<PAGE>
First Quarter - 1997
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
----------
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the period ended March 31, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from __________ to __________
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Commission file number 1-11767
I.R.S. Employer Identification Number 36-3431962
RYERSON TULL, INC.
(a Delaware Corporation)
2621 West 15th Place
Chicago, Illinois 60608
Telephone: (773) 762-2121
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 5,280,763 shares of the
Company's Class A Common Stock and 34,000,000 shares of the Company's Class B
Common Stock (each $1.00 par value per share) were outstanding as of May 8,
1997.
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
RYERSON TULL, INC.
AND SUBSIDIARY COMPANIES
(A majority-owned subsidiary of Inland Steel Industries, Inc.)
Consolidated Statement of Operations (Unaudited)
================================================================================
Dollars in Millions (except per share data)
--------------------------------------------
Three Months Ended
March 31
------------------------
1997 1996
------- -------
<S> <C> <C>
NET SALES $660.7 $625.3
Cost of materials sold 510.4 477.2
------- -------
GROSS PROFIT 150.3 148.1
Operating expenses 109.0 105.9
Depreciation and amortization 6.3 5.6
------- -------
OPERATING PROFIT 35.0 36.6
General corporate expense,
net of income items 0.9 (0.7)
Interest and other expense on debt 7.2 0.6
------- -------
INCOME BEFORE INCOME TAXES 26.9 36.7
PROVISION FOR INCOME TAXES 10.3 14.3
------- -------
NET INCOME $16.6 $22.4
======= =======
PRIMARY EARNINGS PER SHARE
OF COMMON STOCK (Note 5) $0.42 $0.57
======= =======
OPERATING DATA
SHIPMENTS (Tons in Thousands) 708.8 638.6
</TABLE>
See notes to consolidated financial statements
- 1 -
<PAGE>
RYERSON TULL, INC.
AND SUBSIDIARY COMPANIES
(A majority-owned subsidiary of Inland Steel Industries, Inc.)
Consolidated Statement of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
===============================================================================================================
Dollars in Millions
-------------------
Three Months Ended
March 31
------------------
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 16.6 $ 22.4
------- ------
Adjustments to reconcile net income to net
cash used for operating activities:
Depreciation and amortization 6.3 5.6
Net gain on sales of assets (2.4) -
Deferred employee benefit cost 1.2 0.9
Deferred income taxes 1.2 1.7
Change in assets and liabilities, excluding effects of acquisitions:
Receivables (40.1) (30.8)
Inventories (34.8) (34.5)
Other assets (0.5) (0.6)
Accounts payable 53.4 21.4
Payables to related companies 9.2 0.9
Accrued liabilities (17.6) (7.3)
Other deferred items (0.4) -
------- ------
Net adjustments (24.5) (42.7)
Net cash used for operating activities (7.9) (20.3)
------- ------
INVESTING ACTIVITIES
Acquisitions (Note 3) (130.2) -
Capital expenditures (6.9) (3.0)
Proceeds from sales of assets 4.1 1.2
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Net cash used for investing activities (133.0) (1.8)
------- ------
FINANCING ACTIVITIES
Debt retirement (0.4) (0.5)
Reduction of debt assumed in acquisition (22.6) -
Borrowing from related company, net 132.0 14.4
Short-term borrowing under bank credit facility, net 8.0 -
------- ------
Net cash provided from financing activities 117.0 13.9
Net decrease in cash and cash equivalents (23.9) (8.2)
Cash and cash equivalents - beginning of year 23.9 53.6
------- ------
Cash and cash equivalents - end of period $ - $ 45.4
======= ======
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
Interest $ 12.9 $ 0.6
Income taxes, net 10.4 12.5
Debt assumed in acquisition 22.6 -
</TABLE>
See notes to consolidated financial statements
- 2 -
<PAGE>
RYERSON TULL, INC.
AND SUBSIDIARY COMPANIES
(A majority-owned subsidiary of Inland Steel Industries, Inc.)
