<PAGE>
1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X]Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 1996 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 1-11767
RYERSON TULL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3431962
(State of Incorporation) (I.R.S. Employer Identification No.)
2621 WEST 15TH PLACE, CHICAGO, 60608
ILLINOIS
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (773) 762-2121
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Class A Common Stock ($1.00 par New York Stock Exchange, Inc.
value), including
Preferred Stock Purchase Rights
Securities registered pursuant to Section 12(g) of the Act:
None
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of March 13, 1997 the aggregate market value of the voting stock of the
registrant held by non-affiliates of the registrant was approximately
$75,700,000.(1)
The number of shares of Class A and Class B Common Stock ($1.00 par value)
of the registrant outstanding as of March 13, 1997 was 5,277,127 and
34,000,000, respectively, of which all of the Class B Common shares were owned
by Inland Steel Industries, Inc. and not publicly traded.
- --------
(1) Excluding stock held by directors and officers of registrant, without
admission of affiliate status of such individual for any other purpose;
also excluding Class B Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II of this Report on Form 10-K incorporate by reference certain
information from the Annual Report to Stockholders for the fiscal year ended
December 31, 1996. Part III of this Report on Form 10-K incorporates by
reference certain information from the registrant's definitive Proxy Statement
which will be furnished to stockholders in connection with the Annual Meeting
of Stockholders of the registrant scheduled to be held on May 28, 1997.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART I
ITEM 1. BUSINESS.
Ryerson Tull, Inc. ("RT"), a Delaware corporation and a majority-owned
subsidiary of Inland Steel Industries, Inc. ("ISI"), is the sole stockholder
of Joseph T. Ryerson & Son, Inc. ("Ryerson") and J. M. Tull Metals Company,
Inc. ("Tull") (RT, Ryerson and Tull, together with their subsidiaries, are
collectively referred to herein as the "Company"). RT has a single business
segment, which is comprised of Ryerson and Tull, leading steel service,
distribution and materials processing organizations. RT also owns 50% of
Ryerson de Mexico, a joint venture general line metals service center and
processor with facilities in Mexico.
OPERATIONS
RT's materials distribution operations in the United States are conducted
through its operating subsidiaries--Ryerson and Tull. Ryerson, Tull and
Ryerson Coil Processing Company ("Ryerson Coil"), a specialized processing
unit of Ryerson, are organized into five business units along regional and
product lines. The Company believes that it is the largest metals service
center in the United States based on sales revenue, with 1996 sales of $2.4
billion and a current U.S. market share of approximately 9%, based on the
Company's analysis of data prepared by the Steel Service Center Institute
("SSCI"). The Company distributes and processes metals and other materials
throughout the continental United States, and is among the largest purchasers
of steel in the United States.
Joseph T. Ryerson & Son, Inc.
Ryerson, with business unit headquarters in Philadelphia, Pennsylvania
(Ryerson East), Chicago, Illinois (Ryerson Central), and Seattle, Washington
(Ryerson West) and including its wholly-owned subsidiary Thypin Steel Co.,
Inc. ("Thypin"), which was acquired by the Company in February 1997 and is
based in Long Island City, New York, is a leading materials distribution
organization. With full-line service centers in 36 major cities, Ryerson is
engaged in the nationwide sale of its products through its own sales
organization. Ryerson maintains heavy-duty shears, slitters, precision cut-to-
length lines, high-speed saws, flame-cutting machines and other processing
equipment for use in furnishing custom cutting and miscellaneous shapes in
accordance with customer orders. The Ryerson Coil unit, headquartered in
Chicago, performs processing through five facilities for customers who
traditionally buy large quantities of sheet steel products. Ryerson also
markets plant equipment products through a wholesale industrial catalog.
J. M. Tull Metals Company, Inc.
Tull is one of the largest distributors of metals in the southeastern United
States. Tull and its wholly-owned subsidiary, AFCO Metals, Inc. ("AFCO"),
operate 20 service centers and two processing facilities located throughout
the southeastern and south-central United States. Tull produces a variety of
metals products with value-added processing, including welded steel tubing and
roll-formed shapes. Tull's products are sold principally through its own sales
staff.
Ryerson de Mexico
RT also owns a 50% interest in Ryerson de Mexico, a joint venture with Altos
Hornos de Mexico, S.A. de C.V., an integrated steel mill operating in Mexico.
Ryerson de Mexico, which was formed in 1994, is a general line metals service
center and processor with 12 facilities in Mexico. The impact of Ryerson de
Mexico on the Company's results of operations has not been material.
1
<PAGE>
INDUSTRY OVERVIEW
Primary steel producers typically sell steel in the form of standard-sized
coils, sheets, plate, structurals, bars and tubes and generally sell in large
volumes with long lead times for production and delivery. Other primary metals
producers, such as producers of stainless steel and aluminum, also typically
sell their products in large volumes with long lead times for production and
delivery. However, many customers seek to purchase metals with customized
specifications, including value-added processing, in smaller volumes, on
shorter lead times and with more reliable delivery than primary metals
producers are able to provide. Metals service centers act as intermediaries
between primary metals producers and customers by purchasing metals in a
variety of shapes and sizes from primary metals producers in large volumes,
allowing metals service centers to take advantage of producer economies of
scale resulting in lower costs of materials purchased, and engaging in a
variety of distribution and value-added processing operations to meet the
demands of specific customers. Because metals service centers purchase metals
from a number of primary producers, they can maintain a consistent supply of
various types of metal used by their customers. Most importantly, however,
metals service centers generally have lower fixed costs than primary metals
producers. By purchasing products from metals service centers, customers may
be able to lower their inventory levels, decrease the time between the
placement of an order and receipt of materials and reduce internal expenses,
thereby lowering their total cost of raw materials. The Company believes that
the increased prevalence of just-in-time inventory needs of manufacturers and
intermediate processors has made and will continue to make the value-added
inventory, processing and delivery functions performed by metals service
centers more important in the metals market.
The industry is cyclical (with periods of strong demand and higher prices
followed by periods of weaker demand and lower prices), principally due to the
cyclical nature of the industries in which the largest consumers of metals
operate. Any significant slowdown in one or more of those industries could
have a material adverse effect on the demand for metals, resulting in lower
prices for metals and reduced profitability for metals service centers,
including the Company. Metals prices and metals service center profitability
improve as metal-consuming industries experience recoveries following economic
downturns.
The industry is comprised of many companies, the majority of which have
operations limited as to product line and size of inventory, with customers
located in a specific geographic area. Based on SSCI data, the Company
believes that the industry is comprised of between 750 and 1,000 service
centers, operating out of approximately 2,000 locations and servicing
approximately 300,000 customers. The industry is highly fragmented, consisting
of a large number of small companies and a few relatively large companies.
Based on the Company's analysis of SSCI data, the industry handled
approximately 27 million tons or approximately 23.2% of the metals distributed
in the United States in 1996.
The industry is divided into three major groups: general line service
centers, specialized service centers and processing centers, each of which
targets different market segments. General line service centers handle a broad
line of metals products and tend to concentrate on distribution rather than
processing. General line service centers range in size from one location to a
nationwide network of locations. For general line service centers, individual
order size in terms of dollars and tons tends to be small relative to
processing centers, while the total number of orders is typically very high.
Specialized service centers focus their activities on a narrower range of
product and service offerings than general line companies. Such service
centers provide a narrower range of services to their customers and emphasize
product expertise and lower operating costs, while maintaining a moderate
level of investment in processing equipment. Processing centers typically
process large quantities of steel purchased from primary producers for resale
to large industrial customers, such as the automotive industry. Because orders
are typically large, operation of a processing center requires a significant
investment in processing equipment.
2
<PAGE>
PRODUCTS AND SERVICES
The Company carries a full line of carbon steel, stainless steel and
aluminum, and a limited line of alloy steel, nickel, red metals and plastics.
These materials are inventoried in a number of shapes, including coils,
sheets, rounds, hexagons, square and flat bars, plate, structurals and tubing.
The following table sets forth the Company's shipments (by sales revenue)
for 1994, 1995 and 1996 for each of the Company's product lines.
<TABLE>
<CAPTION>
PERCENTAGE OF
PRODUCT LINE SALES REVENUE
- ------------ ----------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Stainless and aluminum........................................ 23% 27% 26%
Carbon flat rolled............................................ 28 24 27
Bars, tubing and structurals.................................. 23 22 22
Fabrication and carbon plate.................................. 19 20 20
Other......................................................... 7 7 5
--- --- ---
Total....................................................... 100% 100% 100%
=== === ===
</TABLE>
More than one-half of the materials sold by the Company is processed. The
Company uses techniques such as sawing, slitting, blanking, pickling, cutting
to length, levelling, flame cutting, laser cutting, edge trimming, edge
rolling, fabricating and grinding to process materials to specified thickness,
length, width, shape and surface quality pursuant to specific customer orders.
Among the most common processing techniques used by the Company are pickling,
a chemical process using an acidic solution to remove surface oxide, commonly
called "scale," from steel which develops after the steel is hot rolled;
slitting, which is cutting coiled metals to specified widths along the length
of the coil; levelling, which is flattening metals and cutting them to exact
lengths; and edge rolling, a process which imparts round or smooth edges.
Although the Company often uses third-party fabricators to outsource certain
limited processes that the Company is not able to perform internally,
outsourcing these processes does not affect a significant part of the
Company's operations or constitute a significant part of the Company's
operating costs and expenses.
The plate burning and fabrication processes are particularly important to
the Company. These processes require sophisticated and expensive processing
equipment. As a result, rather than making investments in such equipment,
manufacturers have increasingly outsourced these processes to metals service
centers. The Company has flame or laser cutting capacity in 41 of its 53
facilities.
The Company also provides services and technical advice to its customers as
an integral part of providing products to its customers. The Company does not
charge customers separately for such services or advice, but rather includes
the costs of such services and advice in the price of products sold to such
customers.
The Company's services include: just-in-time delivery, production of kits
containing multiple products for ease of assembly by the customer, the
provision of Company-owned materials to the customer and the placement of
Company employees at the customer's site for inventory management, production
and technical assistance. The Company also provides special stocking programs
where products that would not otherwise be stocked by the Company are held in
inventory to meet certain customer's needs. The foregoing services are
designed to reduce customers' costs by minimizing their investment in
inventory and improving their production efficiency.
3
<PAGE>
CUSTOMER BASE
The Company's customer base is diverse, numbering over 50,000. No customer
accounted for more than 2% of the Company's sales in 1996 and the top ten
customers accounted for approximately 10% of the Company's sales in 1996. The
Company's customer base includes most metal-consuming industries, most of which
are cyclical. The Company's shipments (by sales revenue) for 1994, 1995 and
1996 for each class of the Company's customers were as set forth in the table
below.
<TABLE>
<CAPTION>
PERCENTAGE OF
CLASS OF CUSTOMER SALES REVENUE
- ----------------- ----------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Machinery manufacturers....................................... 36% 38% 38%
Fabricated metals producers................................... 25 25 26
Transportation equipment producers............................ 10 10 10
Electrical machinery producers................................ 9 9 8
Wholesale distributors........................................ 3 3 3
Construction-related purchasers............................... 4 3 4
Metals mills and foundries.................................... 3 3 3
Other......................................................... 10 9 8
--- --- ---
Total....................................................... 100% 100% 100%
=== === ===
</TABLE>
The Company's flat-rolled processing business unit, Ryerson Coil, generally
serves a customer base that differs from the Company's general line service
center business. A large portion of Ryerson Coil's customers have long-term
supply contracts. These contracts are typically at fixed prices and are
generally from three months to one year in duration, although Ryerson Coil has
a small number of arrangements with large customers that extend beyond one
year. Ryerson Coil attempts to limit its financial exposure on these fixed-
price sales arrangements by entering into fixed-price supply arrangements with
one or more suppliers for comparable periods of time. Ryerson Coil's customers
often seek large quantities of carbon sheet product that have undergone one or
more of the following processes: pickling, cutting to length, slitting, tension
levelling, texturing or blanking. Many of Ryerson Coil's approximately 625
customers are in the transportation, appliance, office furniture or cabinetry
businesses.
SUPPLIERS
In 1996, the Company purchased in excess of 2.4 million tons of materials
from many suppliers, including approximately 460,000 tons (or approximately 11%
of the purchase dollars) from Inland Steel Company ("ISC"), a wholly-owned
subsidiary of ISI. The Company expects to continue purchasing significant
amounts of steel from ISC in the future, although there can be no assurance
that such purchases will continue. Excluding ISC, the Company's top 25
suppliers accounted for approximately 40% of 1996 purchases in dollars.
The Company purchases the majority of its inventories in the open market at
prevailing market prices. However, occasionally the Company enters into long-
term, fixed-price supply contracts to offset its long-term, fixed-price sales
contracts in order to minimize its financial exposure.
Because the Company uses many suppliers and because there is a substantial
overlap of product offerings from these suppliers, the Company believes it will
be able to meet its materials requirements for the foreseeable future. The
Company works with and monitors its suppliers in order to obtain improvements
in price, quality, service, delivery and performance. The Company believes it
has good relationships with most of its suppliers.
SALES AND MARKETING
Each of the Company's business units maintains its own sales and marketing
force. In addition to its office sales staff, the Company markets and sells its
products through the use of its field sales force that has extensive
4
<PAGE>
product and customer knowledge and through a comprehensive catalog of the
Company's products. The Company's office and field sales staffs, which together
consist of approximately 800 employees, include technical and metallurgical
personnel. In addition, the Company's technically-oriented marketing
departments develop advertising materials and maintain product expertise for
each of the various types of materials sold and industries serviced by the
Company.
CAPITAL EXPENDITURES
In recent years the Company has made capital expenditures to maintain,
improve and expand processing capabilities. Additions by the Company to
property, plant and equipment, together with retirements and adjustments, for
the five years ended December 31, 1996, are set forth below. Net capital
additions during such period aggregated $64.4 million.
<TABLE>
<CAPTION>
DOLLARS IN MILLIONS
---------------------------------------------
RETIREMENTS NET CAPITAL
ADDITIONS OR SALES ADJUSTMENTS ADDITIONS
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
1996.............................. $24.1 $ 6.0 $-- $18.1
1995.............................. 19.3 4.7 -- 14.6
1994.............................. 20.4 12.4 -- 8.0
1993.............................. 19.3 3.1 -- 16.2
1992.............................. 9.3 1.8 -- 7.5
</TABLE>
The Company anticipates that capital expenditure and investments in joint
ventures, excluding acquisitions, will be in the range of $40-50 million for
1997 which will be funded from cash generated by operations plus possible
borrowing under RT's credit facility.
EMPLOYEES
As of December 31, 1996, the Company employed approximately 4,850 persons. Of
these employees, approximately 2,250 were salaried employees and approximately
2,600 were hourly employees. Approximately 40% of the hourly employees were
members of various unions, including the United Steelworkers and the Teamsters.
The Company's relationship with the various unions generally has been good, but
occasional work stoppages have occurred. Over the last five years, work
stoppages have occurred at two facilities (approximately 4% of the total number
of facilities), have involved an average of 43 employees and have lasted an
average of six days. During 1997, labor contracts covering approximately 180
employees at six facilities will expire. During 1998 contracts covering
approximately 160 employees at four facilities will expire. The current
agreement with the United Steelworkers will expire on July 31, 1999, and
agreements with the Teamsters expire on various dates during the period
beginning March 31, 1997 and ending June 30, 1999. While management does not
expect any unresolvable issues to arise in connection with the renewal of any
of these contracts, no assurances can be given that any of these contracts will
be extended prior to their expiration.
Prior to April 30, 1996, certain of the Company's employees were eligible to
participate in the ISI Pension Plan, a noncontributory defined benefit pension
plan. Effective April 30, 1996, that portion of the ISI Pension Plan covering
the Company's current and former employees was separated and became the Ryerson
Tull Pension Plan. Almost all employees are covered by Company-provided life
insurance and a health benefits plan which provides broad health coverage for
employees and their families. Premiums for this health coverage are shared
among the Company and its employees. The Company believes that its salary and
benefits structures are competitive in the industry.
COMPETITION
The Company is engaged in a highly fragmented and competitive industry. In
general, competition is based on quality, service, price and geographic
proximity. Based on SSCI data, the Company believes that the industry is
comprised of between 750 and 1,000 service centers, operating out of
approximately 2,000 locations. The
5
<PAGE>
Company competes with many other general line service centers, specialized
service centers and processing centers on a regional and local basis, some of
which may have greater financial resources and flexibility than the Company.
The Company also competes to a lesser extent with primary steel producers.
Primary steel producers typically sell to very large customers that require
regular shipments of large volumes of steel. Although these large customers
sometimes use metals service centers to supply a portion of their metals
needs, metals service center customers typically are consumers of smaller
volumes of metals than customers of primary steel producers. To the extent
that some of the Company's competitors purchase a higher percentage of metals
than the Company from foreign steelmakers, such competitors may benefit from
favorable exchange rates or other economic or regulatory factors that may
result in a competitive advantage. This competitive advantage may be offset
somewhat by higher transportation costs associated with importing metals into
the United States. Excess capacity of metals relative to demand in the
industry since mid-1995 led to a weakening in prices. As a result, the Company
has been reducing its prices since mid-1995 to remain competitive.
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
The Company's operations are subject to many federal, state and local
regulations relating to the protection of the environment and to workplace
health and safety. In particular, the Company's operations are subject to
extensive federal, state and local laws and regulations governing waste
disposal, air and water emissions, the handling of hazardous substances,
environmental protection, remediation, workplace exposure and other matters.
The Company's management believes that the Company is presently in substantial
compliance with all such laws and does not currently anticipate that the
Company will be required to expend any substantial amounts in the foreseeable
future in order to meet current environmental, workplace health or safety
requirements. However, additional costs and liabilities may be incurred to
comply with current and future requirements, which costs and liabilities could
have a material adverse effect on the Company's results of operations or
financial condition.
There are no known pending remedial actions or claims relating to
environmental matters that are expected to have a material effect on the
Company's financial position or results of operations. Some of the properties
owned or leased by the Company, however, are located in industrial areas or
have a history of heavy industrial use. These properties may potentially incur
environmental liabilities in the future that could have a material adverse
effect on the Company's financial condition or results of operations.
Capital and operating expenses for pollution control projects were
significantly below $1,000,000 per year for the past five years and are
expected to remain at similar levels.
PATENTS AND TRADEMARKS
The Company owns several U.S. patents and U.S. and foreign trademarks,
service marks and copyrights. Certain of the trademarks are registered with
the U.S. Patent and Trademark Office and, in certain circumstances, with the
trademark offices of various foreign countries. The patents expire over
various periods of time beginning in 2011. The Company believes that the
expiration of its patents will not materially adversely affect its business.
The Company considers certain other information owned by it to be trade
secrets. The Company protects its trade secrets by, among other things,
entering into confidentiality agreements with its employees regarding such
matters and implementing measures to restrict access to sensitive data and
computer software source code on a need-to-know basis. The Company believes
that these safeguards adequately protect its proprietary rights and vigorously
defends these rights. While the Company considers all of its intellectual
property rights as a whole to be important, the Company does not consider any
single right to be essential to its operations as a whole.
ITEM 2. PROPERTIES.
Joseph T. Ryerson & Son, Inc.
Ryerson owns its regional business unit headquarters offices in Chicago and
leases regional headquarters offices in West Chester (PA) and Renton (WA).
Ryerson East's service centers are at Buffalo, Carnegie (PA),
6
<PAGE>
Charlotte, Chattanooga, Cleveland, Pittsburgh, and Wallingford (CT). Thypin,
which operates as a part of the Ryerson East business unit, maintains its
headquarters at Long Island City (NY) and service centers at the Village of
Blasdell (NY), Birmingham (AL), two at Cambridge (MA), one at Charlotte (NC)
and one each at Easton and Fairless Hills (PA). Ryerson Central's service
centers are at Chicago, Cincinnati, Dallas, Des Moines, one each at Detroit
and Holland (MI), Houston, Indianapolis, Kansas City, Milwaukee, Omaha,
Plymouth (MN), St. Louis, Tulsa, and Wausau (WI). Ryerson West's service
centers are at Commerce City (CO), Emeryville (CA), Los Angeles, Phoenix,
Portland (OR), Renton (WA), Spokane, and Salt Lake City. Ryerson Coil's
processing facilities are located in Chicago (two facilities), Marshalltown
(IA), Plymouth (MN) and New Hope (MN).
All of Ryerson's operating facilities are held in fee with the exception of
the facility at Birmingham (AL) (held under short-term lease), two at
Cambridge (MA) (both held under short-term lease), one at Charlotte (NC) (held
under short-term lease), one at Chicago (held under short-term lease), one at
Easton (PA) (held under short-term lease), one at Fairless Hills (PA) (held
under long-term lease), one at Holland (MI) (held under long-term lease), one
at Long Island City (NY) (held under short-term lease), one at Marshalltown
(IA) (held under an installment purchase contract), two at New Hope (MN) (one
partly held in fee and partly under short-term lease, the other held under
short-term lease), a satellite facility at Omaha (held under short-term
lease), a portion of the property at Portland (held under short-term lease), a
portion of the property at St. Louis (held under long-term lease), one
facility at Salt Lake City (held under short-term lease), one at the Village
of Blasdell (NY) (held under short-term lease), and one at Wausau (WI) (held
under short-term lease). In addition, Ryerson holds in fee approximately 22
acres of unimproved property at Powder Springs (GA), and the approximately 11-
acre site of a former operating facility at Allston (MA). The Allston (MA)
property is currently under contract for sale. Ryerson's properties are
adequate to serve its present and anticipated needs.
J. M. Tull Metals Company, Inc.
Tull maintains service centers at Baton Rouge (LA), Birmingham (AL),
Charlotte (NC), Columbia (SC), Greensboro (NC), Greenville (SC), Jacksonville,
Miami, New Orleans, Pounding Mill (VA), Richmond, Tampa, and Norcross (GA),
where its headquarters is located. All of these facilities are owned by Tull
in fee, except for the Columbia facility, which is held under short-term
lease. AFCO operates service centers at Fort Smith (AR), Jackson (MS), Little
Rock (AR), Oklahoma City, Shreveport, West Memphis (AR) and Wichita (KA).
AFCO's headquarters are located at Norcross (GA), where it leases space owned
in fee by Tull. Each of AFCO's facilities is held in fee except the Wichita
facility, which is held under a short-term lease. Tull's properties are
adequate to serve its present and anticipated needs.
Ryerson de Mexico
Ryerson de Mexico, a joint venture in which RT owns a 50% interest, owns
twelve general line metals service centers and processing centers in Mexico.
Ryerson de Mexico's properties are adequate to serve its present and
anticipated needs.
ITEM 3. LEGAL PROCEEDINGS.
From time to time the Company is named as a defendant in legal actions
arising in the ordinary course of its business. The Company is not a party to
any pending legal proceedings other than routine litigation incidental to its
business. Management does not believe that the resolution of these claims will
have a material adverse effect on the Company's financial condition or results
of operations.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.
Not applicable.
