<PAGE> 1
1994
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 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
INLAND STEEL COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 36-1262880
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
30 WEST MONROE STREET, CHICAGO, ILLINOIS 60603
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (312) 346-0300
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J(1)(A)
AND (B) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
-------------------------------------------- --------------------------------------------
<S> <C>
FIRST MORTGAGE BONDS:
SERIES R, 7.90% DUE JANUARY 15, 2007 NEW YORK STOCK EXCHANGE, INC.
SERIES T, 12% DUE DECEMBER 1, 1998 --
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES X . NO .
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN ANY AMENDMENT TO THIS FORM 10-K. /X/
THE NUMBER OF SHARES OF COMMON STOCK ($1.00 PAR VALUE) OF THE REGISTRANT
OUTSTANDING AS OF MARCH 15, 1995 WAS 980, ALL OF WHICH SHARES WERE OWNED BY
INLAND STEEL INDUSTRIES, INC.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2
PART I
ITEM 1. BUSINESS.
Inland Steel Company (the "Company"), a Delaware corporation and a wholly
owned subsidiary of Inland Steel Industries, Inc. ("Industries"), is a fully
integrated domestic steel company. The Company produces and sells a wide range
of steels, of which approximately 99% consists of carbon and high-strength
low-alloy steel grades. It is also a participant in certain steel-finishing
joint ventures.
The Company has a single business segment, which is comprised of the
operating companies and divisions involved in the manufacturing of basic steel
products and in related raw materials operations.
OPERATIONS
General
The Company is directly engaged in the production and sale of steel and
related products and the transportation of iron ore, limestone and certain other
commodities (primarily for its own use) on the Great Lakes. Certain subsidiaries
and associated companies of the Company are engaged in the mining and
pelletizing of iron ore and in the operation of a cold-rolling mill and steel
galvanizing lines. All raw steel made by the Company is produced at its Indiana
Harbor Works located in East Chicago, Indiana, which also has facilities for
converting the steel produced into semi-finished and finished steel products.
The Company has two divisions -- the Inland Steel Flat Products Company
division and the Inland Steel Bar Company division. The Flat Products division
manages the Company's iron ore operations, conducts its ironmaking operations,
and produces the major portion of its raw steel. This division also manufactures
and sells steel sheet, strip and plate and certain related semi-finished
products for the automotive, appliance, office furniture, steel service center
and electrical motor markets. The Bar division manufactures and sells special
quality bars and certain related semi-finished products for forgers, steel
service centers, heavy equipment manufacturers, cold finishers and the
transportation industry. The Bar division closed its 28-inch structural mill in
early 1991, completing the Company's withdrawal from the structural steel
manufacturing business.
The Company and Nippon Steel Corporation ("NSC") are participants, through
subsidiaries, in two joint ventures that operate steel-finishing facilities near
New Carlisle, Indiana. The total cost of these two facilities was approximately
$1.1 billion. I/N Tek, owned 60% by a wholly owned subsidiary of the Company and
40% by an indirect wholly owned subsidiary of NSC, operates a cold-rolling mill
that began shipping commercial product in 1990 and reached its design capability
in 1992. I/N Kote, owned equally by wholly owned subsidiaries of the Company and
NSC (indirect in the case of NSC), operates two galvanizing lines which began
start-up production in late 1991, became fully operational in the third quarter
of 1992, and have operated near design capacity since August 1993. The Company
is also a participant, through a subsidiary, in another galvanizing joint
venture located near Walbridge, Ohio.
Raw Steel Production and Mill Shipments
The following table shows, for the five years indicated, the Company's
production of raw steel and, based upon American Iron and Steel Institute data,
its share of total domestic raw steel production:
<TABLE>
<CAPTION>
RAW STEEL PRODUCTION
---------------------------------
INLAND STEEL
INLAND STEEL COMPANY AS A % OF
COMPANY U.S. STEEL
(000 TONS*) INDUSTRY
------------ -----------------
<S> <C> <C>
1994..................................................... 5,309 5.5%**
1993..................................................... 5,003 5.2
1992..................................................... 4,740 5.2
1991..................................................... 4,677 5.3
1990..................................................... 5,339 5.5
</TABLE>
---------------
* Net tons of 2,000 pounds.
** Based on preliminary data from the American Iron and Steel Institute.
1
<PAGE> 3
The annual raw steelmaking capacity of the Company was reduced to 6.0
million net tons from 6.5 million net tons effective September 1, 1991, as the
Company ceased making ingots. The basic oxygen process accounted for 94% of raw
steel production of the Company in each of 1994 and 1993. The remainder of such
production was accounted for by electric furnace.
The total tonnage of steel mill products shipped by the Company for each of
the five years 1990 through 1994 was 5.2 million tons in 1994; 4.8 million tons
in 1993; 4.3 million tons in 1992; 4.2 million tons in 1991; and 4.7 million
tons in 1990. In 1994, sheet, strip, plate and certain related semi-finished
products accounted for 86% of the total tonnage of steel mill products shipped
from the Indiana Harbor Works, and bar and certain related semi-finished
products accounted for 14%.
In 1994 and 1993, approximately 95% and 93%, respectively, of the shipments
of the Flat Products division and 93% and 92%, respectively, of the shipments of
the Bar division were to customers in 20 mid-American states. Approximately 77%
of the shipments of the Flat Products division and 84% of the shipments of the
Bar division in 1994 were to customers in a five-state area comprised of
Illinois, Indiana, Ohio, Michigan and Wisconsin, compared to 75% and 83% in
1993. Both divisions compete in these geographical areas, principally on the
basis of price, service and quality, with the nation's largest producers of raw
steel as well as with foreign producers and with many smaller domestic mills.
According to data from the American Iron and Steel Institute, steel imports
to the United States in 1994 totaled approximately 30.1 million tons, compared
with 19.5 million tons imported in 1993. Steel imports constituted approximately
24.7% of apparent domestic supply in 1994, compared with approximately 18.7% of
apparent domestic supply in 1993. During 1984, the previous peak year for steel
imports into the U.S., such imports accounted for 26.4% of apparent domestic
supply.
Many foreign steel producers are owned, controlled or subsidized by their
governments. In 1992, Industries and certain domestic steel producers filed
unfair trade petitions against foreign producers of certain bar, rod and
flat-rolled products. During 1993, the International Trade Commission ("ITC")
upheld final subsidy and dumping margins on essentially all of the bar and rod
products and about half of the flat-rolled products, in each case based on the
tonnage of the products against which claims were brought. Industries and
certain domestic producers have filed formal appeals of the adverse ITC
decisions in the U.S. Court of International Trade ("CIT") or similar
jurisdictional bodies, and foreign producers have appealed certain of the
findings against them. The CIT sustained the ITC in the bar and rod product
cases and in the hot-rolled and cold-rolled flat product cases. Appeals are
pending regarding the corrosion-resistant flat products. It is not certain how
the ITC actions and the appeals have impacted imports of steel products into the
United States or the price of such steel products.
On December 15, 1993, President Clinton notified the U.S. Congress of his
intent to enter into agreements resulting from the Uruguay Round of multilateral
trade negotiations under the General Agreement on Tariffs and Trade. The key
provisions applicable to domestic steel producers include an agreement to
eliminate steel tariffs in major industrial markets, including the United
States, and agreements regarding various subsidy and dumping practices as well
as dispute settlement procedures. Legislation to implement the Uruguay Round
agreement was enacted into federal law in December 1994. The agreement went into
effect January 1, 1995.
Primarily as a result of the influx of foreign steel imports and the
depressed demand for domestic steel products that began in the early 1980s,
certain facilities at the Indiana Harbor Works were permanently closed during
the second half of the 1980s and the early 1990s and others were shut down for
temporary periods. The 28-inch structural mill was closed in early 1991,
reflecting a decision to withdraw from the structural steel markets. In late
1991 the mold foundry, No. 8 Coke Oven Battery, and selected other facilities
were closed either as part of a program to permanently reduce costs through the
closure of uneconomic facilities or for environmental reasons. Provisions with
respect to the shut-down of the structural mill were taken in 1987. Provisions
for estimated costs incurred in connection with the closure of the mold foundry,
No. 8 Coke Oven Battery, and selected other facilities were made in 1991.
Included in such provisions were costs associated with the Company's closure of
its No. 11 Coke Oven Battery in June 1992. All remaining coke batteries were
2
<PAGE> 4
closed by year-end 1993, a year earlier than previously anticipated. An
additional provision was required with respect to those closures. (See
"Environment" below.)
For the five years indicated, shipments by market classification of steel
mill products produced by the Company at its Indiana Harbor Works, including
shipments to affiliates of the Company, are set forth below. The table confirms
that a substantial portion of shipments by the Flat Products division was to
steel service centers and transportation-related markets. The Bar division
shipped more than 53% of its products to the steel converters/processors market
over the five-year period shown in the table.
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL TONNAGE
OF STEEL SHIPMENTS
------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Steel Service Centers:
Affiliates............................................ 9 % 9 % 7 % 8 % 8 %
Non-Affiliates........................................ 20 22 22 24 20
---- ---- ---- ---- ----
29 31 29 32 28
Automotive.............................................. 32 30 28 25 26
Appliance............................................... 9 9 9 8 7
Industrial, Electrical and Farm Machinery............... 8 7 8 9 9
Construction and Contractors' Products.................. 2 3 3 4 8
Steel Converters/Processors............................. 12 13 18 12 15
Other................................................... 8 7 5 10 7
---- ---- ---- ---- ----
100 % 100 % 100 % 100 % 100 %
==== ==== ==== ==== ====
</TABLE>
Some value-added steel processing operations that the Company does not have
the capability to perform are performed by outside processors prior to shipment
of certain products to the Company's customers. In 1994, approximately 23% of
the products produced by the Company were processed further through value-added
services such as electrogalvanizing, painting and slitting, excluding products
processed further by affiliates.
Approximately 48% of the total tonnage of shipments by the Company during
1994 from the Indiana Harbor Works was transported by truck, with the remainder
transported primarily by rail. A wholly owned truck transport subsidiary of the
Company was responsible for shipment of approximately 10% of the total tonnage
of products transported by truck from the Indiana Harbor Works in 1994.
Substantially all of the steel mill products produced by the Flat Products
division are marketed through its own selling organization, with offices located
in Chicago; Southfield, Michigan; St. Louis; and Nashville, Tennessee.
Substantially all of the steel mill products produced by the Bar division are
marketed through its sales office in East Chicago, Indiana.
See "Product Classes" below for information relating to the percentage of
consolidated net sales accounted for by certain classes of similar products of
steel manufacturing operations.
Raw Materials
The Company obtains iron ore pellets primarily from three iron ore
properties, located in the United States and Canada, in which subsidiaries of
the Company have varying interests -- the Empire Mine in Michigan, the Minorca
Mine in Minnesota and the Wabush Mine in Labrador and Quebec, Canada. In recent
years the Company has closed or terminated certain less cost-efficient iron ore
mining operations. See "Properties Relating to Operations -- Raw Materials
Properties and Interests" in Item 2 below for further information relating to
such iron ore properties.
The following table shows (1) the iron ore pellets available to the
Company, as of December 31, 1994, from properties of its subsidiaries and
through interests in raw materials ventures; (2) 1994 and 1993 iron ore
3
<PAGE> 5
pellet production or purchases from such sources; and (3) the percentage of the
Company's iron ore requirements represented by production or purchases from such
sources in 1994 and 1993.
<TABLE>
<CAPTION>
IRON ORE
TONNAGES IN THOUSANDS
(GROSS TONS OF PELLETS)
--------------------------------- % OF
AVAILABLE AS OF PRODUCTION REQUIREMENTS(1)
DECEMBER 31, -------------- ----------------
1994(2) 1994 1993 1994 1993
--------------- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
INLAND STEEL MINING COMPANY PROPERTY
Minorca -- Virginia, MN.................. 66,000 2,717 2,577 41% 41%
IRON ORE VENTURES AND LONG-TERM PURCHASE
CONTRACTS
Empire (40% owned) -- Palmer, MI;
Wabush (13.75% owned) -- Wabush, Labrador
and Pointe Noire, Quebec, Canada...... 112,000 3,625 3,513 55 55
--------------- ----- ----- -- --
Total Iron Ore...................... 178,000 6,342 6,090 96% 96%
========== ===== ===== ===== =====
</TABLE>
---------------
(1) Production in excess of requirements was sold or added to stockpile.
Requirements in excess of production were purchased or taken from
stockpile.
(2) Net interest in proven reserves.
All of the Company's coal requirements are satisfied from independent
sources, with a portion of such requirements being met under a significant
purchase contract. The contract requires the Company to purchase (subject to
force majeure provisions) a total of 1,270,000 tons of metallurgical and/or
steam coal at prices (intended to approximate market) determined with respect to
certain cost factors. The term of the contract has been extended through
year-end 1995, with the extension covering solely steam coal, due to the
shutdown of the Company's coke batteries in December 1993. During 1994, the
Company purchased 21% of its total coal requirements under such contract,
representing 54% of its steam coal requirements.
The Company's other coal requirements are for the PCI Associates joint
venture, in which a subsidiary of the Company holds a 50% interest. The PCI
facility pulverizes coal for injection into the Company's blast furnaces. The
Company had entered into a contract (subject to force majeure provisions) to
purchase 95% of the PCI facility's requirements for injection-quality coal
through the term of the contract (which currently extends through year-end 1995
and is subject to extension by mutual agreement of the parties) at prices
determined by annual good-faith negotiations. Early in 1994, the Company's
obligation to purchase coal under this contract was suspended under the
contract's force majeure provisions. As a result, 75% of the PCI facility's coal
requirements in 1994 were provided through two short-term contracts. The balance
of the Company's coal requirements was purchased from domestic sources under
short-term purchase contracts.
In December 1993, the last of the Company's coke-making facilities was
permanently shut down. The Company entered into a long-term purchase contract
extending through July 1999 that requires the Company to purchase 1,400,000 tons
of coke on an annualized basis through the term of the contract at prices
negotiated annually based on certain market determinants. The purchase
requirement is subject to force majeure provisions. The term of the contract may
be extended by mutual agreement of the parties. During 1994, the Company
satisfied 72% of its total coke needs under such arrangement. The remainder of
its purchased coke requirements was obtained through contracts with independent
domestic sources.
The Company's Michigan limestone and dolomite properties were sold in
September 1990. As part of such sale, the Company agreed, subject to certain
exceptions, to purchase, at prices which approximate market, the full amount of
its annual limestone needs or one million gross tons, whichever is greater,
through 1996, and the annual limestone needs of the Indiana Harbor Works from
1997 through 2002.
Approximately 65% of the iron ore pellets and virtually all of the
limestone received by the Company at its Indiana Harbor Works in 1994 were
transported by its Great Lakes carriers. Contracts are in effect for the
transportation on the Great Lakes of the remainder of its iron ore pellet
requirements. Approximately 17% of
4
<PAGE> 6
the Company's coal requirements were transported in its hopper cars by unit
train in 1994. The remainder of the Company's coal requirements was transported
in independent carrier-owned equipment or leased equipment. Approximately 20% of
the Company's coke requirements in 1994 were transported in its own hopper cars,
40% in leased hopper cars, 26% in independent carrier-owned hopper cars, and 14%
in independent carrier-owned river barges.
See "Energy" below for further information relating to the use of coal in
the operations of the Company.
PRODUCT CLASSES
The following table sets forth the percentage of consolidated net sales,
for the five years indicated, contributed by each class of similar products of
the Company that accounted for 10% or more of consolidated net sales in such
time period. The data includes sales to affiliates of the Company.
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Sheet, Strip and Plate........................ 85% 88% 88% 89% 82%
Bar and Structural............................ 15 12 12 11 18
---- ---- ---- ---- ----
100% 100% 100% 100% 100%
=== === === === ===
</TABLE>
Sales to General Motors Corporation approximated 12% of consolidated net
sales in each of 1994, 1993 and 1992, 11% in 1991, and 12% in 1990. No other
customer accounted for more than 10% of the consolidated net sales of the
Company during any of these years.
