-----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, DNPx8+mJYZGR6DrSPgc9r5ms7Mz5IUt8a1op93CcoikpyMtJLDWYh777SMDlk3q9 yqqxkyogvQIUh5LfZm44Ow== 0000950131-98-004856.txt : 19980817 0000950131-98-004856.hdr.sgml : 19980817 ACCESSION NUMBER: 0000950131-98-004856 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 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: 10-Q SEC ACT: SEC FILE NUMBER: 001-09117 FILM NUMBER: 98689130 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 10-Q 1 FORM 10-Q Second Quarter - 1998 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, 1998 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: 49,231,047 shares of the Company's Common Stock ($1.00 par value per share) were outstanding as of August 7, 1998. 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 ------------------ -------------------- 1998 1997 1998 1997 ------ ------ -------- -------- NET SALES $724.9 $733.6 $1,465.8 $1,397.9 ------ ------ -------- -------- OPERATING COSTS AND EXPENSES Cost of goods sold 631.0 645.0 1,278.6 1,226.4 Selling, general and administrative expenses 49.3 47.4 97.7 91.7 Depreciation 7.5 6.4 14.8 12.4 Gain from sale of assets - (6.9) - (8.9) ------ ------ -------- -------- Total 687.8 691.9 1,391.1 1,321.6 ------ ------ -------- -------- OPERATING PROFIT 37.1 41.7 74.7 76.3 General corporate income, net of expense items 1.6 3.9 4.0 11.9 Interest and other expense on debt (9.6) (9.9) (19.2) (20.7) ------ ------ -------- -------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 29.1 35.7 59.5 67.5 PROVISION FOR INCOME TAXES 11.4 14.0 23.2 26.1 ------ ------ -------- -------- INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST 17.7 21.7 36.3 41.4 MINORITY INTEREST IN RYERSON TULL, INC. 2.2 2.6 4.3 4.8 ------ ------ -------- -------- INCOME FROM CONTINUING OPERATIONS 15.5 19.1 32.0 36.6 INCOME FROM DISCONTINUED OPERATIONS OF INLAND STEEL COMPANY (Net of income taxes of $7.3, $13.8, $10.5 and $23.4) 12.9 21.0 18.2 34.7 ------ ------ -------- -------- NET INCOME $ 28.4 $ 40.1 $ 50.2 $ 71.3 ====== ====== ======== ======== EARNINGS PER SHARE OF COMMON STOCK: Basic: From continuing operations $ .27 $ .34 $ .56 $ .65 Discontinued operations - Inland Steel Company .26 .43 .37 .71 ------ ------ -------- -------- Net income $ .53 $ .77 $ .93 $ 1.36 ====== ====== ======== ======== Diluted: From continuing operations $ .26 $ .33 $ .53 $ .62 Discontinued operations - Inland Steel Company .25 .40 .35 .67 ------ ------ -------- -------- Net income $ .51 $ .73 $ .88 $ 1.29 ====== ====== ======== ========
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 ---------------- 1998 1997 ------ ------- OPERATING ACTIVITIES Net income $ 50.2 $ 71.3 ------ ------- Adjustments to reconcile net income to net cash provided from operating activities of continuing operations: Loss (income) from discontinued operations (18.2) (34.7) Depreciation 15.0 12.7 Deferred employee benefit cost 1.5 2.9 Deferred income taxes 1.5 (.4) Gain from sale of assets - (8.9) Change in: Receivables (34.1) (47.5) Inventories (57.4) (31.7) Accounts payable 2.4 25.6 Accrued salaries and wages (3.9) (9.8) Other accrued liabilities (4.6) 3.9 Other deferred items 11.8 10.2 ------ ------- Net adjustments (86.0) (77.7) ------ ------- Net cash provided from (used for) operating activities of continuing operations (35.8) (6.4) ------ ------- INVESTING ACTIVITIES Acquisitions (Note 2) (7.7) (130.4) Capital expenditures (15.4) (16.1) Investments in and advances to joint ventures, net (2.4) (4.2) Proceeds from sale of assets .2 16.7 ------ ------- Net cash used for investing activities of continuing operations (25.3) (134.0) ------ ------- FINANCING ACTIVITIES Reduction of debt assumed in acquisitions - (22.6) Long-term debt retired (5.3) (5.4) Dividends paid (10.3) (10.4) Acquisition of treasury stock (6.0) (5.0) ------ ------- Net cash used for financing activities of continuing operations (21.6) (43.4) ------ ------- Cash provided by discontinued operations 36.5 112.9 ------ ------- Net decrease in cash and cash equivalents (46.2) (70.9) Cash and cash equivalents - beginning of year 97.0 238.0 ------ ------- Cash and cash equivalents - end of period $ 50.8 $ 167.1 ====== ======= SUPPLEMENTAL DISCLOSURES Cash paid during the period for: Interest (net of amount capitalized) $ 30.1 $ 32.1 Income taxes, net 32.2 22.7
