for management, financial and legal services provided to the Company. Procedures also have been established to charge interest on all intercompany loans within the Industries group of companies. Such loans currently bear interest at the prime rate. The Company's net intercompany interest expense for the first six months of 1994 totaled $.3 million as compared to $3.9 million for the first six months of 1993. The Company sells to and purchases products from other companies within the Industries group of companies. Such transactions are made at prevailing market prices. These transactions are summarized as follows: Dollars in Millions ---------------------------- Three Months Six Months Ended June 30 Ended June 30 ------------- ------------- 1994 1993 1994 1993 ------ ----- ------ ----- Net Product Sales $ 2.9 $ 2.9 $ 5.5 $ 5.6 Net Product Purchases 54.5 49.4 107.3 93.9 A-4 -----END PRIVACY-ENHANCED MESSAGE-----