-----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, LyLnKnJJ03dfpMpKx3RRMWhuprdcsqKqcTYAIfYdsBsL3E7oS2GYKAnmj+FhN5Lh Oblwy5hweGGO3nevnujpWQ== 0000950131-94-000621.txt : 19940520 0000950131-94-000621.hdr.sgml : 19940520 ACCESSION NUMBER: 0000950131-94-000621 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940512 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: 94527510 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 FIRST 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 March 31, 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: 41,239,276 shares of the Company's Common Stock ($1.00 par value) were outstanding as of May 9, 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 March 31 ------------------------- 1994 1993 --------- -------- NET SALES $1,075.7 $941.5 -------- ------ OPERATING COSTS AND EXPENSES Cost of goods sold 957.1 883.4 Selling, general and administrative expenses 48.7 47.7 Depreciation 33.7 31.8 -------- ------ Total 1,039.5 962.9 -------- ------ OPERATING PROFIT (LOSS) 36.2 (21.4) -------- ------ General corporate expense, net of income items 3.3 6.7 Interest and other expense on debt 18.3 19.4 -------- ------ INCOME (LOSS) BEFORE INCOME TAXES 14.6 (47.5) PROVISION FOR INCOME TAXES 5.4 16.1Cr. -------- ------ NET INCOME (LOSS) $ 9.2 $(31.4) ======== ====== EARNINGS (LOSS) PER SHARE OF COMMON STOCK $ .03 $(1.12) ======== ======
See notes to consolidated financial statements -1- INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) ================================================================================
Dollars in Millions ------------------- Three Months Ended March 31 -------------------- 1994 1993 -------- -------- OPERATING ACTIVITIES Net income (loss) $ 9.2 $(31.4) ------- ------ Adjustments to reconcile net income (loss) to net cash provided from (used for) operating activities: Depreciation 33.8 31.9 Deferred employee benefit cost 11.0 12.2 Deferred income taxes 3.7 (16.8) Change in: Receivables (39.6) (61.6) Inventories (6.2) 28.0 Accounts payable (6.4) 9.2 Accrued salaries and wages (4.2) (5.4) Other accrued liabilities 15.5 16.9 Other deferred items 13.4 8.6 ------- ------ Net adjustments 21.0 23.0 ------- ------ Net cash provided from (used for) operating activities 30.2 (8.4) ------- ------ INVESTING ACTIVITIES Capital expenditures (94.7) (9.1) Investments in and advances to joint ventures, net 4.7 (31.4) Proceeds from sales of assets .3 1.4 ------- ------ Net cash used for investing activities (89.7) (39.1) ------- ------ FINANCING ACTIVITIES Long-term debt retired (80.0) (9.8) Dividends paid (6.2) (6.2) Acquisition of treasury stock (1.2) (1.7) ------- ------ Net cash used for financing activities (87.4) (17.7) ------- ------ Net decrease in cash and cash equivalents (146.9) (65.2) Cash and cash equivalents - beginning of year 250.5 137.7 ------- ------ Cash and cash equivalents - end of period $ 103.6 $ 72.5 ======= ====== SUPPLEMENTAL DISCLOSURES Cash paid during the period for: Interest (net of amount capitalized) $ 7.5 $ 9.8 Income taxes, net .4 - 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 --------------------------------------------- March 31, 1994 December 31, 1993 ------------------- ------------------ ASSETS (unaudited) - - ------ CURRENT ASSETS Cash and cash equivalents $ 103.6 $ 250.5 Receivables 466.9 427.3 Inventories - principally at LIFO In process and finished products $ 348.6 $ 331.9 Raw materials and supplies 34.5 383.1 45.0 376.9 -------- -------- Deferred income taxes 44.2 44.2 -------- ------- Total current assets 997.8 1,098.9 INVESTMENTS AND ADVANCES 210.2 221.0 PROPERTY, PLANT AND EQUIPMENT Valued on basis of cost 4,240.0 4,083.7 Less: Reserve for depreciation, amortization and depletion 2,500.6 2,467.6 Allowance for terminated facilities 108.4 1,631.0 108.4 1,507.7 -------- -------- DEFERRED INCOME TAXES 424.7 428.4 INTANGIBLE PENSION ASSET 122.1 122.1 OTHER ASSETS 57.7 57.7 -------- -------- Total Assets $3,443.5 $3,435.8 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - - ------------------------------------ CURRENT LIABILITIES Accounts payable $ 294.5 $ 300.9 Accrued liabilities 214.1 202.8 Long-term debt due within one year 80.6 98.8 -------- -------- Total current liabilities 589.2 602.5 