<PAGE>
FIRST QUARTER - 1994
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
-------------------------
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the period ended March 31, 1994
or
[_] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from __________ to __________
-------------------------
Commission file number 1-2438
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 May 9, 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
March 31
-------------------
1994 1993
------ ------
<S> <C> <C>
NET SALES $590.9 $520.7
------ ------
OPERATING COSTS AND EXPENSES
Cost of goods sold 539.3 520.8
Selling, general and administrative expenses 9.5 9.9
Depreciation 28.5 26.7
------ ------
Total 577.3 557.4
------ ------
OPERATING PROFIT (LOSS) 13.6 (36.7)
General corporate expense, net of income items 3.0 4.2
Interest and other expense on debt 13.3 15.4
------ ------
LOSS BEFORE INCOME TAXES (2.7) (56.3)
PROVISION FOR INCOME TAXES .8Cr. 21.9Cr.
------ -----
NET LOSS $ (1.9) $(34.4)
====== ======
</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
-------------------
Three Months Ended
March 31
-------------------
1994 1993
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (1.9) $(34.4)
------ ------
Adjustments to reconcile net loss to net cash
provided from (used for) operating activities:
Depreciation 28.5 26.7
Deferred employee benefit cost 11.4 11.3
Deferred income taxes (1.7) (10.4)
Change in: Receivables 9.2 (24.2)
Receivables from related companies - (8.7)
Inventories 8.9 34.0
Accounts payable (29.6) (25.7)
Payables to related companies (4.6) (7.6)
Accrued salaries and wages (1.5) (3.3)
Other accrued liabilities 11.4 13.9
Other deferred items 5.8 6.5
------ ------
Net adjustments 37.8 12.5
------ ------
Net cash provided from (used for) operating activities 35.9 (21.9)
------ ------
INVESTING ACTIVITIES
Capital expenditures (92.1) (7.5)
Investments in joint ventures 4.7 (31.4)
Proceeds from sales of assets .2 1.0
------ ------
Net cash used for investing activities (87.2) (37.9)
------ ------
FINANCING ACTIVITIES
Additional contributed capital 110.0 75.0
Long-term debt retired (75.8) (5.5)
Change in notes payable to related companies 23.6 (2.3)
Dividends paid (6.5) (6.5)
------ ------
Net cash provided from financing activities 51.3 60.7
------ ------
Net increase in cash and cash equivalents - .9
Cash and cash equivalents - beginning of year - -
------ ------
Cash and cash equivalents - end of period $ - $ .9
====== ======
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
Interest (net of amount capitalized) $ 5.0 $ 7.2
Income taxes, net - -
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 March 31, 1994 December 31, 1993
- - ------ ------------------ ------------------
(unaudited)
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ - $ -
Receivables 221.0 230.2
Inventories - principally at LIFO
In process and finished products $ 57.1 $ 55.6
Raw materials and supplies 33.6 90.7 44.0 99.6
-------- --------
Deferred income taxes 32.0 32.0
-------- --------
Total current assets 343.7 361.8
INVESTMENTS IN AND ADVANCES
TO JOINT VENTURES 200.1 211.5
PROPERTY, PLANT AND EQUIPMENT
Valued on basis of cost 3,756.6 3,601.9
Less: Reserve for depreciation,
amortization and depletion 2,289.7 2,261.3
Allowance for terminated facilities 108.4 1,358.5 108.4 1,232.2
-------- --------
DEFERRED INCOME TAXES 386.3 384.6
OTHER ASSETS 21.1 20.6
-------- --------
Total Assets $2,309.7 $2,210.7
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
- - ------------------------------------
CURRENT LIABILITIES
Accounts payable $ 178.2 $ 207.8
Payables to related companies
Notes 71.5 47.9
Trade & other 4.4 9.0
Accrued liabilities 167.9 158.0
Long-term debt due within one year 67.6 86.2
-------- --------
Total current liabilities 489.6 508.9
LONG-TERM DEBT 481.4 475.3
DEFERRED EMPLOYEE BENEFITS 1,119.7 1,108.3
OTHER CREDITS 53.7 54.5
-------- --------
Total liabilities 2,144.4 2,147.0
STOCKHOLDER'S EQUITY (Schedule A) 165.3 63.7
-------- --------
Total Liabilities and Stockholder's Equity $2,309.7 $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
March 31, 1994 and for the three-month periods ended March 31, 1994 and 1993 are
unaudited, but in the opinion of management include all adjustments necessary
for a fair presentation of results for such periods. These financial statements
should be read in conjunction with the financial statements and related notes
contained in the Annual Report 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 $4.7 million and $4.8 million by Industries for the first quarter 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 three months of 1994 totaled $1.4 million as compared to $2.5 million
for the first quarter of 1993.
The Company sells to and purchases products from other companies within the
Industries group of companies. Such transactions are made at prevailing market
prices. These transactions are summarized as follows:
<TABLE>
<CAPTION>
Dollars in Millions
-------------------
Three Months
Ended March 31
-------------------
1994 1993
--------- ---------
<S> <C> <C>
Net Product Sales $52.7 $44.4
Net Product Purchases 4.6 4.2
</TABLE>
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 $38 million at March 31, 1994 compared with $12 million
at December 31, 1993.
-4-
<PAGE>
ITEM 2.
MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - Comparison of First Quarter 1994 to First Quarter 1993
- - ------------------------------------------------------------------------------
The Company reported a consolidated net loss of $1.9 million in the first
quarter of 1994 compared with a consolidated net loss of $34.4 million in the
1993 first quarter.
Consolidated net sales improved 13.5 percent in the 1994 quarter to $591
million, due to a 9.8 percent increase in average selling price and a 3.7
percent increase in volume. First quarter 1994 operating profit of $13.6
million represented a significant improvement from the $36.7 million operating
loss reported in the 1993 quarter. The principal reason for the improvement was
the increase in average selling price per ton. Operating cost per ton was held
relatively constant despite being negatively impacted by the severe weather in
January and underperformance in plate operations.
During the first quarter of 1994, the Company redeemed all $75 million of
outstanding Series O, P and Q First Mortgage Bonds and acquired the equity
interest in the operating lease of the No. 2 Basic Oxygen Furnace Shop
continuous casters for $83 million. In connection with such purchase, the
Company recorded $63 million of debt. In March, the Company called
approximately $47.5 million of caster-related debt for prepayment on May 6,
which debt was prepaid on such date.
Inland Steel Industries, Inc., made capital contributions totaling $110
million to the Company during the 1994 first quarter compared with capital
contributions of $75 million in the year-ago period.
Subsequent Event
- - ----------------
In early May, the Company called all remaining debt related to its
continuous caster facility (approximately $48 million) for prepayment on
November 7, 1994.
-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-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 Steel 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.
-6-
<PAGE>
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.)
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the quarter ended
March 31, 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 /s/ Olivia M. Thompson
---------------------------------------
Olivia M. Thompson
Controller and
Chief Accounting Officer
Date: May 12, 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
----------------------------------------------
<S> <C> <C> <C> <C>
March 31, 1994 December 31, 1993
-------------- ----------------------
(unaudited)
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 loss (1.9) (59.7)
Dividends (6.5) (1,029.2) (25.8) (1,020.8)
--------- -------- ------ --------
Total Stockholder's Equity $ 165.3 $ 63.7
========= =========
</TABLE>
-9-
