<PAGE>
THIRD QUARTER - 1994
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
-------
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the period ended September 30, 1994
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from ______ to ______
-------
Commission file number 1-2438
I.R.S. Employer Identification Number 36-1262880
INLAND STEEL COMPANY
(a Delaware Corporation)
30 West Monroe Street
Chicago, Illinois 60603
Telephone: (312) 346-0300
Registrant meets the conditions set forth in General Instruction H(1)(a) and (b)
of Form 10-Q and is therefore filing this Form with the reduced disclosure
format.
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: 980 shares of the Company's
Common Stock ($1.00 par value per share) were outstanding as of November 7,
1994.
<PAGE>
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
==============================================================================
<TABLE>
<CAPTION>
Dollars in Millions
--------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- ----------------------
1994 1993 1994 1993
------ ------ ------- --------
<S> <C> <C> <C> <C>
NET SALES $613.5 $539.9 $1,847.6 $1,626.8
------ ------ -------- --------
OPERATING COSTS AND EXPENSES
Cost of goods sold 530.7 477.7 1,624.3 1,518.9
Selling, general and
administrative expenses 10.3 11.0 31.4 32.1
Depreciation 30.3 29.0 89.5 82.9
------ ------ -------- --------
Total 571.3 517.7 1,745.2 1,633.9
------ ------ -------- --------
OPERATING PROFIT (LOSS) 42.2 22.2 102.4 (7.1)
General corporate expense,
net of income items 2.1 4.4 6.8 11.5
Interest and other expense on debt 13.3 14.9 40.3 46.5
------ ------ -------- --------
INCOME (LOSS) BEFORE INCOME TAXES 26.8 2.9 55.3 (65.1)
PROVISION FOR INCOME TAXES 10.1 7.0Cr. 20.3 33.1Cr.
------ ------ -------- --------
NET INCOME (LOSS) $ 16.7 $ 9.9 $ 35.0 $ (32.0)
====== ====== ======== ========
</TABLE>
See notes to consolidated financial statements
-1-
<PAGE>
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
=============================================================================
<TABLE>
<CAPTION>
Dollars in Millions
-------------------
Nine Months Ended
September 30
-----------------------------
1994 1993
----------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 35.0 $ (32.0)
------- --------
Adjustments to reconcile net income (loss) to net
cash provided from operating activities:
Depreciation 89.5 82.9
Deferred income taxes 24.1 (20.8)
Deferred employee benefit cost 33.5 27.9
Change in: Receivables 8.4 (9.9)
Inventories (69.5) 23.7
Accounts payable (3.2) (22.4)
Payables to related companies 2.9 (2.5)
Accrued salaries and wages .6 (3.4)
Other accrued liabilities 9.5 13.8
Other deferred items (5.5) 3.3
------- --------
Net adjustments 90.3 92.6
------- --------
Net cash provided from operating activities 125.3 60.6
------- --------
INVESTING ACTIVITIES
Capital expenditures (123.3) (44.1)
Investments in and advances to joint ventures, net 10.7 (5.0)
Proceeds from sales of assets 1.8 2.3
------- --------
Net cash used for investing activities (110.8) (46.8)
------- --------
FINANCING ACTIVITIES
Additional contributed capital 110.0 150.0
Long-term debt issued 19.7 39.3
Long-term debt retired (159.3) (58.7)
Change in notes payable to related companies 34.5 (106.1)
Dividends paid (19.4) (19.4)
------- --------
Net cash provided from (used for) financing activities (14.5) 5.1
------- --------
Net increase in cash and cash equivalents - 18.9
Cash and cash equivalents - beginning of year - -
------- --------
Cash and cash equivalents - end of period $ - $ 18.9
======= ========
SUPPLEMENTAL DISCLOSURES
Cash paid (received) during the period for:
Interest (net of amount capitalized) $ 32.7 $ 38.7
Income taxes, net (8.8) (5.3)
Non-cash investing and financing activities:
Long-term debt acquired in purchase of assets 63.3 -
</TABLE>
See notes to consolidated financial statements
-2-
<PAGE>
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
CONSOLIDATED BALANCE SHEET
=============================================================================
<TABLE>
<CAPTION>
Dollars in Millions
---------------------------------------------------------------
ASSETS September 30, 1994 December 31, 1993
- - ------ --------------------------- ---------------------------
(unaudited)
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ - $ -
Receivables 221.8 230.2
Inventories - principally at LIFO
In process and finished products $ 112.8 $ 55.6
Raw materials and supplies 56.3 169.1 44.0 99.6
Deferred income taxes -------- 34.8 -------- 32.0
Deferred income taxes -------- --------
Total current assets 425.7 361.8
INVESTMENTS IN AND ADVANCES
TO JOINT VENTURES 197.7 211.5
PROPERTY, PLANT AND EQUIPMENT
Valued on basis of cost 3,789.6 3,601.9
Less: Reserve for depreciation,
