<PAGE>
Second Quarter - 1996
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 June 30, 1996
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 the latest practicable date: 980 shares of the Company's Common
Stock ($1.00 par value per share) were outstanding as of August 5, 1996.
<PAGE>
PART 1. 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 Six Months Ended
June 30 June 30
-------------------- ----------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $ 604.9 $ 685.4 $ 1,220.6 $ 1,337.1
------- ------- --------- ---------
OPERATING COSTS AND EXPENSES
Cost of goods sold 551.1 573.9 1,113.0 1,132.8
Selling, general and
administrative expenses 11.5 11.5 21.4 21.9
Depreciation 31.0 30.4 62.3 61.5
------- ------- --------- ---------
Total 593.6 615.8 1,196.7 1,216.2
------- ------- --------- ---------
OPERATING PROFIT 11.3 69.6 23.9 120.9
General corporate expense,
net of income items 3.6 3.3 6.8 7.4
Interest and other expense
on debt 12.1 12.0 24.8 24.7
------- ------- --------- ---------
INCOME (LOSS) BEFORE INCOME
TAXES (4.4) 54.3 (7.7) 88.8
PROVISION FOR INCOME TAXES 1.7Cr. 20.9 2.9Cr. 34.2
------- ------- --------- ---------
NET INCOME (LOSS) $ (2.7) $ 33.4 $ (4.8) $ 54.6
======= ======= ========= =========
</TABLE>
See notes to consolidated financial statements
-1-
<PAGE>
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
================================================================================
<TABLE>
<CAPTION> Dollars in Millions
-------------------
Six Months Ended
June 30
--------------------------
1996 1995
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (4.8) $ 54.6
-------- --------
Adjustments to reconcile net income (loss) to
net cash provided from operating activities:
Depreciation 62.3 61.5
Deferred income taxes (3.7) 35.1
Deferred employee benefit cost 9.3 (78.6)
Change in: Receivables 3.2 9.2
Inventories 45.3 (30.1)
Advances - (28.2)
Accounts payable (35.5) (18.5)
Payables to related companies 1.4 (.1)
Accrued salaries and wages (8.4) 2.1
Other accrued liabilities 6.8 12.6
Other deferred items (2.8) (3.3)
-------- --------
Net adjustments 77.9 (38.3)
-------- --------
Net cash provided from operating activities 73.1 16.3
-------- --------
INVESTING ACTIVITIES
Capital expenditures (67.2) (44.0)
Investments in and advances to joint ventures, net 11.5 6.2
Proceeds from sales of assets 3.4 .4
-------- --------
Net cash used for investing activities (52.3) (37.4)
FINANCING ACTIVITIES
Long-term debt retired (3.9) (4.1)
Change in notes payable to related companies (4.0) 38.1
Dividends paid (12.9) (12.9)
-------- --------
Net cash provided from (used for) financing activities (20.8) 21.1
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) $ 24.3 $ 24.0
Income taxes, net (5.8) (2.0)
</TABLE>
See notes to consolidated financial statements
-2-
<PAGE>
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
CONSOLIDATED BALANCE SHEET
================================================================================
<TABLE>
<CAPTION>
Dollars in Millions
-------------------------------------------------------------------
ASSETS June 30, 1996 December 31, 1995
- ------ ---------------------------- ----------------------------
(unaudited)
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ - $ -
Receivables 238.1 241.3
Inventories - principally at LIFO
In process and finished products $ 95.6 $ 124.5
Raw materials and supplies 57.7 153.3 74.1 198.6
-------- --------
Deferred income taxes 30.2 29.9
--------- --------
Total current assets 421.6 469.8
INVESTMENTS IN AND ADVANCES
TO JOINT VENTURES 205.8 214.3
PROPERTY, PLANT AND EQUIPMENT
Valued on basis of cost 3,927.5 3,858.5
Less: Reserve for depreciation,
amortization and depletion 2,487.1 2,425.0
Allowance for terminated facilities 100.7 1,339.7 100.7 1,332.8
-------- --------
PREPAID PENSION COSTS 57.4 44.2
DEFERRED INCOME TAXES 259.7 261.5
OTHER ASSETS 15.0 21.9
-------- --------
Total Assets $2,299.2 $2,344.5
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
- ------------------------------------
CURRENT LIABILITIES
Accounts payable $ 187.9 $ 223.4
Payables to related companies
Notes 133.4 137.4
Trade & other 5.7 4.3
Accrued liabilities 172.4 174.0
Long-term debt due within one year 8.3 7.7
-------- --------
Total current liabilities 507.7 546.8
LONG-TERM DEBT 404.9 409.4
DEFERRED EMPLOYEE BENEFITS 1,096.8 1,089.0
OTHER CREDITS 53.0 54.3
-------- --------
Total liabilities 2,062.4 2,099.5
STOCKHOLDER'S EQUITY (Schedule A) 236.8 245.0
-------- --------
Total Liabilities and Stockholder's Equity $2,299.2 $2,344.5
======== ========
</TABLE>
See notes to consolidated financial statements
-3-
<PAGE>
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A Wholly owned Subsidiary of Inland Steel Industries, Inc.)