See notes to consolidated financial statements - 2 - INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES Consolidated Balance Sheet
========================================================================================================= Dollars in Millions --------------------------------------- June 30, 1998 December 31, 1997 ----------------- ------------------- ASSETS (unaudited) - ------ CURRENT ASSETS Cash and cash equivalents $ 50.8 $ 97.0 Receivables 348.0 523.3 Inventories - principally at LIFO In process and finished products $480.0 $ 543.8 Raw materials and supplies 2.3 482.3 80.3 624.1 ------ -------- Deferred income taxes 5.6 30.7 -------- -------- Total current assets 886.7 1,275.1 INVESTMENTS AND ADVANCES 40.0 271.6 INVESTMENT IN INLAND STEEL COMPANY 492.3 - PROPERTY, PLANT AND EQUIPMENT Valued on basis of cost 595.1 4,649.7 Less: Reserve for depreciation, amortization and depletion 287.1 2,907.2 Allowance for terminated facilities - 308.0 100.7 1,641.8 ------ -------- EXCESS OF COST OVER NET ASSETS ACQUIRED 80.3 82.3 DEFERRED INCOME TAXES 36.2 231.4 PREPAID PENSION COSTS 15.8 77.4 OTHER ASSETS 15.9 66.9 -------- -------- Total Assets $1,875.2 $3,646.5 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES Accounts payable $ 172.2 $ 354.9 Accrued liabilities 47.3 197.3 Long-term debt due within one year 17.1 62.7 -------- -------- Total current liabilities 236.6 614.9 LONG-TERM DEBT 437.4 704.9 DEFERRED EMPLOYEE BENEFITS 160.2 1,275.6 OTHER CREDITS 7.1 65.4 -------- -------- Total liabilities 841.3 2,660.8 MINORITY INTEREST IN RYERSON TULL, INC. 62.4 57.5 COMMON STOCK REPURCHASE COMMITMENT 22.6 28.1 STOCKHOLDERS' EQUITY (Schedule A) 948.9 900.1 -------- -------- Total Liabilities, Minority Interest, Temporary Equity, and Stockholders' Equity $1,875.2 $3,646.5 ======== ========
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, 1998 and for the three-month and six-month periods ended June 30, 1998 and 1997 are unaudited, but in the opinion of management include all adjustments, consisting only 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 Current Report on Form 8-K filed July 20, 1998, for the year ended December 31, 1997. NOTE 2/ACQUISITIONS During the 1998 first quarter a subsidiary of the Company acquired Brockway Pressed Metals, Inc., a powder metallurgy company. NOTE 3/COMPREHENSIVE INCOME The Company adopted Financial Accounting Standards Board Statement No. 130, "Reporting Comprehensive Income," in the first quarter of 1998. Due to the immateriality of the one item covered by the Statement, the Company has elected, as allowed by the Statement, to not apply provisions of the Statement. NOTE 4/ISC/ISPAT TRANSACTION On July 16, 1998, Ispat International N.V. ("Ispat") acquired Inland Steel Company ("ISC"), the Company's wholly owned subsidiary that constituted the steel manufacturing and related operations segment of the Company's consolidated operations, pursuant to an agreement and plan of merger dated May 27, 1998, as amended as of July 16, 1998 (the "Merger Agreement"), among the Company, ISC, Ispat and Inland Merger Sub, Inc. (an Ispat subsidiary). The Merger Agreement provided for the merger of Merger Sub into ISC with ISC being the surviving company in the merger (the "ISC/Ispat Transaction"). As a result of the ISC/Ispat Transaction, ISC became a wholly owned subsidiary of Ispat. Pursuant to the merger, the Company received $1.1 billion in cash in exchange for the outstanding common stock and preferred stock of ISC and repayment of intercompany debt of ISC held by the Company. The Company intends to distribute a significant portion of the net proceeds from the sale to its stockholders through the announced Dutch Auction self-tender offer that is currently expected to be consummated in August 1998, as discussed in Management's Discussion and Analysis of Financial Condition and Results of Operations Subsequent Events below. The Company's primary business is currently metals distribution and processing, conducted