7
<PAGE>
EXECUTIVE OFFICERS OF REGISTRANT
Officers are elected by the Board of Directors of RT to serve for a period
ending with the next succeeding annual meeting of the Board of Directors held
immediately after the Annual Meeting of Stockholders. All executive officers of
RT, with the exception of Neil S. Novich and Darell R. Zerbe, have been
employed by RT or an affiliate of RT throughout the past five years.
Set forth below are the executive officers of RT as of March 1, 1997, and the
age of each as of such date. Their principal occupations at present and during
the past five years, including positions and offices held with RT or a
significant subsidiary or affiliate of RT, are shown below.
NAME, AGE AND PRESENT POSITION POSITIONS AND OFFICES HELD DURING THE PAST
WITH REGISTRANT FIVE YEARS
Robert J. Darnall, 58.......... Mr. Darnall has been Chairman of RT since
Chairman April 1995 and formerly was Chairman of RT
from November 1990 to June 1994. He has been
Chairman and Chief Executive Officer of ISI
since 1992 and its President, Chief Operating
Officer and a director since April 1986. He
is also Chairman and Chief Executive Officer
of ISC, which he joined in 1962, and has
served as ISC's Chairman since 1992, as Chief
Executive Officer from 1992 to 1995 and since
April 1996, and as President from 1984 to
1986, 1987 to 1992 and April 1996 to May
1996.
Neil S. Novich, 42............. Mr. Novich has been President and Chief
President and Chief Executive Officer and Chief Operating Officer
Executive Officer of RT and President of Ryerson and Chairman
of Tull since June 1994. He served as
Chairman of Ryerson from June 1994 to April
1995. He was a Senior Vice President of ISI
from January 1995 to May 1996 and served as a
Vice President of ISI from June 1994 to
January 1995. Prior to joining ISI in 1994,
he led the Distribution and Logistics
Practice at Bain & Company ("Bain"), an
international management consulting firm,
from 1987 and was employed by Bain beginning
in 1981.
Jay M. Gratz, 44............... Mr. Gratz has been Vice President-Finance of
Vice President--Finance and RT since September 1994 and Vice President-
Chief Financial Officer Finance and Chief Financial Officer of ISI
since May 1996. He was Vice President-Finance
of ISC from March 1993 to September 1994 and
Vice President-Finance of the Inland Steel
Flat Products Company division of ISC from
November 1991 to March 1993.
Thomas S. Cygan, 52............ Mr. Cygan has been President of the Ryerson
President--Ryerson West West unit of Ryerson since November 1994. He
served as General Manager of Ryerson
Central's Kansas City location from May 1981
to November 1994.
Timothy L. LaPerre, 50......... Mr. LaPerre has been President of Ryerson
President--Ryerson Coil Coil since January 1993. He served as Vice
Processing President and General Manager of Ryerson Coil
from March 1990 to January 1993. He also
served as Executive Vice President and
General Manager of Keelor Steel from March
1987 to March 1990.
8
<PAGE>
NAME, AGE AND PRESENT POSITION POSITIONS AND OFFICES HELD DURING THE PAST
WITH REGISTRANT FIVE YEARS
Carl G. Lusted, 60............. Mr. Lusted has been President of the Ryerson
President--Ryerson Central Central unit of Ryerson since August 1990.
Mr. Lusted was Vice President and General
Manager of Tull from August 1984 to August
1990.
Stephen E. Makarewicz, 50...... Mr. Makarewicz has been President, Chief
President--Tull Metals Executive Officer and Chief Operating Officer
of Tull since October 1994. Mr. Makarewicz
was Vice President and General Manager of
Ryerson Central's Chicago location from April
1992 to October 1994 and Vice President and
General Manager of Tull from June 1990 to
April 1992.
Gary J. Niederpruem, 45........ Mr. Niederpruem has been President of the
President--Ryerson East Ryerson East unit of Ryerson since January
1993. He served as General Manager of Ryerson
East's Buffalo location from August 1985 to
January 1993.
William Korda, 49.............. Mr. Korda has been Vice President-Human
Vice President--Human Resources Resources of RT since October 1993. He served
as RT's Manager of Human Resources from
August 1992 to October 1993 and as Manager of
Benefits and Salary Administration for RT
from January 1991 to August 1992.
Darell R. Zerbe, 54............ Mr. Zerbe has been Vice President-Information
Vice President--Information Technology and Chief Information Officer of
Technology RT since February 1996. He served as Senior
Vice President, Management Information
Systems, for Venture Stores, Inc. from 1988
to February 1996. Mr. Zerbe has also been
previously employed by PepsiCo., Inc., Dr.
Pepper, Inc., Baxter International, Inc. and
Procter & Gamble Co.
Lily L. May, 47................ Ms. May has been Controller of RT since May
Controller 1996. She was Vice President-Finance and
Purchasing and Controller of ISC from January
1995 through May 1996. Prior to that, she was
Director of Purchases and Energy of the
Inland Steel Flat Products Company division
of ISC from November 1993 to January 1995.
She also served as Director of Internal
Auditing of ISI from February 1992 to
November 1993 and Director of Corporate
Accounting of ISI from February 1991 to
February 1992.
Vicki L. Avril, 42............. Ms. Avril has been Treasurer of RT since
Treasurer February 1994. She has also been Treasurer of
Ryerson and Tull since February 1994 and of
ISI and ISC since January 1994 and Director-
Corporate Planning of ISI since January 1995.
In addition, she was Director of Pension
Investments and Administration of ISI from
June 1991 to January 1995 and Assistant
Treasurer of ISI from May 1993 to January
1994.
Charles B. Salowitz, 48........
Corporate Secretary Mr. Salowitz has been Corporate Secretary of
RT since April 1996. Since September 1995, he
has been Secretary of ISI and ISC. He has
also been Associate General Counsel of ISI
since January 1995. He was an Assistant
General Counsel of ISI from July 1989 and
Assistant Secretary from July 1989 to
September 1995.
9
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.
The Class A Common Stock of RT is listed and traded on the New York Stock
Exchange. As of March 13, 1997, the number of holders of record of Class A
Common Stock of RT was 109.
The remaining information called for by this Item 5 is set forth under the
caption "Summary by Quarter" in RT's Annual Report to Stockholders for the
fiscal year ended December 31, 1996, and is hereby incorporated by reference
herein.
ITEM 6. SELECTED FINANCIAL DATA.
The information called for by this Item 6 with respect to each of the last
five years of RT is set forth under the caption "Eleven-Year Summary of
Selected Financial Data and Operating Results" in RT's Annual Report to
Stockholders for the fiscal year ended December 31, 1996, and is hereby
incorporated by reference herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The information called for by this Item 7 is set forth in the "Management's
Discussion of Operations and Financial Condition" section of RT's Annual
Report to Stockholders for the fiscal year ended December 31, 1996, and is
hereby incorporated by reference herein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of RT called for by this Item 8,
together with the report thereon of the independent accountants dated February
19, 1997, are set forth under the captions "Report of Independent Accountants"
and "Statement of Accounting and Financial Policies and Business Description"
as well as in all consolidated financial statements and schedules of the
Company and the "Notes to Consolidated Financial Statements" in RT's Annual
Report to Stockholders for the fiscal year ended December 31, 1996, and are
hereby incorporated by reference herein. The financial statement schedules
listed under Item 14(a)2 of this Report on Form 10-K, together with the report
thereon of the independent accountants dated February 19, 1997, should be read
in conjunction with the consolidated financial statements. Financial statement
schedules not included in this Report on Form 10-K have been omitted because
they are not applicable or because the information called for is shown in the
consolidated financial statements or notes thereto.
Consolidated quarterly sales, earnings and per share common stock
information for 1995 and 1996 are set forth under the caption "Summary by
Quarter" in RT's Annual Report to Stockholders for the fiscal year ended
December 31, 1996, and are hereby incorporated by reference herein.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information called for by this Item 10 with respect to directors of RT
will be set forth under the caption "Election of Directors" in RT's definitive
Proxy Statement which will be furnished to stockholders in connection with the
Annual Meeting of Stockholders to be held on May 28, 1997, and is hereby
incorporated by reference herein. The information called for with respect to
executive officers of RT is included in Part I of this Report on Form 10-K
under the caption "Executive Officers of Registrant."
10
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION.
The information called for by this Item 11 will be set forth under the
caption "Executive Compensation" in RT's definitive Proxy Statement which will
be furnished to stockholders in connection with the Annual Meeting of
Stockholders to be held on May 28, 1997, and is hereby incorporated by
reference herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) The information called for by this Item 12 with respect to security
ownership of more than five percent of RT's Class A and Class B common stock
will be set forth under the caption "Additional Information Relating to Voting
Securities" in RT's definitive Proxy Statement which will be furnished to
stockholders in connection with the Annual Meeting of Stockholders scheduled
to be held on May 28, 1997, and is hereby incorporated by reference herein.
(b) The information called for by this Item 12 with respect to the security
ownership of directors and of management will be set forth under the caption
"Security Ownership of Directors and Management" in RT's definitive Proxy
Statement which will be furnished to stockholders in connection with the
Annual Meeting of Stockholders to be held on May 28, 1997, and is hereby
incorporated by reference herein.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information called for by this Item 13 will be set forth under the caption
"Certain Relationships and Related Transactions" in RT's definitive Proxy
Statement which will be furnished to stockholders in connection with the
Annual Meeting of Stockholders to be held on May 28, 1997, and is hereby
incorporated by reference herein.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Documents Filed as a Part of This Report.
1. CONSOLIDATED FINANCIAL STATEMENTS OF RT. The consolidated financial
statements listed below are set forth in RT's Annual Report to
Stockholders for the fiscal year ended December 31, 1996, and are
incorporated by reference in Item 8 of this Annual Report on Form 10-K.
Report of Independent Accountants dated February 19, 1997.
Statement of Accounting and Financial Policies.
Consolidated Statements of Income and Reinvested Earnings for the
three years ended December 31, 1996.
Consolidated Statement of Cash Flows for the three years ended
December 31, 1996.
Consolidated Balance Sheet at December 31, 1996 and 1995.
Schedule to Consolidated Financial Statements: Long-Term Debt
Notes to Consolidated Financial Statements.
2. FINANCIAL STATEMENT SCHEDULES OF RT.
Report of Independent Accountants on Financial Statement Schedules
dated February 19, 1997. (Included on page 15 of this Report)
11
<PAGE>
Consent of Independent Accountants. (Included on page 15 of this
Report.)
For the years ended December 31, 1996, 1995 and 1994:
Schedule I--Condensed Financial Information (Parent Company
only). (Included on pages 16 to 18 inclusive in this Report.)
Schedule II--Reserves. (Included on page 19 of this Report.)
3. EXHIBITS. The exhibits required to be filed by Item 601 of
Regulation S-K are listed under the caption "Exhibits" below.
(B) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed by RT during the quarter ended December
31, 1996.
(C) EXHIBITS.
3.1 Restated Certificate of Incorporation of RT. (Filed as Exhibit 3.1 to
RT's Registration Statement on Form S-1 (File No. 333-3235), and
incorporated by reference herein.)
3.2 By-Laws of RT. (Filed as Exhibit 3.2 to RT's Quarterly Report on Form 10-
Q for the quarter ended June 30, 1996, and incorporated by reference
herein.)
4.1 Indenture, dated as of July 1, 1996, between RT and The Bank of New York.
(Filed as Exhibit 4.1 to RT's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996, and incorporated by reference herein.)
4.2 Specimen of 8 1/2% Notes due July 15, 2001. (Filed as Exhibit 4.2 to RT's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, and
incorporated by reference herein.)
4.3 Specimen of 9 1/8% Notes due July 15, 2006. (Filed as Exhibit 4.3 to RT's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, and
incorporated by reference herein.)
4.4 Rights Agreement between RT and Harris Trust and Savings Bank, as Rights
Agent, dated as of June 10, 1996. (Filed as Exhibit 4.4 to RT's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996, and incorporated
by reference herein.)
4.5 Form of Class A Common Stock Certificate. (Filed as Exhibit 4.5 to RT's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, and
incorporated by reference herein.)
10.1 Registration Rights Agreement between RT and Inland Steel Industries,
Inc., dated as of June 26, 1996. (Filed as Exhibit 10.1 to RT's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996, and incorporated
by reference herein.)
10.2 Employment Agreement, dated as of April 8, 1994, between Inland Steel
Industries, Inc. and Neil S. Novich (Filed as Exhibit 10.N.(8) to Inland
Steel Industries, Inc.'s Annual Report on Form 10-K for the fiscal year
ended December 31, 1994, and incorporated by reference herein.)
10.3 Assumption and Amendment Agreement, dated July 24, 1996, by and among
Inland Steel Industries, Inc., Ryerson Tull, Inc. and Neil S. Novich.
(Filed as Exhibit 10.A to the Inland Steel Industries, Inc. Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996, and
incorporated by reference herein.)
10.4 Change in Control Agreement, dated as of March 27, 1996, between Inland
Steel Industries, Inc. and Neil S. Novich. (Filed as Exhibit 10.6 to RT's
Registration Statement on Form S-1 (File No. 333-3235), and incorporated
by reference herein.)
12
<PAGE>
10.5 Employment Agreement between Inland Steel Industries, Inc. and Carl G.
Lusted, dated June 27, 1990. (Filed as Exhibit 10.4 to RT's Registration
Statement on Form S-1 (File No. 333-3235), and incorporated by reference
herein.)
10.6 Copy of Assumption and Amendment Agreement, dated January 22, 1997, by and
among Inland Steel Industries, Inc., Ryerson Tull, Inc. and Carl G.
Lusted.
10.7 Form of Change in Control Agreements, dated as of March 27, 1996, between
Inland Steel Industries, Inc. and the parties listed on the Schedule
thereto. (Filed as Exhibit 10.5 to RT's Registration Statement on Form S-1
(File No. 333-3235), and incorporated by reference herein.)
10.8 Copy of form of Severance Agreement, dated March 27, 1996, between Inland
Steel Industries, Inc. and each of the four executive officers of Inland
Steel Industries, Inc. identified on the exhibit relating to terms and
conditions of termination of employment following a change in control of
Inland Steel Industries, Inc. (Filed as Exhibit 10.A to Inland Steel
Industries, Inc.'s Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996, and incorporated by reference herein.)
10.9 Amended listing of executive officers of Inland Steel Industries, Inc. who
are parties to the form of Severance Agreement, dated March 27, 1996 in
Exhibit 10.8 hereof. (Filed as Exhibit 10.S.(2) to the Inland Steel
Industries, Inc. Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, and incorporated by reference herein.)
10.10 Form of Change in Control Agreements, dated as of June 10, 1996, between
RT and the parties listed on the Schedule thereto. (Filed as Exhibit 10.7
to RT's Registration Statement on Form S-1 (File No. 333-3235), and
incorporated by reference herein.)
10.11 Change in Control Agreement, dated as of June 10, 1996, between RT and
Neil S. Novich. (Filed as Exhibit 10.8 to RT's Registration Statement on
Form S-1 (File No. 333-3235), and incorporated by reference herein.)
10.12 Ryerson Tull Directors' Compensation Plan.
10.13 Ryerson Tull, Inc. Supplemental Retirement Plan for Covered Employees.
(Filed as Exhibit 10.10 to RT's Registration Statement on Form S-1 (File
No. 333-3235), and incorporated by reference herein.)
10.14 Ryerson Tull 1996 Incentive Stock Plan.
10.15 Corporate Separation Agreement between RT and Inland Steel Industries,
Inc., dated as of June 26, 1996. (Filed as Exhibit 10.12 to RT's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, and
incorporated by reference herein.)
10.16 Cross-License Agreement between RT and Inland Steel Industries, Inc.,
dated as of June 26, 1996. (Filed as Exhibit 10.13 to RT's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996, and incorporated
by reference herein.)
10.17 Tax Sharing Agreement between RT and Inland Steel Industries, Inc., dated
as of June 26, 1996. (Filed as Exhibit 10.14 to RT's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1996, and incorporated by
reference herein.)
10.18 ESOP Guarantee Agreement between Joseph T. Ryerson & Son, Inc. and the
Purchasers named therein, dated August 15, 1990. (Filed as Exhibit 10.15
to RT's Registration Statement on Form S-1 (File No. 333-3235), and
incorporated by reference herein.)
13
<PAGE>
10.19 Inland Steel Industries, Inc. Non-Qualified Thrift Plan, as amended.
(Filed as Exhibit 10.D to Inland Steel Industries, Inc.'s Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995, and
incorporated by reference herein.)
10.20 Inland Steel Industries, Inc. Supplemental Retirement Plan for Covered
Employees, as amended. (Filed as Exhibit 10.I to Inland Steel
Industries, Inc.'s Annual Report on Form 10-K for the fiscal year ended
December 31, 1993, and incorporated by reference herein.)
10.21 Inland Steel Industries, Inc. Special Retirement Plan for Covered
Employees. (Filed as Exhibit 10.J to Inland Steel Industries, Inc.'s
Annual Report on Form 10-K for the fiscal year ended December 31, 1993,
and incorporated by reference herein.)
10.22 Inland 1995 Incentive Stock Plan. (Filed as Exhibit A to Inland Steel
Industries, Inc.'s definitive Proxy Statement, dated April 17, 1995 and
furnished to stockholders in connection with the annual meeting held May
24, 1995, and incorporated by reference herein.)
10.23 Inland 1984 Incentive Stock Plan. (Filed as Exhibit 10.A to Inland Steel
Industries, Inc.'s Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated by reference herein.)
10.24 Inland 1988 Incentive Stock Plan. (Filed as Exhibit 10.B to Inland Steel
Industries, Inc.'s Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated by reference herein.)
10.25 Inland 1992 Incentive Stock Plan, as amended. (Filed as Exhibit 10.C to
Inland Steel Industries, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995, and incorporated by reference herein.)
10.26 Ryerson Tull, Inc. Annual Performance Improvement Incentive Plan.
10.27 Inland Steel Industries, Inc. Annual Incentive Plan. (Filed as Exhibit
10.A to Inland Steel Industries, Inc.'s Quarterly Report on Form 10-Q
for the quarter ended September 30, 1995, and incorporated by reference
herein.)
10.28 Inland Steel Industries, Inc. Special Achievement Award Plan. (Filed as
Exhibit 10.I to Inland Steel Industries, Inc.'s Annual Report on Form
10-K for the fiscal year ended December 31, 1987, and incorporated by
reference herein.)
10.29 Inland Steel Industries, Inc. Deferred Compensation Plan for Certain
Employees. (Filed as Exhibit 10.J to Inland Steel Industries, Inc.'s
Annual Report on Form 10-K for the fiscal year ended December 31, 1994,
and incorporated by reference herein.)
12 Statement re: Computation of Ratio of Earnings to Fixed Charges. (Filed
as Exhibit 12 to RT's Registration Statement on Form S-1 (File No. 333-
3235), and incorporated by reference herein.)
13 Information incorporated by reference from Annual Report to Stockholders
for the fiscal year ended December 31, 1996.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants appearing on page 15 of this Annual
Report on Form 10-K.
24 Powers of Attorney.
27 Financial Data Schedules.
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of Ryerson Tull, Inc.
Our audits of the consolidated financial statements referred to in our
report dated February 19, 1997 appearing on page 16 of the 1996 Annual Report
to Stockholders of Ryerson Tull, Inc. (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedules listed in Item
14(a)2 of this Annual Report on Form 10-K. In our opinion, these Financial
Statement Schedules present fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements.
PRICE WATERHOUSE LLP
Chicago, Illinois February 19, 1997
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statement on Form S-8 (No. 333-06977)
and the Registration Statement on Form S-8 (No. 333-06989) of Ryerson Tull,
Inc., of our report dated February 19, 1997, appearing on page 16 of the 1996
Annual Report to Stockholders of Ryerson Tull, Inc. which is incorporated in
this Annual Report on Form 10-K. We also consent to the incorporation by
reference of our report on the Financial Statement Schedules, which appears
above.
PRICE WATERHOUSE LLP
Chicago, Illinois March 28, 1997
15
<PAGE>
RYERSON TULL, INC.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION
(PARENT COMPANY ONLY)
STATEMENT OF INCOME
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Income:
Intercompany interest income...................... $ 0.4 $ -- $ --
Equity in income of subsidiaries.................. 73.8 86.5 53.3
Interest income and other revenue................. -- -- --
----- ----- -----
74.2 86.5 53.3
Expenses:
Interest and other expenses....................... 12.4 -- --
Intercompany interest expense..................... 3.7 0.1 0.1
----- ----- -----
16.1 0.1 0.1
Income before income taxes.......................... 58.1 86.4 53.2
Provision for income taxes.......................... 5.2Cr. 2.1Cr. 0.1Cr.
----- ----- -----
Net income.......................................... $63.3 $88.5 $53.3
===== ===== =====
</TABLE>
- --------
Cr. = Credit
16
<PAGE>
RYERSON TULL, INC.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION
(PARENT COMPANY ONLY)
STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income............................................ $ 63.3 $ 88.5 $ 53.3
Adjustments to reconcile net income to net cash
provided from (used for) operating activities:
Equity in undistributed earnings of subsidiaries.... (73.8) (86.5) (53.3)
Deferred income taxes............................... 1.3 (0.1) 2.0
Change in: Intercompany accounts.................... (4.6) -- --
Accounts payable............................... 0.3 -- --
Accrued liabilities............................ 11.0 -- --
Other deferred items................................ (1.2) -- --
------- ------ ------
Net adjustments................................... (67.0) (86.6) (51.3)
------- ------ ------
Net cash provided from (used for) operating
activities....................................... (3.7) 1.9 2.0
------- ------ ------
INVESTING ACTIVITIES
Net investments in subsidiaries....................... (2.2) -- --
Dividends received from subsidiaries.................. 75.0 -- --
------- ------ ------
Net cash provided from investing activities....... 72.8 -- --
FINANCING ACTIVITIES
Change in notes to and from related companies......... 69.2 (1.9) (2.0)
Issuance of common stock.............................. 77.1 -- --
Long-term debt issued................................. 242.8 -- --
Dividends paid........................................ (445.9) -- --
------- ------ ------
Net cash used for financing activities............ (56.8) (1.9) (2.0)
------- ------ ------
Net increase in cash and cash equivalents............. 12.3 -- --
Cash and cash equivalents--beginning of year.......... -- -- --
------- ------ ------
Cash and cash equivalents--end of year................ $ 12.3 -- --
======= ====== ======
</TABLE>
17
<PAGE>
RYERSON TULL, INC.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION
(PARENT COMPANY ONLY)
BALANCE SHEET
AT DECEMBER 31, 1996 AND 1995
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents..................................... $ 12.3 $ --
Receivables from related companies:
Notes....................................................... -- 1.9
Other....................................................... 4.6 --
------ ------
Total current assets...................................... 16.9 1.9
Investment in subsidiary companies.............................. 659.6 657.5
Deferred income taxes........................................... 8.1 9.1
Deferred charges and other assets............................... 8.4 --
------ ------
Total assets.............................................. 693.0 668.5
------ ------
LIABILITIES
Current Liabilities
Accounts payable.............................................. 0.3 --
Notes payable to related companies............................ 67.3 --
Accrued liabilities........................................... 11.0 --
------ ------
Total current liabilities................................. 78.6 --
Long-term debt.................................................. 250.0 --
------ ------
Total liabilities......................................... 328.6 --
------ ------
STOCKHOLDERS' EQUITY
Preferred stock, $1.00 par value; authorized--16,000,000 shares
for 1996; issued and outstanding--0 shares for 1996 and 1995... -- --
Class A common stock, $1.00 par value; authorized--100,000,000
shares for 1996; issued and outstanding--5,277,127 shares for
1996 and 0 shares for 1995..................................... 5.3 --
Class B common stock, $1.00 par value; authorized--34,000,000
shares for 1996; issued and outstanding--34,000,000 shares for
1996 and 0 shares for 1995..................................... 34.0 --
Common stock, $1.00 par value; authorized--3,000 shares for
1995; issued and
outstanding--0 shares for 1996 and 1 share for 1995
Capital in excess of par value.................................. 304.5 494.6
Reinvested earnings............................................. 22.4 173.9
Unearned restricted stock award compensation.................... (0.5) --
Cumulative translation adjustment............................... (1.3) --
------ ------
Total stockholders' equity................................ 364.4 668.5
------ ------
Total liabilities and stockholders' equity................ $693.0 $668.6
====== ======
</TABLE>
18
<PAGE>
RYERSON TULL, INC. AND SUBSIDIARY COMPANIES
SCHEDULE II--RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994 (DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
PROVISIONS FOR ALLOWANCES,
CLAIMS AND DOUBTFUL ACCOUNTS
--------------------------------------------
YEARS BALANCE AT ADDITIONS DEDUCTIONS BALANCE AT
ENDED BEGINNING CHARGED FROM END OF
DECEMBER 31 OF YEAR TO INCOME RESERVES YEAR
- ----------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
1996............................... $6.4 $0.6 $(1.0)(A) $6.0
1995............................... $6.3 $1.2 $(1.1)(A) $6.4
1994............................... $5.5 $1.4 $(0.6)(A) $6.3
</TABLE>
- --------
NOTES:
(A) Bad debts written off during year.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Ryerson Tull, Inc. has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
RYERSON TULL, INC.