Notes to Consolidated Financial Statements (Unaudited)
===============================================================================
NOTE 1/ FINANCIAL STATEMENTS
Results of operations for any interim period are not necessarily indicative of
results of any other periods or for the year. The financial statements as of
June 30, 1996 and for the three-month and six-month periods ended June 30, 1996
and 1995 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, 1995.
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 $9.0 million and $9.3 million by Industries for the first six months of
1996 and 1995, respectively, for management, financial and legal services
provided to the Company.
Procedures also have been established to charge interest on all intercompany
loans within the Industries group of companies. Such loans currently bear
interest at the prime rate. The Company's net intercompany interest expense for
the first six months of 1996 totaled $7.1 million as compared to $5.9 million
for the first six months of 1995.
The Company sells to and purchases products from other companies within the
Industries group of companies. Such transactions are made at prevailing market
prices. These transactions are summarized as follows:
Dollars in Millions
-----------------------------------------
Three Months Six Months
Ended June 30 Ended June 30
---------------- ------------------
1996 1995 1996 1995
---- ----- ----- -----
Net Product Sales $48.3 $41.4 $105.8 $85.8
Net Product Purchases 4.6 5.8 10.7 11.3
NOTE 3/RETIREMENT BENEFITS
Effective April 30, 1996, that portion of the Industries Pension Plan covering
Ryerson Tull Inc. ("RT") current and former employees was separated and became
a new and separate plan sponsored by RT. Due to this separation, the Company's
benefit obligation was remeasured using plan data and actuarial assumptions as
of April 30, 1996, including a change in the discount rate from 7.75 percent
used previously to 8.0 percent. As a result, the Company recognized a $14.6
million increase in its prepaid pension costs, a $9.5 million reduction in the
accumulated deficit and a $5.1 million deferred tax asset decrease.
-4-
<PAGE>
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A Wholly owned subsidiary of Inland Steel Industries, Inc.)
Notes to Consolidated Financial Statements (Unaudited)
===============================================================================
NOTE 4/SUBSEQUENT EVENT
In July 1996, the Company commenced a tender offer for all of its Series T First
Mortgage Bonds. Of the $125 million principal amount outstanding, $98.7 million
was tendered which will result in the Company recognizing an extraordinary
after-tax loss of approximately $7.7 million, $11.6 million before income taxes,
in the 1996 third quarter. Funds for this early retirement of Series T Bonds
will be provided to the Company by a loan from Industries.
NOTE 5/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 $67 million at June 30, 1996 compared with $55 million
at December 31, 1995.
-5-
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
RESULTS OF OPERATIONS - Comparison of First Six Months of 1996 to First Six
- ---------------------------------------------------------------------------
Months of 1995
--------------
The Company reported a consolidated net loss of $4.8 million in the first
six months of 1996 compared with net income of $54.6 million in the comparable
1995 period. A deterioration in operating results was the principal factor
leading to the decrease.
Company net sales of $1.22 billion in the first six months of 1996 were
$116.5 million, or 9 percent, lower than that reported in the 1995 first half,
due entirely to a lower average selling price. Steel mill shipments were up by
less than one percent on a comparable period-to-period basis. The lower average
selling price was also the primary factor in the decline of first half operating
profit to $23.9 million from $120.9 million a year ago.