through its majority owned subsidiary, Ryerson Tull, Inc. ("RT"). The Company currently intends to merge with RT. Accordingly, the results of operations of ISC have been segregated from the results of continuing operations and reported as a separate item on the statement of operations. The assets and liabilities of ISC at June 30, 1998 have been aggregated and reflected as a net noncurrent asset. ISC's revenues, including intercompany sales, were $619.9 million and $643.8 million for the quarters ended June 30, 1998 and 1997, respectively, and $1,226.0 million and $1,250.4 million for the first six months of each such year, respectively. The investment in ISC on the consolidated balance sheet at June 30, 1998 includes the net assets of discontinued operations of $245.0 million, and notes and other receivables of $247.3 million due from ISC. -4- INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES Notes to Consolidated Financial Statements (Unaudited) ================================================================================
NOTE 5/EARNINGS PER SHARE Dollars and Shares in Millions (except per share data) --------------------------------------- Three Months Ended Six Months Ended June 30 June 30 -------------------- ----------------- BASIC EARNINGS PER SHARE 1998 1997 1998 1997 --------- --------- -------- ------- Income from continuing operations $15.5 $19.1 $32.0 $36.6 Less preferred stock dividends 2.3 2.3 4.6 4.6 ----- ----- ----- ----- Income from continuing operations available to common stockholders 13.2 16.8 27.4 32.0 Discontinued operations 12.9 21.0 18.2 34.7 ----- ----- ----- ----- Net income available to common stockholders $26.1 $37.8 $45.6 $66.7 ===== ===== ===== ===== Average shares of common stock outstanding 48.9 48.9 49.0 48.9 ===== ===== ===== ===== Basic earnings per share From continuing operations $ .27 $ .34 $ .56 $ .65 Discontinued operations .26 .43 .37 .71 ----- ----- ----- ----- Net income $ .53 $ .77 $ .93 $1.36 ===== ===== ===== ===== DILUTED EARNINGS PER SHARE Income from continuing operations available to common stockholders $13.2 $16.8 $27.4 $32.0 Effect of dilutive securities Series A preferred stock - - - .1 Series E leveraged preferred stock 2.2 2.2 4.4 4.4 Additional ESOP funding required on conversion of Series E leveraged preferred stock, net of tax (2.0) (2.1) (4.1) (4.1) ----- ----- ----- ----- Income available to common stockholders and assumed conversions before discontinued operations 13.4 16.9 27.7 32.4 Discontinued operations 12.9 21.0 18.2 34.7 ----- ----- ----- ----- Net income available to common stockholders and assumed conversions $26.3 $37.9 $45.9 $67.1 ===== ===== ===== ===== Average shares of common stock outstanding 48.9 48.9 49.0 48.9 Assumed conversion of Series A preferred stock - .1 - .1 Series E leverage preferred stock 3.0 3.0 3.0 3.0 Dilutive effect of stock options .1 - .1 - ----- ----- ----- ----- Shares outstanding for diluted earnings per share calculation 52.0 52.0 52.1 52.0 ===== ===== ===== ===== Diluted earnings per share From continuing operations $ .26 $ .33 $ .53 $ .62 Discontinued operations .25 .40 .35 .67 ----- ----- ----- ----- Net income $ .51 $ .73 $ .88 $1.29 ===== ===== ===== =====
-5- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations On July 16, 1998, Ispat International N.V. ("Ispat") acquired Inland Steel Company ("ISC"), the Company's wholly owned subsidiary that constituted the steel manufacturing and related operations segment of the Company's consolidated operations, pursuant to an agreement and plan of merger dated May 27, 1998, as amended as of July 16, 1998 (the "Merger Agreement"), among the Company, ISC, Ispat and Inland Merger Sub, Inc. (an Ispat subsidiary). The Merger Agreement provided for the merger of Merger Sub into ISC with ISC being the surviving company in the merger (the "ISC/Ispat Transaction"). As a result of the ISC/Ispat Transaction, ISC became a wholly owned subsidiary of Ispat. Pursuant to the merger, the Company received $1.1 billion in cash in exchange for the outstanding common stock and preferred stock of ISC and repayment of intercompany debt of ISC held by the Company. The Company's primary business