CAPITAL EXPENDITURES AND INVESTMENTS IN JOINT VENTURES
In recent years, the Company and its subsidiaries have made substantial
capital expenditures, principally at the Indiana Harbor Works, to improve
quality and reduce costs, and for pollution control. Additions by the Company
and its subsidiaries to property, plant and equipment, together with retirements
and adjustments, for the five years ended December 31, 1994, are set forth
below. Net capital additions during such period aggregated $300.5 million.
<TABLE>
<CAPTION>
DOLLARS IN MILLIONS
------------------------------------------------------
RETIREMENTS NET CAPITAL
ADDITIONS OR SALES ADJUSTMENTS ADDITIONS
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
1994....................................... $ 223.7 $ 47.8 $ 2.0 $ 177.9
1993....................................... 86.1 140.2 (1.2) (55.3)
1992....................................... 54.4 73.0 (7.5) (26.1)
1991....................................... 124.7 94.3 (.6) 29.8
1990....................................... 219.1 46.3 1.4 174.2
</TABLE>
In recent years, the Company's largest capital improvement projects at the
Indiana Harbor Works have emphasized reducing costs and improving quality in the
steel-processing sequence of the Company. Capital expenditures of $224 million
in 1994 include $146 million related to the purchase of the No. 2 Basic Oxygen
Furnace Shop caster facility which had previously been leased, including $83
million for the purchase of the equity interest plus assumption of $63 million
of caster-related debt. The majority of the remaining capital expenditures was
principally for new machinery and equipment related to maintaining or improving
operations.
In July 1987, a wholly owned subsidiary of the Company formed a
partnership, I/N Tek, with an indirect wholly owned subsidiary of NSC to
construct, own, finance and operate a cold-rolling facility with an annual
capacity of 1,500,000 tons, of which approximately one-third is cold-rolled
substrate for I/N Kote. The I/N Tek facility, located near New Carlisle,
Indiana, became operational in April 1990 and reached its design capability in
March 1992. The Company, which owns, through its subsidiary, a 60% interest in
the I/N Tek partnership is, with certain limited exceptions, the sole supplier
of hot band to be processed by the I/N Tek facility and generally has exclusive
rights to the production capacity of the facility.
5
<PAGE> 7
In September 1989, a wholly owned subsidiary of the Company formed a second
partnership, I/N Kote, with an indirect wholly owned subsidiary of NSC to
construct, own, finance and operate two sheet steel galvanizing lines adjacent
to the I/N Tek facility. The subsidiary of the Company owns a 50% interest in
I/N Kote. The I/N Kote facility consists of a hot-dip galvanizing line and an
electrogalvanizing line with a combined annual capacity of 900,000 tons. The
electrogalvanizing line began start-up operations in September 1991 and the
hot-dip galvanizing line began start-up operations in November 1991; the
facility has been operating near design capability since August 1993. The
Company has guaranteed 50% of I/N Kote's permanent financing. I/N Kote has
contracted to acquire its cold-rolled steel substrate from the Company, which
supplies the substrate from the I/N Tek facility and the Company's Indiana
Harbor Works.
Further information regarding the I/N Tek and I/N Kote joint venture
projects will be set forth under the caption "Certain Relationships and Related
Transactions -- Joint Ventures" in Industries' definitive Proxy Statement which
will be furnished to stockholders of Industries in connection with its Annual
Meeting scheduled to be held on May 24, 1995, and is incorporated by reference
into Item 13 of this Report.
In 1994, the Company and its subsidiaries made capital expenditures of $224
million. Such expenditures principally related to the purchase of the caster
facility discussed above, with the majority of the remaining capital
expenditures for new machinery and equipment related to maintaining or improving
operations at the Indiana Harbor Works. The amount budgeted for 1995 capital
expenditures by the Company and its subsidiaries is approximately $160 million.
It is anticipated that capital expenditures will be funded from cash generated
by operations and advances from and capital contributions by Industries. (See
"Environment" below for a discussion of capital expenditures for pollution
control purposes.)
EMPLOYEES
The monthly average number of active employees of the Company and its
subsidiaries receiving pay during 1994 was approximately 10,200. At year-end,
approximately 7,800 employees were represented by the United Steelworkers of
America, of whom approximately 730 were on furlough or indefinite layoff. Total
employment costs increased from $671 million in 1993 to $690 million in 1994,
due primarily to profit-sharing provisions and increased pension expenses,
offset in part by reduced health insurance costs.
Beginning in 1991, the Company embarked upon a major turnaround strategy,
with the assistance of an outside consulting firm, to significantly reduce
costs, increase revenues and improve asset utilization at the Company. As a
result, employment was reduced by 20% by year-end 1994. The intended 25%
reduction was not fully achieved by year-end 1994 principally because the
Company continued operation of its plate mill, employing approximately 600
people. The plate mill will continue to operate as long as it remains
economically viable.
The current labor agreement between the Company and the United Steelworkers
of America, effective August 1, 1993, covers wages and benefits through July 31,
1999. Among other things, the agreement provides a wage increase of $.50 per
hour in 1995, a $500 bonus in each of 1993 and 1994 (totalling in each case
approximately $4 million) and a potential bonus of up to $1,000 per employee
(approximately $8 million in total) based on the Company's achieving $150
million of pre-tax income in 1995 adjusted to exclude the incremental FASB
Statement No. 106 costs and such bonus. In addition, all active employees
receive an additional week of vacation in 1994 and in 1996. The agreement
provides for a reopener on wages and certain benefits in 1996 with an
arbitration provision to resolve unsettled issues, thereby precluding a work
stoppage over the six-year term of the contract. The agreement also provides for
election of a Union designee acceptable to Industries' Board of Directors (one
director elected at the May 25, 1994 Annual Meeting of Stockholders is such
Union designee), restrictions on the ability of the Company to reduce the Union
workforce (generally limited to attrition and major facilities shutdowns) while
allowing greater flexibility to institute work rule changes, quarterly rather
than annual payment of profit sharing amounts, significant improvements in
pension benefits for active employees, and the securing of retiree health care
obligations through certain trust and second mortgage arrangements. "First
dollar" health care coverage is eliminated under the agreement through the
institution of co-payments and increased deductibles on medical benefits.
6
<PAGE> 8
ENVIRONMENT
The Company is subject to environmental laws and regulations concerning
emissions into the air, discharges into ground water and waterways, and the
generation, handling, labeling, storage, transportation, treatment and disposal
of waste material. These include various federal statutes regulating the
discharge or release of pollutants to the environment, including the Clean Air
Act, Clean Water Act, Resource Conservation and Recovery Act, Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA," also
known as "Superfund"), Safe Drinking Water Act, and Toxic Substances Control
Act, as well as state and local requirements. Violations of these laws and
regulations can give rise to a variety of civil, administrative, and, in some
cases, criminal actions and could also result in substantial liabilities or
require substantial capital expenditures. In addition, under CERCLA the United
States Environmental Protection Agency (the "EPA") has authority to impose
liability for site remediation on waste generators, past and present site owners
and operators, and transporters, regardless of fault or the legality of the
original disposal activity. Liability under CERCLA is strict, joint and several.
On June 10, 1993, the U.S. District Court for the Northern District of
Indiana entered a consent decree that resolved all matters raised by the lawsuit
filed by the EPA in 1990. The consent decree includes a $3.5 million cash fine,
environmentally beneficial projects at the Indiana Harbor Works through 1997
costing approximately $7 million, and sediment remediation of portions of the
Indiana Harbor Ship Canal and Indiana Harbor Turning Basin estimated to cost
approximately $19 million over the next several years. The fine and estimated
remediation costs were provided for in 1991 and 1992. After payment of the fine,
the Company's reserve for environmental liabilities totalled $19 million. The
consent decree also defines procedures for corrective action at the Company's
Indiana Harbor Works. The procedures defined establish essentially a three-step
process, each step of which requires agreement of the EPA before progressing to
the next step in the process, consisting of: assessment of the site, evaluation
of corrective measures for remediating the site, and implementation of the
remediation plan according to the agreed-upon procedures. The Company is
presently assessing the extent of environmental contamination. The Company
anticipates that this assessment will cost approximately $1 million to $2
million per year and take another three to five years to complete. Because
neither the nature and extent of the contamination nor the corrective actions
can be determined until the assessment of environmental contamination and
evaluation of corrective measures is completed, the Company cannot presently
reasonably estimate the costs of or the time required to complete such
corrective actions. Such corrective actions may, however, require significant
expenditures over the next several years that may be material to the results of
operations or financial position of the Company. Insurance coverage with respect
to such corrective actions is not significant.
By year-end 1993, the last of the Company's coke-making facilities was
permanently shut down. All coke battery closures were necessitated by the
inability of the facilities to meet environmental regulations and their
deteriorating condition and performance. The Company had anticipated the closure
of such remaining coke-making facilities at year-end 1994. The October 1993
decision to close these facilities early necessitated a fourth-quarter 1993
pre-tax charge of $22.3 million that included the write-off of property, plant
and equipment costs which were to be depreciated in 1994 and additional costs
related to the earlier-than-anticipated displacement of personnel. The Company
has entered into a long-term contract to satisfy the majority of its coke needs.
(See "Raw Materials" above.) In addition, the Company participates in a joint
venture that has constructed and is operating a pulverized coal injection
facility for blast furnace application, reducing the Company's coke needs by
approximately 25%. The facility achieved operation at its design capacity by
year-end 1994. In addition, during 1994 the Company paid stipulated penalties of
$184,000 pursuant to the provisions of the consent decree described above in
connection with air emissions from the coke facilities.
Capital spending for pollution control projects totaled $17 million in
1994, up from $7 million in 1993. Another $41 million was spent in 1994 to
operate and maintain such equipment, versus $42 million a year earlier. During
the five years ended December 31, 1994, the Company has spent $277 million to
construct, operate and maintain environmental control equipment at its various
locations.
7
<PAGE> 9
Environmental projects previously authorized and presently under
consideration, including those designed to comply with the 1990 Clean Air Act
Amendments, but excluding any amounts that would be required under the consent
decree settling the 1990 EPA lawsuit, will require capital expenditures of
approximately $24 million in 1995. It is anticipated that the Company will make
annual capital expenditures of $5 million to $10 million in each of the four
years thereafter. In addition, the Company will have ongoing annual expenditures
of $40 million to $50 million for the operation of air and water pollution
control facilities to comply with current federal, state and local laws and
regulations. Due to the inability to predict the costs of corrective action that
may be required under the Resource Conservation and Recovery Act and the consent
decree in the 1990 EPA lawsuit, the Company cannot predict the amount of
additional environmental expenditures that will be required. Such additional
environmental expenditures, excluding amounts that may
be required in connection with the consent decree in the 1990 EPA lawsuit,
however, are not expected to be material to the results of operations or
financial position of the Company.
See Item 3 below for information concerning certain proceedings pertaining
to environmental matters in which the Company is involved.
ENERGY
Coal, together with coke, all of which are purchased from independent
sources, accounted for approximately 69% of the energy consumed by the Company
at the Indiana Harbor Works in 1994. In recent years the Company has purchased
varying portions of its coke requirements from outside sources, purchasing
approximately 100% in 1994 and 59% in 1993. See "Environment" above for a
discussion of coke-making by the Company.
Natural gas and fuel oil supplied approximately 29% of the energy
requirements of the Indiana Harbor Works in 1994 and are used extensively by the
Company at other facilities that it owns or in which it has an interest. The
Company anticipates that utilization of the pulverized coal injection facility
(see "Environment" above) will substantially reduce natural gas and fuel oil
consumption at the Indiana Harbor Works.
The Company both purchases and generates electricity to satisfy electrical
energy requirements at the Indiana Harbor Works. In 1994, the Company produced
approximately 62% of its requirements at the Indiana Harbor Works. The purchase
of electricity at the Indiana Harbor Works is subject to curtailment under rules
of the local utility when necessary to maintain appropriate service for various
classes of its customers.
ITEM 2. PROPERTIES.
PROPERTIES RELATING TO OPERATIONS
Steel Production
All raw steel made by the Company is produced at its Indiana Harbor Works
located in East Chicago, Indiana. The property on which this plant is located,
consisting of approximately 1,900 acres, is held by the Company in fee. The
basic production facilities of the Company at its Indiana Harbor Works consist
of furnaces for making iron; basic oxygen and electric furnaces for making
steel; a continuous billet caster, a continuous combination slab/bloom caster
and two continuous slab casters; and a variety of rolling mills and processing
lines which turn out finished steel mill products. Certain of these production
facilities, including a continuous anneal line, are held by the Company under
leasing arrangements. The Company purchased the equity interest of the lessor of
the No. 2 BOF Shop Caster Facility in March 1994 and assumed caster-related
debt, which was repaid by year-end 1994. Substantially all of the remaining
property, plant and equipment at the Indiana Harbor Works, other than the Caster
Facility and leased equipment, is subject to the lien of the First Mortgage of
the Company dated April 1, 1928, as amended and supplemented. See "Operations --
Raw Steel Production and Mill Shipments" in Item 1 above for further information
relating to capacity and utilization of the Company's properties. The Company's
properties are adequate to serve its present and anticipated needs, taking into
account those issues discussed in "Capital Expenditures and Investments in Joint
Ventures" in Item 1 above.
8
<PAGE> 10
I/N Tek, a partnership in which a subsidiary of the Company owns a 60%
interest, has constructed a 1,500,000-ton annual capacity cold-rolling mill on
approximately 200 acres of land, which it owns in fee, located near New
Carlisle, Indiana. Substantially all the property, plant and equipment owned by
I/N Tek at this location is subject to a lien securing related indebtedness. The
I/N Tek facility is adequate to serve the present and anticipated needs of the
Company planned for such facility.
I/N Kote, a partnership in which a subsidiary of the Company owns a 50%
interest, has constructed a 900,000-ton annual capacity steel galvanizing
facility on approximately 25 acres of land, which it owns in fee, located
adjacent to the I/N Tek site. Substantially all the property, plant and
equipment owned by I/N Kote is subject to a lien securing related indebtedness.
The I/N Kote facility is adequate to serve the present and anticipated needs of
the Company planned for such facility.
PCI Associates, a partnership in which a subsidiary of the Company owns a
50% interest, has constructed a pulverized coal injection facility on land
located within the Indiana Harbor Works. The Company leases PCI Associates the
land upon which the facility is located. Substantially all the property, plant
and equipment owned by PCI Associates is subject to a lien securing related
indebtedness. The PCI Associates facility is adequate to serve the present and
anticipated needs of the Company planned for such facility.
The Company owns three vessels for the transportation of iron ore and
limestone on the Great Lakes, and a subsidiary of the Company owns a fleet of
404 coal hopper cars (100-ton capacity each) used in unit trains to move coal
and coke to the Indiana Harbor Works. See "Operations -- Raw Materials" in Item
1 above for further information relating to utilization of the Company's
transportation equipment. Such equipment is adequate, when combined with
purchases of transportation services from independent sources, to meet the
Company's present and anticipated transportation needs.
The Company also owns and maintains research and development laboratories
in East Chicago, Indiana, which facilities are adequate to serve its present and
anticipated needs.
Raw Materials Properties and Interests
Certain information relating to raw materials properties and interests of
the Company and its subsidiaries is set forth below. See "Operations -- Raw
Materials" in Item 1 above for further information relating to capacity and
utilization of such properties and interests.