In July, the Company commenced a tender offer for the entire $125 million
principal amount, of its Series T First Mortgage Bonds outstanding. Of that
amount, $98.7 million was tendered, which will result in the Company recognizing
an extraordinary after-tax loss of approximately $7.7 million, $11.6 million
before income taxes, in the 1996 third quarter. Funds for this early retirement
of Series T Bonds will be provided to the Company by a loan from Industries.
-6-
<PAGE>
PART 11. 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-Fifth 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, file 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); (xxvii) Exhibit 4 filed with the
Company's Current Report on Form 8-K dated June 23, 1993; and
-7-
<PAGE>
(xxviii) Exhibit 4.C filed with the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995; and (xxix) Exhibit
4.C filed with the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995.
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.)
4.C Copy of the Thirty-Fifth Supplemental Indenture dated as of July 29,
1996 from Inland Steel Company to First National Bank and John G.
Finley as Trustees to the First Mortgage Indenture dated April 1,
1928 between Inland Steel Company and First Trust and Savings Bank
and Melvin A. Traylor, as Trustees.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during quarter
ended June 30, 1996.
-8-
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the under-
signed thereunto duly authorized.
INLAND STEEL COMPANY
By /s/ Cynthia C. Heath
---------------------
Cynthia C. Heath
Vice President -
Finance and Purchasing,
Principal Financial Officer
and Controller
Date: August 9, 1996
-9-
<PAGE>
Part I -- Schedule A
--------------------
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
Summary of Stockholder's Equity
<TABLE>
<CAPTION>
===================================================================================================================================
Dollars in Millons
----------------------------------------------
June 30, 1996 December 31, 1995
----------------- ---------------------
(anaudited)
<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 pare value)
- 980 shares issued and outstanding - -
Additional paid-in capital 1,194.5 1,194.5
Accumulated deficit
Balance beginning of year $ (949.5) $ (992.7)
Net Income (loss) (4.8) 69.1
Retained earnings impact
of Pension Plan split 9.5 -
Dividends (12.9) (957.7) (25.9) (949.5)
-------- -------- -------- --------
Total Stockholder's Equity $ 236.8 $ 245.0
======== ========
</TABLE>
-10-
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number
- ------ Description
-----------
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-Fifth 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); (xxvii) Exhibit 4 filed with the Company's Current
Report on Form 8-K dated June 23, 1993; and (xxviii) Exhibit 4.C filed
with the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995; and (xxix) Exhibit 4.C filed with the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1995.
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.)
4.C Copy of the Thirty-Fifth Supplemental indenture dated as of July 29,
1996 from Inland Steel Company to First National Bank and John G.
Finley as Trustees to the First Mortgage Indenture dated April 1, 1928
between Inland Steel Company and First Trust and Savings Bank and
Melvin A. Traylor, as Trustees .....................................
27 Financial Data Schedule ............................................
-i-
<PAGE>
Exhibit 4.C
-----------------------------------------------
Inland Steel Company
To
The First National Bank Of Chicago
And
John G. Finley
As Trustees
----------------------
Thirty-Fifth Supplemental Indenture
----------------------
Dated as of July 29, 1996
-----------------------------------------------
This Instrument Prepared By
And When Recorded Return to:
Virginia M. Dowling, Esq.
Law Department
Inland Steel Company
30 West Monroe Street
Chicago, Illinois 60603
<PAGE>
Thirty-Fifth Supplemental Indenture dated as of July 29, 1996 made by
Inland Steel Company, a corporation organized and existing under the laws of the
State of Delaware (hereinafter sometimes called the "Company"), party of the
first part, to The First National Bank of Chicago, a national banking
association having its office in the City of Chicago, State of Illinois
(hereinafter sometimes called the "Corporate Trustee"), and John G. Finley, of
the City of Naperville, State of Illinois (hereinafter sometimes called the
"Individual Trustee"), as successor trustees under the First Mortgage from the
Company to First Trust and Savings Bank and Melvin A. Traylor, as Trustees,
dated April 1, 1928, parties of the second part (the Corporate Trustee and the
Individual Trustee being hereinafter collectively sometimes called the
"Trustees"):
Whereas, the Company heretofore executed and delivered to First Trust and
Savings Bank and Melvin A. Traylor, as Trustees (the Corporate Trustee being the
successor corporate trustee to said First Trust and Savings Bank and the
Individual Trustee being the successor individual trustee to said Melvin A.