is currently metals distribution and processing, conducted through its majority owned subsidiary, Ryerson Tull, Inc. ("RT"), with which it currently intends to merge. Accordingly, the results of operations of ISC have been segregated from the results of continuing operations and reported as a separate item on the statement of operations. The assets and liabilities of ISC at June 30, 1998 have been aggregated and reflected as a net noncurrent asset. ISC's revenues, including intercompany sales, were $619.9 million and $643.8 million for the quarters ended June 30, 1998 and 1997, respectively, and $1,226.0 million and $1,250.4 million for the first six months of each such year, respectively. The investment in ISC on the consolidated balance sheet at June 30, 1998 includes the net assets of discontinued operations of $245.0 million, and notes and other receivables of $247.3 million due from ISC. Results of Operations - Comparison of Second Quarter 1998 to Second Quarter 1997 - -------------------------------------------------------------------------------- The Company reported consolidated net income of $28.4 million, $.53 per share, in the second quarter of 1998 compared with $40.1 million, $.77 per share, in the year-earlier period. Income from continuing operations in the current year quarter was $15.5 million, $.27 per share, compared with $19.1 million, $.34 per share, in the comparable year-earlier quarter. Included in the consolidated 1997 second quarter results was a pretax gain of $15.9 million, $9.0 million after tax or $.18 per share, associated with the sale of assets, of which $6.9 million pretax, $3.6 million after tax or $.07 per share, affected results of continuing operations. Excluding the gain, income from continuing operations remained unchanged from the previous year. Consolidated net sales from continuing operations declined 1 percent to $725 million in the 1998 second quarter from $734 million in the comparable 1997 quarter. Consolidated net sales primarily reflect the net sales of RT which decreased 2 percent to $715 million in the 1998 quarter. A 4 percent decline in average selling price at RT was only partially offset by a 2 percent increase in volume. Operating results at Magnetics International accounted for a majority of the difference between consolidated results and the results of RT. At RT, lower average selling prices continued to squeeze gross margins resulting in them slipping $2 per ton. Offsetting the unfavorable impact of lower margins was a $4 per ton decline in operating expenses, including depreciation and amortization. These factors resulted in an increase in operating profit, excluding the $6.9 million asset sale gain in 1997, of $2.3 million. The $8.1 million quarter to comparable quarter decline in income from discontinued operations at ISC was primarily the result of a 3 percent decrease in volume, a 1 percent decrease in average selling price and less gain from the sales of assets ($2.7 million in the current quarter compared with $9.0 million in the 1997 second quarter). Provisions for income taxes were lower due to reduced pretax income resulting from the above. -6- Comparison of First Six Months of 1998 to First Six Months of 1997 - ------------------------------------------------------------------ For the first six months of 1998, the Company reported consolidated net income of $50.2 million, $.93 per share, as compared with $71.3 million, $1.36 per share, in the 1997 first half. Income from continuing operations for the first half of 1998 was $32.0 million, $.56 per share, as compared with $36.6 million, $.65 per share, in the comparable 1997 period. The consolidated 1997 first half benefited from an after-tax gain of $10.0 million, $.20 per share, from the sale of assets of which $4.6 million after tax, $.09 per share, was related to results of continuing operations. Excluding the gain, income from continuing operations, as in the quarter, remained unchanged from the comparable prior-year period. Consolidated net sales from continuing operations increased 5 percent to $1.47 billion for the first six months of 1998 from $1.40 billion in the prior- year period. Net sales at