LONG-TERM DEBT 778.6 777.1 DEFERRED EMPLOYEE BENEFITS 1,382.1 1,371.1 OTHER CREDITS 60.7 61.7 -------- -------- Total liabilities 2,810.6 2,812.4 REDEEMABLE PREFERRED STOCK 185.0 185.0 COMMON STOCK REPURCHASE COMMITMENT 40.0 40.8 STOCKHOLDERS' EQUITY (Schedule A) 407.9 397.6 -------- -------- Total Liabilities, Temporary Equity, and Stockholders' Equity $3,443.5 $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 March 31, 1994 and for the three-month periods ended March 31, 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/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 $44 million on March 31, 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 First Quarter 1994 to First Quarter 1993 - - ------------------------------------------------------------------------------ The Company reported a consolidated net income of $9.2 million in the 1994 first quarter, compared with a consolidated net loss of $31.4 million in the year-earlier period. A $50.3 million improvement in operating results at the Company's Integrated Steel segment was the principal factor for the improvement. Other contributing factors were a $6.4 million increase in operating profit at the Steel Service Center segment and lower general corporate expense, net of income items. Consolidated net sales increased 14 percent in the 1994 quarter to $1,075.7 million from $941.5 million in the year-ago quarter as a result of higher volume and improved average selling price at both of the Company's business segments. The Integrated Steel segment's net sales improved 13.5 percent in the 1994 quarter to $591 million, due to a 9.8 percent increase in average selling price and a 3.7 percent increase in volume. First quarter 1994 operating profit of $13.6 million represented a significant improvement from the $36.7 million operating loss reported in the 1993 quarter. The principal reason for the improvement was the increase in average selling price per ton. Operating cost per ton was held relatively constant despite being negatively impacted by the severe weather in January and underperformance in plate operations. The Steel Service Center segment reported net sales of $538.6 million in the first quarter of 1994, compared with $466.9 million in the corresponding 1993 quarter. The increase was due to a 12.9 percent improvement in volume and a 2.5 percent rise in average selling price per ton. Operating profit in the 1994 first quarter increased to $21.4 million from $15.0 million in the comparable 1993 period, primarily due to increases both in volume and in average selling price per ton. Liquidity and Financing - - ----------------------- The Company's cash and cash equivalents were $104 million at March 31, 1994, down from $251 million at year-end 1993. There was no short-term borrowing at either date. During the first quarter of 1994, the Company, through a subsidiary, redeemed all $75 million of outstanding Inland Steel Company 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 such purchase, the Company recorded $63 million of debt. In March, Inland Steel Company called approximately $47.5 million of caster- related debt for prepayment on May 6, which debt was prepaid on such date. Cash flow during the first quarter from operating activities was a positive $30 million compared with an outflow of $8 million in the year-earlier quarter. -5- Subsequent Event - - ---------------- In April, the Company called for redemption on May 31, 1994 all outstanding shares of Series G $4.625 Cumulative Convertible Exchangeable Preferred Stock. The underwritten call will increase the number of shares of common stock outstanding by 2.7 million shares and will reduce preferred dividends by $7 million on an annual basis. In addition, in early May, Inland Steel Company called all remaining debt related to its continuous caster facility (approximately $48 million) for prepayment on November 7, 1994. -6- PART II. OTHER INFORMATION --------------------------- 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 March 31, 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.) -7- 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 March 31, 1994. -8- 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 /s/ Olivia M. Thompson ------------------------------- Olivia M. Thompson Controller and Chief Accounting Officer Date: May 12, 1994 -9-