Traylor), its First Mortgage Indenture, dated April 1, 1928 (the term "First
Mortgage" wherever used herein meaning and including, unless the context shall
otherwise require, said First Mortgage Indenture, dated April 1, 1928, as
amended, and all indentures supplemental thereto), to secure the payment of the
principal of and interest on bonds of the Company to be known as the "First
Mortgage Bonds" of the Company (hereinafter sometimes called the "Bonds"); and
Whereas, there have heretofore been authenticated and delivered by the
Corporate Trustee (or its predecessor) under the First Mortgage (a) $30,000,000
aggregate principal amount of First Mortgage Sinking Fund Four and One-Half Per
Cent. Gold Bonds, Series A, dated April 1, 1928 and maturing April 1, 1978, and
(b) $15,000,000 aggregate principal amount of First Mortgage Sinking Fund Four
and One-Half Per Cent. Gold Bonds, Series B, dated February 1, 1931 and maturing
February 1, 1981, and (c) $10,000,000 aggregate principal amount of First
Mortgage Three Per Cent. Serial Bonds, Series C, dated January 1, 1936 and
maturing serially in the principal amount of $1,000,000 on January 1 of each
year from 1937 to 1946 (inclusive), and (d) $35,000,000 aggregate principal
amount of First Mortgage 3-3/4% Bonds, Series D, dated February 1, 1936 and
maturing February 1, 1961, and (e) $10,000,000 aggregate principal amount of
First Mortgage 3% Bonds, Series E, dated January 15, 1937 and maturing January
15, 1952, and (f) $36,000,000 aggregate principal amount of First Mortgage 3%
Bonds, Series F, dated April 1, 1940 and maturing April 1, 1961, and (g)
$50,000,000 aggregate principal amount of First Mortgage 2.65% Bonds, Series G,
dated November 1, 1946 and maturing November 1, 1976, and (h) $20,000,000
aggregate principal amount of First Mortgage 3% Bonds, Series H, dated August 1,
1948 and maturing August 1, 1978, and (i) $25,000,000 aggregate principal amount
of First Mortgage 3.20% Bonds, Series I, dated March 1, 1952 and maturing March
1, 1982, and (j) $50,000,000 aggregate principal amount of First Mortgage 3-1/2%
Bonds, Series J, dated July 1, 1956 and maturing July 1, 1981, and (k)
$50,000,000 aggregate principal amount of First Mortgage 4-3/8% Bonds, Series K,
dated July 1, 1957 and maturing July 1, 1987, and (l) $50,000,000 aggregate
principal amount of First Mortgage 4-1/2% Bonds, Series L, dated February 1,
1959 and maturing February 1, 1989, and (m) $50,000,000 aggregate principal
amount of First Mortgage 6-1/2% Bonds, Series M, dated December 1, 1967 and
maturing December 1, 1992, and (n) $50,000,000 aggregate principal amount of
First
-1-
<PAGE>
Mortgage 7% Bonds, Series N, dated April 15, 1969 and maturing April 15, 1974,
and (o) $100,000,000 aggregate principal amount of First Mortgage 8-3/4% Bonds,
Series O, dated July 15, 1970 and maturing July 15, 1995, and (p) $75,000,000
aggregate principal amount of First Mortgage 8-7/8% Bonds, Series P, dated April
15, 1974 and maturing April 15, 1999, and (q) $100,000,000 aggregate principal
amount of First Mortgage 9-1/2% Bonds, Series Q, dated September 1, 1975 and
maturing September 1, 2000, and (r) $125,000,000 aggregate principal amount of
First Mortgage 7.90% Bonds, Series R, dated January 15, 1977 and maturing
January 15, 2007, and (s) $26,500,000 aggregate principal amount of First
Mortgage 5-3/4% Bonds, Pollution Control Series 1977, dated February 1, 1977 and
maturing February 1, 2007, and (t) $52,000,000 aggregate principal amount of
First Mortgage 6-1/2% Bonds, Pollution Control Series 1978, dated May 15, 1978
and maturing May 15, 2008, and (u) $150,000,000 aggregate principal amount of
First Mortgage 11-1/4% Bonds, Series S, dated June 1, 1980 and maturing June 1,
1990, and (v) $20,000,000 aggregate principal amount of First Mortgage 7-3/8%
Bonds, Pollution Control Series 1980 A, dated October 15, 1980 and maturing
October 1, 1983, and (w) $25,000,000 aggregate principal amount of First
Mortgage 9-3/4% Bonds, Pollution Control Series 1980 B, dated October 15, 1980
and maturing October 1, 2000, and (x) $5,000,000 aggregate principal amount of
First Mortgage 10% Bonds, Pollution Control Series 1980 C, dated October 15,
1980 and maturing October 1, 2010, and (y) $10,000,000 aggregate principal