Iron Ore
The operating iron ore properties of the Company's subsidiaries and of the
iron ore ventures in which the Company has an interest are as follows:
<TABLE>
<CAPTION>
ANNUAL
PRODUCTION CAPACITY
(IN THOUSANDS OF
GROSS TONS OF
PROPERTY LOCATION PELLETS)
-------------------
<S> <C> <C>
Empire Mine............................ Palmer, Michigan 8,100
Minorca Mine........................... Virginia, Minnesota 2,700
Wabush Mine............................ Wabush, Labrador and Pointe 4,500
Noire, Quebec, Canada
</TABLE>
The Empire Mine is operated by the Empire Iron Mining Partnership, in which
the Company has a 40% interest. The Company, through a subsidiary, is the sole
owner and operator of the Minorca Mine. The Wabush Mine is a taconite project in
which the Company owns a 13.75% interest. The Company also owns a 38% interest
in the Butler Taconite project (permanently closed in 1985) in Nashwauk,
Minnesota.
The reserves at the Empire Mine, the Minorca Mine and the Wabush Mine are
held under leases expiring, or expected at current production rates to expire,
between 2012 and 2040. Substantially all of the reserves at Butler Taconite are
held under leases. The Company's share of the production capacity of its
9
<PAGE> 11
interests in such iron ore properties is sufficient to provide the majority of
its present and anticipated iron ore pellet requirements. Any remaining
requirements have been and are expected to continue to be readily available from
independent sources. During 1992, the Minorca Mine's original ore body was
depleted and production shifted to a new major iron ore body, the Laurentian
Reserve, acquired by lease in 1990.
Limestone and Dolomite
The limestone and dolomite properties of the Company located near the town
of Gulliver in the Upper Peninsula of Michigan were permanently closed on
December 29, 1989 and sold in 1990.
Coal
The Company's sole remaining coal property, the Lancashire No. 25 Property,
located near Barnesboro, Pennsylvania, is permanently closed. All Company coal
requirements for the past several years have been and are expected to continue
to be met through contract purchases and other purchases from independent
sources.
OTHER PROPERTIES
The Company and certain of its subsidiaries lease, under a long-term
arrangement, approximately 15% of the space in the Inland Steel Building located
at 30 West Monroe Street, Chicago, Illinois (where the Company's principal
executive offices are located), which property interest is adequate to serve the
Company's present and anticipated needs.
Certain subsidiaries of the Company hold in fee at various locations an
aggregate of approximately 355 acres of land, all of which is for sale. The
Company also holds in fee approximately 300 acres of land adjacent to the I/N
Tek and I/N Kote sites, which land is available for future development.
Approximately 1,060 acres of rural land, which are held in fee at various
locations in the north-central United States by various raw materials ventures,
are also for sale. I R Construction Products Company, Inc. (formerly Inryco,
Inc.), a subsidiary of the Company and the Company's former Construction
Products business segment, owns, in fee, a combination office building and
warehouse in Hoffman Estates (IL), which is for sale.
ITEM 3. LEGAL PROCEEDINGS.
On June 10, 1993, the U.S. District Court for the Northern District of
Indiana entered a consent decree that resolved all matters raised by the lawsuit
filed by the EPA in 1990. The consent decree includes a $3.5 million cash fine,
environmentally beneficial projects at the Indiana Harbor Works through 1997
costing approximately $7 million, and sediment remediation of portions of the
Indiana Harbor Ship Canal and Indiana Harbor Turning Basin estimated to cost
approximately $19 million over the next several years. The fine and estimated
remediation costs were provided for in 1991 and 1992. After payment of the fine,
the Company's reserve for environmental liabilities totalled $19 million. The
consent decree also defines procedures for corrective action at the Company's
Indiana Harbor Works. The procedures defined establish essentially a three-step
process, each step of which requires agreement of the EPA before progressing to
the next step in the process, consisting of: assessment of the site, evaluation
of corrective measures for remediating the site, and implementation of the
remediation plan according to the agreed-upon procedures. The Company is
presently assessing the extent of environmental contamination. The Company
anticipates that this assessment will cost approximately $1 million to $2
million per year and take another three to five years to complete. Because
neither the nature and extent of the contamination nor the corrective actions
can be determined until the assessment of environmental contamination and
evaluation of corrective measures is completed, the Company cannot presently
reasonably estimate the costs of or the time required to complete such
corrective actions. Such corrective actions may, however, require significant
expenditures over the next several years that may be material to the results of
operations or financial position of the Company. Insurance coverage with respect
to such corrective actions is not significant. In addition, during 1994 the
Company paid stipulated penalties of $184,000 pursuant to the provisions of the
consent decree in connection with air emissions from its coke facilities, which
were permanently shutdown at year-end 1993.
10
<PAGE> 12
On March 22, 1985, the EPA issued an administrative order to the Company's
former Inland Steel Container Company Division ("Division") naming the former
Division and various other unrelated companies as responsible parties under the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA")
in connection with the cleanup of a waste disposal facility operated by Duane
Marine Salvage Corporation at Perth Amboy, New Jersey. The administrative order
alleged that certain of the former Division's wastes were transported to, and
disposed of at, that facility and required the Company to join with other named
parties in taking certain actions relating to the facility. The Company and the
other administrative order recipients have completed the work required by the
order. In unrelated matters, the EPA also advised the former Division and
various other unrelated parties of other sites located in New Jersey at which
the EPA expects to spend public funds on any investigative and corrective
measures that may be necessary to control any releases or threatened releases of
hazardous substances, pollutants and contaminants pursuant to the applicable
provisions of CERCLA. The notice also indicated that the EPA believes the
Company may be a responsible party under CERCLA. The extent of the Company's
involvement and participation in these matters has not yet been determined.
While it is not possible at this time to predict the amount of the Company's
potential liability, none of these matters is expected to materially affect the
Company's financial position.
The EPA has adopted a national policy of seeking substantial civil
penalties against owners and operators of sources for noncompliance with air and
water pollution control statutes and regulations under certain circumstances. It
is not possible to predict whether further proceedings will be instituted
against the Company or any of its subsidiaries pursuant to such policy, nor is
it possible to predict the amount of any such penalties that might be assessed
in any such proceeding.
In 1994, the Company entered into an Agreed Order with the Indiana
Department of Environmental Management ("IDEM") which resolved all outstanding
Notices of Violation and other air emission issues at the Indiana Harbor Works
raised by IDEM. The Agreed Order covers air emissions from coke oven batteries,
steelmaking facilities and fugitive road dust and required the payment of a
$572,000 cash penalty.
The Company received a Notice of Violation from IDEM dated March 3, 1989
alleging violations of the Company's National Pollution Discharge Elimination
System permit regarding water discharges. The Company is presently in
discussions with the staff of IDEM with respect to these matters and cannot
currently estimate the time period within which these matters will be resolved.
While it is not possible at this time to predict the amount of the Company's
potential liability, this matter is not expected to materially affect the
Company's financial position.
The Company received a Special Notice of Potential Liability ("Special
Notice") from IDEM on February 18, 1992 relating to the Four County Landfill
Site, Fulton County, Indiana (the "Facility"). The Special Notice stated that
IDEM has documented the release of hazardous substances, pollutants and
contaminants at the Facility and was planning to spend public funds to undertake
an investigation and control the release or threatened release at the Facility
unless IDEM determined that a potentially responsible party ("PRP") will
properly and promptly perform such action. The Special Notice further stated
that the Company may be a PRP and that the Company, as a PRP, may have potential
liability with respect to the Facility. In August 1993, the Company, along with
other PRPs, entered into an Agreed Order with IDEM pursuant to which the PRPs
agreed to perform a Remedial Investigation/Feasibility Study ("RI/FS") for the
Facility and pay certain past and future IDEM costs. In addition, the PRPs
agreed to provide funds for operation and maintenance necessary for
stabilization of the Facility. The costs which the Company has agreed to assume
under the Agreed Order are not currently anticipated to exceed $178,000. The
cost of the final remedies which will be determined to be required with respect
to the Facility cannot be reasonably estimated until, at a minimum, the RI/FS is
completed. The Company is therefore unable to determine the extent of its
potential liability, if any, relating to the Facility or whether this matter
could materially affect the Company's financial position.
11
<PAGE> 13
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.
The Company meets the conditions set forth in General Instruction J(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
J(2), the information called for by this Item.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.
The Company is a wholly owned subsidiary of Inland Steel Industries, Inc.
thus, market, stockholder and dividend information otherwise called for by this
Item is omitted.
ITEM 6. SELECTED FINANCIAL DATA.
The Company meets the conditions set forth in General Instruction J(2)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
J(2), the information called for by this Item.
ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS.
The Company's 1994 net income of $53.9 million was a marked improvement
from the 1993 net loss of $59.7 million. This was the Company's first reported
net income and best operating profit performance since 1989.
The following table summarizes selected earnings and other data:
<TABLE>
<CAPTION>
1994 1993
-------- --------
DOLLARS AND TONS
IN MILLIONS
<S> <C> <C>
Net sales.......................................... $2,487.9 $2,174.9
Operating profit (loss)............................ 149.3 (28.2)
Net income (loss).................................. 53.9 (59.7)
Net tons shipped................................... 5.2 4.8
</TABLE>
Net sales increased 14 percent, 7 percent due to an increase in the volume
of steel mill products shipped and 7 percent due to improved selling prices and
mix. The recovering economy continued to provide strong demand for products
containing steel and this demand was the principal factor leading to both
increased volume and price. The 1993 financial results were negatively affected
by approximately $30 million due to the unfavorable impact on steel operations
of the scheduled outage of the largest blast furnace at the Indiana Harbor Works
for a mini-reline. In addition, there was a $22.3 million charge taken for the
early closure of the Company's remaining cokemaking facilities due to their
inability to meet environmental regulations and deteriorating operating
performance. Partially offsetting these unfavorable items was a $24 million LIFO
profit recognition due to inventory reductions. The Company operated at 89
percent of its raw steelmaking capability in 1994, compared with 83 percent in
1993.
The Company embarked in 1991 on a turnaround program to increase revenues
and asset utilization, and significantly reduce its underlying cost base by
year-end 1994. A restructuring charge in 1991 of $205 million provided for the
write-off of facilities, an environmental reserve and the cost of an estimated
25 percent reduction in the workforce. Primarily due to the continued operation
of its plate mill, the closure of which was anticipated in arriving at the
targeted workforce reduction, the Company achieved only a 20 percent reduction
in the workforce by year-end 1994. The 1994 effect of this program represents a
savings of approximately $200 million in employment costs and $10 million in
decreased depreciation expense. However, the savings from reduced employment was
partially offset by increased wage and benefit costs.
I/N Tek continued to operate near capacity and produce consistently
high-quality steels. In August 1993, I/N Kote achieved near design capacity
operations and, by year-end 1993, had achieved product qualification at all
major customers. Under the I/N Kote partnership agreement, the Company supplies
all of the steel for
12
<PAGE> 14
the joint venture and, with certain limited exceptions, is required to set the
price of that steel to assure that I/N Kote's expenditures do not exceed its
revenues. During 1993, the Company's sales prices approximated its costs of
production, and in 1994, the prices exceeded production costs but were still
less than the market prices for cold-rolled steel products. As I/N Kote
expenditures include principal payments and provision for return on equity to
the partners, the Company's ability to realize higher prices on its sales to I/N
Kote depends on the facility continuing near-capacity operations and obtaining
appropriate pricing for its products.
The Company's remaining cokemaking facilities were closed by year-end 1993.
The Company determined that it was uneconomical to repair the coke batteries
sufficiently to continue cost-effective operations that would comply with
current environmental laws. To replace Company-produced coke, the Company
entered into a long-term supply contract and other arrangements to purchase
coke. In addition, the Company and NIPSCO, a local utility, formed a joint
venture which constructed and is operating a pulverized coal injection facility
at the Indiana Harbor Works. This facility injects coal directly into the blast
furnaces thereby reducing coke requirements. The joint venture commenced
operations in the third quarter of 1993 and achieved design capacity by year-end
1994, reducing coke requirements by approximately 25 percent.
FASB Statement No. 106 requires that the cost of retiree medical and life
insurance benefits be accrued during the working years of each employee.
Previously, retiree medical benefits were expensed as incurred after an
employee's retirement. Adoption of this standard in 1992 did not and will not
affect cash flow as liabilities for health care and life insurance benefits will
continue to be paid as claims are submitted. The unfunded benefits liability
reflected on the balance sheet as of December 31, 1994, was approximately $1.1
billion. The unfunded liability will continue to grow as long as accrual-basis
costs exceed cash benefit payments. (See Note 7 to the consolidated financial
statements for further details.)
FASB Statement No. 109 requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
recognized in the Company's financial statements or tax returns. At December 31,
1994, the Company had a net deferred tax asset of $364 million, which includes
$398 million related to the temporary difference arising from the adoption of
FASB Statement No. 106. While the Company believes it is more likely than not
that taxable income generated through future profitable operations will be
sufficient to realize all deferred tax assets, a secondary source of future
taxable income could result from tax planning strategies, including the
Company's option of changing from the LIFO method of accounting for inventories
to the FIFO method (such change would have resulted in approximately $250
million of additional taxable income as of year-end 1994 which would serve to
offset approximately $85 million of deferred tax assets) and selection of
different tax depreciation methods. After assuming such change in accounting for
inventories, the Company would need to recognize approximately $800 million of
taxable income over the 15-year net operating loss carryforward period and the
period in which the temporary difference related to the FASB Statement No. 106
obligation will reverse, in order to fully realize its net deferred tax asset.
Additionally, in accordance with the Industries tax sharing agreement, if the
Company is unable to use all of its allocated tax attributes (net operating loss
carryforwards and tax credit carryforwards) in a given year but other companies
in the Industries group are able to utilize them, then the Company will be paid
for the use of its attributes. The Company believes that it is more likely than
not that it will achieve such taxable income level. (See Note 8 to the
consolidated financial statements for further details regarding this net
deferred tax asset.)
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements (including the financial statement
schedules listed under Item 14(a)2 of this report) of the Company called for by
this Item, together with the Report of Independent Accountants dated February
20, 1995, are set forth on pages F-2 to F-19, inclusive, of this Report on Form
10-K, and are hereby incorporated by reference into this Item. Financial
statement schedules not included in this Report on Form 10-K have been omitted
because they are not applicable or because the information called for is shown
in the consolidated financial statements or notes thereto.
13
<PAGE> 15
Consolidated quarterly sales and earnings information for 1994 and 1993 is
set forth in Note 14 of Notes to Consolidated Financial Statements (contained
herein), which is hereby incorporated by reference into this Item.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Company meets the conditions set forth in General Instruction J(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
J(2), the information called for by this Item.
ITEM 11. EXECUTIVE COMPENSATION.
The Company meets the conditions set forth in General Instruction J(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
J(2), the information called for by this Item.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The Company meets the conditions set forth in General Instruction J(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
J(2), the information called for by this Item.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company meets the conditions set forth in General Instruction J(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
J(2), the information called for by this Item.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) DOCUMENTS FILED AS A PART OF THIS REPORT.
1. CONSOLIDATED FINANCIAL STATEMENTS. The consolidated financial
statements listed below are set forth on pages F-2 to F-19, inclusive,
of this Report and are incorporated by reference in Item 8 of this
Annual Report on Form 10-K.
Report of Independent Accountants.
Consolidated Statements of Operations and Reinvested Earnings for the
three years ended December 31, 1994.
Consolidated Statement of Cash Flows for the three years ended
December 31, 1994.
Consolidated Balance Sheet at December 31, 1994 and 1993.
Schedules to Consolidated Financial Statements at December 31, 1994
and 1993, relating to:
Property, Plant and Equipment.
Long-Term Debt.
Statement of Accounting and Financial Policies.
Notes to Consolidated Financial Statements.
Financial Statement Schedule II (Reserves) for the three years ended
December 31, 1994.
14
<PAGE> 16
2. EXHIBITS. The exhibits required to be filed by Item 601 of Regulation
S-K are listed under the caption "Exhibits" below.
(B) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed by the Company during the quarter
ended December 31, 1994.
(C) EXHIBITS.
<TABLE>
<S> <C>
3.(i) Copy of Certificate of Incorporation, as amended, 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.