/S/ Neil S. Novich
By:-----------------------------------
Neil S. Novich
President and Chief Executive
Officer and Director
(Principal Executive Officer)
Date: March 28, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of Ryerson
Tull, Inc. and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
Robert J. Darnall Chairman and Director March 28, 1997
- ------------------------------
Robert J. Darnall
Neil S. Novich President and Chief Executive Officer and
Director (Principal Executive Officer)
March 28, 1997
- ------------------------------
Neil S. Novich
Jay M. Gratz Vice President-Finance and Chief Financial
Officer (Principal Financial Officer)
March 28, 1997
- ------------------------------
Jay M. Gratz
Lily L. May Controller (Principal Accounting Officer)
March 28, 1997
- ------------------------------
Lily L. May
Richard G. Cline Director
James A. Henderson Director
Charles B. Salowitz
By:
Jerry K. Pearlman Director -------------------------
Charles B. Salowitz
Attorney-in-fact
March 28, 1997
Donald S. Perkins Director
Jean-Pierre Rosso Director
Ronald L. Thompson Director
20
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
------- --------------------------------------------------------- ----------
<C> <S> <C>
3.1 Restated Certificate of Incorporation of RT. (Filed as --
Exhibit 3.1 to RT's Registration Statement on Form S-1
(File No. 333-3235), and incorporated by reference
herein.)
3.2 By-Laws of RT. (Filed as Exhibit 3.2 to RT's Quarterly --
Report on Form 10-Q for the quarter ended June 30, 1996,
and incorporated by reference herein.)
4.1 Indenture, dated as of July 1, 1996, between RT and The --
Bank of New York. (Filed as Exhibit 4.1 to RT's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996,
and incorporated by reference herein.)
4.2 Specimen of 8 1/2% Notes due July 15, 2001. (Filed as --
Exhibit 4.2 to RT's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996, and incorporated by
reference herein.)
4.3 Specimen of 9 1/8% Notes due July 15, 2006. (Filed as --
Exhibit 4.3 to RT's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996, and incorporated by
reference herein.)
4.4 Rights Agreement between RT and Harris Trust and Savings --
Bank, as Rights Agent, dated as of June 10, 1996. (Filed
as Exhibit 4.4 to RT's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996, and incorporated by
reference herein.)
4.5 Form of Class A Common Stock Certificate. (Filed as --
Exhibit 4.5 to RT's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996, and incorporated by
reference herein.)
[The registrant hereby agrees to provide a copy of any --
other agreement relating to long-term debt at the request
of the Commission.]
10.1* Registration Rights Agreement between RT and Inland Steel --
Industries, Inc., dated as of June 26, 1996. (Filed as
Exhibit 10.1 to RT's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996, and incorporated by
reference herein.)
10.2* Employment Agreement, dated as of April 8, 1994, between --
Inland Steel Industries, Inc. and Neil S. Novich (Filed
as Exhibit 10.N.(8) to Inland Steel Industries, Inc.'s
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, and incorporated by reference herein.)
10.3* Assumption and Amendment Agreement, dated July 24, 1996, --
by and among Inland Steel Industries, Inc., Ryerson Tull,
Inc. and Neil S. Novich. (Filed as Exhibit 10.A to the
Inland Steel Industries, Inc. Quarterly Report on Form
10-Q for the quarter ended September 30, 1996, and
incorporated by reference herein.)
10.4* Change in Control Agreement, dated as of March 27, 1996, --
between Inland Steel Industries, Inc. and Neil S. Novich.
(Filed as Exhibit 10.6 to RT's Registration Statement on
Form S-1 (File No. 333-3235), and incorporated by
reference herein.)
10.5* Employment Agreement between Inland Steel Industries, --
Inc. and Carl G. Lusted, dated June 27, 1990. (Filed as
Exhibit 10.4 to RT's Registration Statement on Form S-1
(File No. 333-3235), and incorporated by reference
herein.)
10.6* Copy of Assumption and Amendment Agreement, dated January
22, 1997, by and among Inland Steel Industries, Inc.,
Ryerson Tull, Inc,. and Carl G. Lusted...................
</TABLE>
- --------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to the Company's Annual Report on Form 10-K.
21
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
------- --------------------------------------------------------- ----------
<C> <S> <C>
10.7* Form of Change in Control Agreements, dated as of March --
27, 1996, between Inland Steel Industries, Inc. and the
parties listed on the Schedule thereto. (Filed as Exhibit
10.5 to RT's Registration Statement on Form S-1 (File No.
333-3235), and incorporated by reference herein.)
10.8* Copy of form of Severance Agreement, dated March 27, --
1996, between Inland Steel Industries, Inc. and each of
the four executive officers of Inland Steel Industries,
Inc. identified on the exhibit relating to terms and
conditions of termination of employment following a
change in control of Inland Steel Industries, Inc. (Filed
as Exhibit 10.A to Inland Steel Industries, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended March
31, 1996, and incorporated by reference herein.)
10.9* Amended listing of executive officers of Inland Steel --
Industries, Inc. who are parties to the form of Severance
Agreement, dated March 27, 1996, in Exhibit 10.8 hereof.
(Filed as Exhibit 10.S.(2) to the Inland Steel
Industries, Inc. Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, and incorporated by
reference herein.)
10.10* Form of Change in Control Agreements, dated as of June --
10, 1996, between RT and the parties listed on the
Schedule thereto. (Filed as Exhibit 10.7 to RT's
Registration Statement on Form S-1 (File No. 333-3235),
and incorporated by reference herein.)
10.11* Change in Control Agreement, dated as of June 10, 1996, --
between RT and Neil S. Novich. (Filed as Exhibit 10.8 to
RT's Registration Statement on Form S-1 (File No. 333-
3235), and incorporated by reference herein.)
10.12* Ryerson Tull Directors' Compensation Plan................
10.13* Ryerson Tull, Inc. Supplemental Retirement Plan for --
Covered Employees. (Filed as Exhibit 10.10 to RT's
Registration Statement on Form S-1 (File No. 333-3235),
and incorporated by reference herein.)
10.14* Ryerson Tull 1996 Incentive Stock Plan...................
10.15 Corporate Separation Agreement between RT and Inland --
Steel Industries, Inc., dated as of June 26, 1996. (Filed
as Exhibit 10.12 to RT's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1996, and incorporated by
reference herein.)
10.16 Cross-License Agreement between RT and Inland Steel --
Industries, Inc., dated as of June 26, 1996. (Filed as
Exhibit 10.13 to RT's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996, and incorporated by
reference herein.)
10.17 Tax Sharing Agreement between RT and Inland Steel --
Industries, Inc., dated as of June 26, 1996. (Filed as
Exhibit 10.14 to RT's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996, and incorporated by
reference herein.)
10.18 ESOP Guarantee Agreement between Joseph T. Ryerson & Son, --
Inc. and the Purchasers named therein, dated August 15,
1990. (Filed as Exhibit 10.15 to RT's Registration
Statement on Form S-1 (File No. 333-3235), and
incorporated by reference herein.)
10.19* Inland Steel Industries, Inc. Non-Qualified Thrift Plan, --
as amended. (Filed as Exhibit 10.D to Inland Steel
Industries, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995, and incorporated by
reference herein.)
</TABLE>
- --------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to the Company's Annual Report on Form 10-K.
22
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
------- --------------------------------------------------------- ----------
<C> <S> <C>
10.20* Inland Steel Industries, Inc. Supplemental Retirement --
Plan for Covered Employees, as amended. (Filed as Exhibit
10.I to Inland Steel Industries, Inc.'s Annual Report on
Form 10-K for the fiscal year ended December 31, 1993,
and incorporated by reference herein.)
10.21* Inland Steel Industries, Inc. Special Retirement Plan for --
Covered Employees. (Filed as Exhibit 10.J to Inland Steel
Industries, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, and incorporated by
reference herein.)
10.22* Inland 1995 Incentive Stock Plan. (Filed as Exhibit A to --
Inland Steel Industries, Inc.'s definitive Proxy
Statement, dated April 17, 1995, and furnished to
stockholders in connection with the annual meeting held
May 24, 1995, and incorporated by reference herein.)
10.23* Inland 1984 Incentive Stock Plan. (Filed as Exhibit 10.A --
to Inland Steel Industries, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995, and
incorporated by reference herein.)
10.24* Inland 1988 Incentive Stock Plan. (Filed as Exhibit 10.B --
to Inland Steel Industries, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995, and
incorporated by reference herein.)
10.25* Inland 1992 Incentive Stock Plan, as amended. (Filed as --
Exhibit 10.C to Inland Steel Industries, Inc.'s Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995,
and incorporated by reference herein.)
10.26* Ryerson Tull, Inc. Annual Performance Improvement
Incentive Plan...........................................
10.27* Inland Steel Industries, Inc. Annual Incentive Plan. --
(Filed as Exhibit 10.A to Inland Steel Industries, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995, and incorporated by reference
herein.)
10.28* Inland Steel Industries, Inc. Special Achievement Award --
Plan. (Filed as Exhibit 10.I to Inland Steel Industries,
Inc.'s Annual Report on Form 10-K for the fiscal year
ended December 31, 1987, and incorporated by reference
herein.)
10.29* Inland Steel Industries, Inc. Deferred Compensation Plan --
for Certain Employees. (Filed as Exhibit 10.J to Inland
Steel Industries, Inc.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, and incorporated
by reference herein.)
12 Statement re: Computation of Ratio of Earnings to Fixed --
Charges. (Filed as Exhibit 12 to RT's Registration
Statement on Form S-1 (File No. 333-3235), and
incorporated by reference herein.)
13 Information incorporated by reference from Annual Report
to Stockholders for the fiscal year ended December 31,
1996.....................................................
21 Subsidiaries of the Registrant...........................
23 Consent of Independent Accountants appearing on page 15
of this Annual Report on Form 10-K.......................
24 Powers of Attorney.......................................
27 Financial Data Schedules.................................
</TABLE>
- --------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to the Company's Annual Report on Form 10-K.
23
<PAGE>
EXHIBIT 10.6
ASSUMPTION AGREEMENT
This Assumption made and entered into as of January 22, 1997 by and among
Inland Steel Industries, Inc., a Delaware corporation ("Inland"), Ryerson Tull,
Inc., a Delaware corporation ("Ryerson Tull"), and Carl G. Lusted ("Lusted"),
presently residing at 199 Lakewood Circle, Burr Ridge, Illinois 60121.
WHEREAS, Lusted and Inland entered into an agreement on June 27, 1990
relating to certain terms of Lusted's employment with Inland and its
subsidiaries (the "Employment Agreement");
WHEREAS, Inland subsequently sold a portion of the stock of Ryerson Tull to
the public;
WHEREAS, Inland, Ryerson Tull and Lusted desire to assure that each of them
receives the full benefit of the Agreement.
THE PARTIES hereto agree, in consideration of the premises, the mutual
agreements herein set forth and other good and valuable consideration, the
receipt of which is hereby acknowledged, as follows:
1. Ryerson Tull hereby assumes primary responsibility for performing each
and every remaining obligation of Inland pursuant to the Agreement.
2. The parties hereby agree that the term Inland as used in the Agreement
shall mean Ryerson Tull.
3. Inland will continue to be responsible for every obligation agreed to
by it pursuant to the Agreement only to the extent any such obligation is not
fully performed by Ryerson Tull.
4. Lusted will rely on Ryerson Tull as the primary obligor under the
Agreement, and will hold Inland responsible for obligations imposed by the
Agreement only if and when Ryerson Tull has
<PAGE>
refused or failed to perform such obligations.
IN WITNESS WHEREOF, the parties have signed this Assumption Agreement as of
the date first above written.
Carl G. Lusted
-------------------------------------------
Carl G. Lusted
RYERSON TULL, INC.
By: Neil S. Novich
----------------------------------------
Name: Neil S. Novich
Its: President and Chief Executive Officer
INLAND STEEL INDUSTRIES, INC.
By: Robert J. Darnall
----------------------------------------
Name: Robert J. Darnall
Its: Chairman and Chief Executive Officer
<PAGE>
EXHIBIT 10.12
RYERSON TULL
DIRECTORS' COMPENSATION PLAN
SECTION 1
General
1.1. Purpose and Effective Date. The Ryerson Tull Directors' Compensation
Plan (the "Plan") has been established by Ryerson Tull, Inc. (the "Company") to
provide an alternative method of compensating those directors of the Company who
do not otherwise receive compensation as employees of the Company or its
affiliates in order to aid the Company in attracting and retaining as directors
persons whose abilities, experience and judgment can contribute to the continued
progress of the Company and to facilitate the directors' ability to acquire a
proprietary interest in the Company. The Plan shall be effective upon the
consummation of the initial public offering of Class A Common Stock, $1.00 par
value per share, of the Company ("Stock"), which date shall be the "Effective
Date" of the Plan as set forth herein.
1.2. Participation. Only Non-Employee Directors of the Company shall be
eligible to participate in the Plan. As of any applicable date, a "Non-Employee
Director" is a person who is serving as a director of the Company who is not an
employee of the Company or any affiliate of the Company as of that date.
1.3. Administration. The authority to manage and control the operation and
administration of the Plan shall be vested in a committee of the Board of
Directors of the Company (the "Board") which committee (the "Committee") shall
have such authorities as delegated to it from time to time by the Board.
Subject to the limitations of the Plan and any limitations on authorities
imposed on the Committee by the Board, the Committee shall have the sole and
complete authority to:
(a) interpret the Plan and to adopt, amend and rescind administrative
guidelines and other rules and regulations relating to the Plan;
(b) correct any defect or omission and reconcile any inconsistency in the
Plan or in any payment made hereunder; and
(c) to make all other determinations and take all other actions necessary
or advisable for the implementation and administration of the Plan.
<PAGE>
The Committee's determinations on matters within its control shall be conclusive
and binding on the Company and all other persons. Notwithstanding the
foregoing, no member of the Committee shall act with respect to the
administration of the Plan in a manner inconsistent with the exempt status of
the Plan under Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
as amended ("Rule 16b-3") as then in effect.
1.4. Shares Subject to the Plan. The shares of Stock which shall be
available for distribution pursuant to the Plan shall be either authorized and
unissued shares or treasury shares (including, in the discretion of the Company,
shares purchased in the open market). The number of shares of Stock to be
distributed pursuant to Non-Employee Directors' elections to receive shares of
Stock in lieu of Cash Retainers (as described in subsection 2.1) shall be
determined in accordance with Section 2. The number of shares of Stock to be
distributed pursuant to Non-Employee Directors' Deferral Elections (as described
in Section 3) shall be determined in accordance with Section 3. The aggregate
number of shares of Stock which are available for issuance under the Plan shall
be 100,000; provided, however, that:
(a) in the event of any merger, consolidation, reorganization,
recapitalization, spinoff, stock dividend, stock split, reverse stock
split, rights offering, exchange or other change in the corporate
structure or capitalization of the Company affecting the Stock, the
number and kind of shares of Stock available for awards under the Plan
shall be equitably adjusted in such manner as the Committee shall
determine in its sole judgment;
(b) in determining what adjustment, if any, is appropriate pursuant to
paragraph (a), the Committee may rely on the advice of such experts as
it deems appropriate, including counsel, investment bankers and the
accountants of the Company; and
(c) no fractional shares shall be granted or authorized pursuant to any
adjustment pursuant to paragraph (a), although cash payments may be
authorized in lieu of fractional shares that may otherwise result from
such an equitable adjustment.
Except to the extent otherwise determined by the Committee, any shares of Stock
issued pursuant to subsection 2.1 that terminate without vesting, shall become
available for future awards of Stock under the Plan.
1.5. Compliance with Applicable Laws. Notwithstanding any other provision
of the Plan, the Company shall have no obligation
<PAGE>
to deliver any shares of Stock under the Plan unless such delivery would comply
with all applicable laws and the applicable requirements of any securities
exchange or similar entity. Prior to the delivery of any shares of Stock under
the Plan, the Company may require a written statement that the recipient is
acquiring the shares for investment and not for the purpose or with the
intention of distributing the shares. If the redistribution of shares is
restricted pursuant to this subsection 1.5, the certificates representing such
shares may bear a legend referring to such restrictions.
1.6. Director and Shareholder Status. The Plan will not give any person the
right to continue as a director of the Company, or any right or claim to any
benefits under the Plan unless such right or claim to any benefits has
specifically accrued under the terms of the Plan. Participation in the Plan and
any right to accrued benefits shall not create any rights in a director (or any
other person) as a shareholder of the Company until shares of Stock are
registered in the name of the director (or such other person).
1.7. Definition of Fair Market Value. The "Fair Market Value" of a share
of Stock on any date shall be equal to the average of the high and low prices of
a share of Stock reported on the New York Stock Exchange Composite Transactions
for the applicable date or, if there are no such reported trades for such date,
for the last previous date for which trades were reported.
1.8. Source of Payments. Except for Stock actually delivered pursuant to
the Plan, the Plan constitutes only an unfunded, unsecured promise of the
Company to make payments or awards to directors (or other persons) or deliver
Stock in the future in accordance with the terms of the Plan.
1.9. Nonassignment. Neither a director's nor any other person's rights to
payments or awards under the Plan are subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors of the director.
1.10. Elections. Any notice or document required to be filed with the
Committee under the Plan will be properly filed if delivered or mailed by
registered mail, postage prepaid, to the Committee, in care of the Company, at
the Company's principal executive offices. The Committee may, by advance written
notice to affected persons, revise such notice procedure from time to time. Any
notice required under the Plan may be waived by the person entitled thereto.
<PAGE>
SECTION 2
Payment of Retainer; Election
to Receive Stock in Lieu of Retainer
2.1. Payment of Retainer. Subject to the terms and conditions of the Plan,
for each Award Year (as defined below), each individual who is a Non-Employee
Director during such Award Year shall be paid a retainer in an amount determined
from time to time by the Board (the "Retainer") in accordance with and subject
to the following:
(a) For each Award Year, a "Cash Retainer" shall be payable to each
individual who is a Non-Employee Director during such Award Year,
subject to the following:
(i) The amount of the Cash Retainer payable to a Non-Employee
Director for any Award Year shall be one-half of the Retainer
for the Award Year and shall be paid in quarterly installments
on the last day of each Fiscal Quarter (as defined below),
beginning with the last day of the Fiscal Quarter in which the
first day of the Award Year occurs and ending with the earlier
of (A) the last day of the Fiscal Quarter in which the Non-
Employee Director's service as a Non-Employee Director
terminates for any reason, or (B) the last day of the first
Fiscal Quarter ending after the last day of the Award Year.
(ii) The amount of each quarterly installment of the Cash Retainer
for an Award Year payable to a Non-Employee Director shall be
equal to the product of (A) the Cash Retainer, multiplied by (B)
a fraction, the numerator of which is the number of months, or
any portion thereof, during such Fiscal Quarter during which the
individual served as a Non-Employee Director, and the
denominator of which is twelve.
(b) For each Award Year, a "Stock Retainer" shall be payable to each
individual who is a Non-Employee Director during such Award Year,
subject to the following:
(i) The amount of the Stock Retainer payable to a Non-Employee
Director for an Award Year shall be equal to the product of (A)
one-half of the Retainer for the Award Year, multiplied by (B) a
fraction, the numerator of which is the number of months or any
portion thereof
<PAGE>
remaining in the Award Year as of the Issue Date (as defined
below) and denominator of which is 12.
(ii) The Stock Retainer payable to a Non-Employee Director for any
Award Year shall be paid as of the Issue Date in the form of
shares of Class A Common Stock of the Company having a Fair
Market Value (determined as of the Issue Date) equal to the
amount of the Stock Retainer payable to the Non-Employee
Director for the Award Year, which shares shall be subject to
forfeiture and transfer restrictions until earned as described
in this paragraph (b) ("Restricted Stock").
(iii) The shares of Restricted Stock awarded to a Non-Employee
Director for an Award Year pursuant to this paragraph (b) shall
be earned by him or her and the restrictions on such shares
shall lapse in quarterly installments on the last day of each
Fiscal Quarter, beginning with the last day of the Fiscal
Quarter in which the first day of the Award Year occurs and
ending with the earlier of (A) the last day of the Fiscal
Quarter in which the Non-Employee Director's service as a Non-
Employee Director terminates for any reason, or (B) the last day
of the first Fiscal Quarter ending after the last day of the
Award Year. Any shares of Restricted Stock which are not earned
by a Non-Employee Director as of the last day of the Fiscal
Quarter in which his or her service as a Non-Employee Director
terminates shall be forfeited.
(iv) The number of shares of Restricted Stock for any Award Year
which are earned by a Non-Employee Director for any Fiscal
Quarter shall be equal to the product of (A) the total number of
shares of Restricted Stock awarded to him or her for the Award
Year, multiplied by (B) a fraction, the numerator of which is
the number of months, or any portion thereof, during such Fiscal
Quarter during which the individual served as a Non-Employee
Director, and the denominator of which is twelve. In the event
that this subparagraph (iv) results in a fractional share of
Restricted Stock being earned as of the last day of a Fiscal
Quarter, the Fair Market Value of any such fractional share
shall be paid in cash as soon as
<PAGE>
practicable after the last day of the Fiscal Quarter.