amount of First Mortgage 10% Bonds, Pollution Control Series 1982 A, dated
December 1, 1982 and maturing December 1, 2012, and (z) $17,000,000 aggregate
principal amount of First Mortgage Adjustable Rate Bonds, Pollution Control
Series 1982 B, dated December 1, 1982 and maturing December 1, 2012, and (aa)
$125,000,000 aggregate principal amount of First Mortgage 12% Bonds Series T,
dated December 1, 1991 and maturing December 1, 1998, and (bb) $40,000,000
aggregate principal amount of First Mortgage 6.80% Bonds, Pollution Control
Series 1993, dated June 1, 1993 and maturing June 1, 2013, and (cc) $17,000,000
aggregate principal amount of First Mortgage 6.85% Term Bonds, Pollution Control
Series 1995, dated June 1, 1995 and maturing December 1, 2012; and
Whereas, all of said Series A Bonds, Series B Bonds, Series C Bonds,
Series D Bonds, Series E Bonds, Series F Bonds, Series G Bonds, Series H Bonds,
Series I Bonds, Series J Bonds, Series K Bonds, Series L Bonds, Series M Bonds,
Series N Bonds, Series O Bonds, Series P Bonds, Series Q Bonds, Series S Bonds,
Series 1980 A Bonds, Series 1980 B Bonds, Series 1980 C Bonds, Series 1982 A
Bonds and Series 1982 B Bonds were duly purchased and retired or were duly
called for redemption and funds sufficient to redeem the same were, prior to the
respective redemption dates, duly deposited with the Corporate Trustee under the
First Mortgage, and on or prior to June 1, 1996, Bonds of other outstanding
series in respective aggregate principal amounts as follows have been duly
purchased for sinking fund and duly retired or duly called for redemption for
sinking fund and funds sufficient to redeem the same duly deposited with the
Corporate Trustee under the First Mortgage or retired at maturity: Series R
Bonds -- $52,524,000; and
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<PAGE>
Whereas, (a) under date of February 1, 1931, the Company executed,
acknowledged and delivered a Supplemental Indenture to provide for the creation
of its First Mortgage Sinking Fund Four and One-Half Per Cent. Gold Bonds,
Series B, and (b) under date of February 20, 1931, the Company executed,
acknowledged and delivered a Second Supplemental Indenture to subject to the
lien of the First Mortgage certain additional property, and (c) under date of
February 18, 1933, the Company executed, acknowledged and delivered a Third
Supplemental Indenture to effect the exchange of certain mortgaged property, and
(d) under date of December 16, 1935, the Company executed, acknowledged and
delivered a Fourth Supplemental Indenture to provide for the creation of its
First Mortgage Three Per Cent. Serial Bonds, Series C, and for certain
amendments to the First Mortgage, and (e) under date of January 15, 1936, the
Company executed, acknowledged and delivered a Fifth Supplemental Indenture to
subject to the lien of the First Mortgage certain additional property and to
provide for the creation of its First Mortgage 3-3/4% Bonds, Series D, and for a
further amendment to the First Mortgage (which such amendment to the First
Mortgage was superseded by amendments to the First Mortgage made by the
Sixteenth Supplemental Indenture and the Seventeenth Supplemental Indenture
hereinafter referred to), and (f) under date of June 2, 1936, the Company
executed, acknowledged and delivered a Sixth Supplemental Indenture to effect
the exchange of certain mortgaged property, and (g) under date of October 19,
1936, the Company executed, acknowledged and delivered a Seventh Supplemental
Indenture to effect the exchange of certain mortgaged property, and (h) under
date of January 15, 1937, the Company executed, acknowledged and delivered an
Eighth Supplemental Indenture to provide for the creation of its First Mortgage
3% Bonds, Series E, and for a further amendment to the First Mortgage (which
such amendment to the First Mortgage was superseded by an amendment to the First
Mortgage made by the Twelfth Supplemental Indenture hereinafter referred to),
and (i) under date of March 1, 1940, the Company executed, acknowledged and
delivered a Ninth Supplemental Indenture to provide for further amendments to
the First Mortgage, and (j) under date of March 15, 1940, the Company executed,
acknowledged and delivered a Tenth Supplemental Indenture to subject to the lien