Part I -- Schedule A -------------------- INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES SUMMARY OF STOCKHOLDERS' EQUITY - - ------------------------------------------------------------------------------------------------------------------------------------ - - ------------------------------------------------------------------------------------------------------------------------------------ Dollars in Millions ----------------------------------------------------------------------------------- March 31, 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 March 31, 1994 and December 31, 1993, respectively $ .1 $ .1 Series E preferred stock ($1 par value) - 3,097,377 shares and 3,114,568 shares issued and outstanding as of March 31, 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 March 31, 1994 and December 31, 1993 1.5 1.5 Common stock ($1 par value) - 47,854,208 shares issued as of March 31, 1994 and December 31, 1993 47.9 47.9 Capital in excess of par value 1,109.3 1,113.7 Accumulated deficit Balance beginning of year $(371.9) $(302.3) Net income (loss) 9.2 (37.6) Dividends Series A preferred stock - $.60 per share in 1994 and $2.40 per share in 1993 (.1) (.2) Series E preferred stock - $3.523 per share in 1993 - (11.0) Income tax benefit - Series E dividend - 3.6 Series F preferred stock - $23.70 per share in 1994 and $94.80 per share in 1993 (4.4) (17.5) Series G preferred stock - $1.15625 per share in 1994 and $4.625 per share in 1993 (1.7) (368.9) (6.9) (371.9) ------- ------- Unearned compensation related to ESOP (109.0) (112.2) Common stock repurchase commitment (40.0) (40.8) Investment valuation allowance (4.5) (5.2) Unearned restricted stock award compensation (1.9) (2.1) Treasury stock, at cost - 6,625,414 shares and 6,767,139 shares as of March 31, 1994 and December 31, 1993, respectively (229.7) (236.5) -------- -------- Total Stockholders' Equity $ 407.9 $ 397.6 ======== ========
-10- Part I -- Schedule B -------------------- INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES SUMMARY FINANCIAL INFORMATION FOR BUSINESS SEGMENTS (UNAUDITED) - - -------------------------------------------------------------------------------- - - --------------------------------------------------------------------------------
Dollars in Millions --------------------- Three Months Ended March 31 --------------------- 1994 1993 ---- ---- NET SALES - - --------- Integrated Steel Operations $590.9 $520.7 Steel Service Center Operations 538.6 466.9 Eliminations and adjustments (53.8) (46.1) ------ ------ Total Net Sales $1,075.7 $941.5 ======== ======
OPERATING PROFIT (LOSS) - - ----------------------- Integrated Steel Operations $13.6 $(36.7) Steel Service Center Operations 21.4 15.0 Eliminations and adjustments 1.2 .3 ----- ------ Total Operating Profit (Loss) $36.2 $(21.4) ===== ======
-11- Exhibit 11 ---------- INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES Statement of Earnings Per Share of Common Stock - - -------------------------------------------------------------------------------- - - --------------------------------------------------------------------------------
Dollars and Shares in Millions (except per share data) ------------------------ Three Months Ended March 31 ------------------------ 1994 1993 ---- ---- PRIMARY EARNINGS PER SHARE OF COMMON STOCK Shares of common stock Average shares outstanding 41.2 35.2 Dilutive effect of stock options .4 - ----- ------ 41.6 35.2 ===== ====== Net income (loss) $ 9.2 $(31.4) Dividends on preferred stock, net of tax benefit on dividends applicable to leveraged Series E Preferred Stock held by the ESOP 8.0 8.0 ----- ------ Net income (loss) applicable $ 1.2 $(39.4) ===== ====== Primary earnings (loss) per share of common stock $ .03 $(1.12) ===== ====== FULLY DILUTED EARNINGS PER SHARE OF COMMON STOCK Shares of common stock Average shares outstanding 41.2 35.2 Assumed conversion of Series E Preferred Stock 3.0 - Dilutive effect of stock options .4 - ----- ------ 44.6 35.2 ===== ====== Net income (loss) $ 9.2 $(31.4) Dividends on antidilutive preferred stock, net of tax benefit on dividends applicable to leveraged Series E Preferred Stock held by the ESOP 6.3 8.0 Additional ESOP funding required on conversion of leveraged Series E Preferred Stock, net of tax benefit 1.7 - ----- ------ Net income (loss) applicable $ 1.2 $(39.4) ===== ====== Fully diluted earnings (loss) per share of common stock $ .03 $(1.12) ===== ======