amortization and depletion 2,350.8 2,261.3
Allowance for terminated facilities 108.4 1,330.4 108.4 1,232.2
-------- --------
DEFERRED INCOME TAXES 357.7 384.6
OTHER ASSETS 24.1 20.6
-------- --------
Total Assets $2,335.6 $2,210.7
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
- - ------------------------------------
CURRENT LIABILITIES
Accounts payable $ 204.6 $ 207.8
Payables to related companies
Notes 82.4 47.9
Trade & other 11.9 9.0
Accrued liabilities 168.1 158.0
Long-term debt due within one year 57.7 86.2
-------- --------
Total current liabilities 524.7 508.9
LONG-TERM DEBT 427.7 475.3
DEFERRED EMPLOYEE BENEFITS 1,141.8 1,108.3
OTHER CREDITS 52.1 54.5
-------- --------
Total liabilities 2,146.3 2,147.0
STOCKHOLDER'S EQUITY (Schedule A) 189.3 63.7
-------- --------
Total Liabilities and Stockholder's Equity $2,335.6 $2,210.7
======== ========
</TABLE>
See notes to consolidated financial statements
-3-
<PAGE>
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
=============================================================================
NOTE 1/FINANCIAL STATEMENTS
Results of operations for any interim period are not necessarily indicative of
results of any other periods or for the year. The financial statements as of
September 30, 1994 and for the three-month and nine-month periods ended
September 30, 1994 and 1993 are unaudited, but in the opinion of management
include all adjustments necessary for a fair presentation of results for such
periods. These financial statements should be read in conjunction with the
financial statements and related notes contained in the Annual Report on Form
10-K for the year ended December 31, 1993.
NOTE 2/RELATED PARTY TRANSACTIONS
The Company has agreed to procedures established by Inland Steel Industries,
Inc. ("Industries") for charging Industries' administrative expenses to the
operating companies owned by it. Pursuant to these procedures, the Company was
charged $14.0 million and $16.7 million by Industries for the first nine months
of 1994 and 1993, respectively, for management, financial and legal services
provided to the Company.
Procedures also have been established to charge interest on all intercompany
loans within the Industries group of companies. Such loans currently bear
interest at the prime rate. The Company's net intercompany interest expense for
the first nine months of 1994 totaled $5.3 million as compared to $7.0 million
for the first nine months of 1993.
The Company sells to and purchases products from other companies within the
Industries group of companies. Such transactions are made at prevailing market
prices. These transactions are summarized as follows:
Dollars in Millions
----------------------------------------
Three Months Nine Months
Ended September 30 Ended September 30
------------------- -------------------
1994 1993 1994 1993
------ ------ ------- -------
Net Product Sales $43.5 $44.3 $150.5 $138.0
Net Product Purchases 4.5 4.2 14.1 12.6
NOTE 3/COMMITMENTS
The total amount of firm commitments of the Company and its subsidiaries to
contractors and suppliers, primarily in connection with additions to property,
plant and equipment, was $53 million at September 30, 1994 compared with $12
million at December 31, 1993.
-4-
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - Comparison of First Nine Months 1994 to First Nine
- - --------------------------------------------------------------------------
Months 1993
- - -----------
The Company reported consolidated net income of $35.0 million in the first
nine months of 1994 compared with a consolidated net loss of $32.0 million in
the comparable 1993 period. The principal factor leading to the improvement was
a $109.5 million increase in operating profit.
Net sales increased 14 percent to $1.85 billion in the first nine months of
1994 as a result of improved average selling price, which contributed 8 percent
of the increase, and higher shipment levels, which added 6 percent. The
improvement in average selling price was the principal reason that operating
profit increased to $102.4 million in the first nine months of 1994 from an
operating loss of $7.1 million in the year-earlier period.
In the first half of 1994, Inland Steel Industries, Inc. made $110 million in
capital contributions to the Company.
-5-
<PAGE>
PART II. OTHER INFORMATION
---------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
3(i) Copy of Restated Certificate of Incorporation of the Company. (Filed
as Exhibit 3-A to the Company's Annual Report on Form 10-K for the
year ended December 31, 1992, and incorporated by reference herein.)
3(ii) Copy of By-laws, as amended, of the Company. (Filed as Exhibit 3-B to
the Company's Annual Report on Form 10-K for the year ended December
31, 1992, and incorporated by reference herein.)