Consolidated Balance Sheet (Unaudited)
<TABLE>
<CAPTION>
===================================================================================================================
Dollars in Millions
-------------------------------------------
March 31, 1997 December 31, 1996
-------------- -----------------
(unaudited)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ - $ 23.9
Receivables 320.9 234.4
Inventories - principally at LIFO 423.7 314.3
Deferred income taxes 13.0 13.6
-------- ------
Total current assets 757.6 586.2
INVESTMENTS AND ADVANCES 19.9 19.8
PROPERTY, PLANT AND EQUIPMENT
Valued on basis of cost $515.5 $494.4
Less accumulated depreciation 246.2 269.3 243.4 251.0
------ ------
DEFERRED INCOME TAXES 36.8 37.9
PREPAID PENSION COSTS 0.7 1.3
EXCESS OF COST OVER NET ASSETS ACQUIRED 67.4 22.3
OTHER ASSETS 15.0 13.7
-------- ------
Total Assets $1,166.7 $932.2
======== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 176.9 $ 98.4
Note payable to related company 132.0 -
Payables to related companies - trade and other 26.4 17.2
Accrued liabilities 32.8 42.9
Long-term debt due within one year 1.7 2.1
Short-term note payable 8.0 -
-------- ------
Total current liabilities 377.8 160.6
LONG-TERM DEBT 263.2 263.2
DEFERRED EMPLOYEE BENEFITS AND OTHER 144.6 144.0
-------- ------
Total liabilities 785.6 567.8
STOCKHOLDERS' EQUITY (Schedule A) 381.1 364.4
-------- ------
Total Liabilities and Stockholders' Equity $1,166.7 $932.2
======== ======
</TABLE>
See notes to consolidated financial statements
- 3 -
<PAGE>
RYERSON TULL, INC.
AND SUBSIDIARY COMPANIES
(A majority-owned subsidiary of Inland Steel Industries, Inc.)
Notes to Consolidated Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE 1/FINANCIAL STATEMENTS
Results of operations for any interim period are not necessarily indicative of
results of any other periods or for the year. The financial statements as of
March 31, 1997 and for the three-month periods ended March 31, 1997 and 1996
are unaudited, but in the opinion of management include all adjustments
necessary for a fair presentation of results for such periods. These financial
statements should be read in conjunction with the financial statements and
related notes contained in the Annual Report on Form 10-K for the year ended
December 31, 1996.
NOTE 2/RECAPITALIZATION
In the second quarter of 1996, Industries 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 Industries,
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 Industries, of which $152.1 million was in cash
and $293.8 million was in the form of a note payable. Industries 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 Industries,
$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 Industries.
Effective June 1, 1996, as the result of a capital contribution from Industries
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.
- 4 -
<PAGE>
NOTE 3/ACQUISITIONS
During the first quarter of 1997, the Company, through its subsidiaries,
acquired Thypin Steel Co., Inc. and the assets of Cardinal Metals, Inc. for an
aggregate of $130.2 million in cash. Both acquisitions have been accounted for
by the purchase method of accounting and the purchase price has been allocated
to assets acquired and liabilities assumed. Results of operations since
acquisition for each company are included in the consolidated results. The pro
forma effect for 1997 and 1996 had these acquisitions occurred at the beginning
of each such year is not material.
NOTE 4/RELATED PARTY TRANSACTIONS
The Company has agreed to procedures established by Inland Steel Industries,
Inc. ("Industries") for charging Industries' administrative expenses to the
operating companies owned by it. Pursuant to these procedures, the Company was
charged $1.4 million and $1.7 million by Industries for the first quarters of
1997 and 1996, respectively, for management, financial and legal services
provided to the Company.
Prior to the recapitalization in the second quarter of 1996, procedures had been
established to charge interest on all intercompany loans within the Industries
group of companies. Such loans arose as part of a corporate-wide cash
management program and bore interest at the prime rate. In May 1996, after all
such intercompany loans were repaid, the Company ceased participation in such
programs and the Company's cash is not and will no longer be held in Industries'
accounts. In the first quarter of 1996, intercompany interest income was $1.3
million.
On March 27, 1997, the Company established the ability to borrow from Industries
through a five-year $250 million uncommitted line of credit. As of March 31,
1997, $132 million of borrowing was outstanding under this facility.
The Company sells to and purchases products from related companies at prevailing
market prices. These transactions are summarized as follows:
<TABLE>
<CAPTION>
Dollars in Millions
-------------------
Three Months
Ended March 31
-------------------
1997 1996
---- ----
<S> <C> <C>
Net Product Sales $ 3.2 $ 5.2
Net Product Purchases 59.1 57.5
</TABLE>
NOTE 5/EARNINGS PER SHARE
Pro forma earnings per share presented for the first three months of 1996
assumes 39,220,000 average shares outstanding. For the first quarter of 1997,
39,277,127 shares, the actual average common shares outstanding during the
quarter, was used in the calculation of earnings per share.
The Company is required to adopt Financial Accounting Standards Board Statement
No. 128, "Earnings per Share," at year-end 1997. Basic Earning per Share as
defined in that Statement is not materially different from the Primary Earnings
per Share amount presented.