4.A Copy of First Mortgage Indenture, dated April 1, 1928, between the Company
(the "Steel 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 Steel Company's Registration Statement on Form A-2 (No. 2-1855);
(ii) Exhibits D-1(f) and D-1(g), filed with Steel Company's Registration
Statement on Form E-1 (No. 2-2182); (iii) Exhibit B-1(h), filed with Steel
Company's Current Report on Form 8-K dated January 18, 1937; (iv) Exhibit
B-1(i), filed with Steel Company's Current Report on Form 8-K, dated February
8, 1937; (v) Exhibits B-1(j) and B-1(k), filed with Steel Company's Current
Report on Form 8-K for the month of April, 1940; (vi) Exhibit B-2, filed with
Steel Company's Registration Statement on Form A-2 (No. 2-4357); (vii)
Exhibit B-1(l), filed with Steel Company's Current Report on Form 8-K for the
month of January, 1945; (viii) Exhibit 1, filed with Steel Company's Current
Report on Form 8-K for the month of November, 1946; (ix) Exhibit 1, filed
with Steel Company's Current Report on Form 8-K for the months of July and
August, 1948; (x) Exhibits B and C, filed with Steel Company's Current Report
on Form 8-K for the month of March, 1952; (xi) Exhibit A, filed with Steel
Company's Current Report on Form 8-K for the month of July, 1956; (xii)
Exhibit A, filed with Steel Company's Current Report on Form 8-K for the
month of July, 1957; (xiii) Exhibit B, filed with Steel Company's Current
Report on Form 8-K for the month of January, 1959; (xiv) the Exhibit filed
with Steel Company's Current Report on Form 8-K for the month of December,
1967; (xv) the Exhibit filed with Steel Company's Current Report on Form 8-K
for the month of April, 1969; (xvi) the Exhibit filed with Steel 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 Steel Company's Current Report on Form
8-K for the month of April, 1974; (xviii) Exhibit B, filed with Steel
Company's Current Report on Form 8-K for the month of September, 1975; (xix)
Exhibit B, filed with Steel Company's Current Report on Form 8-K for the
month of January, 1977; (xx) Exhibit C, filed with Steel Company's Current
Report on Form 8-K for the month of February, 1977; (xxi) Exhibit B, filed
with Steel Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1978; (xxii) Exhibit B, filed with Steel Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1980; (xxiii) Exhibit 4-D, filed
with Steel Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1980; (xxiv) Exhibit 4-D, filed with Steel Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1982; (xxv)
Exhibit 4-E, filed with Steel 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 Steel 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
</TABLE>
15
<PAGE> 17
<TABLE>
<S> <C>
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.)
24 Powers of attorney.
27 Financial Data Schedules.
</TABLE>
16
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: ROBERT J. DARNALL
Robert J. Darnall
Chairman
Date: March 28, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------------------------------ --------------------------------------------------------
<S> <C> <C>
ROBERT J. DARNALL Chairman and Director March 28, 1995
Robert J. Darnall
LILY L. MAY Vice President -- Finance March 28, 1995
and Purchasing, Principal
Lily L. May Financial Officer and
Controller
A. Robert Abboud Director
James W. Cozad Director
James A. Henderson Director
Robert B. McKersie Director
</TABLE>
By: DAVID B. ANDERSON
<TABLE>
<S> <C> <C>
Maurice S. Nelson, Jr. Director
</TABLE>
David B. Anderson
Attorney in-fact
<TABLE>
<S> <C> <C>
Donald S. Perkins Director
</TABLE>
March 28, 1995
<TABLE>
<S> <C> <C>
Joshua I. Smith Director
Nancy H. Teeters Director
Raymond C. Tower Director
Arnold R. Weber Director
</TABLE>
17
<PAGE> 19
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
OF INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
<TABLE>
<CAPTION>
ITEM PAGE
------------------------------------------------------------------------------------- -----
<S> <C>
Report of Independent Accountants.................................................... F-2
Consolidated Statements of Operations and Reinvested Earnings for the three years
ended December 31, 1994............................................................ F-3
Consolidated Statement of Cash Flows for the three years ended December 31, 1994..... F-4
Consolidated Balance Sheet at December 31, 1994 and 1993............................. F-5
Schedules to Consolidated Financial Statements at December 31, 1994 and 1993,
relating to Property, Plant and Equipment, and Long-Term Debt...................... F-6
Statement of Accounting and Financial Policies....................................... F-7
Notes to Consolidated Financial Statements........................................... F-8
Financial Statement Schedule II (Reserves) for the three years ended December 31,
1994............................................................................... F-19
</TABLE>
F-1
<PAGE> 20
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
Inland Steel Company
In our opinion, the consolidated financial statements listed in the index
appearing on page F-1 present fairly, in all material respects, the financial
position of Inland Steel Company (a wholly owned subsidiary of Inland Steel
Industries, Inc.) and Subsidiary Companies at December 31, 1994 and 1993, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1994, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in Notes 7 and 8 to the consolidated financial statements, in
1992 the Company changed its method of accounting for postretirement benefits
other than pensions and for income taxes.
PRICE WATERHOUSE LLP
Chicago, Illinois
February 20, 1995
F-2
<PAGE> 21
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS AND REINVESTED EARNINGS
DOLLARS IN MILLIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1994 1993 1992
--------- --------- --------
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
Net sales............................................ $ 2,487.9 $ 2,174.9 $1,901.0
--------- --------- --------
Operating costs and expenses:
Cost of goods sold (excluding depreciation)........ 2,127.6 1,975.5 1,916.0
Selling, general and administrative expenses....... 43.4 42.1 45.7
Depreciation....................................... 117.4 111.1 109.2
State, local and miscellaneous taxes............... 50.2 52.1 53.7
Facility shutdown provision (Note 6)............... -- 22.3 --
Gain on sale of partial interest in joint venture
(Note 10)....................................... -- -- (22.5)
--------- --------- --------
Total......................................... 2,338.6 2,203.1 2,102.1
--------- --------- --------
Operating profit (loss).............................. 149.3 (28.2) (201.1)
Other expense:
General corporate expense, net of income items..... 6.8 16.4 17.7
Interest and other expense on debt................. 53.3 60.4 53.2
--------- --------- --------
Income (loss) before income taxes.................... 89.2 (105.0) (272.0)
Provision for income taxes (Note 8).................. 35.3 45.3Cr. 100.3Cr.
--------- --------- --------
Income (loss) before cumulative effect of changes in
accounting principles.............................. 53.9 (59.7) (171.7)
Cumulative effect of changes in accounting principles
Adoption of FASB 109 (Accounting for Income
Taxes)............................................. -- -- (31.3)
Adoption of FASB 106 (Employers' Accounting for
Postretirement Benefits Other Than Pensions).... -- -- (578.3)
--------- --------- --------
Net income (loss).................................... $ 53.9 $ (59.7) $ (781.3)
========= ========= ========
CONSOLIDATED STATEMENT OF REINVESTED EARNINGS
Balance at beginning of year....................... $(1,020.8) $ (935.3) $ (128.1)
Net income (loss) for the year..................... 53.9 (59.7) (781.3)
Preferred dividends declared....................... (25.8) (25.8) (25.9)
--------- --------- --------
Accumulated deficit at end of year................. $ (992.7) $(1,020.8) $ (935.3)
========= ========= ========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE> 22
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
CONSOLIDATED STATEMENT OF CASH FLOWS
DOLLARS IN MILLIONS
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN CASH
YEARS ENDED DECEMBER 31,
-----------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)................................................ $ 53.9 $ (59.7) $(781.3)
------- ------- -------
Adjustments to reconcile net income (loss) to net cash provided
from (used for) operating activities:
Depreciation................................................... 117.4 111.1 109.2
Deferred employee benefit cost, including cumulative effect of
change in accounting principle.............................. 45.9 33.9 944.3
Deferred income taxes.......................................... 52.5 (29.9) (386.7)
Gain on sale of partial interest in joint venture.............. -- -- (22.5)
Facility shutdown provision.................................... -- 18.9 --
Raw material joint venture costs............................... (4.3) (3.3) (2.9)
Change in:
Receivables................................................. (44.2) (24.9) (29.9)
Inventories................................................. (57.3) 12.8 5.9
Accounts payable............................................ 33.7 30.7 26.5
Payables to related companies (other)....................... (1.1) 1.4 (1.2)
Accrued salaries and wages.................................. 10.1 (.2) (1.8)
Other accrued liabilities................................... (17.5) 5.2 20.6
Other deferred items........................................... (30.1) (4.4) 35.0
------- ------- -------
Net adjustments.................................................. 105.1 151.3 696.5
------- ------- -------
Net cash provided from (used for) operating activities........... 159.0 91.6 (84.8)
------- ------- -------
INVESTING ACTIVITIES
Capital expenditures............................................. (160.3) (86.1) (54.4)
Investments in and advances to joint ventures, net............... 23.7 (1.9) (6.3)
Proceeds from sales of assets.................................... 2.6 5.7 27.5
------- ------- -------
Net cash used for investing activities................. (134.0) (82.3) (33.2)
------- ------- -------
FINANCING ACTIVITIES
Additional paid-in capital -- Inland Steel Industries............ 110.0 150.0 60.0
Long-term debt issued............................................ 19.7 39.3 --
Long-term debt retired........................................... (219.9) (66.1) (36.7)
Change in notes payable to related companies..................... 91.0 (106.7) 119.1
Dividends paid................................................... (25.8) (25.8) (24.4)
------- ------- -------
Net cash provided from (used for) financing
activities........................................... (25.0) (9.3) 118.0
------- ------- -------
Net change in cash and cash equivalents.......................... -- -- --
Cash and cash equivalents -- beginning of year................... -- -- --
------- ------- -------
Cash and cash equivalents -- end of year......................... $ -- $ -- $ --
======= ======= =======
SUPPLEMENTAL DISCLOSURES
Cash paid (received) during the year for:
Interest (net of amount capitalized)........................... $ 54.4 $ 59.9 $ 52.2
Income taxes, net.............................................. (14.5) (21.1) (2.7)
Non-cash investing and financing activities:
Long-term debt acquired in purchase of assets.................. 63.3 -- --
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 23
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
CONSOLIDATED BALANCE SHEET
DOLLARS IN MILLIONS
<TABLE>
<CAPTION>
AT DECEMBER 31,
----------------------
1994 1993
-------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................ $ -- $ --
Receivables less provision for allowances, claims and doubtful
accounts
of $19.3 and $22.9, respectively.................................. 274.4 230.2
Inventories (Note 1)................................................. 156.9 99.6
Deferred income taxes (Note 8)....................................... 28.0 32.0
-------- ---------
Total current assets......................................... 459.3 361.8
Investments in and advances to joint ventures.......................... 204.9 211.5
Property, plant and equipment, at cost, less accumulated depreciation
(see details page F-6)............................................... 1,339.8 1,232.2
Deferred income taxes (Note 8)......................................... 336.1 384.6
Deferred charges and other assets...................................... 21.8 20.6
-------- ---------
Total assets................................................. $2,361.9 $ 2,210.7
======= ========
LIABILITIES
Current liabilities:
Accounts payable..................................................... $ 241.5 $ 207.8
Payables to related companies:
Notes............................................................. 139.0 47.9
Other............................................................. 7.9 9.0
Accrued liabilities:
Salaries, wages and commissions................................... 67.7 57.6
Taxes, other than Federal income taxes............................ 59.3 64.1
Interest on debt.................................................. 6.6 10.1
Terminated facilities costs and other (Note 6).................... 17.0 26.2
Long-term debt due within one year................................... 6.6 86.2
-------- ---------
Total current liabilities.................................... 545.6 508.9
Long-term debt (see details page F-6 and Note 3)....................... 417.1 475.3
Allowance for terminated facilities costs and other (Note 6)........... 34.0 36.1
Deferred employee benefits (Note 7).................................... 1,154.2 1,108.3
Deferred income and other.............................................. 9.2 18.4
-------- ---------
Total liabilities............................................ 2,160.1 2,147.0
-------- ---------
STOCKHOLDER'S EQUITY
Preferred stock, all series, 500 shares, $1.00 par value, authorized,
aggregate liquidation value $238.2 in 1994 and 1993 (Note 4)......... -- --
Common stock, 2,000 shares, $1 par value, authorized, 980 shares issued
and outstanding in 1994 and 1993 (Note 4)............................ -- --
Additional paid-in capital (Note 4).................................... 1,194.5 1,084.5
Accumulated deficit.................................................... (992.7) (1,020.8)
-------- ---------
Total stockholder's equity................................... 201.8 63.7
-------- ---------
Total liabilities and stockholder's equity................... $2,361.9 $ 2,210.7
======= ========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE> 24
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
SCHEDULES TO CONSOLIDATED FINANCIAL STATEMENTS
DOLLARS IN MILLIONS
<TABLE>
<CAPTION>
AT DECEMBER 31,
-----------------------
1994 1993
-------- --------
<S> <C> <C>
PROPERTY, PLANT AND EQUIPMENT:
Land, land improvements and mineral properties....................... $ 122.8 $ 122.0
Buildings, machinery and equipment................................... 3,486.6 3,307.8
Transportation equipment............................................. 127.7 129.3
Property under capital leases -- primarily machinery and equipment... 42.7 42.8
-------- --------
Total......................................................... 3,779.8 3,601.9
Less --
Accumulated depreciation........................................... 2,302.0 2,226.0
Accumulated depreciation -- capital leases......................... 37.3 35.3
Allowance for retirements and terminated facilities................ 100.7 108.4
-------- --------
Net........................................................... $1,339.8 $1,232.2
======= =======
LONG-TERM DEBT:
First Mortgage Bonds:
Series R, 7.9% due January 15, 2007................................ $ 72.5 $ 87.9
Series T, 12% due December 1, 1998................................. 125.0 125.0
Pollution Control Series 1977, 5 3/4% due February 1, 2007......... 26.5 26.5
Pollution Control Series 1978, 6 1/2% due May 15, 2008............. 52.0 52.0
Pollution Control Series 1982B, 10 3/4% due December 1, 2012....... 17.0 17.0
Pollution Control Series 1993, 6.8% due June 1, 2013............... 40.0 40.0
-------- --------
Total First Mortgage Bonds.................................... 333.0 348.4
-------- --------
Obligations for Industrial Development Revenue Bonds:
Pollution Control Projects No. 3, 6 1/4% due April 1, 1999......... 10.0 12.0
Pollution Control Project No. 4, 8 1/8%............................ -- 20.0
Pollution Control Project No. 9, 10% due November 1, 2011.......... 38.0 38.0
Pollution Control Project No. 11, 7 1/8% due June 1, 2007.......... 20.0 --
Obligations under capital leases including Pollution Control Projects
No. 1
and No. 2 -- primarily at rates ranging from 5.9% to 12.6%, due
through August 1, 1998............................................. 16.1 20.7
No. 2 BOF Shop Caster Project Debt, 9.4% and 11 1/4%................. -- 36.2
-------- --------
Total long-term debt.......................................... $ 417.1 $ 475.3
======= =======
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE> 25
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
STATEMENT OF ACCOUNTING AND FINANCIAL POLICIES
The following briefly describes the Company's principal accounting and
financial policies.
ACCOUNTING FOR EQUITY INVESTMENTS
The Company's investments in 20% or more but less than majority-owned
companies, joint ventures and partnerships, and the Company's majority interest
in the I/N Tek partnership, are accounted for under the equity method.
INVENTORY VALUATION
Inventories are valued at cost which is not in excess of market. Cost is
determined by the last-in, first-out method except for supply inventories, which
are determined by the average cost or first-in, first-out methods.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is depreciated for financial reporting
purposes over the estimated useful lives of the assets. Steelmaking machinery
and equipment, a significant class of assets, is depreciated on a
production-variable method, which adjusts straight-line depreciation to reflect
production levels at the steel plant. The adjustment is limited to not more than
a 25% increase or decrease from straight-line depreciation. Blast furnace
relining expenditures are capitalized and amortized on a unit-of-production
method over the life of the lining. All other assets are depreciated on a
straight-line method.