of the First Mortgage certain additional property and to provide for the
creation of its First Mortgage 3% Bonds, Series F, and for a further amendment
to the First Mortgage and an amendment to said Eighth Supplemental Indenture
(which such amendment to the First Mortgage was superseded by an amendment to
the First Mortgage made by the Twelfth Supplemental Indenture hereinafter
referred to), and (k) under date of January 15, 1945, the Company executed,
acknowledged and delivered an Eleventh Supplemental Indenture to subject to the
lien of the First Mortgage certain additional property, and (l) under date of
November 1, 1946, the Company executed, acknowledged and delivered a Twelfth
Supplemental Indenture to subject to the lien of the First Mortgage certain
additional property and to provide for the creation of its First Mortgage 2.65%
Bonds, Series G, and for further amendments to the First Mortgage, and (m) under
date of July 1, 1948, the Company executed, acknowledged and delivered a
Thirteenth Supplemental Indenture to provide for the creation of its First
Mortgage 3% Bonds, Series H, and (n) under date of February 1, 1952, the Company
executed, acknowledged and delivered a Fourteenth Supplemental Indenture to
effect the exchange of certain mortgaged property, and (o) under date of March
1, 1952, the Company executed, acknowledged and delivered a Fifteenth
Supplemental Indenture to
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<PAGE>
provide for the creation of its First Mortgage 3.20% Bonds, Series I, and
for further amendments to the First Mortgage, and under date of July 1, 1956,
the Company executed, acknowledged and delivered a Sixteenth Supplemental
Indenture to subject to the lien of the First Mortgage certain additional
property and to provide for the creation of its First Mortgage 3-1/2% Bonds,
Series J, and for further amendments to the First Mortgage, and (q) under date
of July 1, 1957, the Company executed, acknowledged and delivered a Seventeenth
Supplemental Indenture to subject to the lien of the First Mortgage certain
additional property and to provide for the creation of its First Mortgage
4-3/8% Bonds, Series K, and for a further amendment to the First Mortgage, and
(r) under date of January 15, 1959, the Company executed, acknowledged and
delivered an Eighteenth Supplemental Indenture to subject to the lien of the
First Mortgage certain additional property and to provide for the creation of
its First Mortgage 4-1/2% Bonds, Series L, and for further amendments to the
First Mortgage, and (s) under date of December 1, 1967, the Company executed,
acknowledged and delivered a Nineteenth Supplemental Indenture to subject to
the lien of the First Mortgage certain additional property and to provide for
the creation of its First Mortgage 6-1/2% Bonds, Series M, and for further
amendments to the First Mortgage, and (t) under date of April 15, 1969, the
Company executed, acknowledged and delivered a Twentieth Supplemental Indenture
to subject to the lien of the First Mortgage certain additional property and to
provide for the creation of its First Mortgage 7% Bonds, Series N, and (u)
under date of July 15, 1970, the Company executed, acknowledged and delivered a
Twenty-First Supplemental Indenture to provide for the creation of its First
Mortgage 8-3/4% Bonds, Series O, and for a further amendment to the First
Mortgage, and (v) under date of April 15, 1974, the Company executed,
acknowledged and delivered a Twenty-Second Supplemental Indenture to subject to
the lien of the First Mortgage certain additional property and to provide for
the creation of its First Mortgage 8-7/8% Bond, Series P, and for a further
amendment to the First Mortgage, and (w) under date of September 1, 1975, the
Company executed, acknowledged and delivered a Twenty-Third Supplemental
Indenture to subject to the lien of the First Mortgage certain additional
properties and to provide for the creation of its First Mortgage 9-1/2% Bonds,
Series Q, and (x) under date of January 15, 1977, the Company executed,
acknowledged and delivered a Twenty-Fourth Supplemental Indenture to subject to
the lien of the First Mortgage certain additional property and to provide for
