<PAGE> 1
FIRST QUARTER - 1995
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
_________________________
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the period ended March 31, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from to
---------- ----------
_________________________
Commission file number 1-2438
I.R.S. Employer Identification Number 36-1262880
INLAND STEEL COMPANY
(a Delaware Corporation)
30 West Monroe Street
Chicago, Illinois 60603
Telephone: (312) 346-0300
Registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore filing this Form with the reduced disclosure
format.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 980 shares of the Company's
Common Stock ($1.00 par value per share) were outstanding as of May 5, 1995.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Dollars in Millions
-------------------
Three Months Ended
March 31
------------------------
1995 1994
-------- --------
<S> <C> <C>
NET SALES $651.7 $590.9
------ ------
OPERATING COSTS AND EXPENSES
Cost of goods sold 558.9 539.3
Selling, general and administrative expenses 10.4 9.5
Depreciation 31.1 28.5
------ ------
Total 600.4 577.3
------ ------
OPERATING PROFIT 51.3 13.6
General corporate expense, net of income items 4.1 3.0
Interest and other expense on debt 12.7 13.3
------ ------
INCOME (LOSS) BEFORE INCOME TAXES 34.5 (2.7)
PROVISION FOR INCOME TAXES 13.3 .8Cr.
------ ------
NET INCOME (LOSS) $ 21.2 $ (1.9)
====== ======
</TABLE>
See notes to consolidated financial statements
-1-
<PAGE> 3
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Dollars in Millions
-------------------
Three Months Ended
March 31
----------------------
1995 1994
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 21.2 $ (1.9)
------ ------
Adjustments to reconcile net income (loss) to
net cash provided from operating activities:
Depreciation 31.1 28.5
Deferred employee benefit cost 2.7 11.4
Deferred income taxes 9.2 (1.7)
Change in: Receivables 38.2 9.2
Receivables from related companies - -
Inventories (26.1) 8.9
Accounts payable (21.0) (29.6)
Payables to related companies (7.8) (4.6)
Accrued salaries and wages (8.8) (1.5)
Other accrued liabilities 22.5 11.4
Other deferred items 5.8 5.8
-------- --------
Net adjustments 45.8 37.8
-------- --------
Net cash provided from operating activities 67.0 35.9
-------- --------
INVESTING ACTIVITIES
Capital expenditures (21.3) (92.1)
Investments in joint ventures (.1) 4.7
Proceeds from sales of assets .3 .2
-------- --------
Net cash used for investing activities (21.1) (87.2)
-------- --------
FINANCING ACTIVITIES
Additional contributed capital - 110.0
Long-term debt retired (.8) (75.8)
Change in notes payable to related companies (38.6) 23.6
Dividends paid (6.5) (6.5)
-------- -------
Net cash provided from (used for) financing activities (45.9) 51.3
-------- --------
Net change in cash and cash equivalents - -
Cash and cash equivalents - beginning of year - -
------- -------
Cash and cash equivalents - end of period $ - $ -
====== ======
SUPPLEMENTAL DISCLOSURES
Cash paid (received) during the period for:
Interest (net of amount capitalized) $ 3.7 $ 5.0
Income taxes, net 5.8 (2.9)
Non-cash investing and financing activities:
Long-term debt acquired in purchase of assets - 63.3
</TABLE>
See notes to consolidated financial statements
-2-
<PAGE> 4
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
Dollars in Millions
-----------------------------------------------------------
March 31, 1995 December 31, 1994
------------------------ ----------------------------
(unaudited)
<S> <C> <C> <C> <C>
ASSETS
- ------
CURRENT ASSETS
Cash and cash equivalents $ - $ -
Receivables 236.2 274.4
Inventories - principally at LIFO
In process and finished products $ 127.8 $ 92.1
Raw materials and supplies 55.2 183.0 64.8 156.9
--------- --------
Deferred Income Taxes 28.3 28.0
-------- --------
Total current assets 447.5 459.3
INVESTMENTS IN AND ADVANCES
TO JOINT VENTURES 198.7 204.9
PROPERTY, PLANT AND EQUIPMENT
Valued on basis of cost 3,799.9 3,779.8
Less: Reserve for depreciation,
amortization and depletion 2,370.4 2,339.3
Allowance for terminated facilities 100.7 1,328.8 100.7 1,339.8
--------- --------
DEFERRED INCOME TAXES 326.6 336.1
OTHER ASSETS 21.3 21.8
--------- ---------
Total Assets $2,322.9 $2,361.9
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
- ------------------------------------
CURRENT LIABILITIES
Accounts payable $ 220.5 $ 241.5
Payables to related companies
Notes 100.4 139.0
Trade & other .1 7.9
Accrued liabilities 164.3 150.6
Long-term debt due within one year 6.2 6.6
--------- --------
Total current liabilities 491.5 545.6
LONG-TERM DEBT 416.6 417.1
DEFERRED EMPLOYEE BENEFITS 1,156.9 1,154.2
OTHER CREDITS 41.4 43.2
-------- --------
Total liabilities 2,106.4 2,160.1
STOCKHOLDER'S EQUITY (Schedule A) 216.5 201.8
--------- ---------
Total Liabilities and Stockholder's Equity $2,322.9 $2,361.9
======== ========
</TABLE>
See notes to consolidated financial statements
-3-
<PAGE> 5
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1/FINANCIAL STATEMENTS
Results of operations for any interim period are not necessarily indicative of
results of any other periods or for the year. The financial statements as of
March 31, 1995 and for the three-month periods ended March 31, 1995 and 1994
are unaudited, but in the opinion of management include all adjustments
necessary for a fair presentation of results for such periods. These financial
statements should be read in conjunction with the financial statements and
related notes contained in the Annual Report on Form 10-K for the year ended
December 31, 1994.