4.A Copy of First Mortgage Indenture, dated April 1, 1928, between the
Company and First Trust and Savings Bank and Melvin A. Traylor, as
Trustees, and of supplemental indentures thereto, to and including the
Thirty-Second Supplemental Indenture, incorporated by reference from
the following Exhibits: (i) Exhibits B-1(a), B-1(b), B-1(c), B-1(d)
and B-1(e), filed with the Company's Registration Statement on Form A-
2 (No. 2-1855); (ii) Exhibits D-1(f) and D-1(g), filed with the
Company's Registration Statement on Form E-1 (No. 2-2182); (iii)
Exhibit B-1(h), filed with the Company's Current Report on Form 8-K
dated January 18, 1937; (iv) Exhibit B-1(i), filed with the Company's
Current Report on Form 8-K, dated February 8, 1937; (v) Exhibits B-
1(j) and B-1(k), filed with the Company's Current Report on Form 8-K
for the month of April, 1940; (vi) Exhibit B-2, filed with the
Company's Registration Statement on Form A-2 (No. 2-4357); (vii)
Exhibit B-1(l), filed with the Company's Current Report on Form 8-K
for the month of January, 1945; (viii) Exhibit 1, filed with the
Company's Current Report on Form 8-K for the month of November, 1946;
(ix) Exhibit 1, filed with the Company's Current Report on Form 8-K
for the months of July and August, 1948; (x) Exhibits B and C, filed
with the Company's Current Report on Form 8-K for the month of March,
1952; (xi) Exhibit A, filed with the Company's Current Report on Form
8-K for the month of July, 1956; (xii) Exhibit A, filed with the
Company's Current Report on Form 8-K for the month of July, 1957;
(xiii) Exhibit B, filed with the Company's Current Report on Form 8-K
for the month of January, 1959; (xiv) the Exhibit filed with the
Company's Current Report on Form 8-K for the month of December, 1967;
(xv) the Exhibit filed with the Company's Current Report on Form 8-K
for the month of April, 1969; (xvi) the Exhibit filed with the
Company's Current Report on Form 8-K for the month of July, 1970;
(xvii) the Exhibit filed with the amendment on Form 8 to the Company's
Current Report on Form 8-K for the month of April, 1974; (xviii)
Exhibit B, filed with the Company's Current Report on Form 8-K for the
month of September, 1975; (xix) Exhibit B, filed with the Company's
Current Report on Form 8-K for the month of January, 1977; (xx)
Exhibit C, filed with the Company's Current Report on Form 8-K for the
month of February, 1977; (xxi) Exhibit B, filed with the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1978;
(xxii) Exhibit B, filed with the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1980; (xxiii) Exhibit 4-D, filed
with the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1980; (xxiv) Exhibit 4-D, filed with the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1982; (xxv) Exhibit 4-E, filed with the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1983; (xxvi) Exhibit
4(i) filed with the the Company's Registration Statement on Form S-2
(No. 33-43393); and (xxvii) Exhibit 4 filed with the Company's Current
Report on Form 8-K dated June 23, 1993.
4.B Copy of consolidated reprint of First Mortgage Indenture, dated April
1, 1928, between the Company and First Trust and Savings Bank and
Melvin A. Traylor, as Trustees, as amended and supplemented by all
supplemental indentures thereto, to and including the Thirteenth
Supplemental Indenture. (Filed as Exhibit 4-E to Form S-1 Registration
Statement No. 2-9443, and incorporated by reference herein.)
-6-
<PAGE>
27 Financial Data Schedule.
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the quarter
ended September 30, 1994.
-7-
<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.
INLAND STEEL COMPANY
By Olivia M. Thompson
----------------------------------
Olivia M. Thompson
Vice President, Finance
(Principal Financial Officer and
Principal Accounting Officer)
Date: November 10, 1994
-8-
<PAGE>
Part I -- Schedule A
--------------------
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
SUMMARY OF STOCKHOLDER'S EQUITY
==============================================================================
<TABLE>
<CAPTION>
Dollars in Millions
-----------------------------------------------------------------------
September 30, 1994 December 31, 1993
------------------------------- -------------------------------
(unaudited)
<S> <C> <C> <C> <C>
STOCKHOLDER'S EQUITY
- - --------------------
Series A preferred stock ($1 par value)
- 10 shares issued and outstanding $ - $ -
Series B preferred stock ($1 par value)
- 50 shares issued and outstanding - -
Series C preferred stock ($1 par value)
- 50 shares issued and outstanding - -
Common stock ($1 par value)
- 980 shares issued and outstanding - -
Additional paid-in capital 1,194.5 1,084.5
Accumulated deficit
Balance beginning of year $(1,020.8) $(935.3)
Net income (loss) 35.0 (59.7)
Dividends (19.4) (1,005.2) (25.8) (1,020.8)
--------- --------- ------- --------
Total Stockholder's Equity $ 189.3 $ 63.7
========= ========
</TABLE>
-9-
<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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 242,000
<ALLOWANCES> 20,200
<INVENTORY> 169,100
<CURRENT-ASSETS> 425,700
<PP&E> 3,789,600
<DEPRECIATION> 2,350,800
<TOTAL-ASSETS> 2,335,600
<CURRENT-LIABILITIES> 524,700
<BONDS> 427,700
<COMMON> 0
0
0
<OTHER-SE> 189,300
<TOTAL-LIABILITY-AND-EQUITY> 2,335,600
<SALES> 1,844,400
<TOTAL-REVENUES> 1,847,600
<CGS> 1,710,900
<TOTAL-COSTS> 1,713,800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40,300
<INCOME-PRETAX> 55,300
<INCOME-TAX> 20,300
<INCOME-CONTINUING> 35,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