RT improved 4 percent in large part due to the inclusion of a full six months of net sales from acquisitions made by RT during 1997. The higher sales level combined with a decline in operating expenses were the major factors in the increase in operating profit of $7.1 million at RT, excluding the $8.9 million pretax gain from asset sales in 1997. Income from discontinued operations at ISC for the first six months of 1998 were approximately half the income recognized in the comparable 1997 period due primarily to a 2 percent decline in average selling price and the lower gain from the sale of assets discussed above. The reduced pretax income resulting from the above resulted in lower provisions for income taxes in the 1998 first half compared with the year-earlier period. Liquidity and Financing - ----------------------- The Company's cash and cash equivalents were $50.8 million at June 30, 1998 compared with $97.0 million at December 31, 1997. Not included in the June 30 amount was $14.1 million of cash and cash equivalents at Inland Steel Company. There was no short-term borrowing at either date. Subsequent Events - ----------------- On July 20, 1998, the Company commenced an offer to purchase up to 25.5 million shares of its common stock pursuant to a "Dutch Auction" self-tender offer. The tender price will be between $30 and $34 per share. The offer, which will expire August 14, 1998, unless extended, is not contingent upon any minimum number of shares being tendered. The Company will finance the tender with cash received from the sale of Inland Steel Company. On August 3, 1998, the Company retired the remaining outstanding $100 million principal amount of its Subordinated Voting Note for $114 million, which included $14 million of breakage and other related costs. -7- PART II. OTHER INFORMATION --------------------------- Item 1. Legal Proceedings By letter dated June 17, 1998, Inland Steel Company ("Inland") was offered an opportunity to show cause why enforcement action should not be taken against Inland in connection with alleged violations of the Resource Conservation and Recovery Act ("RCRA") arising out of an October 1997 Inspection. Inland is in the process of attempting to resolve this matter with EPA. It is not possible at this time to predict the amount of Inland's potential liability or whether such liability could affect Inland's financial position. Item 4. Submision of Matters to a Vote of Security Holders (a) A meeting of stockholders was held on May 27, 1998 and was an annual meeting. (b) No answer is required. (c) The election of nine 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 ------- ----------------- -------------- A. Robert Abboud 43,521,900 7,369,190 Robert J. Darnall 43,525,567 7,365,522 James A. Henderson 43,550,007 7,341,082 Robert B. McKersie 43,548,155 7,342,934 Leo F. Mullin 43,550,330 7,340,759 Jean-Pierre Rosso 43,551,929 7,339,161 Joshua I. Smith 43,541,087 7,350,003 Nancy H. Teeters 43,545,787 7,345,303 Arnold R. Weber 43,546,290 7,344,800
The results of the voting for the election of PricewaterhouseCoopers L.L.P. to audit the accounts of the Company and its subsidiaries for 1998 are as follows:
For Against Abstain --- ------- ------- 50,584,623 216,849 89,616
There were no matters voted upon at the meeting to which broker non- votes applied. (d) Not applicable. Item 5. Other Information. To be considered for inclusion in the Company's proxy statement and form of proxy relating to the 1999 Annual Meeting, proposals of holders of voting securities must be received in writing by the Secretary of the Company no later than December 22, 1998 and must comply with the requirements of the Securities and Exchange Commission. In order for a candidate recommended by a stockholder to be considered by the Committee as a nominee for election at the 1999 Annual Meeting, the name of the candidate and a written description of his or her qualifications must be received by the Secretary of the Company by December 31, 1998. Holders of voting securities who intend to nominate persons for election as directors at annual meetings, and proposals not included in a proxy statement for an annual meeting, must