- 5 -
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations-Comparison of First Quarter 1997 to First Quarter 1996
The Company reported consolidated net income of $16.6 million, or $.42 per
common share in the first quarter of 1997, as compared with $22.4 million, or
$.57 per common share pro forma in the year-ago quarter. First quarter 1997
earnings benefited from a $2 million pre-tax gain (three cents per common share)
on the sale of the Company's property in Jersey City, New Jersey. Reduced
quarter-to-quarter earnings resulted primarily from lower selling prices which
pressured gross margins, and from significantly higher interest expense and
lower interest income resulting from the recapitalization. Partially offsetting
these impacts were strong tonnage volumes and good expense control.
Consolidated net sales of $660.7 million were 6% higher than the
year-earlier period due to acquisitions. Volume increased 11% to 709,000 tons
from 639,000 tons, as a result of market share gains assisted by the
acquisitions of Thypin Steel and Cardinal Metals during the quarter, as well as
strong service center industry shipment levels. Average selling price declined
5% to $932 per ton from $979 per ton.
Gross profit per ton decreased to $212 from $232 in the year-ago quarter
due to continued pressure from declining industrywide metals prices. Expenses,
defined as operating expenses, depreciation and amortization, were reduced to
$165 per ton (excluding the gain on the Jersey City sale reflected in operating
expenses) from $175 per ton in first quarter 1996.
Operating profit of $35.0 million was 4% less than the $36.6 million
recorded in the year-earlier period, mainly due to weaker gross margins.
Recent Developments
On February 13, 1997, the Company, through its wholly-owned subsidiary
Joseph T. Ryerson & Son, Inc., acquired 100% of the outstanding capital stock of
Thypin Steel Co., Inc. ("Thypin"), a privately held company, for $120 million in
cash. The Company also assumed and simultaneously retired $22.6 million in
existing Thypin debt. Thypin is a distributor and processor of carbon and
stainless steel products located in the eastern United States, with 1996 sales
of $320 million. The Company believes the acquisition of Thypin will
significantly strengthen Ryerson Tull's presence in the eastern United States.
On March 3, 1997, the Company, through its wholly-owned subsidiary J.M.
Tull Metals Company, Inc., acquired substantially all of the assets of Cardinal
Metals, Inc. ("Cardinal"), a privately held distributor and processor of carbon
steel products with a single facility in Pounding Mill, Virginia. Cardinal, with
1996 sales of $23 million, fills a geographic gap for the Company and provides
expertise and added capacity in carbon plate processing.
-6-
<PAGE>
Liquidity and Financing
As part of the recapitalization that took place in 1996, the Company issued
$250 million of long term debt ("Notes") and established a committed four-year
$250 million bank revolving credit facility. Restrictions contained in the bank
facility and the Notes indenture prohibit the Company from, among other things,
declaring or paying dividends on Company common stock under certain conditions.
At March 31, 1997, up to $53 million of common dividends could have been paid.
In order to provide additional borrowing flexibility, the Company
established a five-year $250 million uncommitted line of credit with its
parent, Inland Steel Industries, Inc. ("Industries") on March 27, 1997. Interest
under this credit line is at market rates. Under terms of the agreement,
Industries may, at its sole option, demand repayment of any or all amounts
outstanding at any time.
At March 31, 1997, the Company had outstanding borrowing of $132 million
under the Industries line and $8 million under the bank credit facility. The
short term borrowings were used entirely for the acquisitions and the repayment
of debt assumed in the acquisitions. On a combined basis, the Company had
committed and uncommitted lines of credit of $360 million unused as of March 31,
1997. However, the Company currently intends to have outstanding at any time
under the Industries line no more than is available under the bank credit
facility. Additionally, a covenant contained in the bank credit facility
restricting the Company's leverage limited the amount of additional debt,
including additional borrowings under the credit lines, to $160 million as of
March 31, 1997.
-7-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
3.1 Restated Certificate of Incorporation of the Company (Filed as Exhibit
3.1 to the Company's Registration Statement on Form S-1 (File No. 333-
3235), and incorporated by reference herein.)
3.2 By-Laws of the Company. (File as Exhibit 3.2 to the Company'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 the Company and The Bank of
New York. (Filed as Exhibit 4.1 to the Company'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% Note due July 15, 2001. (Filed as Exhibit 4.2 to the
Company'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% Note due July 15, 2006. (Filed as Exhibit 4.3 to the
Company's Quarterly report on Form 10-Q for the quarter ended June 30,
1996 and incorporated by reference herein.)
4.4 Rights Agreement between the Company and Harris Trust and Savings Bank,
as Rights Agent, dated as of June 10, 1996. (Filed as Exhibit 4.4 to the
Company'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 the
Company's Quarterly report on Form 10-Q for the quarter ended June 30,
1996 and incorporated by reference herein.)
