-----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, Vu+F8JFcgXub5aD7j4T6+Ia5KeXwnWf9WjUVrutQvcHVcIj6sju6H15+g94WiWwv mBB3THljO9/ZecBSk1tnXA== 0000950131-97-003185.txt : 19970508 0000950131-97-003185.hdr.sgml : 19970508 ACCESSION NUMBER: 0000950131-97-003185 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19970507 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INLAND STEEL INDUSTRIES 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: DEFA14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-09117 FILM NUMBER: 97597483 BUSINESS ADDRESS: STREET 1: 30 W MONROE ST CITY: CHICAGO STATE: IL ZIP: 60603 BUSINESS PHONE: 3123460300 MAIL ADDRESS: STREET 1: 30 WEST MONROE STREET STREET 2: 16TH FLOOR CITY: CHICAGO STATE: IL ZIP: 60603 DEFA14A 1 ADDITIONAL INFORMATION-PRESENTATION SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2)) [_] Definitive Proxy Statement [X] Definitive Additional Materials [_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 INLAND STEEL INDUSTRIES INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [x] No fee required [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------- (5) Total fee paid: ------------------------------------------------------------------------- [_] Fee paid previously with preliminary materials. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------- (3) Filing Party: ------------------------------------------------------------------------- (4) Date Filed: ------------------------------------------------------------------------- Notes: Value Creation Through Operational Excellence April 1997 Inland Steel Industries Strategic Focus . Improve operational performance at Inland Steel Company . Profitably grow Ryerson-Tull Financial Benefits of Recapitalization . Reduce interest costs ISI Retire debt | 87% . Increase financial ------------------ Ownership flexibility | | ISC RT . Rebalance ISI, ISC & RT | | capital structures Retire debt New debt . Provide RT with new 13% Public source of capital Ownership Strategic Benefits of Recapitalization . Completes accelerated deleveraging program begun in 1993 X $700 million reduction in fixed obligations X Annual savings of $70 million from lower fixed charges . Facilitates growth of Ryerson Tull X Two acquisitions since public offering Strategic Benefits of Recapitalization . IAD's 87% economic interest in RT preserves tax consolidation (along with voting power over 80%) X over $800 million in NOLs plus AMT credit carryforwards . Maintenance of IAD's voting power over 80% preserves tax-free spin-off option. An economic interest of 50% for IAD maintains 80% voting power due to each IAD share having 4 votes. Our Board of Directors unanimously recommends a vote "AGAINST" the Greenway Proposal . Current structure provides financial flexibility . Significant tax savings . Overall valuation could suffer . Operating performance drives long-term stockholder value A spin-off is NOT in IAD's stockholders' best interests AT THIS TIME! Inland Steel Industries Financial Review INLAND STEEL INDUSTRIES SALES [BAR GRAPH APPEARS HERE] Dollars in Millions 1996 1997 ------------------------------------ ---- Q1 Q2 Q3 Q4 Q1 $1,181 $1,163 $1,118 $1,122 $1,207 INLAND STEEL INDUSTRIES NET INCOME [BAR GRAPH APPEARS HERE] Dollars in Millions 1996 1997 ------------------------------------ ---- Q1 Q2 Q3 Q4 Q1 $17.2 $19.2* $8.5* $0.8* $31.2 *Quarters include extraordinary and non-recurring items. INLAND STEEL INDUSTRIES EARNINGS* BEFORE INTEREST, TAXES, DEPRECIATION & AMORTIZATION [BAR GRAPH APPEARS HERE] Dollars in Millions 1996 1997 ------------------------------------ ---- Q1 Q2 Q3 Q4 Q1 $85 $111 $88 $57 $111 *Before minority interest and extraordinary items. Inland Steel Industries Operating Profit [BAR GRAPH APPEARS HERE] Dollars in Millions
1996 1997 ------------------------------ ----- Q1 Q2 Q3 Q4 Q1 $49.2 $43.2 $50.8 $48.8* $72.8
- -------- *Adjusted to exclude $26.3 million provision for workforce reduction. Inland Steel and Ryerson Tull Operating Profit [BAR GRAPH APPEARS HERE] Dollars in Millions
Inland Steel Ryerson Tull 1996 Q1 $12.6 $36.6 Q2 $11.3 $32.7 Q3 $24.9 $26.3 Q4 $(0.8)* $24.5 1997 Q1 $38.3 $35.0
- -------- *Reflects $26.3 million provision for workforce reduction. Inland Steel and Ryerson Tull Operating Profit to Operating Assets [BAR GRAPH APPEARS HERE]
Inland Steel Ryerson Tull 1996 Q1 2.6% 17.7% Q2 2.3% 15.6% Q3 5.1% 12.5% Q4 5.2% 11.7% 1997 Q1 7.7% 15.9%
Inland Steel Industries Balance Sheet (Dollars in Millions)
3/31/97 3/31/96 % Change ------- ------- -------- Net Liquidity $ 81.7 $246.9 -66.9% Long-Term Debt (Including Debt Due Within 1 Year) $786.6 $885.6 -11.2% Stockholders Equity $819.6 $765.8 +7.0% Long-Term Debt/ Total Capitalization 46.6% 52.6% Weighted Average Interest Rate on Debt 8.4% 9.7%
Inland Steel Industries Debt to Total Capitalization -- Year End [BAR GRAPH APPEARS HERE]
1992 1993 1994 1995 1996 [ ] Long Term Debt 0.63 0.55 0.49 0.5 0.47 [ ] Redeemable Preferred 0.14 0.14 0.13