For purposes of the Plan:
(1) The term "Fiscal Quarter" shall mean each calendar quarter ending
after the regular annual meeting of shareholders of the Company (an
"Annual Meeting") occurring in 1997.
(2) The term "Award Year" shall mean the 12-consecutive-month period
commencing as of the first day of the first calendar month following
the date of the Annual Meeting occurring in 1997 and each 12-
consecutive-month period commencing as of the first day of the first
calendar month following each Annual Meeting thereafter.
(3) The term "Issue Date" shall mean (A) in the case of an individual who
was a Non-Employee as of the first day of the Award Year, the first
day of the Award Year, or (B) in the case of an individual who becomes
a Non-Employee Director during the Award Year but after the first day
thereof, the first day of the month coincident with or next following
the date on which such individual first becomes a Non-Employee
Director.
Notwithstanding the foregoing, the Board, in its sole discretion, may determine
that an Award Year of less than 12 months is appropriate, in which case, the
amount of the Retainer for such Award Year and the period over which such
Retainer is paid or earned shall be equitably adjusted as determined by the
Board.
2.2. Election to Receive Stock. Subject to the terms and conditions of the
Plan, each Non-Employee Director may elect to forego receipt of all or any
portion of the Cash Retainer otherwise payable to him or her following the
Effective Date and instead to receive whole shares of Stock of equivalent value
to the Retainer so foregone (determined in accordance with subsection 2.4). A
Non-Employee Director's election under this subsection 2.2 to have all or any
portion of his or her Cash Retainer paid in shares of Stock shall be valid only
if it is in writing, signed by the Non-Employee Director, and filed with the
Committee in accordance with uniform and nondiscriminatory rules adopted by the
Committee.
2.3. Revocation of Election to Receive Stock. Once effective, a Non-
Employee Director's election pursuant to subsection 2.2 to receive Stock in lieu
of his or her Cash Retainer shall remain in effect for successive calendar years
until it is revised or revoked. Any such revision or revocation shall be in
writing, signed by the Non-Employee Director and
<PAGE>
filed with the Committee and shall be effective for the calendar year next
following the date on which it is received by the Committee, or such later date
specified in such notice.
2.4. Equivalent Amount of Stock. The number of whole shares of Stock to be
distributed to any Non-Employee Director by reason of his or her election
pursuant to subsection 2.2 to receive Stock in lieu of his or her Cash Retainer
shall be equal to:
(a) the dollar amount of the Cash Retainer which the Non-Employee Director
has elected to have paid to him or her in shares of Stock;
DIVIDED BY
(b) the Fair Market Value of a share of Stock as of the date on which such
Cash Retainer (or portion thereof) would otherwise have been payable
to the Non-Employee Director.
The Fair Market Value of any fractional share shall be paid to the Non-Employee
Director in cash.
SECTION 3
Deferral Elections
3.1. Deferrals. Subject to the terms and conditions of the Plan, each Non-
Employee Director may elect to defer the receipt of all or any portion of the
Retainer and Eligible Fees (as defined below) otherwise payable to or, in the
case of the Stock Retainer, earned by him or her, for periods on or after the
Effective Date. A Non-Employee Director may elect the deferral described in the
preceding sentence by filing a written "Deferral Election" with the Committee in
accordance with uniform and nondiscriminatory rules adopted by the Committee. A
Non-Employee Director's Deferral Election shall specify the portion of his or
her Retainer and Eligible Fees (including any portion of his or her Stock
Retainer or any portion of his or her Cash Retainer that he or she has elected
to receive in Stock pursuant to subsection 2.2) to be deferred and the future
date as of which distribution of the deferred amounts is to be made in
accordance with the terms and conditions of the Plan (the "Distribution Date").
If no Distribution Date is specified in a Non-Employee Director's Deferral
Election, the Distribution Date shall be deemed to be the first business day in
January of the year following the date on which the Non-Employee Director ceases
to be a director of the Company for any reason. A Non-Employee Director's
Deferral Election shall be effective with respect to the portion of his or her
Retainer and Eligible Fees otherwise payable to or, in the case of the Stock
Retainer, earned by him
<PAGE>
or her for services rendered after the last day of the calendar year in which
such election is filed with the Committee; provided, however, that:
(a) a Deferral Election which is filed within 30 days of the date on which
a director first becomes a Non-Employee Director shall be effective
with respect to all Eligible Fees and Retainer otherwise payable to
or, in the case of the Stock Retainer, earned by him or her after the
date of the Deferral Election; and
(b) by notice filed with the Committee in accordance with uniform and
nondiscriminatory rules established by it, a Non-Employee Director may
terminate or modify any Deferral Election as to his or her Retainer
and Eligible Fees payable to or, with respect to the Stock Retainer,
earned by him or her for services rendered after the last day of the
calendar year in which such notice is filed with the Committee;
provided, however, that no modification may be made to the
Distribution Date unless the Non-Employee Director shall file such
notice with the Committee at least one year prior to the Distribution
Date.
Notwithstanding the provisions of paragraph (b) next above, the Committee may,
in its sole discretion, after considering all of the pertinent facts and
circumstances, approve a change to the Distribution Date which is requested by a
Non-Employee Director less than one year prior thereto. For purposes of the
Plan, the term "Eligible Fees" means the meeting fees, committee fees and
committee chair fees (and does not include any portion of the Retainer) that
would otherwise be payable to the Non-Employee Director by the Company as
established, from time to time, by the Board or any committee thereof.
3.2. Crediting and Adjustment of Deferred Amounts. The amount of any
Retainer and Eligible Fees deferred pursuant to subsection 3.1 ("Deferred
Compensation") shall be credited to a bookkeeping account maintained by the
Company in the name of the Non-Employee Director (the "Deferred Compensation
Account"), which account shall consist of two subaccounts, the "Company Stock
Subaccount" and the "Cash Subaccount." The amount, if any, of the Stock
Retainer or the Cash Retainer that the Non-Employee Director has elected to
receive in Stock pursuant to subsection 2.2 and with respect to which he or she
has filed a Deferral Election pursuant to subsection 3.1 shall be credited to
his or her Company Stock Subaccount. Any other Deferred Compensation shall be
credited to his or her Cash Subaccount. A Non-Employee Director's Deferred
Compensation Account shall be adjusted as follows:
<PAGE>
(a) As of the first day of each calendar quarter (which dates are referred
to herein as "Accounting Dates"), the Non-Employee Director's Cash
Subaccount shall be adjusted as follows:
(i) first, the amount of any distributions made since the last
preceding Accounting Date and attributable to the Cash
Subaccount shall be charged to the Cash Subaccount;
(ii) next, the balance of the Cash Subaccount after adjustment in
accordance with subparagraph (i) next above shall be credited
with interest since the last preceding Accounting Date computed
at the prime rate as reported by The First National Bank of
Chicago (or its successor) for such date or, if such date is not
a business day, for the next preceding business day;
(iii) finally, after adjustment in accordance with the foregoing
provisions of this paragraph (a), the Cash Subaccount shall be
credited with the portion of the Deferred Compensation otherwise
payable to the Non-Employee Director since the last preceding
Accounting Date which is to be credited to the Cash Subaccount.
(b) The Non-Employee Director's Company Stock Subaccount shall be adjusted
as follows:
(i) as of any date on or after the Effective Date on which any
portion of a Non-Employee Director's Retainer would have been
payable to the Non-Employee Director in Stock but for his or her
Deferral Election, the Company Stock Subaccount shall be
credited with a number of "Stock Units" equal to the number of
shares of Stock (including any fractional shares) to which he or
she would have been entitled pursuant to Section 2;
(ii) as of the date on which shares of Stock are distributed to the
Non-Employee Director in accordance with subsection 3.3 below,
an equal number of Stock Units will be subtracted from the
Company Stock Subaccount; and
(iii) as of the record date for any dividend paid on Stock, the
Company Stock Subaccount shall be credited with that number of
additional Stock Units which is equal to the number obtained by
multiplying the number of Stock Units then credited to the
Company Stock Subaccount by the
<PAGE>
amount of the cash dividend or the fair market value (as
determined by the Board) of any dividend in kind payable on a
share of Stock, and dividing that product by the then Fair
Market Value of a share of Stock.
In the event of any merger, consolidation, reorganization,
recapitalization, spinoff, stock split, reverse stock split, rights
offering, exchange or other change in the corporate structure or
capitalization of the Company affecting the Stock, each Non-Employee
Director's Company Stock Subaccount shall be equitably adjusted in such
manner as the Committee shall determine in its sole judgment.
3.3. Payment of Deferred Compensation Account. Except as otherwise
provided in this subsection 3.3 or subsection 3.4, the balances credited to the
Cash Subaccount and Company Stock Subaccount of a Non-Employee Director's
Deferred Compensation Account shall each be payable to the Non-Employee Director
in a lump sum or quarterly installments (over a period not exceeding ten years)
as elected by the Non-Employee Director in his or her Deferral Election;
provided, however, that if no distribution form was elected by the Non-Employee
Director in his or her Deferral Election, payment shall be made in a lump sum.
Installment distributions shall commence as of the first day of the first
calendar quarter after the Distribution Date and shall continue as of the first
day of each calendar quarter thereafter for the applicable period.
Notwithstanding the foregoing, a Non-Employee Director, by filing a notice with
the Committee at least one year prior to the Distribution Date, may elect to
change the number of payments to a single payment or to any number of quarterly
payments not in excess of forty. Each installment payment shall include a cash
portion, if applicable, and a Stock portion, if applicable, as follows:
(a) The cash portion to be paid as of any date determined under the
foregoing provisions of this Section 3.3 and charged to the Cash
Subaccount shall be equal to the balance of the Cash Subaccount
multiplied by a fraction, the numerator of which is one and the
denominator of which is the number of remaining payments to be made,
including such payment.
(b) The Stock portion to be paid as of any date determined under the
foregoing provisions of this Section 3.3 and charged to the Company
Stock Subaccount shall be distributed in whole shares of Stock, the
number of shares of which shall be determined by rounding to the next
lower integer the product obtained by multiplying the number of Stock
Units then credited to the Non-Employee Director's Company Stock
Subaccount by a
<PAGE>
fraction, the numerator of which is one and the denominator of which
is the number of remaining payments to be made, including such
payment. The Fair Market Value of any fractional share of Stock
remaining after all installment Stock distributions have been made to
the Non-Employee Director pursuant to this paragraph (b) shall be paid
to the Non-Employee Director in cash.
Notwithstanding the foregoing, the Committee, in its sole discretion, may
distribute all balances in any Deferred Compensation Account to a Non-Employee
Director (or former Non-Employee Director) in a lump sum as of any date.
3.4. Payments in the Event of Death. If a Non-Employee Director dies
before payment of his or her Deferred Compensation Account commences, all
amounts then credited to his or her Deferred Compensation Account shall be
distributed to his or her Beneficiary (as described below), as soon as
practicable after his or her death, in a lump sum. If a Non-Employee Director
dies after payment of his or her Deferred Compensation Account has commenced but
before the entire balance of such account has been distributed, the remaining
balance thereof shall be distributed to his or her Beneficiary, as soon as
practicable after his or her death, in a lump sum. Any amounts in the Cash
Subaccount shall be distributed in cash and any amounts in the Stock Subaccount
shall be distributed in whole shares of Stock determined in accordance with
paragraph 3.3(b), and the Fair Market Value of any fractional share of Stock
shall be distributed in cash. For purposes of the Plan, the Non-Employee
Director's "Beneficiary" is the person or persons the Non-Employee Director
designates, which designation shall be in writing, signed by the Non-Employee
Director and filed with the Committee prior to the Non-Employee Director's
death. A Beneficiary designation shall be effective when filed with the
Committee in accordance with the preceding sentence. If more than one
Beneficiary has been designated, the balance in the Non-Employee Director's
Deferred Compensation Account shall be distributed to each such Beneficiary per
capita (with cash distributed in lieu of any fractional share of Stock). In the
absence of a Beneficiary designation or if no Beneficiary survives the Non-
Employee Director, the Beneficiary shall be the Non-Employee Director's estate.
SECTION 4
Amendment and Termination
While the Company expects and intends to continue the Plan, the Board
reserves the right to, at any time and in any way,
<PAGE>
amend, suspend or terminate the Plan; provided, however, that no amendment,
suspension or termination shall:
(a) be made without shareholder approval to the extent such approval is
required by law, agreement or the rules of any exchange or automated
quotation system upon which the Stock is listed or quoted;
(b) except as provided in subsection 3.3 (relating to lump sum payments
of amounts held in a Non-Employee Director's Deferred Compensation
Account) or this Section 4, materially alter or impair the rights of
a Non-Employee Director under the Plan without the consent of the
Non-Employee Director with respect to rights already accrued
hereunder; or
(c) make any change that would disqualify the Plan or any other plan of
the Company intended to be so qualified from the exemption provided by
Rule 16b-3 under the Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT 10.14
RYERSON TULL 1996 INCENTIVE STOCK PLAN
1. Purpose.
The purpose of the Ryerson Tull 1996 Incentive Stock Plan (the "Plan") is
to attract and retain outstanding individuals as officers and key employees of
Ryerson Tull, Inc. (the "Company") and its subsidiaries, and to furnish
incentives to such individuals through rewards based upon the ownership and
performance of the Common Stock (as defined in Section 3). To this end, the
Committee hereinafter designated and, in certain circumstances, the Chairman of
the Board of the Company (the "Chairman") or the President of the Company, may
grant stock options, stock appreciation rights, restricted stock awards, and
performance awards, or combinations thereof, to officers and other key employees
of the Company and its subsidiaries, on the terms and subject to the conditions
set forth in this Plan.
2. Participants.
Participants in the Plan shall consist of: (i) such officers and other key
employees of the Company and its subsidiaries as the Committee in its sole
discretion may select from time to time to receive stock options, stock
appreciation rights, restricted stock awards or performance awards, either
singly or in combination, as the Committee may determine in its sole discretion;
and (ii) if the Committee authorizes the Chairman or the President to make
grants or awards of stock options, stock appreciation rights, restricted stock
or performance awards, such employees of the Company and its subsidiaries who
are not subject to section 16(a) of the Exchange Act as the Chairman or the
President shall determine in his or her sole discretion after consultation with
the Vice President-Human Resources of the Company. Individuals who receive
awards of Substitute Options and Substitute Restricted Stock pursuant to Section
14 shall also be Participants in the Plan. Any director of the Company or any of
its subsidiaries who is not also an employee of the Company or any of its
subsidiaries shall not be eligible to receive stock options, stock appreciation
rights, restricted stock awards or performance awards under the Plan. As used in
the Plan, the term "subsidiary" means (a) any corporation of which the Company
owns or controls, directly or indirectly, 50% or more of the outstanding shares
of capital stock entitled to vote for the election of directors or (b) any
partnership, joint venture, or
<PAGE>
other business entity in respect of which the Company, directly or indirectly,
has comparable ownership or control.
3. Shares Reserved under the Plan.
Subject to adjustment pursuant to the provisions of Section 11 of the Plan,
the maximum number of shares of Class A Common Stock, $1.00 par value per share,
of the Company ("Common Stock") which may be issued pursuant to grants or awards
made under the Plan shall not exceed 2,300,000. No more than 800,000 shares of
Common Stock shall be issued pursuant to restricted stock awards and performance
awards under the Plan.
The following restrictions shall apply to all grants and awards under the
Plan other than grants and awards which by their terms are not intended to
comply with the "Performance-Based Exception" (defined below in this Section 3):
(a) the maximum aggregate number of shares of Common Stock that may be
granted or awarded under the Plan to any participant under the Plan during any
three year period shall be 1,500,000; and
(b) the maximum aggregate cash payout with respect to grants or awards
under the Plan in any fiscal year of the Company to any Named Executive Officer
(defined below in this Section 3) shall be $1,000,000.
For purposes of the Plan, "Named Executive Officer" shall mean a
participant who is one of the group of "covered employees" as defined in the
regulations promulgated under section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code") or any successor statute, and "Performance-Based
Exception" shall mean the performance-based exception from the deductibility
limitations as set forth in Section 162(m) of the Code.
Except to the extent otherwise determined by the Committee, any shares of
Common Stock subject to grants or awards under the Plan that terminate by
expiration, cancellation or otherwise without the issuance of such shares
(including shares underlying a stock appreciation right exercised for stock, to
the extent that such underlying shares are not issued), that are settled in cash
(to the extent so settled), or, in the case of restricted stock awards, that
terminate without vesting, shall become
-2-
<PAGE>
available for future grants and awards under the Plan. Shares of Common Stock to
be issued pursuant to grants or awards 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 "Board"). To the
extent necessary to comply with the exemption provided by rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or any
successor rule ("Rule 16b-3"), each member of the Committee shall be a "non-
employee director" within the meaning of Rule 16b-3. Subject to the provisions
of the Plan, the Committee shall have authority: (i) to determine which
employees of the Company and its subsidiaries shall be eligible for
participation in the Plan; (ii) to select employees to receive grants under the
Plan; (iii) to determine the form of grant, whether as a stock option, stock
appreciation right, restricted stock award, performance award or a combination
thereof, the number of shares of Common Stock or units subject to the grant, the
time and conditions of exercise or vesting, the fair market value of the Common
Stock for purposes of the Plan, and all other terms and conditions of any grant
and to amend such awards or accelerate the time of exercise or vesting thereof;
and (iv) to prescribe the form of agreement, certificate or other instrument
evidencing the grant. Notwithstanding the foregoing, the Committee, subject to
the terms and conditions of the Plan, may delegate to the Chairman or the
President of the Company, if such individual is then serving as a member of the
Board, the authority to act as a subcommittee of the Committee for purposes of
making grants or awards of stock options, stock appreciation rights, restricted
stock or performance awards, not to exceed such number of shares as the
Committee shall designate annually, to such employees of the Company and its
subsidiaries who are not subject to section 16(a) of the Exchange Act as the
Chairman or the President shall determine in his or her sole discretion after
consultation with the Vice President-Human Resources of the Company, and the
Chairman or the President, as applicable, shall have the authority and duties
of the Committee with respect to such grants.
The Committee shall also have authority to interpret the Plan and to
establish, amend and rescind rules and regulations for the
-3-
<PAGE>
administration of the Plan, and all such interpretations, rules and regulations
shall be conclusive and binding on all persons.
5. Effective Date of Plan.
The Plan shall be effective upon approval by the stockholder(s) of the
Company.
6. Stock Options.
(a) Grants. Subject to the terms of the Plan, options to purchase shares
of Common Stock, including "incentive stock options" within the meaning of
Section 422 of the Code, may be granted from time to time to such officers and
other key employees of the Company and its subsidiaries as may be selected by
the Committee. Each grant of an option under the Plan may designate whether the
option is intended to be an incentive stock option or a "nonqualified" stock
option. Any option not so designated shall be deemed to be a "nonqualified"
stock option.
(b) Terms of Options. An option shall be exercisable in whole or in such
installments and at such times as may be determined by the Committee in its
sole discretion, provided that no option shall be exercisable less than six
months or more than ten years after the date of grant (except in the case of
death or physical or mental incapacity). The per share option price shall not be
less than the greater of par value or 100% of the fair market value of a share
of Common Stock on the date the option is granted. Upon exercise, the option
price may be paid in cash, in shares of Common Stock having a fair market value
equal to the option price which have been owned by the Participant for at least
6 months prior thereto, or in a combination thereof. The Committee may also
allow the cash less exercise of options by holders thereof, as permitted under
regulations promulgated by the Board of Governors of the Federal Reserve System,
subject to any applicable restrictions necessary to comply with rules adopted by
the Securities and Exchange Commission, and the exercise of options by holders
thereof by any other means that the Committee determines to be consistent with
the Plan's purpose and applicable law, including loans, with or without
interest, made by the Company to the holder thereof.
(c) Restrictions Relating to Incentive Stock Options. To the extent
required by the Code, the aggregate fair market value
-4-
<PAGE>
(determined as of the time the option is granted) of the Common Stock with
respect to which incentive stock options are exercisable for the first time by
an employee during any calendar year (under the Plan or any other plan of the
Company or any of its subsidiaries) shall not exceed $100,000.
(d) Termination of Employment. If an optionee ceases to be employed by the
Company or any of its subsidiaries by reason of (i) death, (ii) physical or
mental incapacity, (iii) retirement on or after the normal retirement date
provided for in and pursuant to any pension plan of the Company or any
subsidiary of the Company in effect at the time of such retirement, or (iv)
early retirement (with the consent of the Committee) provided for in and
pursuant to any such pension plan, any option held by such optionee may be
exercised, with respect to all or any part of the Common Stock as to which such
option was not theretofore exercised (whether or not such option was otherwise
then exercisable), for such period from and after the date of such cessation of
employment (not extending, however, beyond the date of expiration of such
option) as the Committee may determine at the time of the grant or at any time
thereafter. If an optionee ceases to be employed by the Company and any of its
subsidiaries for any reason other than a reason set forth in the immediately
preceding sentence, any option granted to such optionee may be exercised for a
period ending on the 30th day following the date of such cessation of employment
or the date of expiration of such option, whichever first occurs, but only with
respect to that number of shares of Common Stock for which such option was
exercisable immediately prior to the date of cessation of employment, except as
otherwise determined by the Committee at the time of grant or any time
thereafter.
(e) Additional Terms and Conditions. The agreement or instrument
evidencing the grant of a stock option may contain such other terms, provisions
and conditions not inconsistent with the Plan as may be determined by the
Committee in its sole discretion.
7. Stock Appreciation Rights.
(a) Grants. Subject to the terms of the Plan, rights entitling the grantee
to receive cash or shares of Common Stock having a fair market value equal to
the appreciation in market value of a stated number of shares of such Common
Stock from the
-5-
<PAGE>
date of the grant to the date of exercise, or, in the case of rights granted in
tandem with or by reference to a stock option granted prior to the grant of such
rights, from the date of grant of such related stock option to the date of
exercise, may be granted from time to time to such officers and other key
employees of the Company and its subsidiaries as may be selected by the
Committee.
(b) Terms of Grant. Such rights may be granted in tandem with or by
reference to a related stock option, in which event the grantee may elect to
exercise either the stock option or the right, but not both, as to the shares
subject to the stock option and the right, or the right may be granted
independently of a stock option. Rights granted in tandem with or by reference
to a related stock option shall be exercisable to the extent, and only to the
extent, that the related option is exercisable, provided that no such right
(except in the case of death or physical or mental incapacity) shall be
exercisable prior to the expiration of six months following the date the right
is granted. Rights granted independently of a stock option shall be exercisable
in whole or in such installments and at such times as may be determined by the
Committee, provided that no right (except in the case of death or physical or
mental incapacity) shall be exercisable less than six months or more than ten
years after the date of grant. Further, in the event that any employee to whom
rights are granted independently of a stock option ceases to be an employee of
the Company and its subsidiaries, such rights shall be exercisable only to the
extent and upon the conditions that stock options are exercisable in accordance
with the provisions of paragraph (d) of Section 6 of the Plan. The Committee may
at the time of the grant or at any time thereafter impose such additional terms
and conditions on the exercise of stock appreciation rights as it deems
necessary or desirable for any reason, including for compliance with Section
16(a) or Section 16(b) of the Exchange Act and the rules and regulations
thereunder.