Expenditures for normal repairs and maintenance are charged to income as
incurred.
Gains or losses from significant abnormal disposals or retirements of
properties are credited or charged to income. The cost of other retired assets
less any sales proceeds is charged to accumulated depreciation.
BENEFITS FOR RETIRED EMPLOYEES
Pension benefits are provided by the Company to substantially all employees
under a trusteed non-contributory plan of Inland Steel Industries, Inc. Life
insurance and certain medical benefits are provided for retired employees.
The estimated costs of pension, medical, and life insurance benefits are
determined annually by consulting actuaries. With the adoption of Financial
Accounting Standards Board ("FASB") Statement No. 106, "Employers' Accounting
For Postretirement Benefits Other Than Pensions," effective January 1, 1992, the
cost of health care benefits for retirees, previously recognized as incurred, is
now being accrued during their term of employment (see Note 7). Pensions are
funded in accordance with ERISA requirements in a trust established under the
plan. Costs for retired employee medical benefits and life insurance are funded
when claims are submitted.
CASH EQUIVALENTS
Cash equivalents reflected in the Statement of Cash Flows are highly
liquid, short-term investments with maturities of three months or less. Cash
management activities are performed by the Company's parent, Inland Steel
Industries, Inc., and periodic cash transfers are made, thereby minimizing the
level of cash maintained by the Company.
INCOME TAXES
Effective January 1, 1992, the Company adopted FASB Statement No. 109,
"Accounting for Income Taxes" (see Note 8).
F-7
<PAGE> 26
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. INVENTORIES
Inventories were classified on December 31 as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1994 1993
------ -----
DOLLARS IN
MILLIONS
<S> <C> <C>
In process and finished steel........................................ $ 92.1 $55.6
------ -----
Raw materials and supplies:
Iron ore........................................................... 34.7 25.3
Scrap and other raw materials...................................... 17.8 7.3
Supplies........................................................... 12.3 11.4
------ -----
64.8 44.0
------ -----
Total........................................................... $156.9 $99.6
====== =====
</TABLE>
During 1993, various inventory quantities were reduced, resulting in
liquidations of LIFO inventory quantities carried at lower costs prevailing in
prior years as compared with the current year costs. The effect of these
liquidations on continuing operations was to decrease cost of goods sold by $24
million in 1993. The effect on cost of goods sold of LIFO liquidations in 1992
was not material.
Replacement costs for the LIFO inventories exceeded LIFO values by
approximately $248 million and $241 million on December 31, 1994 and 1993,
respectively.
NOTE 2. BORROWING ARRANGEMENTS
Inland Steel Administrative Service Company, a wholly owned subsidiary of
the Company established to provide a supplemental source of short-term funds to
the Company, has a $100 million revolving credit facility with a group of banks
which extends to November 30, 1995. Under this arrangement the Company has
agreed to sell substantially all of its receivables to Inland Steel
Administrative Service Company to secure this facility. The facility requires
the maintenance of various financial ratios including minimum net worth and
leverage ratios.
NOTE 3. LONG-TERM DEBT
The outstanding First Mortgage Bonds of Inland Steel Company are the
obligation solely of the Company and have not been guaranteed or assumed by, or
otherwise become the obligation of, Inland Steel Industries, Inc. ("Industries")
or any of its other subsidiaries. Each series of First Mortgage Bonds issued by
the Company is limited to the principal amount outstanding, with the Pollution
Control Series 1977 Bonds, the Pollution Control Series 1978 Bonds, and the
Series R First Mortgage Bonds subject to a sinking fund. Substantially all the
property, plant and equipment owned by the Company at its Indiana Harbor Works
is subject to the lien of the First Mortgage. This property had a net book value
of approximately $1.0 billion on December 31, 1994.
During the second quarter of 1994, the Company refinanced $20 million of
8.125 percent pollution control revenue bonds bearing an interest rate of 7.125
percent. In addition, in June 1993, the Company refinanced $40 million of
pollution control revenue bonds at an interest rate of 6.8 percent. The weighted
average percentage rate of the refunded bonds was 9.9 percent.
In 1994, the Company redeemed all $75 million of its outstanding Series O,
P, and Q First Mortgage Bonds. At year-end 1993, all such remaining Bonds had
been called for redemption and, accordingly, the
F-8
<PAGE> 27
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
outstanding principal amount was classified as a current liability. The Company
also acquired the equity interest in the operating lease of the No. 2 Basic
Oxygen Furnace Shop continuous casters, assuming $63 million of debt. By
year-end 1994, the assumed debt and approximately $40 million of other
caster-related debt was repaid by the Company.
The amended and supplemented Mortgage under which the First Mortgage 12%
Bonds, Series T, were issued contains covenants limiting, among other things,
the creation of additional indebtedness; the declaration and payment of
dividends and distributions on the Company's capital stock; and the acquisition
or retirement of any debt of the Company that is subordinate to the Series T
Bonds.
Maturities of long-term debt and capitalized lease obligations due within
five years are: $6.6 million in 1995, $7.7 million in 1996, $7.9 million in
1997, $139.3 million in 1998, and $10.8 million in 1999. See Note 11 regarding
commitments and contingencies for other scheduled payments.
Interest cost incurred by the Company totaled $54.4 million in 1994, $63.3
million in 1993, and $63.4 million in 1992. Included in these totals is
capitalized interest of $1.1 million in 1994, $2.9 million in 1993, and $10.2
million in 1992.
NOTE 4. CAPITAL STOCK
In the fourth quarter of 1992, the Board of Directors authorized: (i) a
reduction in the number of Company shares authorized, issued and outstanding and
(ii) a change from no par to $1.00 par value stock. One share of $1.00 par value
stock was issued for each 30,000 shares of the no par stock, rounded to the
nearest whole share. As a result, capital in excess of par increased and
corresponding capital accounts decreased by $674.5 million. Summarized below is
the effect of these actions on the shares of Company stock:
<TABLE>
<CAPTION>
BEFORE AFTER
----------- ---------
<S> <C> <C>
Authorized shares.......................................... No Par $1.00 Par
Preferred stock.......................................... 15,000,000 500
Common stock............................................. 60,000,000 2,000
Issued and outstanding shares.............................. No Par $1.00 Par
Series A Preferred stock................................. 295,094 10
Series B Preferred stock................................. 1,497,500 50
Series C Preferred stock................................. 1,500,000 50
Common stock............................................. 29,399,207 980
</TABLE>
Information provided below for each preferred issue is presented on an
after-change basis, which reflects the current status of each such issue.
Cash dividends on Series A Preferred Stock are cumulative and payable
quarterly at an annual rate of $72,000 per share. The shares are convertible
into common stock at the rate of one share of common stock for each share of
Series A Preferred Stock and are redeemable, at the Company's option, for
$1,320,000 per share plus any accrued and unpaid dividends.
Cash dividends on Series B Preferred Stock are cumulative and payable
quarterly at an annual rate of $142,500 per share. The shares are convertible
into common stock at a conversion price of $1,128,750 per share, or 1.33 common
shares for each preferred share, and have a liquidation value of $1,500,000 per
share plus any accrued and unpaid dividends. The shares are redeemable at the
Company's option, for $1,500,000 per share plus any accrued and unpaid
dividends.
Cash dividends on Series C Preferred Stock are cumulative and payable
quarterly at an annual rate of $360,000 per share. The shares have a liquidation
value of $3,000,000 per share plus any accrued and unpaid
F-9
<PAGE> 28
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
dividends. The shares are redeemable at the Company's option at a price (plus
accrued and unpaid dividends) declining from $3,306,000 for the one-year period
commencing December 1, 1994 to $3,000,000 beginning December 1, 2011. The Series
C Preferred Stock is also exchangeable at the Company's option on any dividend
payment date for the Company's 12% subordinated debentures due December 1, 2016,
at a rate of $3,000,000 principal amount of debentures for each share of Series
C Preferred Stock.
NOTE 5. DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value.
Derivatives
The Company has only limited involvement with derivative financial
instruments, none of which are used for trading purposes. Derivatives are used
to hedge exposure to fluctuations in costs caused by the price volatility of
certain metal commodities and natural gas supplies, and in foreign currency
exchange rates related to firm commitments regarding a Canadian raw material
joint venture. Gains and losses associated with these hedging transactions
become part of the cost of the item being hedged. At no time during 1994 or 1993
were such hedging transactions material.
Long-term debt
The estimated fair value of the Company's long-term debt (including current
portions thereof), using quoted market prices of Company debt securities
recently traded and market-based prices of similar securities for those
securities not recently traded, was $420 million at December 31, 1994 and $583
million at December 31, 1993 as compared with the carrying value of $424 million
and $562 million included in the balance sheet at year-end 1994 and 1993,
respectively.
NOTE 6. PROVISIONS FOR FACILITIES SHUTDOWN
In 1993, the Company recorded a facility shutdown provision of $22.3
million which covered costs associated with the earlier than planned closure of
the Company's cokemaking facilities. Of the amount provided, $7.7 million
related to the write-off of assets with the remainder provided for various
expenditures associated with the shutdown of the facility, including personnel
costs.
The Company has taken initiatives to reduce its production costs by
shutdown of certain Indiana Harbor Works facilities and raw materials
operations. Reserve balances related to provisions recorded in prior years for
these shutdowns, which include long-term liabilities for mine reclamation costs
and employee benefits, totaled $133.8 million, $149.7 million and $140.7 million
at December 31, 1994, 1993 and 1992, respectively.
NOTE 7. RETIREMENT BENEFITS
Pensions
The Inland Steel Industries Pension Plan and Pension Trust, which covers
certain employees of the Company, also covers certain employees of Industries
and of certain of Industries' other subsidiaries. The plan is a non-contributory
defined benefit plan with pensions based on final pay and years of service for
all salaried employees and certain wage employees, and years of service and a
fixed rate (in most instances based on frozen pay or on job class) for all other
wage employees, including members of the United Steelworkers union. Because the
fair value of pension plan assets pertains to all participants in the plan, no
separate determination of the fair value of such assets is made solely with
respect to the Company. At year-end 1994 and 1993, the
F-10
<PAGE> 29
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
actuarial present value of benefits for service rendered to date and the fair
value of plan assets available for benefits for the Industries consolidated
group were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1994 1993
------ ------
DOLLARS IN
MILLIONS
<S> <C> <C>
Fair value of plan assets........................................... $1,652 $1,794
------ ------
Actuarial present value of benefits for service rendered to date:
Accumulated Benefit Obligation based on compensation to date...... 1,641 1,960
Additional benefits based on estimated future compensation
levels......................................................... 98 117
------ ------
Projected Benefit Obligation................................... 1,739 2,077
------ ------
Plan assets shortfall to Projected Benefit Obligation............... $ (87) $ (283)
====== ======
</TABLE>
In 1993, Industries recorded an additional minimum pension liability of
$122.1 million representing the excess of the unfunded Accumulated Benefit
Obligation over previously accrued pension costs. A corresponding intangible
asset was recorded as an offset to this additional liability as prescribed. In
1994, the additional minimum pension liability and corresponding intangible
asset were no longer required.
A weighted average discount (settlement) rate of 8.8% in 1994 and 7.25% in
1993 was used in the determination of the actuarial present value of benefits.
Pension cost for the Company for 1994 was $25.2 million compared with a
credit of $5.6 million in 1993 and $9.5 million in 1992.
Benefits Other Than Pension
Substantially all of the Company's employees are covered under
postretirement life insurance and medical benefit plans that involve deductible
and co-insurance requirements. The postretirement life insurance benefit formula
used in the determination of postretirement benefit cost is primarily based on
applicable annual earnings at retirement for salaried employees and specific
amounts for hourly employees. The Company does not prefund any of these
postretirement benefits. Effective January 1, 1994, a Voluntary Employee Benefit
Association Trust was established for payment of health care benefits made to
United Steelworkers of America ("USWA") retirees. Funding of the Trust will be
made as claims are submitted for payment.
The Company adopted FASB Statement No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," effective January 1, 1992. FASB
Statement No. 106 requires accrual accounting for all postretirement benefits
other than pensions. The Company must be fully accrued for these postretirement
benefits by the date each employee attains full eligibility for such benefits.
In conjunction with the adoption of FASB Statement No. 106, the Company elected
to immediately recognize the accumulated postretirement benefit obligation for
current and future retirees (the "transition obligation").
In 1993, in connection with the Company's new labor agreement with the
USWA, the postretirement medical benefit plan covering union employees was
amended, effective August 1, 1993, to provide for employee co-payments and
increased deductibles. As a result of these plan amendments, the Company
remeasured its postretirement benefit obligation under FASB Statement No. 106,
as of August 1, 1993. This remeasurement incorporated the effect of the union
contract changes as well as the effects of changes in actuarial assumptions to
reflect more current information regarding claim costs, census data and interest
rate factors.
F-11
<PAGE> 30
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The amount of net periodic postretirement benefit cost for 1994, 1993 and
1992 is composed of the following:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Service cost.................................................... $12 $12 $11
Interest cost................................................... 64 76 85
Net amortization and deferral................................... (5) (2) --
--- --- ---
Total net periodic postretirement benefit cost.................. $71 $86 $96
=== === ===
</TABLE>
The following table sets forth components of the accumulated postretirement
benefit obligation:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1994 1993
------ ------
DOLLARS IN
MILLIONS
<S> <C> <C>
Accumulated postretirement benefit obligation attributable to:
Retirees......................................................... $ 422 $ 500
Fully eligible plan participants................................. 135 191
Other active plan participants................................... 202 252
------ ------
Accumulated postretirement benefit obligation...................... 759 943
Unrecognized net gain............................................ 262 53
Unrecognized prior service credit................................ 50 54
------ ------
Accrued postretirement benefit obligation.......................... $1,071 $1,050
====== ======
</TABLE>
Any net gain or loss in excess of 10 percent of the accumulated
postretirement benefit obligation is amortized over the remaining service period
of active plan participants.
The assumptions used to determine the plan's accumulated postretirement
benefit obligation are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1994 1993
------ ------
<S> <C> <C>
Discount rate...................................................... 8.8% 7.25%
Rate of compensation increase...................................... 5.0% 5.0%
Medical cost trend rate............................................ 6%-5% 7%-5%
Year ultimate rate reached......................................... 1996 1996
</TABLE>
A one percentage point increase in the assumed health care cost trend rates
for each future year increases the annual net periodic postretirement benefit
cost and the accumulated postretirement benefit obligation as of December 31,
1994 by $10 million and $88 million, respectively.
Postemployment Benefits
In November 1992, the FASB issued Statement No. 112, "Employers' Accounting
for Postemployment Benefits." Adoption of the new Standard in 1994 did not have
a material impact on the results of operations or the financial position of the
Company.
F-12
<PAGE> 31
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 8. INCOME TAXES
The Company adopted FASB Statement No. 109, "Accounting for Income Taxes,"
effective January 1, 1992. As a result of adopting Statement No. 109, the
Company recorded a $31.3 million charge reflecting the cumulative effect of the
change on prior years. The Company is now required to record deferred tax assets
and liabilities on its balance sheet as compared with the Company's past
practice under APB Opinion No. 11 and Industries' former tax-sharing agreement
under which no such recording was required.
To comply with the provisions of FASB Statement No. 109, a new tax-sharing
agreement was adopted under which current and deferred income tax provisions are
determined for each company in the Industries group on a stand-alone basis.
Companies with taxable losses record current income tax credits not to exceed
current income tax charges recorded by profitable companies. NOL and tax credit
carryforwards are allocated to each company in accordance with applicable tax
regulations as if a company were to leave the consolidated group.
The elements of the provisions for income taxes for each of the three years
indicated below were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1994 1993 1992
----- ----- ------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Current income taxes:
Federal.............................................. $17.5Cr. $15.5Cr. $ 6.3Cr.