NOTE: In the three months ended March 31, 1994, the assumed conversions of Series A, non-leveraged Series E, and Series G Preferred Stock were antidilutive. In the three months ended March 31, 1993, the assumed conversions of Series A, Series E, and Series G Preferred Stock were antidilutive. -12- 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 March 31 ------------------- 1994 1993 ------------------- NET SALES $538.6 $466.9 ------ ------ OPERATING COSTS AND EXPENSES Cost of goods sold 473.9 409.8 Selling, general and administrative expenses 38.3 36.9 Depreciation 5.0 5.2 ------ ------ Total 517.2 451.9 ------ ------ OPERATING PROFIT 21.4 15.0 General corporate expense 1.8 1.8 Interest expense, net of interest income .8 2.6 ------ ------ INCOME BEFORE INCOME TAXES 18.8 10.6 PROVISION FOR INCOME TAXES 6.0 2.9 ------ ------ NET INCOME $ 12.8 $ 7.7 ====== ======
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 ------------------- Three Months Ended March 31 ------------------ 1994 1993 -------- -------- OPERATING ACTIVITIES Net income $ 12.8 $ 7.7 ------ ------ Adjustments to reconcile net income to net cash used for operating activities: Depreciation and amortization 5.0 5.2 Deferred employee benefit cost (.8) 1.1 Deferred income taxes (.2) (2.4) Change in: Receivables (48.6) (37.6) Inventories (14.3) (6.0) Accounts payable 35.0 (3.1) Payables to related companies 8.9 12.6 Accrued liabilities (4.6) (4.0) ------ ------ Net adjustments (19.6) (34.2) ------ ------ Net cash used for operating activities (6.8) (26.5) ------ ------ INVESTING ACTIVITIES Capital expenditures (2.3) (1.5) Proceeds from sales of assets .3 .4 ------ ------ Net cash used for investing activities (2.0) (1.1) ------ ------ FINANCING ACTIVITIES Long-term debt retired (.4) (.8) Change in notes payable to related companies (2.0) 28.7 ------ ------ Net cash provided from (used for) financing activities (2.4) 27.9 ------ ------ Net increase (decrease) in cash and cash equivalents (11.2) .3 Cash and cash equivalents - beginning of year 29.5 - ------ ------ Cash and cash equivalents - end of period $ 18.3 $ .3 ====== ====== SUPPLEMENTAL DISCLOSURES Cash paid during the period for: Interest (net of amount capitalized) $ 1.1 $ 1.3
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 March 31, 1994 December 31, 1993 - - ------ ---------------- ----------------- (unaudited) CURRENT ASSETS Cash and cash equivalents $ 18.3 $ 29.5 Receivables 244.7 196.0 Inventories - principally at LIFO 293.2 278.9 Deferred income taxes 11.9 11.8 ------ ------- Total current assets 568.1 516.2 PROPERTY, PLANT AND EQUIPMENT Valued on basis of cost $456.5 $455.2 Less accumulated depreciation 202.0 254.5 198.0 257.2 ------ ------ DEFERRED INCOME TAXES 28.6 28.5 EXCESS OF COST OVER NET ASSETS ACQUIRED 26.0 26.4 ------ ------- Total Assets $877.2 $828.3 ====== ======= LIABILITIES AND STOCKHOLDER'S EQUITY - - ------------------------------------ CURRENT LIABILITIES Accounts payable $112.2 $ 77.2 Payables to related companies Notes 27.6 29.6 Other 17.9 9.0 Accrued liabilities 24.0 28.6 Long-term debt due within one year 5.0 5.0 ------ ------ Total current liabilities 186.7 149.4 LONG-TERM DEBT 27.8 28.2 DEFERRED EMPLOYEE BENEFITS AND OTHER 123.2 124.0 ------ ------ Total liabilities 337.7 301.6 STOCKHOLDER'S EQUITY 539.5 526.7 ------ ------ Total Liabilities and Stockholder's Equity $877.2 $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 March 31, 1994 and for the three-month periods ended March 31, 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 $1.8 million by Industries for each of the first quarters of 1994 and 1993, 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 three months of 1994 totaled $.1 million as compared to $1.8 million for the first quarter 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 Ended March 31 --------------------- 1994 1993 ------ ------ Net Product Sales $ 2.6 $ 2.7 Net Product Purchases 52.8 44.5
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