(c) Payment on Exercise. Upon exercise of a stock appreciation right, the
holder shall be paid the excess of the then fair market value of the number of
shares of Common Stock to which the right relates over the fair market value of
such number of shares at the date of grant of the right or of the related stock
option, as the case may be. Such excess shall be paid in cash or in shares of
Common Stock having a fair market value
-6-
<PAGE>
equal to such excess, or in such combination thereof, as may be provided in the
grant of such right (which may permit the holder to elect between cash and
Common Stock or to elect a combination thereof), or, if no such provision is
made in the grant, as the Committee shall determine upon exercise of the right,
provided, in any event, that the holder shall be paid cash in lieu of any
fractional share of Common Stock to which such holder would otherwise be
entitled.
(d) Additional Terms and Conditions. The agreement or instrument
evidencing the grant of stock appreciation rights may contain such other terms,
provisions and conditions not inconsistent with the Plan as may be determined by
the Committee in its sole discretion.
8. Restricted Stock Awards.
Subject to the terms of the Plan, restricted stock awards consisting of
shares of Common Stock may be made from time to time to such officers and other
key employees of the Company and its subsidiaries as may be selected by the
Committee, provided that any such employee (except an employee whose terms of
employment include the granting of a restricted stock award) shall have been
employed by the Company or any of its subsidiaries for at least six months. Such
awards shall be contingent on the employee's continuing employment with the
Company or its subsidiaries for a period to be specified in the award, which
(except in the case of death or physical or mental incapacity) shall not be less
than six months or more than ten years from the date of award, and shall be
subject to such additional terms and conditions as the Committee in its sole
discretion deems appropriate, including, but not by way of limitation,
restrictions on the sale or other disposition of such shares during the
restriction period. Except as otherwise determined by the Committee at the time
of the award, the holder of a restricted stock award shall have the right to
vote the restricted shares and to receive dividends thereon, unless and until
such shares are forfeited.
9. Performance Awards
(a) Awards. Performance awards consisting of (i) shares of Common Stock,
(ii) monetary units or (iii) units which are expressed in terms of shares of
Common Stock may be made from
-7-
<PAGE>
time to time to such officers and other key employees of the Company and its
subsidiaries as may be selected by the Committee. Subject to the provisions of
Section 12 below, such awards shall be contingent on the achievement over a
period of not less than six months or more than ten years of such corporate,
division, subsidiary, group or other measures and goals as shall be established
by the Committee. Subject to the provisions of Section 12 below, such measures
and goals may be revised by the Committee at any time from time to time during
the performance period. Except as may otherwise be determined by the Committee
at the time of the award or at any time thereafter, a performance award shall
terminate if the grantee of the award does not remain continuously in the employ
of the Company or its subsidiaries at all times during the applicable
performance period.
(b) Rights with Respect to Shares and Share Units. If a performance award
consists of shares of Common Stock or units which are expressed in terms of
shares of such Common Stock, amounts equal to dividends otherwise payable on a
like number of shares may, if the award so provides, be converted into
additional such shares (to the extent that shares are then available for
issuance under the Plan) or credited as additional units and paid to the
participant if and when, and to the extent that, payment is made pursuant to
such award.
(c) Payment. Payment of a performance award following the end of the
performance period, if such award consists of monetary units or units expressed
in terms of shares of Common Stock, may be made in cash, shares of Common Stock,
or a combination thereof, as determined by the Committee. Any payment made in
Common Stock shall be based on the fair market value of such stock on the
payment date.
10. Performance Measures Applicable to Awards to Named Executive Officers
Unless and until the Committee proposes for stockholder vote a change in
the general performance measures set forth in this Section 10, the attainment of
which may determine the degree of payout or vesting with respect to awards under
the Plan which are designed to qualify for the Performance-Based Exception, the
performance measure(s) to be used for purposes of such awards shall be chosen
from among the following alternatives: safety (including total injury frequency,
lost workday rates or cases,
-8-
<PAGE>
medical treatment cases and fatalities); quality control (including critical
product characteristics and defects); cost control (including cost as a
percentage of sales); capital structure (including debt and equity levels, debt-
to-equity ratios, and debt-to total-capitalization ratios); inventory turnover;
customer performance or satisfaction; revenue growth; net income; conformity to
cash flow plans; return on investment; and operating profit to operating assets.
The Committee shall have the discretion to establish performance goals
based upon the foregoing performance measures and to adjust such goals and the
methodology used to measure the determination of the degree of attainment of
such goals; provided, however, that awards under the Plan that are intended to
qualify for the Performance-Based Exception and that are issued to or held by
Named Executive Officers may not be adjusted in a manner that increases such
award. The Committee shall retain the discretion to adjust such awards in a
manner that does not increase such awards. Furthermore, the Committee shall not
make any adjustment to awards under the Plan issued to or held by Named
Executive Officers that are intended to comply with the Performance-Based
Exception if the result of such adjustment would be the disqualification of such
award under the Performance-Based Exception.
In the event that applicable laws change to permit the Committee greater
discretion to amend or replace the foregoing performance measures applicable to
awards to Named Executive Officers without obtaining stockholder approval of
such changes, the Committee shall have sole discretion to make such changes
without obtaining such approval. In addition, in the event that the Committee
determines that it is advisable to grant awards under the Plan to Named
Executive Officers that may not qualify for the Performance-Based Exception, the
Committee may make such grants upon any performance measures it deems
appropriate with the understanding that they may not satisfy the requirements of
Section 162(m) of the Code.
11. Adjustments for Changes in Capitalization, Etc.
Subject to the provisions of Section 12 herein, in the event of any change
in corporate capitalization, such as a stock split, reverse stock split, stock
dividend, or a corporate transaction, such as a merger, consolidation, or
separation, including a spin-
-9-
<PAGE>
off, or other distribution of stock or property of the Company or its
subsidiaries (other than normal cash dividends), any reorganization (whether or
not such reorganization comes within the definition of such term in Code Section
368) or any partial or complete liquidation of the Company or its subsidiaries,
such adjustment shall be made in the number and class of shares which may be
delivered under Section 3 (including the number of shares referred to in the
last sentence of the first paragraph of Section 3 and in subparagraph (a) of the
second paragraph of Section 3), and in the number and class of and/or price of
shares subject to outstanding grants or awards under the Plan, as may be
determined to be appropriate and equitable by the Committee, in its sole
discretion, to prevent dilution or enlargement of rights; provided, however,
that the number of shares subject to any grants or awards under the Plan shall
always be a whole number.
12. Effect of Change in Control.
(a) Acceleration of Benefits. Subject to the following sentence, in the
event of a "Change in Control" as defined in paragraph (b) of this Section 12,
(i) the value of all outstanding stock options, stock appreciation rights and
restricted stock awards (whether or not then fully exercisable or vested) shall
be cashed out on the basis of the "Change in Control Price" (as defined in
paragraph (c) of this Section 12) as of the date the Change in Control occurs,
provided, however, that any stock options or stock appreciation rights
outstanding for less than six months shall not be cashed out until six months
after the respective date of grant, and provided, further, that the Committee
may provide for the immediate vesting instead of the cashing out of restricted
stock awards in such circumstances as it deems appropriate; and (ii) all
outstanding performance awards shall be cashed out in such manner and in such
amount or amounts as determined by the Committee in its sole discretion. In the
event of a transaction which is intended to be accounted for through the pooling
- -of-interest accounting method, (i) in lieu of cashing out all or any portion of
the outstanding stock options, stock appreciation rights, restricted stock
awards and performance awards, the Committee, in its discretion, may cause such
grants or awards to vest, and may limit payment to shares of Common Stock, and
(ii) the Committee, in its discretion, may extend the exercise period for stock
options and stock appreciation rights, but not beyond the earlier of (A) 30 days
-10-
<PAGE>
after the end of the pooling period or (B) the original term of the stock option
or stock appreciation right.
(b) Change in Control. For purposes of this Section 12, a Change in
Control means the happening of any of the following:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than (w) the Company and its affiliates
(collectively referred to herein as "RTI"), (x) a trustee or other
fiduciary holding securities under an employee benefit plan of RTI, (y) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (z) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities beneficially
owned by such person any securities acquired directly from the Company or
its affiliates) representing 40% or more of the combined voting power of
the Company's then outstanding securities;
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clauses
(i), (ii) or (iv) of this Subsection) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved cease for any reason to
constitute a majority thereof;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or other
fiduciary holding securities under an
-11-
<PAGE>
employee benefit plan of RTI, at least 60% of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person acquires more than 50% of the
combined voting power of the Company's then outstanding securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets.
A Change in Control shall also be deemed to occur with respect to any
Participant for purposes of the Plan if there occurs:
(1) a sale or disposition, directly or indirectly, other than to a
person described in subclause (w), (x) or (z) of clause (i) next above, of
securities of the Participant's employer, any direct or indirect parent
company of the Participant's employer or any company that is a subsidiary
of the Participant's employer and is also a significant subsidiary (as
defined below) of the Company (the Participant's employer and such a parent
or subsidiary being a "Related Company"), representing 50% or more of the
combined voting power of the securities of such Related Company then
outstanding;
(2) a merger or consolidation of a Related Company with any other
corporation, other than a merger or consolidation which would result in 50%
or more of the combined voting power of the surviving company being
beneficially owned by a majority owned direct or indirect subsidiary of the
Company; or
(3) the sale or disposition of all or substantially all the assets of
a Related Company to a person other than a majority owned direct or
indirect subsidiary of the Company.
Notwithstanding the foregoing, no Change in Control shall be deemed to have
occurred with respect to a Participant for purposes of the Plan if (I) such
transaction includes or involves a sale to the public or a distribution to the
stockholders of the
-12-
<PAGE>
Company of more than 50% of the voting securities of the Participant's employer
or a direct or indirect parent of the Participant's employer, and (II) the
Participant's employer or a direct or indirect parent of the Participant's
employer agrees to become a successor to the Company under an individual
agreement between the Company and the Participant or the Participant is covered
by an agreement providing for benefits upon a change in control of his or her
employer following an event described clauses (1), (2) or (3) next above. For
purposes of the Plan, the term "significant subsidiary" has the meaning given to
such term under Rule 405 of the Securities Act of 1933, as amended.
(c) Change in Control Price. For purposes of this Section 12, Change in
Control Price means:
(i) with respect to a Change in Control by reason of a merger or
consolidation of the Company described in paragraph (b)(iii) of this
Section 12 in which the consideration per share of Common Stock to be paid
for the acquisition of shares of Common Stock specified in the agreement of
merger or consolidation is all in cash, the highest such consideration per
share;
(ii) with respect to a Change in Control by reason of an acquisition
of securities described in paragraph (b)(i) of this Section 12, the highest
price per share for any share of the Common Stock paid by any holder of any
of the securities representing 40% or more of the combined voting power of
the Company giving rise to the Change in Control; and
(iii) with respect to a Change in Control by reason of a merger or
consolidation of the Company (other than a merger or consolidation
described in paragraph (b)(iii) of this Section) or a change in the
composition of the Board of Directors described in paragraph (b)(ii) of
this Section 12, the highest price per share of Common Stock reported on
the Composite Transactions (or, if such shares are not traded on the New
York Stock Exchange, such other principal market on which such shares are
traded) during the sixty-day period ending on the date the Change in
Control occurs, except that, in the case of incentive stock options and
stock appreciation rights relating to incentive stock options, the holder
may not receive an amount in excess of the maximum
-13-
<PAGE>
amount that will enable such option to continue to qualify as an incentive
stock option.
13. Amendment and Termination of Plan.
The Plan may be amended by the Board in any respect, provided that, without
stockholder approval, no amendment (other than pursuant to Section 11 of the
Plan) shall increase the maximum number of shares available for issuance under
the Plan if such action would result in awards under the Plan no longer being
exempt under Rule 16b-3 as then in effect. In addition, no amendment may impair
the rights of a participant under any stock option, stock appreciation right,
restricted stock award or performance award previously granted under the Plan
without the consent of such participant, unless required by law. The Plan may
also be terminated at any time by the Board. No further grants may be made under
the Plan after termination, but termination shall not affect the rights of any
participant under, or the authority of the Committee with respect to, any grants
or awards made prior to termination.
14. Grant of Substitute Awards
(d) Substitute Options. In lieu of outstanding options to purchase Inland
Steel Industries, Inc. ("ISI") common stock ("ISI Options") granted pursuant to
the Inland 1995 Incentive Stock Plan, the Inland 1992 Incentive Stock Plan, the
Inland 1988 Incentive Stock Plan or the Inland 1984 Incentive Stock Plan
(collectively, the "ISI Incentive Plans") to officers and employees of ISI and
its subsidiaries who are or who become officers or employees of the Company or
any of its subsidiaries on or after the closing date of the initial public
offering of Common Stock and prior to the date on which the Company and its
subsidiaries cease to be treated as a single employer with ISI under section
414(b) or (c) of the Code ("Transferred Employees"), such Transferred Employees
shall receive a grant of "Substitute Stock Options" under the Plan; provided
that the Committee, in its sole discretion, may award Substitute Stock Options
to any Transferred Employee with respect to less than all (including none) of
his or her outstanding options under the ISI Incentive Plans, in which case the
outstanding ISI Options for which no Substitute Stock Options have been granted
will remain outstanding. The number of shares of Common Stock subject to any
Substitute Stock Option shall bear the same ratio to the number
-14-
<PAGE>
of shares of ISI common stock subject to the corresponding ISI Option as the
Average Value (as defined below) of a share of ISI common stock bears to the
Average Value of a share of Common Stock. The per share option price of Common
Stock subject to the Substitute Stock Option shall be equal to the amount which
bears the same ratio to the Average Value of a share of Common Stock as the per
share option price of ISI common stock under the ISI Option bears to the Average
Value of a share of ISI common stock. Other than the option price and number of
shares, the Substitute Stock Options shall be subject to the same terms and
conditions as the ISI Options. The term "Average Value" means the average
closing price of Common Stock or ISI common stock, as applicable, as reported,
in the case of Common Stock, on the New York Stock Exchange Composite
Transactions (the "Composite Transactions") (or, if such shares are not traded
on the New York Stock Exchange, such other principal market on which such shares
are traded) for the first ten trading days after the date of the substitution.
(e) Substitute Restricted Stock. In lieu of outstanding shares of
restricted ISI common stock ("ISI Restricted Stock") granted pursuant to the ISI
Incentive Plans to Transferred Employees, such Transferred Employees shall
receive a grant of "Substitute Restricted Stock" under the Plan; provided that
the Committee, in its sole discretion, may award Substitute Restricted Stock to
any Transferred Employee with respect to less than all (including none) of his
or her outstanding restricted stock under the ISI Incentive Plans, in which case
the outstanding ISI Restricted Stock for which no Substitute Restricted Stock
has been granted will remain outstanding. The number of shares of Substitute
Restricted Stock shall bear the same ratio to the number of shares of ISI
Restricted Stock as the Average Value of a share of ISI common stock bears to
the Average Value of a share of Common Stock. Other than the number of shares,
the Substitute Restricted Stock shall be subject to the same terms and
conditions as the ISI Restricted Stock.
15. Miscellaneous.
(f) No Right to a Grant. Neither the adoption of the Plan nor any action
of the Board or of the Committee shall be deemed to give any employee any right
to be selected as a participant or to be granted a stock option, stock
appreciation right, restricted stock award or performance award.
-15-
<PAGE>
(g) Rights as Stockholders. No person shall have any rights as a
stockholder of the Company with respect to any shares covered by a stock option,
stock appreciation right, or performance award until the date of the issuance of
a stock certificate to such person pursuant to such stock option, right or
award.
(h) Employment. Nothing contained in this Plan shall be deemed to confer
upon any employee any right of continued employment with the Company or any of
its subsidiaries or to limit or diminish in any way the right of the Company or
any such subsidiary to terminate his or her employment at any time with or
without cause.
(i) Taxes. The Company shall be entitled to deduct from any payment under
the Plan the amount of any tax required by law to be withheld with respect to
such payment or may require any participant to pay such amount to the Company
prior to and as a condition of making such payment. In addition, the Committee
may, in its discretion and subject to such rules as it may adopt from time to
time, permit a participant to elect to have the Company withhold from any
payment under the Plan (or to have the Company accept from the participant), for
tax withholding purposes, shares of Common Stock, valued at their fair market
value, but in no event shall the fair market value of the number of shares so
withheld (or accepted) exceed the amount necessary to meet the maximum Federal,
state and local marginal tax rates then in effect that are applicable to the
participant and to the particular transaction.
(j) Nontransferability. Except as permitted by the Committee, no stock
option, stock appreciation right, restricted stock award or performance award
shall be transferable except by will or the laws of descent and distribution,
and, during the holder's lifetime, stock options and stock appreciation rights
shall be exercisable only by, and shares subject to restricted stock awards and
payments pursuant to performance awards shall be delivered or made only to, such
holder or such holder's duly appointed legal representative.
-16-
<PAGE>
EXHIBIT 10.26
RYERSON TULL, INC.
ANNUAL PERFORMANCE IMPROVEMENT INCENTIVE PLAN
1. Purpose
The purpose of the Ryerson Tull, Inc. Annual Performance Improvement
Incentive Plan (the "Plan") is to promote the interests of Ryerson Tull, Inc.
(the "Company") and its stockholders by (i) attracting and retaining salaried
employees of outstanding ability; (ii) strengthening the Company's capability to
develop, maintain and direct a competent employee population; (iii) motivating
salaried employees, by means of performance-related incentives, to achieve
financial rewards; (iv) providing annual incentive compensation opportunities
which are competitive with those of other major corporations; and (v) enabling
salaried employees to participate in the growth and financial success of the
Company.
2. Definitions
"Affiliate" means any corporation or other entity which is not a Subsidiary
but as to which the Company possesses a direct or indirect ownership interest
and has power to exercise management control.
"Award" means an amount for an Award Period determined to be payable to a
Participant under the Plan.
"Award Period" means such calendar quarters or calendar years as the
Committee may establish from time to time with respect to any applicable salary
grade designation, to any Corporate Unit or to a combination of these factors.
"Award Schedule" means the schedule to be used for determining Awards as
established by the Committee and set forth in the Addendum to the Plan
applicable to the Corporate Unit covered thereby.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Compensation Committee of the Board of Directors of
the Company.
"Corporate Unit" means the Company, Joseph T. Ryerson & Son/East, Joseph T.
Ryerson & Son/Central, Joseph T. Ryerson & Son/West, Ryerson Coil Processing,
J.M. Tull Metals Company, Inc., Inland Industries de Mexico, S.A. de C.V., and
any Affiliate, other Subsidiary or any division or group of the Company or any
Subsidiary designated as a Corporate Unit from time to time by the Board of
Directors of the Company.
"Employee" means an employee eligible to be designated as a Participant in
the Plan.
<PAGE>
"Named Executive Officer" means a Participant who is one of the group of
"covered employees" as defined in the regulations promulgated under section
162(m) of the Code.
"Participant" means an Employee who is selected by the Committee to
receive an Award under the Plan.
"Performance-Based Exception" means the performance-based exception from
the deductibility limitations as set forth in section 162(m) of the Code.
"Subsidiary" means any corporation in which the Company possesses directly
or indirectly more than fifty percent (50%) of the total combined voting power
of all classes of its stock.
"Target Award" means the percentage of a Participant's base salary earnings
or base annual salary for an Award Period as established by the Committee
pursuant to paragraph 6 of the Plan and set forth in the Addendum to the Plan
applicable to the Corporate Unit in which such Participant is employed.
"Threshold" means the minimum financial performance (established by the
Committee and set forth in the Addendum to the Plan applicable to such Corporate
Unit) required by a Corporate Unit before an Award may be paid to a Participant
employed in such Corporate Unit.
3. Administration
The Plan shall be administered by the Committee. No member of the Committee
shall be eligible to receive an Award while serving on the Committee. The
Committee shall have the authority to interpret the Plan and 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. In addition, the Committee may delegate to one or more senior
executive officers of the Company the right to administer the Plan as it
pertains to employees who are not officers of the Company or of any other
Corporate Unit. Subject to the provisions of paragraph 7 hereof, the Committee
may impose such conditions on participation in and Awards under the Plan as it
deems appropriate.
4. Eligibility
Except as otherwise provided by the Committee and subject to paragraph 9
hereof, all full-time salaried employees of a Corporate Unit as of the first day
and the last day of an Award Period are eligible to be designated as
Participants in the Plan for such Award Period; provided, however, that, with
respect to Award Periods that extend for at least one year, individuals who are
full-time salaried employees of a Corporate Unit on August 1 of the first year
of the Award Period and the last day of the Award Period shall also be eligible
to be designated as Participants in the Plan for such Award
-2-
<PAGE>
Period. Notwithstanding the foregoing, the Committee may adopt criteria
restricting the number of full-time salaried employees of a Corporate Unit
eligible to be designated as Participants in the Plan for any Award Period,
which criteria shall be set forth in the Addendum to the Plan applicable to
such Corporate Unit.
5. Designation of Participants
The Committee shall determine and designate from time to time those
Employees who shall be Participants. The designation of an Employee as a
Participant in the Plan for any Award Period shall not bestow upon such Employee
any right to receive an Award for such Award Period or the right to be
designated as a Participant for any subsequent Award Period.
6. Individual Award Opportunity
For each Award Period, the Committee shall establish for each Participant a
Target Award, expressed as a percentage of his or her base salary earnings for
such Award Period, on the basis of his or her salary grade designation.
7. Determination of Awards
Awards for each Award Period for Participants in each Corporate Unit shall
be determined in accordance with the Award Schedule established by the Committee
for such Corporate Unit. No Award shall be paid to any Participant in a
Corporate Unit for any Award Period in which the performance of such Corporate
Unit does not equal or exceed the Threshold applicable to such Corporate Unit.
The Award for each Participant in a Corporate Unit shall be his or her Target
Award multiplied by the Percent Attainment (determined in accordance with the
applicable Award Schedule), subject to the following:
(a) Subject to paragraph 3 and the provisions of this paragraph 7, the
Committee may adjust such Award for individual performance on the basis of
such quantitative and qualitative performance measures and evaluations as
it deems appropriate.
(b) The Committee may make such adjustments as it deems appropriate in
the case of any Participant whose salary grade designation has changed
during the applicable Award Period or who has been employed in more than
one Corporate Unit during an Award Period.
(c) Unless and until the Committee proposes for stockholder vote a change
in the general performance measures set forth in this paragraph 7(c), the
attainment of which may determine the degree of payout with respect to
Awards under the Plan which are designed to qualify for the Performance-
Based Exception, the performance measure(s) to be used for purposes of such
Awards shall be chosen from among the following alternatives: return on
operating assets, operating profit, return on equity,
-3-
<PAGE>
net income, stock price, revenue growth, expense management, inventory
management, quality management, customer service performance, shareholder
return, gross margin management and market share improvement. The
Committee shall have the discretion to establish performance goals based
upon the foregoing performance measures and to adjust such goals and the
methodology used to measure the determination of the degree of attainment
of such goals; provided, however, that Awards under the Plan that are
intended to qualify for the Performance-Based Exception and that are issued
to or held by any Named Executive Officer may not be adjusted in a manner
that increases such Award. The Committee shall retain the discretion to
adjust such Awards in a manner that does not increase such Awards.