10.1 Ryerson Tull 1996 Incentive Stock Plan
10.2 Ryerson Tull, Inc. Annual Performance Improvement Incentive Plan
27 Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the first quarter of 1997.
-8-
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RYERSON TULL, INC.
By
------------------------------
Lily L. May
Controller and
Principal Accounting Officer
Date: May 13, 1997
-9-
<PAGE>
Part I -- Schedule A
--------------------
RYERSON TULL, INC.
AND SUBSIDIARY COMPANIES
(A majority-owned subsidiary of Inland Steel Industries, Inc.)
SUMMARY OF STOCKHOLDERS' EQUITY
================================================================================
<TABLE>
<CAPTION>
Dollars in Millions
---------------------------------------
March 31, 1997 December 31, 1996
---------------- -------------------
(unaudited)
<S> <C> <C> <C> <C>
STOCKHOLDERS' EQUITY
- --------------------
Series A common stock ($1 par value)
- 5,277,127 shares issued and outstanding
as of March 31, 1997 $ 5.3 $ 5.3
Series B common stock ($1 par value)
- 34,000,000 shares issued and outstanding
as of March 31, 1997 34.0 34.0
Capital in excess of par value (1) (2) 304.5 304.5
Retained earnings
Balance beginning of year $22.4 $ 173.9
Net income 16.6 63.3
Retained earnings impact of Pension Plan split - (16.5)
Dividends on common stock (2) - 39.0 (198.3) 22.4
----- -------
Cumulative translation adjustment (1.3) (1.3)
Restricted stock awards (0.4) (0.5)
------ ------
Total Stockholders' Equity $381.1 $364.4
====== ======
</TABLE>
(1) Capital in excess of par at December 31, 1996 was increased from December
31, 1995 by $71.9 million due to the issuance of Series A common stock and
$18.9 million as a result of the contribution of Inland Industries de
Mexico to Ryerson Tull. It was decreased by $34.0 million for the issuance
of Series B common stock as part of the recapitalization of Ryerson Tull.
(2) Of the $445.9 million of dividends paid in the 1996 second quarter, $198.3
million eliminated the balance in retained earnings at June 26, 1996 while
the remaining $247.6 million reduced capital in excess of par.
<PAGE>
EXHIBIT 10.1
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 Securities Exchange Act of 1934, as
amended (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 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
<PAGE>
-2-
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 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
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 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 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.
<PAGE>
-3-
(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 cashless 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 (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 or affiliates 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 or affiliate 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 and affiliates 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 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
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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 and its
affiliates, 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 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 or its affiliates for at
least six months. Such awards shall be contingent on the employee's continuing
employment with the Company or its subsidiaries or affiliates 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 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 or affiliates at
all times during the applicable performance period.
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(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, 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-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
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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 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 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
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(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 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 in 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 amount that will
enable such option to continue to qualify as an incentive stock option.
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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.
(a) 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 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.
(b) 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.
(a) 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.
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(b) 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.
(c) 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 its affiliates or to limit or diminish in any way the right
of the Company or any such subsidiary or affiliate to terminate his or her
employment at any time with or without cause.
(d) 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.
(e) 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.
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.
<PAGE>
EXHIBIT 10.2
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 Committee of
the Company.
"Employee" means an employee eligible to be designated as a Participant
in the Plan.
"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 designated by the Committee to be
eligible 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.
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"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 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 or
base annual salary 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
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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, 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.
<PAGE>
-4-
9. Termination of Employment
Except in the case of death, disability, normal retirement (determined in
accordance with the qualified retirement plans of the Company), early retirement
(with the consent of the Committee) or except as provided in paragraph 10, a
Participant must be an employee of the Company or of a Subsidiary or Affiliate
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 24 months, unless the election of each new director who was not a director
at the beginning of the 24 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 additional 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, compensation or benefit plan
or program.
<PAGE>
<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 QUARTERLY REPORT ON FORM
10-Q TO WHICH THIS EXHIBIT IS ATTACHED AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL SCHEDULES.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 328,600
<ALLOWANCES> 7,700
<INVENTORY> 423,700
<CURRENT-ASSETS> 757,600
<PP&E> 515,500
<DEPRECIATION> 246,200
<TOTAL-ASSETS> 1,166,700
<CURRENT-LIABILITIES> 377,800
<BONDS> 263,200
0
0
<COMMON> 39,300
<OTHER-SE> 341,800
<TOTAL-LIABILITY-AND-EQUITY> 1,166,700
<SALES> 660,700
<TOTAL-REVENUES> 660,700
<CGS> 583,100
<TOTAL-COSTS> 583,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,200
<INCOME-PRETAX> 26,900
<INCOME-TAX> 10,300
<INCOME-CONTINUING> 16,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,600
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