NOTE 2/RELATED PARTY TRANSACTIONS
The Company has agreed to procedures established by Inland Steel Industries,
Inc. ("Industries") for charging Industries' administrative expenses to the
operating companies owned by it. Pursuant to these procedures, the Company was
charged $4.7 million by Industries for each of the first quarters of 1995 and
1994, for management, financial and legal services provided to the Company.
Procedures also have been established to charge interest on all intercompany
loans within the Industries group of companies. Such loans currently bear
interest at the prime rate. The Company's net intercompany interest expense
for the first three months of 1995 totaled $3.3 million as compared to $1.4
million for the first quarter of 1994.
The Company sells to and purchases products from other companies within the
Industries group of companies. Such transactions are made at prevailing market
prices. These transactions are summarized as follows:
<TABLE>
<CAPTION>
Dollars in Millions
-------------------
Three Months
Ended March 31
--------------
1995 1994
------ ------
<S> <C> <C>
Net Product Sales $44.4 $52.7
Net Product Purchases 5.5 4.6
</TABLE>
NOTE 3/COMMITMENTS
The total amount of firm commitments of the Company and its subsidiaries to
contractors and suppliers, primarily in connection with additions to property,
plant and equipment, was $37 million at March 31, 1995 compared with $39
million at December 31, 1994.
-4-
<PAGE> 6
ITEM 2.
MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - Comparison of First Quarter 1995 to First Quarter 1994
The Company reported a consolidated net income of $21.2 million in
the first quarter of 1995 compared with a consolidated net loss of $1.9 million
in the 1994 first quarter.
Consolidated net sales of $651.7 million in the first quarter of
1995 represented a 10 percent improvement from the year-ago period. The
average selling price of steel mill products shipped rose 8 percent from the
year-ago period reflecting, in part, the continued overall strength of the
market, while steel mill shipments increased 2 percent to 1,282,000 tons. In
spite of interruptions caused by unscheduled equipment outages, operating
profit in the quarter jumped to $51.3 million from $13.6 million in the
comparable 1994 quarter. The sales improvement was the primary factor leading
to the increase.
-5-
<PAGE> 7
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
3.(i) Copy of Restated Certificate of Incorporation of the Company.
(Filed as Exhibit 3-A to the Company's Annual Report on Form 10-K
for the year ended December 31, 1992, and incorporated by
reference herein.)
3.(ii) Copy of By-laws, as amended, of the Company. (Filed as Exhibit
3.(ii) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994, and incorporated by reference herein.)
4.A Copy of First Mortgage Indenture, dated April 1, 1928, between
the Company and First Trust and Savings Bank and Melvin A.
Traylor, as Trustees, and of supplemental indentures thereto, to
and including the Thirty-Second Supplemental Indenture,
incorporated by reference from the following Exhibits: (i)
Exhibits B-1(a), B-1(b), B-1(c), B-1(d) and B-1(e), filed with
the Company's Registration Statement on Form A-2 (No. 2-1855);
(ii) Exhibits D-1(f) and D-1(g), filed with the Company's
Registration Statement on Form E-1 (No. 2-2182); (iii) Exhibit
B-1(h), filed with the Company's Current Report on Form 8-K dated
January 18, 1937; (iv) Exhibit B-1(i), filed with the Company's
Current Report on Form 8-K, dated February 8, 1937; (v) Exhibits
B-1(j) and B-1(k), filed with the Company's Current Report on
Form 8-K for the month of April, 1940; (vi) Exhibit B-2, filed
with the Company's Registration Statement on Form A-2 (No.