Furthermore, the Committee shall not make any adjustment to Awards under
the Plan issued to or held by any Named Executive Officer that are intended
to comply with the Performance-Based Exception if the result of such
adjustment would be the disqualification of such Award under the
Performance-Based Exception. In the event that applicable laws change to
permit the Committee greater discretion to amend or replace the foregoing
performance measures applicable to Awards to Named Executive Officers
without obtaining stockholder approval of such changes, the Committee
shall have sole discretion to make such changes without obtaining such
approval. In addition, in the event that the Committee determines that it
is advisable to grant Awards under the Plan to Named Executive Officers
that may not qualify for the Performance-Based Exception, the Committee
may make such grants upon any performance measures it deems appropriate
with the understanding that they may not satisfy the requirements of
section 162(m) of the Code.
Notwithstanding any other provision of the Plan, in no event may a
Participant be paid an Award in any calendar year in excess of $2,000,000. No
segregation of any moneys or the creation of any trust or the making of any
special deposit shall be required in connection with any awards made or to be
made under the Plan.
8. Payment of Awards
Awards shall be paid in cash as soon as practicable after the end of the
Award Period for which the Award is made. If a Participant to whom an Award has
been made dies prior to the payment of the Award, such Award shall be delivered
to his or her legal representative or to such other person or persons as shall
be determined by the Chairman, the President, the Chief Executive Officer or the
Vice President-Human Resources of the Company. The Company or other applicable
Corporate Unit shall have the right to deduct from all Awards payable under the
Plan any taxes required by law to be withheld by the Company or other Corporate
Unit with respect thereto; provided, however, that to the extent provided by
the Committee, any payment under the Plan may be deferred and to the extent
deferred, may be credited with an interest or earnings factor as determined by
the Committee.
-4-
<PAGE>
9. Termination of Employment
Except in the case of death, disability or normal retirement (determined in
accordance with the qualified retirement plans of the Company) or except as
provided in paragraph 10, a Participant must be an employee as of the end of the
Award Period in order to be eligible for an Award.
10. Change of Control
In the event of a Change of Control of the Company (as hereinafter
defined), the Plan shall remain in full force and effect for the remainder of
any Award Period (or, if longer, the remainder of the calendar year) during
which such Change of Control of the Company occurs, and each Participant shall
receive an Award for such Award Periods (or any Award Periods occurring in such
calendar year), at least equal to his or her Target Awards, regardless of
whether or not Awards would otherwise have been payable under the Plan for such
Award Periods and regardless of whether or not such Participant was an Employee
at the end of any such Award Period. A "Change of Control of the Company" shall
be deemed to have occurred if there shall have been a change in the composition
of the Board of Directors of the Company such that a majority of the Board of
Directors shall have been members of the Board of Directors for less than
twenty-four months, unless the election of each new director who was not a
director at the beginning of the twenty-four month period was approved by a vote
of at least two-thirds of the directors then still in office who were directors
at the beginning of such period.
11. Transferability
Any payment to which a Participant may be entitled under the Plan shall be
free from the control or interference of any creditor of such Participant and
shall not be subject to attachment or susceptible of anticipation or
alienation. The interest of a Participant shall not be transferable except by
will or the laws of descent and distribution.
12. No Right to Participate; Employment
Neither the adoption of the Plan nor any action of the Committee shall be
deemed to give any Employee any right to be designated as a Participant under
the Plan. Further, nothing contained in the Plan, nor any action by the
Committee or any other person hereunder, shall be deemed to confer upon any
Employee any right of continued employment with any Corporate Unit or to limit
or diminish in any way the right of any Corporate Unit to terminate his or her
employment at any time with or without cause.
13. Nonexclusivity of the Plan
This Plan is not intended to and shall not preclude the Board of Directors
of the Company from adopting or continuing such addi-
-5-
<PAGE>
tional compensation arrangements as it deems desirable for Participants under
this Plan, including any thrift, savings, investment, stock purchase, stock
option, profit sharing, pension, retirement, insurance or other incentive plan.
14. Amendment
Except as provided in paragraph 10 hereof, the Board of Directors of the
Company may amend, suspend or terminate the Plan at any time.
-6-
<PAGE>
Exhibit 13
Eleven-Year Summary of Selected Financial Data and Operating Results
<TABLE>
<CAPTION>
Dollars in millions, except per share and per ton data 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Summary of Earnings
Net sales $ 2,394.0 $2,450.1 $2,197.5 $1,893.3
Gross profit 558.1 576.2 514.9 457.8
Operating profit 120.0 148.7 98.1 56.4
Income before income taxes 103.5 145.4 88.3 38.1
Net income 63.3 88.5 53.3 26.7
Earnings per share/(2)/ 1.61/(3)/ 2.26 N/M N/M
Financial Position at Year-End
Inventory--current value/(4)/ $ 439.4 $ 409.2 $ 405.8 $ 384.9
Working capital 425.6 500.2 425.8 366.8
Property, plant and equipment 251.0 249.7 252.5 257.2
Total assets 932.2 972.6 891.3 828.3
Long-term debt 263.2 18.9 23.6 28.2
Stockholders' equity 364.4 668.5 580.0 526.7
Financial Ratios
Inventory turnover--current value/(4)/ 4.2 4.2 4.1 3.8
Operating asset turnover 2.9 2.9 2.7 2.4
Operating profit on operating assets (OP/OA) 14.3% 17.6% 12.2% 7.3%
Return on ending stockholders' equity 17.4 13.2 9.2 5.1
Volume and Per Ton Data
Tons shipped (000) 2,514 2,347 2,327 2,078
Average selling price per ton $ 952 $ 1,044 $ 944 $ 911
Gross profit per ton 222 245 221 220
Operating expenses per ton 174 182 179 193
Operating profit per ton 48 63 42 27
Profit Margins
Gross profit as a percent of sales 23.3% 23.5% 23.4% 24.2%
Operating expenses as a percent of sales 18.3 17.4 19.0 21.2
Operating profit as a percent of sales 5.0 6.1 4.5 3.0
Other Data
Number of employees at year-end 4,823 4,993 5,158 5,093
Tons shipped per employee 521 470 451 408
Capital expenditures $ 24.1 $ 19.3 $ 20.4 $ 19.3
EBITDA 139.9 169.8 112.4 69.6
Cash flow/(5)/ 60.0 84.4 79.7 (25.3)
-------------------------------------------------
</TABLE>
(1) Net income in 1992 was negatively impacted by $84.1 million as a result of
the adoption of FASB Statement No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," and FASB Statement No. 109,
"Accounting for Income Taxes."
(2) Assumes 39.2 million shares outstanding since January 1, 1995.
(3) Earnings per share in 1996 reflect six months of interest expense (an
unfavorable impact of 18 cents) arising from the issuance of $250 million of
Notes in July 1996 in conjunction with the company's initial public
offering. Future years' earnings will be impacted by a full year of interest
expense on the Notes.
(4) Current value of inventory consists of book value of inventory plus LIFO
reserve.
(5) Net cash provided from (used for) operating activities.
N/A--Not available
N/M--Not meaningful
10
<PAGE>
Ryerson Tull, Inc. and Subsidiary Companies
(A Majority-Owned Subsidiary of Inland Steel Industries, Inc.)
<TABLE>
<CAPTION>
1992 1991 1990 1989 1988 1987 1986
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$1,716.6 $1,655.9 $1,825.4 $1,973.4 $1,815.3 $1,442.3 $1,192.3
424.2 403.5 436.0 452.1 456.9 375.1 315.9
27.1 16.2 18.1 63.8 115.7 61.9 17.0
5.9 (11.5) (20.2) 22.6 80.3 35.6 (2.6)
(80.8)/(1)/ (9.2) (19.4) 16.4 74.3 33.6 (5.3)
N/M N/M N/M N/M N/M N/M N/M
$ 360.1 $ 371.5 $ 439.1 $ 439.2 $ 428.6 $ 379.4 $ 331.8
187.7 162.6 163.4 128.9 174.5 227.4 182.5
257.8 268.2 277.2 258.5 210.6 189.4 181.0
751.4 765.3 796.5 810.1 703.1 641.3 599.0
25.7 N/A N/A N/A N/A N/A N/A
350.0 430.7 439.9 389.3 373.0 298.7 265.1
3.5 3.2 N/A N/A N/A N/A N/A
2.2 2.0 2.2 2.3 2.5 2.3 2.0
3.5% 2.0% 2.2% 7.3% 15.7% 10.1% 2.9%
(23.1)/(1)/ (1.6) (4.4) 4.2 19.9 11.2 (2.0)
1,872 1,736 1,847 1,850 1,528 1,515 1,390
$ 917 $ 954 $ 988 $ 1,067 $ 1,188 $ 952 $ 858
226 232 236 244 299 248 227
212 223 226 210 223 207 215
14 9 10 34 76 41 12
24.7% 24.4% 23.9% 22.9% 25.2% 26.0% 26.5%
23.1 23.4 22.9 19.7 18.8 21.7 25.1
1.6 1.0 1.0 3.2 6.4 4.3 1.4
5,040 5,224 5,406 5,606 5,099 4,889 4,883
371 332 342 330 300 310 285
$ 9.3 $ 9.8 $ 29.6 $ 53.4 $ 31.6 $ 21.7 $ 25.5
38.8 25.3 22.4 67.3 117.2 65.7 22.1
46.1 40.4 72.3 26.4 92.8 34.5 (4.4)
- --------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
Management's Discussion of Operations and Financial Condition
- ----------------------------
Comparison of 1996 with 1995
- --------------------------------------------------------------------------------
Net Sales
Sales of $2.39 billion in 1996 declined 2.3 percent compared with $2.45 billion
in 1995. The effect of a 7.1 percent increase in tons shipped--to 2.51 million
tons from 2.35 million tons--was more than offset by an 8.8 percent decrease in
the average selling price per ton to $952 from $1,044. Excess supply of metals
relative to demand in the steel industry in 1996 led to the decline in selling
prices. Based on analysis of Steel Service Center Institute ("SSCI") data, the
company expanded its share of the market to 9.1 percent in 1996 compared with
8.4 percent in 1995.
- --------------------------------------------------------------------------------
Gross Profit
Gross profit--the difference between net sales and the cost of materials sold--
declined 3.1 percent to $558.1 million in 1996 from $576.2 million in 1995.
Gross profit as a percent of sales dipped slightly to 23.3 percent from 23.5
percent. Gross profit per ton declined to $222 in 1996 versus $245 in 1995, as
an 8.8 percent decrease in average selling price per ton more than offset an 8.5
percent decrease in material cost per ton.
- --------------------------------------------------------------------------------
Operating Expenses
Operating expenses--including plant and office employee-related costs, selling
expenses, freight expenses, plant supplies and maintenance costs, systems costs,
depreciation and amortization--increased by 2.5 percent in 1996. The increase in
operating expenses was less than the increase in tons shipped and, on a per ton
basis, operating expenses declined to $174 from $182. The year-end employee
count decreased 3.4 percent to 4,823 in 1996 from 4,993 in 1995, and tons
shipped per employee increased 10.9 percent to 521 tons from 470 tons.
- --------------------------------------------------------------------------------
Operating Profit
Operating profit decreased 19.3 percent to $120.0 million in 1996 from $148.7
million in 1995. The benefits of an increase in tons shipped and lower operating
expenses per ton were not enough to offset the impact of a lower average selling
price per ton and the resulting decline in gross profit per ton.
- --------------------------------------------------------------------------------
General Corporate Expense, Net of Income Items
General corporate expense--the charge from Inland Steel Industries, Inc. ("ISI")
for services rendered to the company--decreased to $6.4 million in 1996 from
$6.8 million in 1995. Other items, principally interest income, decreased to
$4.2 million in 1996 from $6.1 million in 1995 because of lower cash and cash
equivalent balances.
- --------------------------------------------------------------------------------
Interest and Other Expense on Debt
Interest and other expense on debt increased to $14.3 million from $2.6 million
due to the $250 million of Notes issued in mid-1996 in conjunction with the
initial public offering. See Recapitalization.
- --------------------------------------------------------------------------------
Provision for Income Taxes
Income taxes decreased 29.3 percent to $40.2 million in 1996 from $56.9 million
in 1995, primarily due to a decrease in taxable income and a slight reduction in
the effective tax rate, which decreased to 38.9 percent in 1996 from 39.1
percent in 1995.
12
<PAGE>
--------------------------------------------------------------
Ryerson Tull, Inc. and Subsidiary Companies
(A Majority-Owned Subsidiary of Inland Steel Industries, Inc.)
- ----------------------------
Comparison of 1995 with 1994
- --------------------------------------------------------------------------------
Sales increased 11.5 percent to $2.45 billion in 1995 compared with $2.20
billion in 1994. Tons shipped rose 0.8 percent to 2.35 million tons from 2.33
million tons, while average selling price per ton increased 10.6 percent to
$1,044 from $944. Higher selling prices were experienced in the industry in 1995
due to strong market conditions. Based on analysis of SSCI data, the company's
market share was unchanged year-over-year at 8.4 percent.
- --------------------------------------------------------------------------------
Gross profit increased 11.9 percent to $576.2 million in 1995 versus $514.9
million in 1994. Gross profit as a percent of sales was 23.5 percent in 1995 and
23.4 percent in 1994. A 10.6 percent increase in average selling price per ton
more than offset a 10.4 percent increase in material cost per ton.
- --------------------------------------------------------------------------------
Operating expenses in 1995 were 2.6 percent higher than 1994. Employee count at
year-end decreased 3.2 percent and tons shipped per employee increased 4.2
percent. However, operating expenses per ton increased 1.7 percent to $182 in
1995 from $179 in 1994 due to higher incentive pay tied to improved profits,
recognition of costs associated with closing the company's New Jersey facility,
and higher spending on information systems.
- --------------------------------------------------------------------------------
Operating profit of $148.7 million in 1995 increased 51.7 percent from $98.1
million in 1994. The increase was primarily due to improved gross profit per ton
and a modest increase in the volume of tons shipped.
- --------------------------------------------------------------------------------
General corporate expense decreased to $6.8 million in 1995 from $7.4 million in
1994. Other items, principally interest income, increased to $6.1 million in
1995 from $0.5 million in 1994 because of higher cash and cash equivalent
balances.
- --------------------------------------------------------------------------------
Interest and other expense on debt declined to $2.6 million in 1995 from $2.9
million in 1994, principally due to reduced debt levels.
- --------------------------------------------------------------------------------
Income taxes increased 62.6 percent to $56.9 million in 1995 from $35.0 million
in 1994 due to an increase in taxable income. The effective tax rate declined to
39.1 percent in 1995 from 39.7 percent in 1994.
13
<PAGE>
Management's Discussion of Operations and Financial Condition (cont.)
- ------------------------
Recapitalization
In the second quarter of 1996, ISI undertook a recapitalization that involved
the company. As part of the recapitalization, the company exchanged existing
shares of company common stock, all of which were owned by ISI, for 34.0 million
shares of new-issue Class B common stock ($1.00 par value). The company also
sold 5.2 million shares of new-issue Class A common stock ($1.00 par value) in a
public offering, the net proceeds of which approximated $77.1 million.
Prior to the issuance of the Class A common stock, the company declared and
paid dividends of $445.9 million to ISI, of which $152.1 million was in cash and
$293.8 million was in the form of a note payable. ISI used $63.2 million of the
cash dividend to repay intercompany borrowing from the company and its
subsidiaries. Of the $445.9 million of dividends paid to ISI, $198.3 million
eliminated the reinvested earnings balance that existed at June 26, 1996, while
the remaining $247.6 million reduced capital in excess of par value.
In July 1996, the company sold $150 million of 8.5 percent Notes due July 15,
2001 and $100 million of 9.125 percent Notes due July 15, 2006 (collectively,
the "Notes") in a public offering. The net proceeds of the offering along with a
portion of the company's cash on hand were used to pay the $293.8 million note
balance due ISI.
Effective June 1, 1996, as the result of a capital contribution from ISI to
the company, Inland Industries de Mexico and its 50 percent-owned Ryerson de
Mexico joint venture became part of the company. The contribution increased both
investments in joint ventures and capital in excess of par value by $18.9
million. The impact of Ryerson de Mexico on the company's results of operations
has not been material.
- -------------------------------
Liquidity and Financing
The company finished 1996 with cash and cash equivalents of $23.9 million
compared with $53.6 million at year-end 1995. There was no short-term bank
borrowing at either year-end.
For 1996, net cash provided from operating activities amounted to $60.0
million, compared to $84.4 million for 1995. The decrease is primarily due to
lower earnings in 1996.
On June 28, 1996, the company established a new four-year $250 million
unsecured credit facility. The $200 million credit facility at Joseph T. Ryerson
& Son, Inc. ("Ryerson") and the $25 million credit facility at J.M. Tull Metals
Company, Inc. were concurrently terminated.
The new credit facility, which extends to June 28, 2000, requires compliance
with various financial covenants, including fixed charge coverage ratio,
leverage ratio and minimum net worth. The facility also limits the amount of
cash dividends the company may pay. At year-end 1996, up to $45 million of
common dividends could have been paid under terms of the credit agreement.
The interest rates on borrowing under the credit agreement are, at the
company's option, based on Eurodollar, Certificate of Deposit, or the greater of
federal funds plus 0.5 percent or prime rate. At year-end, the highest interest
rate option for borrowings was the applicable prime rate. At December 31, 1996,
the entire $250 million was unused and available. As a result of the acquisition
of Thypin Steel Co., Inc. on February 13, 1997, as of that date the company had
borrowings of approximately $100 million under its credit agreement. See
Subsequent Event.
As of December 31, 1996, Ryerson was also the guarantor of $106.2 million of
the ISI Thrift Plan ESOP notes (the "ESOP Guarantee"). The ESOP notes are
payable in installments through July 2004. The ESOP Guarantee requires
compliance with various financial covenants, including minimum net worth and
leverage ratio tests, and also limits Ryerson's ability to advance funds or make
dividend payments to the company. Under these covenants, Ryerson's ability to
make dividend payments or advance funds to the company at any time is limited to
$30 million (i) plus 80% of net income (decreased by 100% of net losses) earned
by Ryerson since December 31, 1989, (ii) minus the dollar amount of dividends
paid and capital stock repurchased and the balance of any advances outstanding,
and (iii) plus capital contributions to Ryerson and the proceeds from the
issuance of any capital stock or certain other investments
14
<PAGE>
--------------------------------------------------------------
Ryerson Tull, Inc. and Subsidiary Companies
(A Majority-Owned Subsidiary of Inland Steel Industries, Inc.)
during such period. At December 31, 1996, approximately $43 million was
available for making advances and paying dividends to the company under the ESOP
Guarantee.
The indenture under which the $250 million of Notes were issued contains
covenants limiting, among other things, the creation of secured indebtedness,
sale and leaseback transactions, the repurchase of capital stock, transactions
with affiliates and mergers, consolidations and certain sales of assets. In
addition, the Notes restrict the payment of dividends, albeit to a lesser extent
than the new credit facility described above.
The debt ratings of the company's Notes at year-end 1996 were:
Moody's Ba 1
Standard & Poor's BB
The company had a debt-to-capital ratio of 42 percent at the end of 1996 and
a coverage ratio for earnings before interest, taxes, depreciation and
amortization to interest expense of 10 times for the year 1996.
The company believes that available borrowings under its credit facility and
anticipated cash flow from operations will provide sufficient liquidity to meet
its scheduled debt retirements, fund its capital program and meet any operating
cash requirements that may arise for at least the next two years.
- --------------------------------------------------------------
Capital Expenditures and Investments in Joint Ventures
Capital expenditures and investments in joint ventures during 1996 totaled $26.3
million compared with $19.3 million in 1995. Capital expenditures were primarily
for buildings, machinery and equipment. The company anticipates capital
expenditures and investments in joint ventures, excluding acquisitions, to be in
the range of $40 to $50 million in 1997, which will substantially expand the
company's processing capacity.
In 1995, the company reported that it was working with Geneva Steel to
establish a plate cutting facility in the Chicago area. Subsequently, the
company decided to continue using existing sources of material and to develop
additional arrangements to satisfy this growing part of the business.
- ----------------
Pensions
Effective April 30, 1996, that portion of the ISI Pension Plan covering the
company's current and former employees was separated and became the Ryerson Tull
Pension Plan. Due to this separation, the company's benefit obligation was
remeasured using plan data and actuarial assumptions as of April 30, 1996. An
amount of assets proportional to the liabilities assumed by the Ryerson Tull
Pension Plan was allocated to this new plan. As a result, the company recognized
a $25.4 million decrease in its prepaid pension cost, a $16.5 million reduction
in reinvested earnings and an $8.9 million deferred tax asset increase.
The company's pension plan currently meets the minimum funding requirements
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Our current policy is to continue to fund the plan in the future to at least
meet these minimum funding standards. Although the company is not expected to
have any required pension plan contributions during 1997, the company may elect
to make voluntary contributions to improve the plan's funded status.
- ------------------------
Subsequent Event
On February 13, 1997, the company purchased Thypin Steel Co., Inc. ("Thypin"), a
distributor and processor of carbon and stainless steel products, for $120
million in cash. The company also assumed $23 million in existing Thypin debt.
15
<PAGE>
Financial Responsibility
Senior management is responsible for the integrity and objectivity of the
financial data reported by Ryerson Tull, Inc. and its subsidiaries. The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, and in management's judgment reflect
fairly the consolidated financial position, cash flows and results of operations
of Ryerson Tull and its subsidiary companies.
The company maintains systems of internal accounting controls and procedures
to provide reasonable assurance of the safeguarding and accountability of
company assets, and to ensure that its financial records provide a reliable
basis for the preparation of financial statements and other data.
Internal accounting control is maintained through:
. The ongoing activities of corporate staff, line officers and accounting
management to monitor the adequacy of internal accounting control systems
throughout the company
. The selection and proper training of qualified personnel
. The appropriate separation of duties in organizational arrangements
. The establishment and communication of accounting and business policies
together with detailed procedures for their implementation
. The use of an intensive ongoing program of internal auditing
. The use of a detailed budgeting system to assure that expenditures are
properly approved and charged
Stockholders annually elect a firm of independent accountants to audit the
annual financial statements (their current report appears below). The principal
role of the Audit Committee of the Board of Directors (consisting entirely of
non-management Directors) is to review the conclusions reached by management in
its evaluation of internal accounting controls, approve the scope of audit
programs and evaluate audit results of both independent accountants and internal
auditors. Both the independent accountants and internal auditors have
unrestricted access to the Audit Committee, without the presence of management.
Report of Independent Accountants
Price Waterhouse LLP
To the Board of Directors and Stockholders of Ryerson Tull, Inc.
In our opinion, the consolidated financial statements on pages 17 through 27
present fairly, in all material respects, the financial position of Ryerson
Tull, Inc. (a majority-owned subsidiary of Inland Steel Industries, Inc.) and
subsidiary companies at December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ Price Waterhouse LLP
Chicago, Illinois
February 19, 1997
16
<PAGE>
--------------------------------------------------------------
Ryerson Tull, Inc. and Subsidiary Companies
(A Majority-Owned Subsidiary of Inland Steel Industries, Inc.)