the creation of its First Mortgage 7.90% Bonds, Series R, and to provide for
the future modification of certain provisions of the First Mortgage, and (y)
under date of February 1, 1977, the Company executed, acknowledged and
delivered a Twenty-Fifth Supplemental Indenture to subject to the lien of the
First Mortgage certain additional property and to provide for the creation of
the First Mortgage 5-3/4% Bonds, Pollution Control Series 1977, and to provide
for the future modification of certain provisions of the First Mortgage, and
(z) under date of February 1, 1977, the Company executed, acknowledged and
delivered a Restated Twenty-Fifth Supplemental Indenture amending and restating
said Twenty-Fifth Supplemental Indenture, and (aa) under date of May 15, 1978,
the Company executed, acknowledged and delivered a Twenty-Sixth Supplemental
Indenture to subject to the lien of the First Mortgage certain additional
property and to provide for the creation of the First Mortgage 6-1/2% Bonds,
Pollution Control Series 1978 and to provide for the future modification of
certain provisions of the First Mortgage, and (bb) under date of June 1, 1980,
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<PAGE>
the Company executed, acknowledged and delivered a Twenty-Seventh Supplemental
Indenture to subject to the lien of the First Mortgage certain additional
property and to provide for the creation of its First Mortgage 11-1/4% Bonds,
Series S, and to provide for the future modification of certain provisions of
the First Mortgage, and (cc) under date of October 15, 1980, the Company
executed, acknowledged and delivered a Twenty-Eighth Supplemental Indenture to
subject to the lien of the First Mortgage certain additional property and to
provide for the creation of its First Mortgage 7-3/8% Bonds, Pollution Control
Series 1980 A, its First Mortgage 9-3/4% Bonds, Pollution Control Series 1980 B,
and its First Mortgage 10% Bonds, Pollution Control Series 1980 C, and to
provide for the future modification of certain provisions of the First Mortgage,
and (dd) under date of December 1, 1982, the Company executed, acknowledged and
delivered a Twenty-Ninth Supplemental Indenture to subject to the lien of the
First Mortgage certain additional property and to provide for the creation of
its First Mortgage 10% Bonds, Pollution Control Series 1982 A and its First
Mortgage Adjustable Rate Bonds, Pollution Control Series 1982 B and to provide
for the future modification of certain provisions of the First Mortgage, and
(ee) under date of November 30, 1983, the Company executed, acknowledged and
delivered a Thirtieth Supplemental Indenture to subject to the lien of the First
Mortgage certain additional property, and (ff) under date of December 1, 1991,
the Company executed, acknowledged and delivered a Thirty-First Supplemental
Indenture to subject to the lien of the First Mortgage certain additional
property and to provide for the creation of its First Mortgage 12% Bonds, Series
T and to provide for the future modification of certain provisions of the First
Mortgage, and (gg) under date of June 1, 1993, the Company executed,
acknowledged, and delivered a Thirty-Second Supplemental Indenture to provide
for the creation of its First Mortgage 6.80% Bonds, Pollution Control Series
1993 and to provide for the future modification of certain provisions of the
First Mortgage, and (hh) under date of June 1, 1995, the Company executed,
acknowledged, and delivered a Thirty-Third Supplemental Indenture to provide for
the creation of its First Mortgage 6.85% Term Bonds, Pollution Control Series
1995 and to provide for the future modification of certain provisions of the
First Mortgage, and (ii) under date of August 1, 1995, the Company executed,
acknowledged, and delivered a Thirty-Fourth Supplemental Indenture to provide
for the modification of certain provisions of the First Mortgage; and
Whereas, (a) said First Mortgage Indenture, dated April 1, 1928, has been
duly recorded or registered in the offices of the proper public officials of
Cook County, Illinois, Jefferson County, Illinois, Lake County, Indiana, Porter
County, Indiana, Floyd County, Kentucky, Pike County, Kentucky, Knott County,
Kentucky, Letcher County, Kentucky, Iron County, Michigan, Marquette County,