2-4357); (vii) Exhibit B-1(l), filed with the Company's Current
Report on Form 8-K for the month of January, 1945; (viii) Exhibit
1, filed with the Company's Current Report on Form 8-K for the
month of November, 1946; (ix) Exhibit 1, filed with the Company's
Current Report on Form 8-K for the months of July and August,
1948; (x) Exhibits B and C, filed with the Company's Current
Report on Form 8-K for the month of March, 1952; (xi) Exhibit A,
filed with the Company's Current Report on Form 8-K for the month
of July, 1956; (xii) Exhibit A, filed with the Company's Current
Report on Form 8-K for the month of July, 1957; (xiii) Exhibit B,
filed with the Company's Current Report on Form 8-K for the
month of January, 1959; (xiv) the Exhibit filed with the
Company's Current Report on Form 8-K for the month of December,
1967; (xv) the Exhibit filed with the Company's Current Report on
Form 8-K for the month of April, 1969; (xvi) the Exhibit filed
with the Company's Current Report on Form 8-K for the month of
July, 1970; (xvii) the Exhibit filed with the amendment on Form 8
to the Company's Current Report on Form 8-K for the month of
April 1974; (xviii) Exhibit B, filed with the Company's Current
Report on Form 8-K for the month of September, 1975; (xix)
Exhibit B, filed with the Company's Current Report on Form 8-K
for the month of January, 1977; (xx) Exhibit C, filed with the
Company's Current Report on Form 8-K for the month of February,
1977; (xxi) Exhibit B, filed with the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1978; (xxii) Exhibit
B, filed with the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1980; (xxiii) Exhibit 4-D, filed with the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1980; (xxiv) Exhibit 4-D, filed with the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1982; (xxv) Exhibit 4-E, filed with the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1983; (xxvi)
Exhibit 4(i) filed with the Steel Company's Registration
Statement on Form S-2 (No. 33-43393); and (xxvii) Exhibit 4 filed
with the Company's Current Report on Form 8-K dated June 23, 1993.
-6-
<PAGE> 8
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.)
27 Financial Data Schedule.
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the
quarter ended March 31, 1995.
-7-
<PAGE> 9
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INLAND STEEL COMPANY
By Lily L. May
-----------------------------------
Lily L. May
Vice President -
Finance and Purchasing,
Principal Financial Officer
and Controller
Date: May 10, 1995
-8-
<PAGE> 10
Part I -- Schedule A
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
SUMMARY OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Dollars in Millions
----------------------------------------------------------
March 31, 1995 December 31, 1994
------------------------ ---------------------------
(unaudited)
<S> <C> <C> <C> <C>
STOCKHOLDER'S EQUITY
Series A preferred stock ($1 par value)
- 10 shares issued and outstanding $ - $ -
Series B preferred stock ($1 par value)
- 50 shares issued and outstanding - -
Series C preferred stock ($1 par value)
- 50 shares issued and outstanding - -
Common stock ($1 par value)
- 980 shares issued and outstanding - -
Additional paid-in capital 1,194.5 1,194.5
Retained earnings
Balance beginning of year $ (992.7) $(1,020.8)
Net income 21.2 53.9
Dividends (6.5) (978.0) (25.8) (992.7)
-------- ------ -------- -------
Total Stockholder's Equity $ 216.5 $ 201.8
======= =======
</TABLE>
-9-
<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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 255,100
<ALLOWANCES> 18,900
<INVENTORY> 183,000
<CURRENT-ASSETS> 447,500
<PP&E> 3,799,900
<DEPRECIATION> 2,471,100
<TOTAL-ASSETS> 2,322,900
<CURRENT-LIABILITIES> 491,500
<BONDS> 416,600
<COMMON> 0
0
0
<OTHER-SE> 216,500
<TOTAL-LIABILITY-AND-EQUITY> 2,322,900
<SALES> 651,000
<TOTAL-REVENUES> 651,700
<CGS> 589,400
<TOTAL-COSTS> 590,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,700
<INCOME-PRETAX> 34,500
<INCOME-TAX> 13,300
<INCOME-CONTINUING> 21,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,200
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