On and off balance sheet obligations reduced by $700 million resulting in lower annual fixed charges by more than $70 million. Full effect to be seen in 1997. Looking Ahead Primary Strategies - ------------------------------------------------------------------------------- Inland Steel "Operational Company Excellence" - ------------------------------------------------------------------------------- Ryerson "Profitable Tull Growth" - ------------------------------------------------------------------------------- Inland Steel Company Focus on Operational Excellence . New management team . Redefinition of primary strategy Fundamentals of Operational Excellence . CUSTOMER PERFORMANCE: Consistent quality and delivery by matching manufacturing capabilities with products . COST: Best total cost for products offered . CAPABILITIES: Constant improvement in quality throughput . CONTROL: Processes are in a state of control, driven by effective data systems Safety for Inland Steel Co. Total-Injury Rate: Since 1994, our rate has improved by 25% Lost-Workday-Case Rate: Since 1994 our rate has improved by 31% Lost-Workday (Severity) Rate: Since 1994 our rate has improved by 52% Customer Performance Costs Opportunities Manufacturing Prime Yield Capability Inland Steel Company Customer Performance -- Revenue Enhancement . Revenues/ton back above $480 . Market share at strategic OEMs is back . 300,000 ton product mix shift successfully completed in 1996 Plates Cold Rolled & Coated Products . More revenue benefits to follow from improved prime yields and enhanced finished product capabilities Inland Steel Company OFS . State-of-the-art information system . Completed on-schedule and under budget X 3 year installation X $36.8 million capital investment . "Real-time" access to data vs. "Batch" Impact of Higher Prime Yield Delivery - - arrow pointing upward Performance Manufacturing - - arrow pointing downward Cost Price - - arrow pointing upward Realizations Yield: The Historical Perspective Raw Steel to Prime Yield [BAR GRAPH APPEARS HERE] 1993 1994 1995 1Q96 2Q96 3Q96 4Q96 1Q97 77.2% 78.6% 78.7% 78.7% 78.0% 80.8% 80.9% 82.6%
Operating Cost Reduce operating cost by $10 per ton each year for the next three years ISC Cost Imperatives . Reduce raw material and energy costs . Eliminate purchased steel . Reduce other purchased-material costs . Reduce repair-and-maintenance costs ISC Cost Imperatives . Reduce outside storage and processing costs . Improve yield . Reduce workforce INLAND STEEL COMPANY Workforce Trends vs. Shipments [BAR GRAPH APPEARS HERE]
1991 1992 1993 1994 1995 1996 1997 ---- ---- ---- ---- ---- ---- ---- Number of Employees 14,711 13,730 12,590 11,943 11,539 10,764 10,211 Shipments (Tons in 000s) 4,171 4,251 4,835 5,170 5,117 5,096 5,040*
*Annualized Manufacturing Capabilities Purchased Semi-Finished Steel Shipments (Tons in 000s) (Tons in 000s) [BAR GRAPH APPEARS HERE]
1991 1992 1993 1994 1995 1996 ---- ---- ---- ---- ---- ---- Purchased 353 753 492 149 Semi-Finished Shipments 4,171 4,251 4,835 5,170 5,117 5,096
Customer Performance Costs Prime Yield Manufacturing Capability Ryerson Tull, Inc. Focus on Profitable Growth . Leverage competitive market position . Grow internally with profitable customer groups and externally through acquisitions . Satisfy and retain customers better than competition . Exploit customer and vendor system economics . Exercise disciplined cost management Ryerson Tull, Inc. Service Center Industry - Undergoing Tremendous Change Historic Future Direction -------- ---------------- Fragmented -- Rapid consolidation Low barriers to entry -- Size has value: buying power; critical mass -- Sophisticated information technology impacts distributor and customer costs In-house fabrication -- Outsourcing Commodity-based purchasing -- Value-added services Multiple local relationships -- Vendor consolidation/national relationships Ryerson Tull, Inc. External Growth - Acquisitions . Highly fragmented industry X 750 - 1,000 participants in U.S. and Canada X Most have few locations and limited product lines X Approximately one-half of companies have sales under $10 million . Consolidation underway Ryerson Tull, Inc. Acquisition Strategy/Criteria . Well run or "fixable" . Strategic fit . Opportunities for expense/asset consolidation . Financial evaluation on the basis of cash flow . Additive to earnings Ryerson Tull, Inc. Internal Growth Results [BAR GRAPH APPEARS HERE] Market Share 7.9% 8.2% 8.3% 8.4% 8.4% 9.1% 1991 1992 1993 1994 1995 1996 Ryerson Tull, Inc. Results . . . Operating Profit/Operating Assets [BAR GRAPH APPEARS HERE] 2.0% 3.5% 7.3% 12.1% 17.6% 14.3% 15.9% 1991 1992 1993 1994 1995 1996 1Q97 Ryerson Tull, Inc. Self-Reinforcing Growth - Economies of Scale ------ Grow Faster ----- Than The Competition Gain Market Costs Decline Share Faster Than Profitably The Competition Ability to Acquire And Retain Customers More ----- Profitably and Aggressively ----- Than Competitors Inland International . IMF Trading Company ------------------- X Hong Kong joint venture owned on a 50/50 basis with an affiliate of MacSteel of South Africa. . Shanghai Ryerson Processing and Distribution Company ---------------------------------------------------- X Shanghai joint venture owned 51% by Baoshan Iron and Steel Corporation and 49% by Inland. . TATA-Ryerson Processing and Distribution Company ------------------------------------------------ X 50/50 joint venture in India with TATA Iron and Steel Company (TISCO). Initial sites are Jamshedpur and Pune. Inland Steel Industries 1997 Outlook . Good demand for products and services in both businesses. . ISC implementing Operational Excellence with a sense of urgency. . RT profitably growing from existing assets and through acquisitions. . More optimistic today than a year ago. -----END PRIVACY-ENHANCED MESSAGE-----