State and foreign.................................... .3 .1 --
----- ----- ------
17.2Cr. 15.4Cr. 6.3Cr.
Deferred income taxes.................................. 52.5 29.9Cr. 94.0Cr.
----- ----- ------
Total tax expense or benefit.................... $35.3 $45.3Cr. $100.3Cr.
===== ===== ======
</TABLE>
---------------
Cr. = Credit
In accordance with FASB Statement No. 109, the Company adjusted its
deferred tax assets and liabilities for the effect of the change in the
corporate Federal income tax rate from 34 percent to 35 percent, effective
January 1, 1993. A credit to income of $9 million, which includes the effect of
the rate change on deferred tax asset and liability balances as of January 1,
1993 as well as the effect on 1993 tax benefits recorded by the Company prior to
the enactment date of August 10, 1993, was recorded in the third quarter of
1993.
F-13
<PAGE> 32
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of the deferred income tax assets and liabilities arising
under FASB Statement No. 109 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1994 1993
---- ----
DOLLARS IN
MILLIONS
<S> <C> <C>
Deferred tax assets (excluding postretirement benefits other than
pensions):
Net operating loss and tax credit carryforwards................... $280 $324
Restructuring and termination reserves............................ 85 92
Other deductible temporary differences............................ 80 78
Less: Valuation allowances........................................ (5) (9)
---- ----
440 485
---- ----
Deferred tax liabilities:
Fixed asset basis difference...................................... 402 388
Other taxable temporary differences............................... 72 76
---- ----
474 464
---- ----
Net deferred asset (liability) excluding postretirement
benefits other than pensions............................ (34) 21
FASB Statement No. 106 impact (postretirement benefits other than
pensions)......................................................... 398 396
---- ----
Net deferred asset........................................ $364 $417
==== ====
</TABLE>
For tax purposes, the Company had available, at December 31, 1994, net
operating loss ("NOL") carryforwards for regular Federal income tax purposes of
approximately $715 million which will expire as follows: $60 million in year
2005, $288 million in year 2006, $258 million in year 2007, and $109 million in
2008. The Company also had investment tax credit and other general business
credit carryforwards for tax purposes of approximately $14 million, which expire
during the years 1995 through 2006. A valuation allowance of $5 million has been
established for those tax credits which are not expected to be realized.
Additionally, in conjunction with the Alternative Minimum Tax ("AMT") rules, the
Company had available minimum tax credit carryforwards for tax purposes of
approximately $16 million, which may be used indefinitely to reduce regular
Federal income taxes.
The Company believes that it is more likely than not that the $715 million
of NOL carryforwards will be utilized prior to their expiration. This belief is
based upon the factors discussed below.
The NOL carryforwards and existing deductible temporary differences
(excluding those relating to FASB Statement No. 106) are substantially offset by
existing taxable temporary differences reversing within the carryforward period.
Furthermore, any such recorded tax benefits which would not be so offset are
expected to be realized by achieving future profitable operations based on the
following:
First, the Company launched a turnaround strategy to improve performance by
implementing a cost reduction program and enhancing asset utilization. This
resulted in a $205 million restructuring provision in 1991 to write off
uneconomic facilities and provide for future workforce reductions at the
Company.
Second, in 1992 the Company completed a major plant and equipment
investment program that amounted to approximately $1.3 billion since 1988. This
included the joint ventures of I/N Tek and I/N Kote and major upgrades to
facilities in the flat products and bar business. As expected, these facility
upgrades resulted in significant start-up costs and disruptions to operations
that negatively impacted financial results. By early 1994, all facilities
reached their design capabilities. This major investment program also shifts the
F-14
<PAGE> 33
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
product mix to higher value-added products which historically have not
experienced significant price volatility. Consequently, the Company is now
positioned with modern facilities that will enhance its ability to generate
taxable profits.
Finally, the Company operates in a highly cyclical industry and
consequently has had a history of generating and then fully utilizing
significant amounts of NOL carryforwards.
Subsequent to the adoption of FASB Statement No. 109, the Company adopted
FASB Statement No. 106 and recognized the entire transition obligation at
January 1, 1992 as a cumulative effect charge in 1992 (Note 7). At December 31,
1994, the deferred tax asset related to the Company's FASB Statement No. 106
obligation was $398 million. To the extent that future annual charges under FASB
Statement No. 106 continue to exceed deductible amounts, this deferred tax asset
will continue to grow. Thereafter, even if the Company should have a tax loss in
any year in which the deductible amount would exceed the financial statement
expense, the tax law provides for a 15-year carryforward period of that loss.
Because of the extremely long period that is available to realize these future
tax benefits, a valuation allowance for this deferred tax asset is not
necessary.
While not affecting the determination of deferred income taxes for
financial reporting purposes, at December 31, 1994, the Company had available
for AMT purposes approximately $108 million of NOL carryforwards which will
expire as follows: $74 million in 2007 and $34 million in 2008.
Total income taxes reflected in the Consolidated Statement of Operations
differ from the amounts computed by applying the Federal corporate tax rate as
follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1994 1993 1992
----- ----- ------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Federal income tax expense or benefit computed at
statutory tax rate of 35% in 1994 and 1993, and 34% in
1992................................................... $31.2 $36.8Cr. $ 92.5Cr.
Additional taxes or credits from:
State and local income taxes, net of Federal income tax
effect.............................................. 4.5 .8 2.0Cr.
Percentage depletion................................... 2.8Cr. 2.2Cr. 4.1Cr.
Change in Federal statutory rate....................... -- 9.3Cr. --
All other, net......................................... 2.4 2.2 1.7Cr.
----- ----- ------
Total income tax expense or benefit............... $35.3 $45.3Cr. $100.3Cr.
===== ===== ======
</TABLE>
---------------
Cr. = Credit
NOTE 9. TRANSACTIONS WITH NIPPON STEEL CORPORATION
On December 18, 1989, Industries sold 185,000 shares of its Series F
Exchangeable Preferred Stock to NS Finance III, Inc., an indirectly wholly owned
subsidiary of Nippon Steel Corporation ("NSC"), for $1,000 per share. With
respect to Industries stockholder voting, such preferred stock entitles the
holder to 30.604 votes per share, which number may be adjusted from time to time
upon the occurrence of certain events. The following is a summary of the
Company's relationships with NSC.
I/N Tek, a general partnership formed for a joint venture between the
Company and NSC, owns and operates a cold-rolling facility that commenced
operations in early 1990. I/N Tek is 60% owned by a wholly owned subsidiary of
the Company and 40% owned by an indirect wholly owned subsidiary of NSC. The
cost of the facility was $525 million, of which $111.6 million was contributed
by the subsidiary of the Company and $74.4 million by the subsidiary of NSC,
with the balance borrowed by I/N Tek from three Japanese trading
F-15
<PAGE> 34
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
companies. The Company has exclusive rights to the productive capacity of the
facility, except in certain limited circumstances, and, under a tolling
arrangement with I/N Tek, has an obligation to use the facility for the
production of cold-rolled steel. Under the tolling arrangement, the Company was
charged $131.1 million, $141.2 million and $122.6 million in 1994, 1993 and
1992, respectively, for such tolling services. NSC has the right to purchase up
to 400,000 tons of cold-rolled steel from the Company in each year at
market-based negotiated prices, up to half of which may be steel processed by
I/N Tek. Purchases of Company products by a subsidiary of NSC aggregated $172.8
million, $157.8 million and $123.0 million during 1994, 1993 and 1992,
respectively. At year-end 1994 and 1993, a subsidiary of NSC owed the Company
$10.6 million and $8.2 million, respectively, related to these purchases.
The Company and NSC also own and operate another joint venture which
consists of a 400,000 ton electrogalvanizing line and a 500,000 ton hot-dip
galvanizing line adjacent to the I/N Tek facility. I/N Kote, the general
partnership formed for this joint venture, is owned 50% by a wholly owned
subsidiary of the Company and 50% by an indirect wholly owned subsidiary of NSC.
The facility commenced operations in the fourth quarter of 1991 and became fully
operational in the third quarter of 1992, with the cost of the project being
$554 million. Permanent financing for the project, as well as for capitalized
interest and a portion of the working capital, was provided by third-party
long-term financing, by capital contributions of the two partners of $60 million
each and by subordinated partner loans of $30 million each. The Company and NSC
each have guaranteed the share of long-term financing attributable to their
respective subsidiary's interest in the partnership. I/N Kote had $485 million
outstanding under its long-term financing agreement at December 31, 1994.
Additional working capital requirements were met by partner loans and by
third-party credit arrangements. I/N Kote is required to buy all of its
cold-rolled steel from the Company, which is required to furnish such
cold-rolled steel at a price that results in an annual return on equity to the
partners of I/N Kote, depending upon operating levels, of up to 10 percent after
operating and financing costs; this price may be subject to an adjustment if the
Company's return on sales differs from I/N Kote's return on sales. Purchases of
Company cold-rolled steel by I/N Kote aggregated $275.6 million in 1994, $191.7
million in 1993 and $99.3 million in 1992. At year-end 1994 and 1993, I/N Kote
owed the Company $26.0 million and $35.5 million, respectively, related to these
purchases. Prices of cold-rolled steel sold by the Company to I/N Kote are
determined pursuant to the terms of the joint venture agreement and are based,
in part, on operating costs of the partnership. During 1993, the Company sold
cold-rolled steel to I/N Kote at prices that approximated its costs of
production and in 1994 the prices exceeded production costs but were still less
than the market prices for cold-rolled steel products. I/N Kote also provides
tolling services to the Company for which it was charged $36.0 million in 1994
and $29.1 million in 1993. The Company sells all I/N Kote products that are
distributed in North America.
The Company and NSC have entered into various agreements pursuant to which
NSC has provided technical services and licenses of proprietary steel technology
with respect to specific Company research and engineering projects. Pursuant to
such agreements, the Company incurred costs of $1.6 million, $3.7 million and
$4.1 million for technical services and related administrative costs for
services provided during 1994, 1993 and 1992, respectively.
NOTE 10. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
The Company's investments in unconsolidated joint ventures accounted for by
the equity method consist primarily of its 60% interest in I/N Tek, 50% interest
in I/N Kote, 50% interest in PCI Associates, 40% interest in the Empire Iron
Mining Partnership, 12 1/2% interest in Walbridge Electrogalvanizing Company and
13 3/4% interest in Wabush Mines. I/N Tek and I/N Kote are joint ventures with
NSC (see Note 9). The Company does not exercise control over I/N Tek, as all
significant management decisions of the joint venture require agreement by both
of the partners. Due to this lack of control by the Company, the Company
accounts for its investment in I/N Tek under the equity method. PCI Associates
is a joint venture which operates a
F-16
<PAGE> 35
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
pulverized coal injection facility at the Indiana Harbor Works. Empire and
Wabush are iron ore mining and pelletizing ventures owned in various percentages
primarily by U.S. and Canadian steel companies. On June 30, 1992, the Company
sold one-half of its interest in Walbridge, resulting in a $22.5 million pre-tax
gain. Walbridge is a venture that coats cold-rolled steel in which Inland has
the right to 25% of the productive capacity. Following is a summary of combined
financial information of the Company's unconsolidated joint ventures:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31:
Gross revenue.......................................... $1,098.3 $ 956.7 $ 740.8
Costs and expenses..................................... 1,070.2 945.1 748.3
-------- -------- --------
Net income (loss)...................................... $ 28.1 $ 11.6 $ (7.5)
======= ======= =======
FINANCIAL POSITION AT DECEMBER 31:
Current assets......................................... $ 265.2 $ 279.7 $ 203.2
Total assets........................................... 1,868.3 1,925.9 1,949.9
Current liabilities.................................... 246.5 241.6 174.0
Total liabilities...................................... 1,499.9 1,545.5 1,511.7
Net assets............................................. 368.4 380.4 438.2
</TABLE>
NOTE 11. COMMITMENTS AND CONTINGENCIES
The Company guarantees payment of principal and interest on its 40% share
of the long-term debt of Empire Iron Mining Partnership requiring principal
payments of approximately $7.6 million annually through 1996. At year-end 1994,
the Company also guaranteed $32.5 million of long-term debt attributable to a
subsidiary's interest in PCI Associates.
As part of the agreement covering the 1990 sale of the Inland Lime & Stone
Company division assets, the Company agreed, subject to certain exceptions, to
purchase, at prices which approximate market, the full amount of its annual
limestone needs or one million gross tons, whichever is greater, through 1996,
and the annual limestone needs of the Indiana Harbor Works from 1997 through
2002.
The Company and its subsidiaries have various operating leases for which
minimum lease payments are estimated to total $125.5 million through 2019,
including approximately $25.7 million in 1995, $20.5 million in 1996, $16.6
million in 1997, $13.5 million in 1998, and $9.5 million in 1999.
It is anticipated that the Company will make expenditures of $24 million in
1995 and $5 million to $10 million annually in each of the four years thereafter
for the construction, and have ongoing annual expenditures of $40 million to $50
million for the operation, of air and water pollution control facilities to
comply with current Federal, state and local laws and regulations. The Company
is involved in various environmental and other administrative or judicial
actions initiated by governmental agencies. While it is not possible to predict
the results of these matters, the Company does not expect environmental
expenditures, excluding amounts that may be required in connection with the
consent decree in the 1990 EPA lawsuit, to materially affect the Company's
results of operations or financial position. Corrective actions relating to the
EPA consent decree may require significant expenditures over the next several
years that may be material to the results of operations or financial position of
the Company. At December 31, 1993, the Company's reserves for environmental
liabilities totaled $19 million related to the sediment remediation under the
1993 EPA consent decree.
F-17
<PAGE> 36
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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, approximated $39 million at year-end 1994.
NOTE 12. RELATED PARTY TRANSACTIONS
Industries has established procedures for charging its administrative
expenses to the operating companies owned by it. These charges are for
management, financial and legal services provided to those companies. Charges
from Industries for 1994, 1993 and 1992 totaled $18.6 million, $24.2 million,
and $25.4 million, respectively.
There are also established procedures to charge interest on all
intercompany loans within the Industries group of companies. Such loans
currently bear interest at the prime rate. For 1994, 1993 and 1992, the
Company's net interest expense to companies within the Industries group totaled
$7.7 million, $8.0 million and $5.1 million, respectively.
The Company sells to and purchases products from other companies within the
Industries group of companies at prevailing market prices. These transactions
for the indicated years are summarized as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Net product sales........................................... $183.4 $173.6 $116.8
Net product purchases....................................... 18.7 16.3 14.5
</TABLE>
NOTE 13. CONCENTRATION OF CREDIT RISK
The Company produces and sells a wide range of steels, of which
approximately 99% consists of carbon and high-strength low-alloy steel grades.
Approximately 78% of the sales were to customers in five mid-American states,
and 95% were to customers in 20 mid-American states. Over half the sales are to
the steel service center and transportation (including automotive) markets.
Sales to General Motors Corporation approximated 12% of consolidated net
sales in 1994, 1993 and 1992. No other customer accounted for more than 10% of
the consolidated net sales of the Company during any of these years.
NOTE 14. CONSOLIDATED QUARTERLY SALES AND EARNINGS (UNAUDITED)
<TABLE>
<CAPTION>
1994
----------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
DOLLARS IN MILLIONS
<S> <C> <C> <C> <C>
Net sales........................................... $ 590.9 $ 643.2 $ 613.5 $ 640.3
Gross profit........................................ 23.5 58.5 53.6 61.5
Net income or (loss)................................ (1.9) 20.1 16.7 19.0
</TABLE>
<TABLE>
<CAPTION>
1993
----------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
DOLLARS IN MILLIONS
<S> <C> <C> <C> <C>
Net sales........................................... $ 520.7 $ 566.2 $ 539.9 $ 548.1
Gross profit or (loss).............................. (26.2) 19.3 33.8 13.2
Net income or (loss)................................ (34.4) (7.5) 9.9 (27.7)*
</TABLE>
---------------
* Includes facility shutdown provision of $22.3 million, $14.7 million after
tax.