comply with the advance notice procedure set forth in the By-laws of the Company in order to be properly brought before that annual meeting of stockholders. The advance notice procedure requires that, if the Company provides less than 105 days' notice or prior public disclosure of the date of the meeting, such stockholder's notice must be received no later than the close of business on the 15th day following the first to occur of the date on which notice of the annual meeting date was mailed or the date on which public disclosure of the meeting date was made. Otherwise, the stockholder's notice must be delivered to or mailed and received at the Company's principal executive offices not less than 90 or more than 115 days prior to the meeting. -8- Item 6. Exhibits and Reports 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. The Company did not file any Current Reports on Form 8-K during the quarter ended June 30, 1998. -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 James M. Hemphill ------------------------------------- James M. Hemphill Controller and Principal Accounting Officer Date: August 12, 1998 -10- Part I -- Schedule A -------------------- INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES SUMMARY OF STOCKHOLDERS' EQUITY ================================================================================
Dollars in Millions ----------------------------------------- June 30, 1998 December 31, 1997 ------------------ ------------------- (unaudited) STOCKHOLDERS' EQUITY - ------------------------------------------- Series A preferred stock ($1 par value) - 94,101 shares issued and outstanding as of June 30, 1998 and December 31, 1997 $ .1 $ .1 Series E preferred stock ($1 par value) - 2,967,022 shares and 3,014,548 shares issued and outstanding as of June 30, 1998 and December 31, 1997, respectively 3.0 3.0 Common stock ($1 par value) - 50,556,350 shares issued as of June 30, 1998 and December 31, 1997 50.6 50.6 Capital in excess of par value 1,037.8 1,039.8 Accumulated deficit Balance beginning of year $(45.6) $(146.0) Net income 50.2 119.3 Dividends Series A preferred stock - $1.20 per share in 1998 and $2.40 per share in 1997 (.1) (.2) Series E preferred stock - $1.7615 per share in 1998 and $3.523 per share in 1997 (5.3) (10.8) Income tax benefit - Series E dividend .8 1.9 Common stock - $.10 per share in 1998 and $.20 per share in 1997 (4.9) (4.9) (9.8) (45.6) ------ ------- Unearned compensation related to ESOP (63.6) (68.6) Common stock repurchase commitment (22.6) (28.1) Investment valuation allowance (6.7) (7.1) Unearned restricted stock award compensation (.6) (.2) Treasury stock, at cost - 1,556,870 shares and 1,557,635 shares as of June 30, 1998 and December 31, 1997, respectively (40.9) (40.5) Cumulative translation adjustment (3.3) (3.3) -------- -------- Total Stockholders' Equity $ 948.9 $ 900.1 ======== ========
-11- EXHIBIT INDEX
Exhibit Sequential Number Description Page No. - ------ ----------- ---------- 2. Agreement and Plan of Merger, dated as of May 27, 1998 between Ispat International, N.V., Inland Steel Industries, Inc., Inland Merger Sub, Inc. and Inland Steel Company. (Filed as Exhibit 2.1 to Inland Steel Company's Current Report on Form 8-K filed on June 9, 1998, and incorporated by reference herein.) -- 2.1 Amendment to Agreement and Plan of Merger dated as of July 16, 1998 between Ispat International, N.V., Inland Steel Industries, Inc., Inland Merger Sub, Inc. and Inland Steel Company. (Filed as Exhibit 2.2 to the Company's Current Report on Form 8-K filed on July 20, 1998, and incorporated by reference herein.) -- 3.(i) Copy of Certificate of Incorporation, as amended, of the Company. (Filed as Exhibit 3.(i) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995, and incorporated by reference herein.) -- 3.(ii) Copy of By-laws, as amended, of the Company. (Filed as Exhibit 3.(ii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997, and incorporated by reference herein.) -- 10.A* Copy of Inland 1992 Stock Plan for Non-Employee Directors, as amended....................................................... 27 Financial Data Schedule.......................................