Consolidated Statements of Income and Reinvested Earnings
<TABLE>
<CAPTION>
Year ended December 31
----------------------------
Dollars in millions, except per share data 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Consolidated Statement of Income
Net sales $2,394.0 $2,450.1 $2,197.5
Cost of materials sold 1,835.9 1,873.9 1,682.6
----------------------------
Gross profit 558.1 576.2 514.9
Operating expenses 416.0 405.7 395.6
Depreciation and amortization 22.1 21.8 21.2
----------------------------
Operating profit 120.0 148.7 98.1
Other expenses:
General corporate expense, net of income items 2.2 0.7 6.9
Interest and other expense on debt 14.3 2.6 2.9
----------------------------
Income before income taxes 103.5 145.4 88.3
Provision for income taxes (Note 10) 40.2 56.9 35.0
----------------------------
Net income $ 63.3 $ 88.5 $ 53.3
============================
Earnings per share $ 1.61 $ 2.26
==================
Consolidated Statement of Reinvested Earnings
Balance at beginning of year $ 173.9 $ 85.4 $ 32.1
Net income 63.3 88.5 53.3
Reinvested earnings impact of Pension Plan split (16.5) - -
Dividends on common stock (198.3) - -
----------------------------
Balance at end of year $ 22.4 $ 173.9 $ 85.4
============================
</TABLE>
See Notes to Consolidated Financial Statements on pages 22-27.
17
<PAGE>
Ryerson Tull, Inc. and Subsidiary Companies
(A Majority-Owned Subsidiary of Inland Steel Industries, Inc.)
Consolidated Statement of Cash Flows
- -------------------------------------
<TABLE>
<CAPTION>
Increase (decrease) in cash
Year ended December 31
---------------------------
Dollars in millions 1996 1995 1994
- -------------------------------------------------------- ---------------------------
<S> <C> <C> <C>
Operating Activities
Net income $ 63.3 $ 88.5 $ 53.3
------- ------ ------
Adjustments to reconcile net income to net cash provided
from operating activities:
Depreciation and amortization 22.1 21.8 21.2
Net gain on sales of assets - (0.2) (0.5)
Deferred employee benefit cost 3.8 (14.4) 3.9
Deferred income taxes (3.5) 0.5 0.7
Change in:
Receivables 9.4 (16.7) (31.1)
Inventories (51.5) 10.4 5.7
Other assets (2.6) (2.3) (1.6)
Accounts payable 5.6 (7.0) 22.6
Payables to related companies 2.8 (0.4) 5.8
Accrued liabilities 10.4 4.2 (0.3)
Other deferred items 0.2 - -
------- ------ ------
Net adjustments (3.3) (4.1) 26.4
------- ------ ------
Net cash provided from operating activities 60.0 84.4 79.7
------- ------ ------
Investing Activities
Capital expenditures (24.1) (19.3) (20.4)
Proceeds from sales of assets 2.0 1.9 5.8
Investments in joint ventures (2.2) - -
------- ------ ------
Net cash used for investing activities (24.3) (17.4) (14.6)
------- ------ ------
Financing Activities
Sale of Class A common stock 77.1 - -
Long-term debt issued 242.8 - -
Long-term debt retired (8.2) (4.7) (4.9)
Dividends paid (445.9) - -
Change in notes to and from related companies 68.8 (11.2) (87.2)
------- ------ ------
Net cash used for financing activities (65.4) (15.9) (92.1)
------- ------ ------
Net increase (decrease) in cash and cash equivalents (29.7) 51.1 (27.0)
Cash and cash equivalents-beginning of period 53.6 2.5 29.5
------- ------ ------
Cash and cash equivalents-end of period $ 23.9 $ 53.6 $ 2.5
======= ====== ======
Supplemental Disclosures
Cash paid during the period for:
Interest $ 2.3 $ 3.0 $ 2.9
Income taxes, net 47.9 56.4 30.5
Non-cash activities:
Investments and advances increased by capital
contribution from Inland Steel Industries, Inc. 18.9 - -
------- ------ ------
</TABLE>
See Notes to Consolidated Financial Statements on pages 22-27.
18
<PAGE>
-------------------------------------------
Ryerson Tull, Inc. and Subsidiary Companies
(A Majority-Owned Subsidiary of Inland Steel Industries, Inc.)
Consolidated Balance Sheet
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
At December 31
----------------
Dollars in millions 1996 1995
- ------------------------------------------------------------------------------ ------ -------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 23.9 $ 53.6
Receivables less provision for allowances, claims and
doubtful accounts of $6.0 and $6.4, respectively 234.4 243.8
Inventories (Note 1) 314.3 262.8
Notes receivable from related companies - 68.8
Deferred income taxes (Note 10) 13.6 15.6
------ ------
Total current assets 586.2 644.6
------ ------
Investments and advances (Note 12) 19.8 -
Property, plant and equipment, at cost, less accumulated
depreciation (Note 2) 251.0 249.7
Prepaid pension costs (Note 9) 1.3 27.3
Excess of cost over net assets acquired, net of accumulated amortization 22.3 23.6
Deferred income taxes (Note 10) 37.9 23.5
Other assets 13.7 3.9
------ ------
Total assets $932.2 $972.6
====== ======
Liabilities
Current liabilities:
Accounts payable $ 98.4 $ 92.8
Payables to related companies 17.2 14.4
Accrued liabilities:
Salaries and wages 21.0 20.0
Taxes other than federal income taxes 8.0 8.9
Interest on long-term debt 10.9 0.4
Other 3.0 3.2
Long-term debt due within one year (see details page 20 and Note 4) 2.1 4.7
------ ------
Total current liabilities 160.6 144.4
------ ------
Long-term debt (see details page 20 and Note 4) 263.2 18.9
Deferred employee benefits and other liabilities (Note 9) 144.0 140.8
------ ------
Total liabilities 567.8 304.1
------ ------
Stockholders' Equity
Preferred stock, $1.00 par value; authorized-16,000,000 shares for 1996; issued
and outstanding-0 shares for 1996 and 1995 - -
Class A common stock, $1.00 par value; authorized-100,000,000 shares for 1996;
issued and outstanding-5,277,127 shares for 1996 and 0 shares for 1995 5.3 -
Class B common stock, $1.00 par value; authorized-34,000,000 shares for 1996;
issued and outstanding-34,000,000 shares for 1996 and 0 shares for 1995 34.0 -
Common stock, $1.00 par value; authorized-3,000 shares for 1995;
issued and outstanding-0 shares for 1996 and 1 share for 1995 - -
Capital in excess of par value (Note 5) 304.5 494.6
Reinvested earnings 22.4 173.9
Unearned restricted stock award compensation (0.5) -
Cumulative translation adjustment (1.3) -
------ ------
Total stockholders' equity 364.4 668.5
------ ------
Total liabilities and stockholders' equity $932.2 $972.6
====== ======
</TABLE>
See Notes to Consolidated Financial Statements on pages 22-27.
19
<PAGE>
Ryerson Tull, Inc. and Subsidiary Companies
(A Majority-Owned Subsidiary of Inland Steel Industries, Inc.)
Schedule to Consolidated Financial Statements
- ---------------------------------------------
<TABLE>
<CAPTION>
At December 31
--------------------
Dollars in millions 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Long-Term Debt
Ryerson Tull, Inc.
Notes, 8.50%, due July 15, 2001 $150.0 $ --
Notes, 9.125%, due July 15, 2006 100.0 --
--------------------
Total Ryerson Tull, Inc. 250.0 --
--------------------
Joseph T. Ryerson & Son, Inc.
Industrial Revenue Bond, floating interest rate set weekly based on 13-week Treasury bills,
due November 1, 2007 7.0 7.0
Other long-term debt, 10.25%, due through November 30, 1997 1.4 1.6
--------------------
Total Joseph T. Ryerson & Son, Inc. 8.4 8.6
--------------------
J.M. Tull Metals Company, Inc.
Senior Notes, 9.43% -- 7.1
Term Note, LIBOR plus 62.5 basis points per annum, due through December 15, 1998 6.5 6.8
Industrial Revenue Bonds, interest rates ranging from 6.50% to 65% of the prime rate,
due through January 1, 1997 0.4 0.9
Other long-term debt -- 0.2
--------------------
Total J.M. Tull Metals Company, Inc. 6.9 15.0
--------------------
Subtotal 265.3 23.6
Less: Maturities due within one year 2.1 4.7
--------------------
Total long-term debt $263.2 $18.9
====================
See Notes to Consolidated Financial Statements on pages 22-27.
</TABLE>
Summary by Quarter (Unaudited)
- -----------------
<TABLE>
<CAPTION>
1995 1996
-------------------------------------------------------------------------
Dollars in millions, except per share data 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $652.3 $631.7 $590.7 $575.4 $625.3 $ 607.5 $ 592.3 $ 568.9
Cost of materials sold 498.4 482.7 456.6 436.2 477.3 465.7 457.3 435.6
-------------------------------------------------------------------------
Gross profit 153.9 149.0 134.1 139.2 148.0 141.8 135.0 133.3
Operating expenses 106.4 102.6 99.9 96.8 105.8 103.6 103.0 103.6
Depreciation and amortization 5.4 5.5 5.6 5.3 5.6 5.5 5.7 5.3
-------------------------------------------------------------------------
Operating profit 42.1 40.9 28.6 37.1 36.6 32.7 26.3 24.4
General corporate expense,
net of income items 0.4 0.8 0.4 (0.9) (0.7) 0.1 1.6 1.2
Interest and other expense on debt 0.7 0.7 0.6 0.6 0.6 1.1 6.4 6.2
-------------------------------------------------------------------------
Income before income taxes 41.0 39.4 27.6 37.4 36.7 31.5 18.3 17.0
Provision for income taxes 16.5 15.5 10.6 14.3 14.3 12.6 6.9 6.4
-------------------------------------------------------------------------
Net income 24.5 23.9 17.0 23.1 22.4 18.9 11.4 10.6
=========================================================================
Earnings per share/(1)/ $ 0.63 $ 0.61 $ 0.43 $ 0.59 $ 0.57 $ 0.48 $ 0.29 $ 0.27
-------------------------------------------------------------------------
Common stock prices:
High -- -- -- -- -- $16-1/8 $16-1/8 $15-1/8
Low -- -- -- -- -- 16 13-1/4 12-7/8
Close -- -- -- -- -- 16-1/8 13-7/8 13-1/2
-------------------------------------------------------------------------
</TABLE>
(1) Earnings per share calculations prior to the initial public offering in June
1996 assume 39.2 million shares outstanding since January 1, 1995.
20
<PAGE>
-------------------------------------------
Ryerson Tull, Inc. and Subsidiary Companies
(A Majority-Owned Subsidiary of Inland Steel Industries, Inc.)
Statement of Accounting and Financial Policies and Business Description
- ------------------------------------------------------------------------
Business Description
The company is organized along regional and product lines into five business
units that operate in one business segment and distribute a broad line of steel
products, nonferrous metals and industrial plastics to a wide range of
industrial users on a nationwide basis. Substantially all of the company's
operations are located in the United States, and foreign sales are not material.
At year-end 1996, investments in foreign operations were not material.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Joseph T. Ryerson & Son, Inc. ("Ryerson") and J. M. Tull Metals Company, Inc.
("Tull"), which are wholly-owned subsidiaries of the company. The accounts of
Tull are consolidated with its wholly-owned subsidiary, AFCO Metals, Inc.
Accounting for Equity Investment
The company's investment in its 50 percent-owned joint venture Ryerson de Mexico
is accounted for under the equity method.
Per Share Results
Pro forma earnings per share presented for 1996 and 1995 are calculated under
the assumption that the 39,220,000 shares resulting from the June 1996
recapitalization were outstanding since January 1, 1995. See Note 5.
Inventory Valuation
Inventories are valued at cost that is not in excess of market. Cost is
determined principally by the last-in, first-out ("LIFO") method.
Property, Plant and Equipment
Property, plant and equipment is depreciated, for financial reporting purposes,
using the straight-line method over the estimated useful lives of the assets.
Expenditures for normal repairs and maintenance are charged against income in
the period incurred.
Excess of Cost Over Net Assets Acquired
The excess of cost over fair value of net assets of businesses acquired
(goodwill) is amortized on the straight-line method over a 25-year period.
Accumulated amortization of goodwill totaled $11.5 million at December 31, 1996
and $10.2 million at December 31, 1995.
Benefits for Retired Employees
Effective April 30, 1996, that portion of the Inland Steel Industries Pension
Plan (the "Industries Pension Plan") covering the company's current and former
employees was separated and became the Ryerson Tull Pension Plan. Pension
benefits are provided by the company to substantially all employees under such
trusteed noncontributory plan. Life insurance and certain medical benefits are
provided for substantially all retired employees.
The estimated costs of pension, medical, and life insurance benefits are
determined annually by consulting actuaries. The cost of these benefits for
retirees is accrued during their term of employment (see Note 9). Pensions are
funded in accordance with Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), requirements in a trust established under the Industries
Pension Plan and the Ryerson Tull Pension Plan. Costs for retired employee
medical benefits and life insurance are funded when claims are submitted.
Cash Equivalents
Cash equivalents are highly liquid, short-term investments with maturities of
three months or less.
Gross Profit
Gross profit is calculated as net sales less the cost of materials sold. Direct
labor costs and overhead costs are included in operating expenses.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and related
notes to financial statements. Changes in such estimates may affect amounts
reported in future periods.
Stock-Based Compensation
Financial Accounting Standards Board ("FASB") Statement No. 123, "Accounting for
Stock-Based Compensation," encourages, but does not require companies to record
compensation cost for stock-based employee compensation plans at fair value. The
company has chosen to continue to account for stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related Interpretations.
Accordingly, compensation cost for stock options is measured as the excess, if
any, of the quoted market price of the company's stock at the date of the grant
over the amount an employee must pay to acquire the stock. Compensation cost for
stock appreciation rights and performance equity units is recorded annually
based on the quoted market price of the company's stock at the end of the
period. See Note 6.
Reclassification
Certain items previously reported in specific financial statement captions on
the Statement of Income have been reclassified to conform with the 1996
presentation.
21
<PAGE>
Notes to Consolidated Financial Statements
Note 1: Inventories
The company's inventories consist principally of finished steel, nonferrous
metals and industrial plastic products for sale at service center locations.
The difference between LIFO values and approximate replacement costs for
the LIFO inventories was $125.1 million at December 31, 1996 and $146.4 million
at December 31, 1995.
During 1996, 1995 and 1994, various inventory quantities were reduced,
resulting in liquidations of LIFO inventory quantities carried at costs
prevailing in prior years that were different from current year costs. The
effect on cost of materials sold of LIFO liquidations in these years was not
material.
Note 2: Property, Plant and Equipment
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
At December 31
-------------------
Dollars in millions 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Buildings, machinery and equipment $464.1 $448.2
Land and land improvements 30.3 28.0
-------------------
Total 494.4 476.2
Less --
Accumulated depreciation 243.4 226.5
-------------------
Net $251.0 $249.7
===================
</TABLE>
Note 3: Borrowing Arrangements
At December 31, 1996, the company had available an unused credit facility
totaling $250 million that extends to June 28, 2000. The facility requires
compliance with various financial covenants, including minimum net worth, fixed
charge coverage and leverage ratio tests, and also limits the amount of cash
dividends that the company may pay. At year-end 1996, up to $45 million of
common dividends could have been paid under terms of the credit facility.
Note 4: Long-Term Debt
In July 1996, the company sold $150 million of 8.5 percent Notes due July 15,
2001 and $100 million of 9.125 percent Notes due July 15, 2006 in a public
offering. The indenture under which the Notes were issued contains covenants
limiting, among other things, the creation of secured indebtedness, sale and
leaseback transactions, the repurchase of capital stock, transactions with
affiliates, and mergers, consolidations and certain sales of assets.
Under the provisions of certain loan agreements, as well as the Inland
Steel Industries Thrift Plan ESOP Notes Guarantee (the "ESOP Guarantee") (see
Note 13 regarding commitments and contingencies for further description), the
company's subsidiaries are required to maintain specified amounts of working
capital and net worth and to meet leverage tests, as outlined in the agreements,
and Ryerson is restricted as to loans or dividends that may be paid to the
company. At December 31, 1996, approximately $43 million was available for
Ryerson to make loans or pay dividends to the company under these loan
agreements and the ESOP Guarantee.
Maturities of long-term debt due within five years are: $2.1 million in
1997, $6.2 million in 1998, and $150.0 million in 2001. See Note 13 regarding
commitments and contingencies for other scheduled payments.
Property with a net recorded carrying value of approximately $12.2 million
at December 31, 1996 is pledged as collateral on the Industrial Revenue Bonds
and mortgage loans. See Long-Term Debt Schedule on page 20.
Note 5: Capital Stock
Under the company's Restated Certificate of Incorporation, effective June 1996,
the authorized capital stock of the company consists of 100,000,000 shares of
Class A common stock, 34,000,000 shares of Class B common stock and 16,000,000
shares of preferred stock.
In June 1996, the company exchanged existing shares of company common
stock, all of which were owned by Inland Steel Industries, Inc. ("ISI"), for
34.0 million shares of new-issue Class B common stock. The company also sold 5.2
million shares of new-issue Class A common stock in a public offering, the net
proceeds of which approximated $77.1 million. On December 31, 1996, 1,209,692
shares of Class A common stock remained reserved for issuance under the
company's incentive stock plan. No shares of preferred stock have been issued.
There were no changes in capital accounts during 1994 and 1995. The
following table details changes in capital accounts during 1996:
<TABLE>
<CAPTION>
Capital in Excess
Class A Common Stock Class B Common Stock of Par Value
-------------------- -------------------- -----------------
Shares in thousands; dollars in millions Shares Dollars Shares Dollars Dollars
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1996 -- $ -- -- $ -- $ 494.6
Issuance of Class A common stock 5,220 5.2 -- -- 71.9
Exchange of common stock for
Class B common stock -- -- 34,000 34.0 (34.0)
Dividends on common stock -- -- -- -- (247.6)
Capital contribution -- -- -- -- 18.9
Issuance under employee stock plans 57 0.1 -- -- 0.7
-------------------------------------------------------------------
Balance at December 31, 1996 5,277 $5.3 34,000 $34.0 $ 304.5
===================================================================
</TABLE>
22
<PAGE>
--------------------------------------------------------------
Ryerson Tull, Inc. and Subsidiary Companies
(A Majority-Owned Subsidiary of Inland Steel Industries, Inc.)
Each share of Class A common stock is entitled to one vote, while each share
of Class B common stock is entitled to four votes. At such time as the number of
shares of Class B common stock outstanding represents less than 50 percent of
the total number of shares of Class A common stock and Class B common stock
outstanding, the outstanding Class B common stock will convert into an equal
number of shares of Class A common stock.
Prior to the issuance of the Class A common stock, the company declared and
paid dividends of $445.9 million to ISI, of which $152.1 million was in cash and
$293.8 million was in the form of a note payable. The net proceeds of the $250
million Note offering, along with a portion of the company's cash on hand, were
used to pay the note balance due ISI. ISI used $63.2 million of the cash
dividend to repay intercompany borrowing from the company and its subsidiaries.
Of the $445.9 million of dividends paid, $198.3 million eliminated the
reinvested earnings balance that existed at June 26, 1996, while the remaining
$247.6 million reduced capital in excess of par value. See Note 3 regarding
borrowing arrangements and for restrictions on payment of dividends by the
company.
Note 6: Stock Option Plan
The company has adopted the disclosure-only provisions of FASB Statement No.
123. Accordingly, no compensation cost has been recognized for the company's
stock option plan. Had compensation cost for the stock option plan been
determined based on the fair value at the grant date for awards in 1996 and 1995
consistent with the provisions of FASB Statement No. 123, the company's net
income and earnings per share would have been reduced to the pro forma amounts
indicated below:
<TABLE>
<CAPTION>
Dollars in millions, except per share data 1996 1995
- ----------------------------------------------------------
<S> <C> <C>
Net income--as reported $63.3 $88.5
Net income--pro forma 62.0 88.2
Earnings per share--as reported $1.61 $2.26
Earnings per share--pro forma 1.58 2.25
------------
</TABLE>
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 1996 and 1995: dividend yield of 1.08 percent;
expected volatility of 31.83 percent; risk-free interest rate of 6.13 percent;
and expected term of five years. In 1996, grants were originally made and valued
under the ISI stock plan.
In July 1996, after the initial public offering of the company's Class A
common stock, the compensation committee of the company elected to allow the
substitution of certain ISI common stock options into company Class A common
stock options. As the exercise price of options substituted exceeded the then
current market price and all other terms of the options remained unchanged,
there was no material increase in value to the employees resulting from the
substitution and no material increase in cost to the company. 1,041,949 company
Class A common stock options were substituted for 855,494 ISI stock options.
Options substituted retain their original granted vesting schedules. No new
options were granted under the Ryerson Tull 1996 Incentive Stock Plan (the
"Plan").
The Plan, approved by the stockholder on June 10, 1996, provides for the
issuance pursuant to options and other awards, of 2.3 million shares of Class A
common stock to officers and other key employees. Under the Plan, the per share
option exercise price may not be less than the fair market value per share on
the date of grant. A total of 1,209,692 shares was available for future grants
under the Plan as of December 31, 1996.
Options outstanding on December 31, 1996 under the Plan have expiration dates
ranging from July 21, 1997 to March 26, 2006 with a weighted-average exercise
price per share of $22.80. On December 31, 1996, there were 106 holders of
options granted under the Plan.
The Plan also provides for the granting of restricted stock and performance
awards to officers and other key employees. During 1996, 31,424 shares of
previously granted ISI restricted stock were converted to 38,273 shares of
company Class A common stock. During 1996, restricted stock awards totaling
18,854 shares were granted to 10 executives and no performance awards were
granted.
The Plan also provides that stock appreciation rights ("SAR") may be granted.
Upon exercise of an SAR, the holder is entitled to receive the excess of the
fair market value of the shares for which the SAR is exercised over the related
option exercise price. The holder may elect to receive payment in stock or in a
combination of stock and cash. An SAR is exercisable only upon surrender of the
related option and only to the extent that the related option is exercisable. No
SARs have been granted.
The company's employees participate in the ISI employee stock purchase plan
where employees have the opportunity to sign up twice a year to purchase ISI
stock at the end of each six month period at a price that is 90 percent of the
fair market value on the last day of the period. In each of 1996 and 1995,
employees received ISI stock with a total value that was approximately $30,000
greater than the amount paid for the stock issued.
23
<PAGE>
The following table summarizes information on fixed-price stock options
outstanding at December 31, 1996.