F-18
<PAGE> 37
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
SCHEDULE II -- RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
DOLLARS IN MILLIONS
<TABLE>
<CAPTION>
PROVISIONS FOR ALLOWANCES
CLAIMS AND DOUBTFUL ACCOUNTS
------------------------------------------------------
YEARS BALANCE AT ADDITIONS DEDUCTIONS BALANCE AT
ENDED BEGINNING CHARGED FROM END OF
DECEMBER 31, OF YEAR TO INCOME RESERVES YEAR
------------ ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1994........................................... $ 22.9 $ 4.4 $1.7(A) $ 19.3
$6.3(B)
1993........................................... $ 18.4 $12.3 $1.8(A) $ 22.9
$6.0(B)
1992........................................... $ 25.0 $ 4.0 $4.5(A) $ 18.4
$6.1(B)
</TABLE>
---------------
NOTES:
(A) Bad debts written off during year.
(B) Allowances granted during year.
F-19
<PAGE> 38
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- ----------
<S> <C> <C>
3.(i) Copy of Certificate of Incorporation, as amended, 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......................
4.A Copy of First Mortgage Indenture, dated April 1, 1928, between
the Company (the "Steel 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 Steel Company's Registration Statement on
Form A-2 (No. 2-1855); (ii) Exhibits D-1(f) and D-1(g), filed
with Steel Company's Registration Statement on Form E-1 (No.
2-2182); (iii) Exhibit B-1(h), filed with Steel Company's Current
Report on Form 8-K dated January 18, 1937; (iv) Exhibit B-1(i),
filed with Steel Company's Current Report on Form 8-K, dated
February 8, 1937; (v) Exhibits B-1(j) and B-1(k), filed with
Steel Company's Current Report on Form 8-K for the month of
April, 1940; (vi) Exhibit B-2, filed with Steel Company's
Registration Statement on Form A-2 (No. 2-4357); (vii) Exhibit
B-1(l), filed with Steel Company's Current Report on Form 8-K for
the month of January, 1945; (viii) Exhibit 1, filed with Steel
Company's Current Report on Form 8-K for the month of November,
1946; (ix) Exhibit 1, filed with Steel Company's Current Report
on Form 8-K for the months of July and August, 1948; (x) Exhibits
B and C, filed with Steel Company's Current Report on Form 8-K
for the month of March, 1952; (xi) Exhibit A, filed with Steel
Company's Current Report on Form 8-K for the month of July, 1956;
(xii) Exhibit A, filed with Steel Company's Current Report on
Form 8-K for the month of July, 1957; (xiii) Exhibit B, filed
with Steel Company's Current Report on Form 8-K for the month of
January, 1959; (xiv) the Exhibit filed with Steel Company's
Current Report on Form 8-K for the month of December, 1967; (xv)
the Exhibit filed with Steel Company's Current Report on Form 8-K
for the month of April, 1969; (xvi) the Exhibit filed with Steel
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 Steel
Company's Current Report on Form 8-K for the month of April,
1974; (xviii) Exhibit B, filed with Steel Company's Current
Report on Form 8-K for the month of September, 1975; (xix)
Exhibit B, filed with Steel Company's Current Report on Form 8-K
for the month of January, 1977; (xx) Exhibit C, filed with Steel
Company's Current Report on Form 8-K for the month of February,
1977; (xxi) Exhibit B, filed with Steel Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1978; (xxii)
Exhibit B, filed with Steel Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1980; (xxiii) Exhibit 4-D,
filed with Steel Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1980; (xxiv) Exhibit 4-D, filed
with Steel Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1982; (xxv) Exhibit 4-E, filed with Steel
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 Steel Company's Current Report on
Form 8-K dated June 23, 1993. --
</TABLE>
<PAGE> 39
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- ----------
<S> <C> <C>
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.) --
24 Powers of Attorney...............................................
27 Financial Data Schedules.........................................
</TABLE>
<PAGE> 1
EXHIBIT 3.(ii)
BY-LAWS
OF
INLAND STEEL COMPANY
(as Amended to and Including November 22, 1994)
ARTICLE I
OFFICES
The registered office of the Corporation shall be in the City of Wilmington,
County of New Castle, State of Delaware. The Corporation may also have offices
at such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
STOCKHOLDERS
Section 1. Time and Place of Meetings. All meetings of the
stockholders for the election of directors or for any other purpose shall be
held at such time and place, within or without the State of Delaware, as shall
be designated by the Board of Directors.
Section 2. Annual Meetings. An annual meeting of stockholders
shall be held for the purpose of electing Directors and transacting such other
business as may properly be brought before the meeting. The date of the annual
meeting shall be the fourth Wednesday of May each year or such other date as
may be determined by the Board of Directors.
Section 3. Special Meetings. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed by law,
may be called by the Chairman of the Board, the Vice Chairman of the Board, the
President, the Board of Directors or by the holders of at least a majority of
the outstanding shares of stock of the Corporation then entitled to vote in an
election of Directors and shall be called by the Secretary at the direction of
the Chairman of the Board, the Vice Chairman of the Board, the President, the
Board of Directors or the holders of at least a majority of the outstanding
shares of stock of the Corporation then entitled to vote in an election of
Directors.
Section 4. Notice of Meetings. Written notice of each meeting
of the stockholders stating the place, date and time of the meeting shall be
given, unless otherwise required by law, not less than ten nor more than sixty
days before the date of the meeting to each stockholder entitled to vote at
such meeting. The notice of any special meeting of stockholders shall state
the purpose or purposes for which the meeting is called. If mailed such notice
<PAGE> 2
- 2 -
shall be deemed to be delivered to a stockholder when deposited in the United
States Mail in a sealed envelope addressed to the stockholder at his or her
address as it appears on the records of the Corporation with postage thereon
prepaid.
Section 5. Quorum. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business, except as otherwise provided by
law. If a quorum is not present or represented, the holders of the stock
present in person or represented by proxy at the meeting and entitled to vote
thereat shall have the power, by the affirmative vote of the holders of a
majority of such stock, to adjourn the meeting to another time and/or place,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
of record entitled to vote at the meeting.
Section 6. Voting. At all meetings of the stockholders, each
stockholder of record on the record date for the meeting shall be entitled to
vote, in person or by proxy, the shares of voting stock owned of record by such
stockholder of record on the record date. When a quorum is present or
represented at any meeting, the vote of the holders of a majority of the stock
entitled to be voted present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one upon which, by
express provision of law or of the Certificate of Incorporation, a different
vote is required, in which case such express provision shall govern and control
the decision of such question.
Section 7. Informal Action By Stockholders. Any action required
to be taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted.
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the
<PAGE> 3
- 3 -
Corporation shall be managed and controlled by or under the direction of a
Board of Directors, which may exercise all such powers of the Corporation and
do all such lawful acts and things as are not by law or by the Certificate of
Incorporation or by these By-laws directed or required to be exercised or done
by the stockholders.
If a Chairman of the Board has been elected pursuant to the applicable
provisions of these By-laws, immediately upon his or her death, physical or
mental incapacity, or other inability to act (other than due to absence for a
brief and identifiable period), the Chairman of the committee responsible for
recommending candidates to fill vacancies on the Board of Directors of Inland
Steel Industries, Inc. (the "Nominating Committee Chairman") shall assume the
position of Chairman of the Board and responsibility for performing all
functions, authorities and duties thereof, and shall serve in such capacity
until his or her successor is duly elected and qualified pursuant to the
applicable provisions of these By-laws or until his or her earlier resignation
or removal. The Nominating Committee Chairman shall have sole discretion to
determine, at any time and from time to time, whether the Chairman of the Board
is physically or mentally incapacitated, otherwise unable to act, or absent for
other than a brief and identifiable period and shall, immediately upon making
such a determination or learning of the death of the Chairman of the Board,
notify each member of the Board of Directors of the Company and each officer of
the Company of the relevant facts and circumstances.
Section 2. Number, Qualification and Tenure. The Board of
Directors shall consist of not fewer than three (3) directors nor more than
eighteen (18) directors. Within the limits above specified, the number of
Directors shall be determined from time to time by resolution of the Board of
Directors. The Directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 3 of this Article, and each
Director elected shall hold office until his or her successor is elected and
qualified or until his or her earlier resignation or removal.
Section 3. Vacancies. Vacancies and newly created directorships
resulting from any increase in the number of directors may be filled by a
majority of the Directors then in office (even if less than a quorum), and each
Director so chosen shall hold office until his or her successor is elected and
qualified or until his or her earlier resignation or removal. If there are no
Directors in office, then an election of Directors may be held in the manner
provided by law.
Section 4. Place of Meetings. The Board of Directors may hold
meetings, whether regular or special, within or without the State of Delaware.
Section 5. Regular Meetings. The Board of Directors shall
<PAGE> 4
- 4 -
hold a regular meeting, to be known as the annual meeting, immediately following
each annual meeting of the stockholders. Other regular meetings of the Board
of Directors shall be held at such time and place as shall from time to time be
determined by the Board. No notice of regular meetings need be given.
Section 6. Special Meetings. Special meetings of the Board may
be called by the Chairman of the Board, the Vice Chairman of the Board or the
President. Special meetings of the Board shall be called by the Secretary on
the written request of any Director. Notice of special meetings should be
given at least one day before any such meetings.
Section 7. Quorum. At all meetings of the Board of Directors a
majority of the total number of Directors shall constitute a quorum for the
transaction of business, and the act of a majority of the Directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by law. If a
quorum shall not be present at any meeting of the Board of Directors, the
Directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 8. Organization. The Chairman of the Board, if elected
pursuant to the applicable provisions of these By-laws or serving pursuant to
Section 3 of this Article, shall act as chairman at all meetings of the Board
of Directors. If a Chairman of the Board is not elected pursuant to the
applicable provisions of these By-laws or serving pursuant to Section 3 of this
Article or, if so elected or serving, is not present, the Vice Chairman of the
Board, if any, or if a Vice Chairman of the Board is not elected or, if
elected, is not present, the President or, in the absence of the President, a
Director chosen by a majority of the Directors present shall act as chairman at
meetings of the Board of Directors.
Section 9. Executive Committee. The Board of Directors, by
resolution adopted by a majority of the whole Board, may designate not fewer
than five (5) and not more than nine (9) Directors to constitute an Executive
Committee, to serve as such, unless the resolution designating the Executive
Committee is sooner amended or rescinded by the Board of Directors, until the
next annual meeting of the Board or until their respective successors are
designated. The Board of Directors, by resolution adopted by a majority of the
whole Board, may also designate additional Directors as alternate members of
the Executive Committee (so long as the aggregate number of members of the
Executive Committee does not exceed nine (9)) to serve as members of the
Executive Committee in the place and stead of any regular member or members
thereof who may be unable to attend a meeting or are otherwise unavailable to
act as members of the Executive Committee. In the absence or disqualification
of a
<PAGE> 5
- 5 -
member and all alternate members who may serve in the place and stead of
such member, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another Director to act at the meeting in place
of any such absent or disqualified member.
Except as expressly limited by the General Corporation Law of the
State of Delaware or the Certificate of Incorporation, the Executive Committee
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation
between the meetings of the Board of Directors, but subject always to the final
control of the Board of Directors except where rights of third parties have
intervened. The Executive Committee shall keep a record of its acts and
proceedings, which shall form a part of the records of the Corporation in the
custody of the Secretary, and all actions of the Executive Committee shall be
reported to the Board of Directors at the next meeting of the Board.
Meetings of the Executive Committee may be called at any time by the
Chairman of the Board, the Chairman of the Executive Committee or any two (2)
members of the Executive Committee. A majority of the members of the Executive
Committee shall constitute a quorum for the transaction of business and, except
as expressly limited by this Section, the act of a majority of the members
present at any meeting at which there is a quorum shall be the act of the
Executive Committee. Except as expressly provided in this Section, the
Executive Committee shall fix its own rules of procedure. Notice of Executive
Committee meetings shall be given at least one day before such meetings.
Section 10. Other Committees. The Board of Directors, by
resolution adopted by a majority of the whole Board, may designate one or more
other committees, each such committee to consist of one or more Directors.
Except as expressly limited by the General Corporation Law of the State of
Delaware or the Certificate of Incorporation, any such committee shall have and
may exercise such powers as the Board of Directors may determine and specify in
the resolution designating such committee. The Board of Directors, by
resolution adopted by a majority of the whole Board, also may designate one or
more additional Directors as alternate members of any such committee to replace
any absent or disqualified member at any meeting of the committee, and at any
time may change the membership of any committee or amend or rescind the
resolution designating the committee. In the absence or disqualification of a
member or alternate member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another Director
to act at the meeting in the place of any such absent or disqualified member,
provided that the Director so appointed meets any qualifications stated in the
<PAGE> 6
- 6 -
resolution designating the committee. Each committee shall keep a record of
its proceedings and report the same to the Board of Directors to such extent
and in such form as the Board of Directors may require. Unless otherwise
provided in the resolution designating a committee, a majority of all of the
members of any such committee may select its chairman, fix its rules or
procedure, fix the time and place of its meetings and specify what notice of
meetings, if any, shall be given.
Section 11. Action Without Meeting. Unless otherwise restricted
by the Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board
or committee, as the case may be, consent thereto in writing, and the writing
or writings are filed with the minutes of proceedings of the Board or
committee.
Section 12. Attendance by Telephone. Members of the Board of
Directors, or of any committee, may participate in a meeting of the Board of
Directors, or of such committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
Section 13. Compensation. The Board of Directors shall have the
authority to fix the compensation of Directors, which may include reimbursement
for their expenses, if any, of attendance at each meeting of the Board of
Directors or of a committee.
ARTICLE IV
OFFICERS
Section 1. Enumeration. The officers of the Corporation shall be chosen by
the Board of Directors and shall be a President, a Secretary, a Treasurer, and
a Controller. The Board of Directors may also elect a Chairman of the Board, a
Vice Chairman of the Board, a Chief Executive Officer, one or more Vice
Presidents, one or more Assistant Secretaries and Assistant Treasurers, and
such other officers and agents as the Board of Directors shall deem
appropriate. Any number of offices may be held by the same person.
Section 2. Term of Office. The officers of the Corporation shall be elected
at the annual meeting of the Board of Directors and shall hold office until
their successors are elected and qualified. Any officer elected or appointed
by the Board of Directors may be removed at any time by the Board of Directors.
Any vacancy occurring in any office of the Corporation required by this Article
shall be filled by the Board of Directors, and any vacancy in any other office
may be filled by the Board of Directors.
<PAGE> 7
- 7 -
Section 3. Chairman of the Board. The Chairman of the Board, if and when
elected, shall preside at meetings of directors and of stockholders, and shall
have such other functions, authority and duties as customarily appertain to the
office of the chairman of the board of a business corporation or as may be
prescribed by the Board of Directors. During any period when there is no Chief
Executive Officer, the Chairman of the Board shall be the chief executive
officer of the Corporation and, as such, shall have general supervision,
direction and control of the business and affairs of the Corporation, subject
to the control of the Board of Directors, and shall have such other functions,
authority and duties as customarily appertain to the office of the chief
executive of a business corporation or as may be prescribed by the Board of
Directors.
Section 4. Vice Chairman of the Board. The Vice Chairman of the Board, if
and when elected, shall, in case of the absence of the Chairman of the Board
for any brief and identifiable period, have and exercise the powers and duties
of the Chairman of the Board. He or she shall have such other duties and
powers as may be assigned to him by the Board of Directors, the Executive
Committee or the Chairman of the Board.
Section 5. Chief Executive Officer. The Chief Executive Officer, if and
when elected, shall be the chief executive officer of the Corporation and, as
such, shall have general supervision, direction and control of the business and
affairs of the Corporation, subject to the control of the Board of Directors,
and shall have such other functions, authority and duties as customarily
appertain to the office of the chief executive of a business corporation or as
may be assigned to him by the Board of Directors, the Executive Committee or
the Chairman of the Board.