- ---------------------- * Management contract or compensatory plan or arrangement required to be filed as an exhibit to the Company's Quarterly Report on Form 10-Q -i- EX-10.A 2 INLAND 1992 STOCK PLAN Exhibit 10.A INLAND 1992 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS (as Amended through July 15, 1998) 1. Purpose. -------- The purpose of the Inland 1992 Stock Plan for Non-Employee Directors (the "Plan") is to attract and retain outstanding individuals as directors of Inland Steel Industries, Inc. (the "Company") and to provide such directors with an opportunity to increase their ownership interest in the Company through the payment of a portion of their directors' fees in shares of common stock of the Company. 2. Participants. ------------- Participants in the Plan shall consist of directors of the Company who are not employees of the Company or any of its subsidiaries. 3. Shares Reserved under the Plan. ------------------------------- The maximum number of shares of common stock, $1.00 par value per share, of the Company that may be issued under the Plan shall not exceed 50,000. Such number, however, may be appropriately adjusted by the Committee (hereinafter referred to) in the event of stock dividends, stock splits, spinoffs or other distributions of assets (other than normal cash dividends), recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in corporate structure or capitalization. Shares of common stock of the company to be issued under the Plan may be authorized and unissued shares of common stock, treasury common stock, or any combination thereof. 4. Administration of the Plan. --------------------------- The Plan shall be administered by the Compensation Committee (the "Committee") of the Board of Directors of the Company. The Committee shall have authority to interpret the Plan, to establish, amend and rescind rules and regulations for the administration of the Plan, and all such interpretations, rules and regulations shall be conclusive and binding on all persons. 5. Effective Date of the Plan. --------------------------- The Plan shall be submitted to the stockholders of the Company for approval at the annual meeting of stockholders to be held on April 22, 1992, or any adjournment thereof, and, if approved by the stockholders, shall be deemed to have become effective on the date of such approval. 6. Payment of Shares. ------------------ For each calendar year beginning with the calendar year commencing January 1, 1992, with respect to each participant who is elected a director at the annual meeting of stockholders for such year and continues to be a director as of July 1 of such year, twenty -2- percent (20%) of the first $30,000 of his or her annual retainer for services as a member of the Board of Directors of the Company plus any amount of annual retainer in excess of $30,000 shall be paid in shares of common stock of the Company. The number of such shares shall be determined on the basis of (a) the average of the highest and lowest selling prices of such stock on the New York Stock Exchange Composite Transactions on July 1 of such year, or if such stock is not traded on that day, then on the next preceding day on which such stock was traded, and (b) the annual retainer in effect as of such date, with any fraction of a share to be rounded up to the next whole share. A certificate for such shares shall be delivered to each such director as soon as practicable after each July 1, unless such director has elected to defer the issuance of such shares in accordance with such rules and procedures as the Board of Directors of the Company may from time to time have established for such deferrals. 7. Transfer of Shares. ------------------- Shares of stock issued under the Plan may be sold, assigned, transferred or otherwise disposed of immediately after a director receives such shares. 8. Amendment and Termination of the Plan. -------------------------------------- The Plan may be amended by the Board of Directors of the Company in any respect, provided that, without stockholder approval, no amendment shall increase the maximum number of shares available for issuance under the Plan, and provided, further, that the Plan may not be amended more than once every six months except to comply with the Internal Revenue Code, the Employee Retirement Income Security Act, or the rules and regulations thereunder. The Plan may also be terminated at any time by the Board of Directors. 9. Miscellaneous. -------------- (a) No right to Continue as Director. Nothing contained in this Plan shall be deemed to confer upon any person any right to continue as a director of or to be associated in any other way with the Company. (b) Rights as Stockholder. No person shall have any rights as a stockholder of the Company with respect to any payment of shares covered by the Plan until the date of the issuance of a stock certificate to such person. (c) Governing Law. The Plan shall be governed by and construed under the law of the State of Illinois. EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENT OF OPERATIONS, THE CONSOLIDATED BALANCE SHEET, AND THE SUMMARY OF STOCKHOLDERS' EQUITY CONTAINED IN THE QUARTERLY REPORT ON FORM 10-Q TO WHICH THIS EXHIBIT IS ATTACHED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL SCHEDULES. 1,000 6-MOS DEC-31-1998 JUN-30-1998 50,800 0 356,200 8,200 482,300 886,700 595,100 287,100 1,875,200 236,600 437,400 0 3,100 50,600 895,200 1,875,200 1,465,800 1,465,800 1,293,400 1,293,400 0 0 19,200 59,500 23,200 32,000 18,200 0 0 50,200 .93 .88
-----END PRIVACY-ENHANCED MESSAGE-----