<TABLE>
<CAPTION>
Options outstanding Options exercisable
----------------------------------------------- ------------------------------
Number Weighted-Average Weighted-Average Number Weighted-Average
Outstanding Remaining Exercise Price Exercisable Exercise Price
Range of Exercise Prices at 12/31/96 Contractual Life at 12/31/96
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$25.4976 5,112 1 yr. $25.50 5,112 $25.50
30.987 to 32.6287 67,404 2 yrs. 32.07 67,404 32.07
17.5456 to 27.7036 67,184 4 yrs. 25.20 67,184 25.20
20.9316 58,462 5 yrs. 20.93 58,462 20.93
21.4446 90,334 6 yrs. 21.44 90,334 21.44
25.3436 to 29.550 150,167 7 yrs. 26.03 150,167 26.03
23.3941 145,411 8 yrs. 23.39 72,696 23.39
20.2647 449,107 9 yrs. 20.26 0 N/A
---------------------------------------------------------------------------------
</TABLE>
The following summarizes the status of options under the Plan for the periods
indicated:
<TABLE>
<CAPTION>
Number Option Exercise Weighted-
of Shares Price or Range Average
Per Share Exercise
Price
-----------------------------------------
<S> <C> <C> <C>
Options (granted and unexercised)
at December 31, 1995 -- -- --
Converted from ISI options 1,041,949 $17.55-32.63 $22.79
Granted 0 N/A N/A
Exercised 0 N/A N/A
Canceled or forfeited (8,768) 20.26-25.34 21.50
Options (granted and unexercised)
at December 31, 1996
(511,359 exercisable) 1,033,181 17.55-32.63 22.80
-----------------------------------------
</TABLE>
Note 7: Stockholder Rights Plan
Pursuant to a stockholder rights plan, on June 10, 1996, the Board of Directors
declared a dividend distribution of one right (a "Right") for each outstanding
share of common stock payable to stockholders of record on June 13, 1996 and
authorized the issuance of one Right for each share of common stock that becomes
outstanding prior to the June 13, 2006 expiration of the rights plan. Except as
described below, each Right, when exercisable, entitles its holder to purchase
from the company one one-hundredth of a share of Series A Junior Participating
Preferred Stock, at a price of $95.00, subject to adjustment. The Rights become
exercisable only if a person or group acquires, or commences a tender or
exchange offer to acquire, beneficial ownership of capital stock representing 10
percent or more of the voting power of the company; provided that in no event
will the Rights become exercisable prior to the first date that ISI and its
affiliates and associates, in the aggregate, collectively beneficially own
capital stock representing less than 50 percent of the voting power of the
company. The Rights will not become exercisable if a person obtains 10 percent
or more of the voting power of the company through a sale by ISI of Class B
common stock unless such person thereafter acquires additional shares of common
stock from persons other than ISI.
In the event that any person or group acquires beneficial ownership of
capital stock representing 10 percent or more of the voting power of the
company, each holder of a Right will thereafter have the right to receive, upon
exercise at the then current exercise price of the Right, Class A common stock
(or, in certain circumstances, cash, property or other securities of the
company) having a value equal to two times the exercise price of the Right. In
the event that, at any time following such a 10 percent acquisition, the company
is acquired by the 10 percent acquiror in a merger or other business combination
transaction or 50 percent or more of the company's assets or earning power are
sold to the 10 percent acquiror, each holder of a Right will thereafter have the
right to receive, upon exercise at the then current exercise price of the Right,
common stock of the acquiring or surviving company having a value equal to two
times the exercise price of the Right. In addition, if a person or group makes
such a 10 percent acquisition but does not acquire 50 percent or more of the
voting power of the company, the Board of Directors may exchange the Rights at
an exchange ratio of one share of Class A common stock per Right (subject to
adjustment). Any Rights that are beneficially owned by the 10 percent acquiror
would then become null and void.
The Board of Directors may redeem the Rights in whole, but not in part, at a
price of $ 0.01 per Right (subject to adjustment) prior to the time someone
acquires beneficial ownership of capital stock representing 10 percent or more
of the voting power of the company.
Note 8: Derivatives and Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value.
Derivatives
The company has only limited involvement with derivative financial instruments
and does not use them for speculative or trading purposes. The company has
entered into an interest rate swap agreement to reduce the effects of changes in
interest rates on the Tull Term Note. At December 31, 1996, the company had
outstanding an interest rate swap agreement with a bank having a notional
principal amount equal to the outstanding principal of the Tull
24
<PAGE>
--------------------------------------------------------------
Ryerson Tull, Inc. and Subsidiary Companies
(A Majority-Owned Subsidiary of Inland Steel Industries, Inc.)
Term Note. This agreement effectively changes the company's interest rate
exposure on the Tull Term Note from LIBOR plus 0.625 percent (a floating rate)
to a fixed rate of 5.925 percent. This interest rate swap matures on August 17,
1998. Gains and losses associated with this hedging transaction will be reported
as part of the interest expense of the Tull Term Note. The company is exposed to
potential credit loss in the event of nonperformance by the bank; however, the
company does not anticipate such nonperformance. This interest rate swap has not
had a material impact on the results of operations or financial position of the
company.
Cash and Cash Equivalents
The carrying amount of cash equivalents approximates fair value because of the
short maturity of those instruments.
Long-Term Debt
The estimated fair value of the company's long-term debt (including current
portions thereof) using quoted market prices of company debt securities recently
traded and market-based prices of similar securities for those securities not
recently traded was $276.0 million at December 31, 1996 and $23.6 million at
December 31, 1995, as compared with the carrying value of $265.3 million and
$23.6 million at year-end 1996 and 1995, respectively.
Note 9: Retirement Benefits
Pensions
Prior to April 30, 1996, certain employees of the company were eligible to
participate in the ISI Pension Plan. Because the fair value of the ISI Pension
Plan assets pertains to all participants in the ISI Pension Plan, no separate
determination of the fair value of such assets was made solely with respect to
the company. The company recorded a pension credit of $2.3 million in 1995 and a
charge of $1.8 million in 1994.
Effective April 30, 1996, that portion of the ISI Pension Plan covering the
company's current and former employees was separated and became the Ryerson Tull
Pension Plan, a new and separate plan sponsored by the company, which covers
certain employees, retirees and their beneficiaries of the company and its
subsidiaries. The Ryerson Tull Pension Plan is a noncontributory defined benefit
plan that provides benefits based on final pay and years of service for all
salaried employees, and years of service and a fixed rate or a rate determined
by job grade for all wage employees, including employees under collective
bargaining agreements.
Due to this separation, the company's benefit obligation was remeasured using
plan data and actuarial assumptions as of April 30, 1996. An amount of assets
proportional to the liabilities assumed by the Ryerson Tull Pension Plan was
allocated to this new plan. As a result, the company recognized a $25.4 million
decrease in its prepaid pension cost, a $16.5 million reduction in reinvested
earnings and an $8.9 million deferred tax asset increase.
The assumptions used to determine the plan's funded status for 1996 are as
follows:
- -----------------------------------------
Discount (settlement) rate 8.0%
Rate of compensation increase 4.0%
Rate of return on plan assets 9.5%
----
The funded status of the plan as of September 30, 1996 was as follows:
<TABLE>
<CAPTION>
Dollars in millions
- -------------------------------------------------------------------
<S> <C>
Fair value of plan assets $ 251
------
Actuarial present value of benefits for services
rendered to date:
Accumulated Benefit Obligation based on
compensation to date, including vested
benefits of $211 225
Additional benefits based on estimated future
compensation levels 27
------
Projected Benefit Obligation 252
------
Plan asset shortfall to Projected Benefit Obligation $ (1)
======
</TABLE>
The Projected Benefit Obligation is the full measure of the company's "going
concern" liability for pensions accrued to date based on current interest rates.
It includes the effect of future compensation increases for benefits based on
final pay. It does not, however, take into consideration contingent benefits
that are not expected to be paid but that would require funding in any plan
termination.
The prepaid pension cost reflected in the company's balance sheet at December
31, 1996 can be reconciled to the shortfall of plan assets as shown below:
<TABLE>
<CAPTION>
Dollars in millions
- ---------------------------------------------------------
<S> <C>
Plan asset shortfall to Projected
Benefit Obligation $ (1)
Unrecognized transition asset (8)
Unrecognized net loss 3
Unrecognized prior service cost 8
------
Prepaid pension cost at September 30, 1996 2
Expense, October through December 1996 (1)
------
Prepaid pension cost at December 31, 1996 $ 1
======
</TABLE>
The unrecognized transition asset is being recognized in income by reducing
pension expense in equal annual installments of $2.4 million through 1999. Any
subsequent unrecognized net gain or loss in excess of 10 percent of the greater
of the Projected Benefit Obligation or the fair value of plan assets will be
amortized over the remaining service period of active employees.
Pension cost for 1996 is composed of the components set forth in the table
below:
<TABLE>
<CAPTION>
Dollars in millions
- -------------------------------------------------------------------
<S> <C>
Service cost--present value of benefits earned
during the year $ 5.5
Interest on service cost and Projected Benefit Obligation 20.4
Actual return on plan assets (24.8)
Net amortization and deferral 0.5
------
Total pension cost $ 1.6
======
</TABLE>
The cost of other industry welfare and retirement funds, for bargaining unit
employees, was $3.3 million in 1996 and 1995 and $2.6 million in 1994.
25
<PAGE>
Benefits Other Than Pensions
Substantially all of the company's employees are covered under postretirement
life insurance and medical benefit plans that involve deductible and co-
insurance requirements. The postretirement life insurance benefit formula used
in the determination of postretirement benefit cost is primarily based on
applicable annual earnings at retirement for salaried employees and specific
amounts for hourly employees. The company does not prefund any of these
postretirement benefits.
The amount of net periodic postretirement benefit cost for 1996, 1995 and
1994 is composed of the following:
<TABLE>
<CAPTION>
Dollars in millions 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 2.4 $ 2.2 $ 2.7
Interest cost 8.2 8.4 7.3
Net amortization and deferral (2.0) (3.4) (2.0)
---------------------
Total net periodic postretirement benefit cost $ 8.6 $ 7.2 $ 8.0
=====================
</TABLE>
The following table sets forth components of the accumulated postretirement
benefit obligation:
<TABLE>
<CAPTION>
September 30
----------------
Dollars in millions 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation attributable to:
Retirees $ 60.3 $ 59.5
Fully eligible plan participants 10.0 17.6
Other active plan participants 35.8 28.2
---------------
Accumulated postretirement benefit obligation 106.1 105.3
Unrecognized net gain 19.9 16.7
Unrecognized prior service credit 17.6 18.9
---------------
Accrued postretirement benefit obligation $143.6 $140.9
Expense net of benefits provided, October through December 0.4 0.2
---------------
Accrued postretirement benefit obligation at December 31 $144.0 $141.1
===============
</TABLE>
Any net gain or loss in excess of 10 percent of the accumulated postretirement
benefit obligation is amortized over the remaining service period of active plan
participants.
The assumptions used to determine the plan's accumulated postretirement
benefit obligation are as follows:
<TABLE>
<CAPTION>
September 30
--------------
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Discount rate 8.0% 7.75%
Rate of compensation increase 4.0% 4.0%
Medical cost trend rate 4.5% 4.5%
Year ultimate rate reached 1996 1996
-------------
</TABLE>
A one percentage point increase in the assumed health care cost trend rates for
each future year increases annual periodic postretirement benefit cost and the
accumulated postretirement benefit obligation as of September 30, 1996 by $2.5
million and $13.6 million, respectively.
Note 10: Taxes on Income
The company participates in a tax-sharing arrangement under which current and
deferred federal income tax provisions are determined for each company in the
ISI group on a stand-alone basis. Any current liability is paid to ISI. If the
company is unable to use all of its allocated tax attributes (net operating loss
and tax credit carryforwards) in a given year but other companies in the
consolidated group are able to utilize them, then the company will be paid by
ISI for the use of its attributes. Net operating loss ("NOL") and tax credit
carryforwards are allocated to each company in accordance with applicable tax
regulations as if a company were to leave the consolidated group. Companies with
taxable losses record current income tax credits not to exceed current income
tax charges recorded by profitable companies. If ISI uses NOL carryforwards, the
company will use the appropriate portion of that year's carryforward previously
allocated to it, if any.
A state tax-sharing arrangement, similar to the arrangement described above
with respect to federal taxes, also exists with ISI for those states in which
the consolidated group is charged state taxes on a unitary or combined basis.
The elements of the provision for income taxes for the periods indicated
below are as follows:
<TABLE>
<CAPTION>
Year ended December 31
-----------------------
Dollars in millions 1996 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Current income taxes
Federal $38.9 $ 49.7 $ 30.4
State and local 4.8 6.7 3.9
-----------------------
43.7 56.4 34.3
Deferred income taxes 3.5Cr. 0.5 0.7
-----------------------
Total provision for income taxes $40.2 $ 56.9 $ 35.0
=======================
</TABLE>
Cr. = Credit
The components of the deferred income tax assets and liabilities arising under
FASB Statement No. 109 were as follows:
<TABLE>
<CAPTION>
December 31
---------------
Dollars in millions 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets, excluding postretirement benefits other
than pensions:
NOL and tax credit carryforwards $ 16.1 $ 16.2
Other deductible temporary differences 25.3 27.9
---------------
Deferred tax assets 41.4 44.1
---------------
Deferred tax liabilities:
Fixed asset basis difference 37.6 37.2
Other taxable temporary differences 2.7 17.2
---------------
Deferred tax liabilities 40.3 54.4
---------------
Net deferred tax asset (liability), excluding postretirement
benefits other than pensions 1.1 (10.3)
FASB Statement No. 106 impact (postretirement benefits other
than pensions) 50.4 49.4
---------------
Net deferred tax asset $ 51.5 $ 39.1
===============
</TABLE>
26
<PAGE>
--------------------------------------------------------------
Ryerson Tull, Inc. and Subsidiary Companies
(A Majority-Owned Subsidiary of Inland Steel Industries, Inc.)
For tax purposes, the company had, at December 31, 1996, approximately $43
million of NOL carryforwards available for regular federal income tax purposes,
expiring as follows: $8 million in 2005, $21 million in 2006, $7 million in
2007, $6 million in 2008 and $1 million in 2011. Additionally, in conjunction
with the Alternative Minimum Tax ("AMT") rules, the company had available AMT
credit carryforwards for tax purposes of approximately $1 million, which may be
used indefinitely to reduce regular federal income taxes.
The company believes that it is more likely than not that all of the NOL
carryforwards will be utilized prior to their expiration. This belief is based
upon the factors discussed below.
The NOL carryforwards and existing deductible temporary differences
(excluding those relating to FASB Statement No. 106) are substantially offset by
existing taxable temporary differences reversing within the carryforward period.
Furthermore, any such recorded tax benefits that would not be so offset are
expected to be realized by continuing to achieve future profitable operations.
Subsequent to the adoption of FASB Statement No. 109, the company adopted
FASB Statement No. 106 and recognized the entire transition obligation at
January 1, 1992 as a cumulative effect charge in 1992. At December 31, 1996, the
deferred tax asset related to the company's FASB Statement No. 106 obligation
was $50.4 million. To the extent that future annual charges under FASB Statement
No. 106 continue to exceed deductible amounts, this deferred tax asset will
continue to grow. Thereafter, even if the company should have a tax loss in any
year in which the deductible amount would exceed the financial statement
expense, the tax law provides for a 15-year carryforward period of that loss.
Because of the extremely long period that is available to realize these future
tax benefits, a valuation allowance for this deferred tax asset is not
necessary.
Total income taxes reflected in the Statement of Income differ from the
amounts computed by applying the federal tax rate as follows:
<TABLE>
<CAPTION>
Year ended December 31
----------------------
Dollars in millions 1996 1995 1994
- ---------------------------------------------------------------
<S> <C> <C> <C>
Federal income tax provision
computed at statutory tax
rate of 35% $ 36.2 $ 50.9 $ 30.9
Additional taxes or credits from:
State and local income
taxes, net of federal
income tax effect 3.0 4.5 2.5
All other, net 1.0 1.5 1.6
----------------------
Total income tax provision $ 40.2 $ 56.9 $ 35.0
======================
</TABLE>
Note 11: Related Party Transactions
The company sells products to and purchases products from related companies at
prevailing market prices. These transactions were as follows:
<TABLE>
<CAPTION>
Year ended December 31
----------------------
Dollars in millions 1996 1995 1994
- ---------------------------------------------------------------
<S> <C> <C> <C>
Net product sales $ 15.2 $ 15.7 $ 10.7
Net product purchases $202.2 $176.6 $184.1
----------------------
</TABLE>
Administrative expenses covering management, financial and legal services
provided to the company were charged to the company by ISI. Such charges totaled
$6.4 million in 1996, $6.8 million in 1995 and $7.4 million in 1994.
Prior to June 1996, the company's cash was periodically transferred to ISI
under a corporatewide cash management program. Funds transferred to ISI were
supported by interest-bearing notes receivable. Interest, at prevailing prime
market rates, was charged on all intercompany loans between the company and ISI.
There was $1.5 million of net intercompany interest income in 1996, $3.9 million
of net intercompany interest income in 1995, and no net intercompany interest
expense in 1994.
Effective June 1996, while ISI continues to perform cash management
activities on behalf of the company, the company's cash is no longer transferred
to ISI and is maintained and invested separately from ISI's cash.
Note 12: Investment in Unconsolidated Joint Venture
Effective June 1, 1996, as a result of a capital contribution from ISI to the
company, Inland Industries de Mexico and its 50 percent-owned Ryerson de Mexico
joint venture became part of the company. The contribution increased both
investments in joint ventures and capital in excess of par value by $18.9
million. Ryerson de Mexico is a materials distribution joint venture operated in
Mexico and is accounted for under the equity method.
Note 13: Commitments and Contingencies
The company has noncancellable operating leases for which future minimum rental
commitments are estimated to total $40.5 million, including approximately $11.2
million in 1997, $10.1 million in 1998, $8.9 million in 1999, $5.3 million in
2000, $3.2 million in 2001 and $1.8 million thereafter.
Rental expense under operating leases totaled $15.7 million in 1996 and
$15.9 million in 1995 and 1994.
Ryerson is the guarantor of $106.2 million at year-end 1996 of the ISI
Thrift Plan ESOP Notes. The notes are payable in installments through July 2004.
There are various claims and pending actions against the company. The
amount of liability, if any, for these claims and actions at December 31, 1996
is not determinable but, in the opinion of management, such liability, if any,
will not have a materially adverse effect on the company's financial position or
results of operations.
Note 14: Subsequent Event
On February 13, 1997, the company purchased Thypin Steel Co., Inc. ("Thypin"), a
distributor and processor of carbon and stainless steel products, for $120
million in cash. The company also assumed $23 million in existing Thypin debt.
27
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF RYERSON TULL, INC.
----------------------------------
The subsidiaries of Ryerson Tull, Inc. (other than certain subsidiaries which,
considered in the aggregate as a single subsidiary, do not constitute a
significant subsidiary), one of which is incorporated in the State of Delaware
and one of which is incorporated in the State of Georgia, as noted below, and
each of which is wholly owned by Ryerson Tull, Inc., are as follows:
Joseph T. Ryerson & Son, Inc.
(a Delaware corporation)
J. M. Tull Metals Company, Inc.
(a Georgia corporation)
<PAGE>
EXHIBIT 24
RYERSON TULL, INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Ryerson Tull, Inc., a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Jay M. Gratz, Vicki L. Avril
and Charles B. Salowitz, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Ryerson Tull, Inc. to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Ryerson Tull, Inc. for the
fiscal year ended December 31, 1996, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Ryerson Tull, Inc. to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 11th day of February,
1997.
/s/ Richard G. Cline
------------------------------------------
<PAGE>
EXHIBIT 24
RYERSON TULL, INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Ryerson Tull, Inc., a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Jay M. Gratz, Vicki L. Avril
and Charles B. Salowitz, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Ryerson Tull, Inc. to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Ryerson Tull, Inc. for the
fiscal year ended December 31, 1996, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Ryerson Tull, Inc. to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of February,
1997.
/s/ Robert J. Darnall
------------------------------------------
<PAGE>
EXHIBIT 24
RYERSON TULL, INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Ryerson Tull, Inc., a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Jay M. Gratz, Vicki L. Avril
and Charles B. Salowitz, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Ryerson Tull, Inc. to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Ryerson Tull, Inc. for the
fiscal year ended December 31, 1996, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Ryerson Tull, Inc. to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of February,
1997.
/s/ Neil S. Novich
------------------------------------------
<PAGE>
EXHIBIT 24
RYERSON TULL, INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Ryerson Tull, Inc., a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Jay M. Gratz, Vicki L. Avril
and Charles B. Salowitz, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Ryerson Tull, Inc. to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Ryerson Tull, Inc. for the
fiscal year ended December 31, 1996, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Ryerson Tull, Inc. to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 10 day of February,
1997.
/s/ James A. Henderson
------------------------------------------
<PAGE>
EXHIBIT 24
RYERSON TULL, INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Ryerson Tull, Inc., a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Jay M. Gratz, Vicki L. Avril
and Charles B. Salowitz, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Ryerson Tull, Inc. to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Ryerson Tull, Inc. for the
fiscal year ended December 31, 1996, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Ryerson Tull, Inc. to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of February,
1997.
/s/ Jerry K. Pearlman
------------------------------------------
<PAGE>
EXHIBIT 24
RYERSON TULL, INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Ryerson Tull, Inc., a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Jay M. Gratz, Vicki L. Avril
and Charles B. Salowitz, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Ryerson Tull, Inc. to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Ryerson Tull, Inc. for the
fiscal year ended December 31, 1996, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Ryerson Tull, Inc. to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 5th day of February,
1997.
/s/ Donald S. Perkins
------------------------------------------
<PAGE>
EXHIBIT 24
RYERSON TULL, INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Ryerson Tull, Inc., a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Jay M. Gratz, Vicki L. Avril
and Charles B. Salowitz, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Ryerson Tull, Inc. to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Ryerson Tull, Inc. for the
fiscal year ended December 31, 1996, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Ryerson Tull, Inc. to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of February,
1997.
/s/ Jean-Pierre Rosso
------------------------------------------
<PAGE>
EXHIBIT 24
RYERSON TULL, INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Ryerson Tull, Inc., a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Jay M. Gratz, Vicki L. Avril
and Charles B. Salowitz, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Ryerson Tull, Inc. to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Ryerson Tull, Inc. for the
fiscal year ended December 31, 1996, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Ryerson Tull, Inc. to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 6 day of February,
1997.
/s/ Ronald L. Thompson
------------------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> 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 Annual Report on Form 10-K
to which this Exhibit is attached and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 23,900
<SECURITIES> 0
<RECEIVABLES> 240,400
<ALLOWANCES> 6,000
<INVENTORY> 314,300
<CURRENT-ASSETS> 586,200
<PP&E> 494,400
<DEPRECIATION> 243,400
<TOTAL-ASSETS> 932,200
<CURRENT-LIABILITIES> 160,600
<BONDS> 263,200
<COMMON> 39,300
0
0
<OTHER-SE> 325,100
<TOTAL-LIABILITY-AND-EQUITY> 932,200
<SALES> 2,394,000
<TOTAL-REVENUES> 2,394,000
<CGS> 2,112,700
<TOTAL-COSTS> 2,112,700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,300
<INCOME-PRETAX> 103,500
<INCOME-TAX> 40,200
<INCOME-CONTINUING> 63,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,300
<EPS-PRIMARY> 1.61
<EPS-DILUTED> 1.61
</TABLE>