Section 6. President. During any period when there shall be a Chairman of
the Board or Chief Executive Officer, the President shall be the chief
operating officer of the Corporation and shall have such functions, authority
and duties as may be prescribed by the Board of Directors, the Executive
Committee, the Chairman of the Board or the Chief Executive Officer. During
any period when there shall not be a Chairman of the Board or Vice Chairman of
the Board, the President shall be the chairman of the board of the Corporation
and, as such, shall have the functions, authority and duties provided for the
office of Chairman of the Board. During any period when there shall not be a
Chairman of the Board, Vice Chairman of the Board or Chief Executive Officer,
the President shall be the chief executive officer of the Corporation and, as
such, shall have the functions, authority and duties provided for the office of
Chief Executive Officer.
Section 7. Vice Presidents. Each Vice President shall perform such duties and
have such other powers as may from time to time be prescribed by the Board of
Directors, the Chairman of the
<PAGE> 8
- 8-
Board,the Vice Chairman of the Board, the Chief Executive Officer, the
President or the Executive Committee.
Section 8. Secretary. The Secretary shall keep a record of all proceedings
of the stockholders of the Corporation and of the Board of Directors, and shall
perform like duties for any standing committees when required. The Secretary
shall give, or cause to be given, notice, if any, of all meetings of the
stockholders and shall perform such other duties as may be prescribed by the
Board of Directors, the Chairman of the Board, the Vice Chairman of the Board,
the Chief Executive Officer, the President or the Executive Committee. The
Secretary shall have custody of the corporate seal of the Corporation, and the
Secretary, or in the absence of the Secretary any Assistant Secretary, shall
have authority to affix the same to any instrument requiring it, and when so
affixed it may be attested by the signature of the Secretary or an Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the corporation and to attest such affixing of the
seal.
Section 9. Assistant Secretary. The Assistant Secretary, or if there be
more than one, the Assistant Secretaries in the order determined by the Board
of Directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the Secretary or in the event of the
Secretary's inability or failure to act, perform the duties and exercise the
powers of the Secretary and shall perform such other duties as may from time to
time be prescribed by the Board of Directors, the Chairman of the Board, the
Vice Chairman of the Board, the Chief Executive Officer, the President, the
Secretary or the Executive Committee.
Section 10. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors or the Executive Committee. The Treasurer shall disburse the funds
of the Corporation as may be ordered by the Board of Directors, keeping proper
records of such disbursements, and shall render to the Chairman of the Board,
the Vice Chairman of the Board, the Chief Executive Officer, the President, the
Controller, and the Board of Directors and the Executive Committee at its
regular meetings or when the Board of Directors or the Executive Committee so
requires, an account of all transactions as Treasurer and of the financial
condition of the Corporation. The Treasurer shall perform such other duties as
may from time to time be prescribed by the Board of Directors, the Chairman of
the Board, the Vice Chairman of the Board, the Chief Executive Officer, the
President or the Controller.
Section 11. Assistant Treasurer. The Assistant Treasurer, or if there shall
be more than one, the Assistant Treasurers in the order determined by the Board
of Directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the Treasurer or in the event of the
Treasurer's inability or refusal to act, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties and have such other
powers as may from time to time be prescribed by the Board of Directors, the
Chairman of the Board, the Vice Chairman of the Board, the Chief Executive
Officer, the President, the Treasurer or the Executive Committee.
<PAGE> 9
- 9 -
Section 12. Controller. The Controller shall be the chief financial officer
and the chief accounting officer of the Corporation. The Controller shall,
when proper, approve all bills for purchases, payrolls, and similar instruments
providing for disbursement of money by the Corporation, for payment by the
Treasurer, shall be in charge of and maintain books of account and accounting
records of the Corporation, and shall perform such other acts as are usually
performed by a controller of a corporation. The Controller shall render to the
Chairman of the Board, the Vice Chairman of the Board, the Chief Executive
Officer, the President, the Board of Directors, and the Executive Committee,
such reports as any thereof may require.
Section 13. Other Officers. Any officer who is elected or appointed from
time to time by the Board of Directors and whose duties are not specified in
these By-laws shall perform such duties and have such powers as may be
prescribed from time to time by the Board of Directors, the Chairman of the
Board, the Vice Chairman of the Board, the Chief Executive Officer, the
President or the Executive Committee.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Form. The shares of the Corporation shall be
represented by certificates; provided, however, that the Board of Directors may
provide by resolution or resolutions that some or all of any or all classes or
series of the Corporation's stock shall be uncertificated shares. Certificates
of stock in the Corporation, if any, shall be signed by or in the name of the
Corporation by the Chairman of the Board, the President or another officer of
the Corporation. Where a certificate is countersigned by a transfer agent,
other than the Corporation or an employee of the Corporation, or by a
registrar, the signature may be a facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, the certificate may be issued by
the Corporation with the same effect as if such officer, transfer agent or
registrar were such officer, transfer agent or registrar at the date of its
issue.
Section 2. Transfer. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate, and record the
transaction on its books.
Section 3. Replacement. In case of the loss, destruction or
theft of a certificate for any stock of the Corporation, a new certificate
of stock or uncertificated shares in place of any certificate theretofore
issued by the Corporation may be issued upon satisfactory proof of such
loss, destruction or theft and upon such terms as the Board of Directors may
prescribe. The Board of Directors may in its discretion require the owner of
the lost, destroyed or stolen certificate, or his or her legal representative,
to give the Corporation a bond, in such sum and in such form and with such
surety or sureties as it may direct, to indemnify the Corporation against any
claim that may be made against it with respect to a certificate alleged to
have been lost, destroyed or stolen.
<PAGE> 10
- 10 -
ARTICLE VI
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Corporation)
by reason of the fact that he or she is or was a Director, officer or employee
of the Corporation (and the Corporation, in the discretion of the Board of
Directors, may so indemnify a person by reason of the fact that he or she is or
was an agent of the Corporation), or is or was serving at the request of the
Corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise (and the Corporation, in
the discretion of the Board of Directors, may so indemnify a person by reason
of the fact that he or she is or was serving at the request of the Corporation
as an agent of another such entity), against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his or
her conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that his
or her conduct was unlawful.
Section 2. The Corporation shall indemnify any person who was or is a
party or is threatened to be made party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment in
its favor by reason of the fact that he or she is or was a Director, officer or
employee of the Corporation (and the Corporation, in the discretion of the
Board of Directors, may so indemnify a person by reason of the fact that he or
she is or was an agent of the Corporation), or is or was serving at the request
of the Corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise (and the Corporation, in
the discretion of the Board of Directors, may so indemnify a person by reason
of the fact that he or she is or was serving at the request of the Corporation
as an agent of another such entity), against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection with the
defense or settlement of such action or suit if he or she acted in good faith
and in a manner he or she reasonably
<PAGE> 11
- 11 -
believed to be in or not opposed to the best interests of the Corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Delaware Court of Chancery
or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Delaware Court of Chancery or such other
court shall deem proper.
Section 3. To the extent that a Director, officer, employee, or agent
of the Corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Section 1 and 2 of this Article,
or in defense of any claim, issue or matter therein, he or she shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.
Section 4. Any indemnification under Section 1 or 2 of this Article
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the Director,
officer, employee or agent is proper in the circumstances because he or she has
met the applicable standard of conduct set forth in Section 1 and 2 of this
Article. Such determination shall be made (1) by the Board of Directors by a
majority vote of a quorum consisting of Directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested Directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
Section 5. Expenses incurred by an officer or Director in defending a
civil or criminal action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer, to repay
such amount if it shall ultimately be determined that he or she is not entitled
to be indemnified by the Corporation under this Article. Such expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
Section 6. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office.
<PAGE> 12
- 12 -
Section 7. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
or her and incurred by him or her in any such capacity, or arising out of his
or her status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability under the provisions of this
Article.
Section 8. The indemnification and advancement of expenses provided
by, or granted pursuant to, this Article shall (except to the extent, if any,
provided by the Board of Directors at the time of any indemnification by the
Corporation of a person by reason of the fact that he or she is or was an agent
of the Corporation or is or was serving at the request of the Corporation as an
agent of another entity) continue as to a person who has ceased to be a
director, officer, employee or agent, and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 9. No repeal or modification of any of the provisions of this
Article (other than any modification which does not impair any rights or
obligations hereunder) shall affect any rights or obligations under this
Article of or to any person who is or was a director, officer or employee of
the Corporation with respect to any action, suit or proceeding (whether brought
before or after such repeal or modification) based in whole or in part on any
state of facts existing at the time of or before such repeal or modification.
ARTICLE VII
DIVISIONS OF THE COMPANY
The Board of Directors may from time to time create unincorporated
divisions of the Company. The Chairman of the Board of the Company may appoint
members of a board of directors of any such division, who, as such, shall not
be directors of the Company. The directors of a division, if so appointed,
shall exercise active administrative and operational supervision and control
over the business, properties and employees of the division, and shall have
such other duties and powers as may be assigned to it by the Chairman of the
Board of Directors of the Company, all subject to the control of the Board of
Directors of the Company. The Chairman of the Board of the Company may at any
time terminate the appointment of any member of the board of directors of any
division. The board of directors of each division may adopt by-laws for the
division, and such by-laws, if so adopted, may be amended or repealed from time
to time by the board of directors of the division or by the Chairman of the
Board of the Company. Each
<PAGE> 13
- 13 -
such division may have such officers (including, among other officers, a
division President and one or more Vice Presidents), who, as such, shall not be
officers of the Company, as the Chairman of the Board of the Company shall
appoint. The terms of office, compensation, duties, powers (including, among
other powers, general or specific authority to execute and deliver, in the name
and on behalf of the Company, contracts, leases, checks, drafts or other orders
of the payment of money, and other written instruments affecting or relating to
the business and operations of the respective divisions), and other terms of
employment of division officers, may be fixed, and may be terminated or changed
from time to time, by the Chairman of the Board of the Company. The Chairman
of the Board of the Company may delegate to the board of directors of the
division, upon such conditions as he may specify, the authority to appoint
division officers and to determine, terminate, or change the terms of office,
compensation, duties, powers and other terms of employment of such division
officers. Any person who is a director or employee of the Company may also be
appointed a director or officer of a division or divisions.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Fiscal Year. The fiscal year of the Corporation
shall be the calendar year.
Section 2. Corporate Seal. The corporate seal shall be in such
form as may be approved from time to time by the Board of Directors. The seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
in any other manner reproduced.
Section 3. Waiver of Notice. Whenever any notice is required to
be given under law or the provisions of the Certificate of Incorporation or
these By-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent to notice.
ARTICLE IX
AMENDMENTS
These By-laws may be altered, amended or repealed or new By-laws may
be adopted by the Board of Directors. The fact that the power to amend, alter,
repeal or adopt the By-laws has been conferred upon the Board of Directors
shall not divest the stockholders of the same powers.
<PAGE> 1
EXHIBIT 24
INLAND STEEL COMPANY
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Inland Steel Company, a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Earl L. Mason, Vicki L.
Avril and David B. Anderson, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Inland Steel Company to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Inland Steel Company for the
fiscal year ended December 31, 1994, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Inland Steel Company to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of
January, 1995.
/s/ A. ROBERT ABBOUD
A. Robert Abboud
<PAGE> 2
INLAND STEEL COMPANY
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Inland Steel Company, a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Earl L. Mason, Vicki L.
Avril and David B. Anderson, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Inland Steel Company to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Inland Steel Company for the
fiscal year ended December 31, 1994, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Inland Steel Company to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 11th day of
January, 1995.
/s/ JAMES W. COZAD
James W. Cozad
<PAGE> 3
INLAND STEEL COMPANY
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Inland Steel Company, a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Earl L. Mason, Vicki L.
Avril and David B. Anderson, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Inland Steel Company to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Inland Steel Company for the
fiscal year ended December 31, 1994, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Inland Steel Company to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of
January, 1995.
/s/ JAMES A. HENDERSON
James A. Henderson
<PAGE> 4
INLAND STEEL COMPANY
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Inland Steel Company, a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Earl L. Mason, Vicki L.
Avril and David B. Anderson, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Inland Steel Company to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Inland Steel Company for the
fiscal year ended December 31, 1994, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Inland Steel Company to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of
January, 1995.
/s/ ROBERT B. MCKERSIE
Robert B. McKersie
<PAGE> 5
INLAND STEEL COMPANY
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Inland Steel Company, a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Earl L. Mason, Vicki L.
Avril and David B. Anderson, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Inland Steel Company to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Inland Steel Company for the
fiscal year ended December 31, 1994, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Inland Steel Company to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of
January, 1995.
/s/ DONALD S. PERKINS
Donald S. Perkins
<PAGE> 6
INLAND STEEL COMPANY
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Inland Steel Company, a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Earl L. Mason, Vicki L.
Avril and David B. Anderson, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Inland Steel Company to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Inland Steel Company for the
fiscal year ended December 31, 1994, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Inland Steel Company to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of
January, 1995.
/s/ MAURICE S. NELSON, JR.
Maurice S. Nelson, Jr.
<PAGE> 7
INLAND STEEL COMPANY
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Inland Steel Company, a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Earl L. Mason, Vicki L.
Avril and David B. Anderson, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Inland Steel Company to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Inland Steel Company for the
fiscal year ended December 31, 1994, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Inland Steel Company to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of
January, 1995.
/s/ JOSHUA I. SMITH
Joshua I. Smith
<PAGE> 8
INLAND STEEL COMPANY
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Inland Steel Company, a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Earl L. Mason, Vicki L.
Avril and David B. Anderson, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Inland Steel Company to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Inland Steel Company for the
fiscal year ended December 31, 1994, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Inland Steel Company to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of
January, 1995.
/s/ NANCY H. TEETERS
Nancy H. Teeters
<PAGE> 9
INLAND STEEL COMPANY
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Inland Steel Company, a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Earl L. Mason, Vicki L.
Avril and David B. Anderson, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Inland Steel Company to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Inland Steel Company for the
fiscal year ended December 31, 1994, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Inland Steel Company to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 23rd day of
January, 1995.
/s/ RAYMOND C. TOWER
Raymond C. Tower
<PAGE> 10
INLAND STEEL COMPANY
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director
and(or) officer of Inland Steel Company, a Delaware corporation, do hereby
nominate, constitute and appoint Robert J. Darnall, Earl L. Mason, Vicki L.
Avril and David B. Anderson, or any one or more of them, my true and lawful
attorneys and agents to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or any of them, may deem necessary
or advisable to enable said Inland Steel Company to comply with the Securities
Exchange Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the preparation and
filing of the Annual Report on Form 10-K of said Inland Steel Company for the
fiscal year ended December 31, 1994, including specifically, but without
limitation thereof, full power and authority to sign my name as a director
and(or) officer of said Inland Steel Company to said Annual Report on Form 10-K
and any amendment thereto, hereby ratifying and confirming all that said
attorneys and agents, or any of them, shall do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 11th day of
January, 1995.
/s/ ARNOLD R. WEBER
Arnold R. Weber
<TABLE> <S> <C>
<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> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 293,700
<ALLOWANCES> 19,300
<INVENTORY> 156,900
<CURRENT-ASSETS> 459,300
<PP&E> 3,779,800
<DEPRECIATION> 2,440,000
<TOTAL-ASSETS> 2,361,900
<CURRENT-LIABILITIES> 545,600
<BONDS> 417,100
<COMMON> 0
0
0
<OTHER-SE> 201,800
<TOTAL-LIABILITY-AND-EQUITY> 2,361,900
<SALES> 2,483,400
<TOTAL-REVENUES> 2,487,900
<CGS> 2,289,700
<TOTAL-COSTS> 2,293,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,300
<INCOME-PRETAX> 89,200
<INCOME-TAX> 35,300
<INCOME-CONTINUING> 53,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,900
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