Michigan, Crow Wing County, Minnesota, St. Louis County, Minnesota, and Raleigh
County, West Virginia, and (b) said Supplemental Indenture, dated February 1,
1931, has been duly recorded or registered in the offices of the proper public
officials of Cook County, Illinois, Jefferson County, Illinois, Lake County,
Indiana, Porter County, Indiana, Crow Wing County, Minnesota, and St. Louis
County, Minnesota, and (c) said Second Supplemental Indenture has been duly
recorded or registered in the offices of the proper public officials of Lake
County, Indiana, Floyd County, Kentucky, Pike County, Kentucky, Knott County,
Kentucky, Marquette County, Michigan and St. Louis County,
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<PAGE>
Minnesota, and (d) said Third Supplemental Indenture has been duly recorded or
registered in the office of the proper public official of Floyd County,
Kentucky, and (e) said Fourth Supplemental Indenture has been duly recorded or
registered in the office of the proper public official of each of said counties
in which said First Mortgage Indenture has been recorded or registered, and (f)
said Fifth Supplemental Indenture has been duly recorded or registered in the
office of the proper public official of each of said counties in which said
First Mortgage Indenture has been recorded or registered, and (g) said Sixth
Supplemental Indenture and said Seventh Supplemental Indenture have been duly
recorded or registered in the offices of the proper public officials of Floyd
County, Kentucky and Knott County, Kentucky, and (h) said Eighth Supplemental
Indenture has been duly recorded or registered in the office of the proper
public official of each of said counties (except Letcher County, Kentucky and
Iron County, Michigan) in which said First Mortgage Indenture has been duly
recorded or registered, and (i) said Ninth Supplemental Indenture has been duly
recorded or registered in the office of the proper public official of each of
said counties in which said First Mortgage Indenture has been recorded or
registered, and (j) said Tenth Supplemental Indenture has been duly recorded or
registered in the office of the proper public official of each of said counties
(except Letcher County, Kentucky and Iron County, Michigan) in which said First
Mortgage Indenture has been recorded or registered, and (k) said Eleventh
Supplemental Indenture has been duly recorded or registered in the office of the
proper public official of Lake County, Indiana, and (l) said Twelfth
Supplemental Indenture and said Thirteenth Supplemental Indenture have been duly
recorded or registered in the office of the proper public official of each of
said counties in which said First Mortgage Indenture has been recorded or
registered, and (m) said Fourteenth Supplemental Indenture has been duly
recorded or registered in the office of the proper public official of Raleigh
County, West Virginia, and (n) said Fifteenth Supplemental Indenture, said
Sixteenth Supplemental Indenture, said Seventeenth Supplemental Indenture, and
said Eighteenth Supplemental Indenture have been duly recorded or registered in
the office of the proper public official of each of said counties in which said
First Mortgage Indenture has been recorded or registered, and (o) said
Nineteenth Supplemental Indenture has been duly recorded or registered in the
office of the proper public official of each of said counties (except Floyd
County, Kentucky, Pike County, Kentucky, Knott County, Kentucky, Letcher County,
Kentucky and Raleigh County, West Virginia) in which said First Mortgage
Indenture has been recorded or registered, and (p) said Twentieth Supplemental
Indenture, said Twenty-First Supplemental Indenture, and said Twenty-Second
Supplemental Indenture have been duly recorded or registered in the office of
the proper public official of each of said counties (except Cook County,
Illinois, Floyd County, Kentucky, Pike County, Kentucky, Knott County, Kentucky,
Letcher County, Kentucky, and Raleigh County, West Virginia) in which said First
Mortgage Indenture has been recorded or registered, and (q) said Twenty-Third
Supplemental Indenture, said Twenty-Fourth Supplemental Indenture, said Twenty-
Fifth Supplemental Indenture, said Restated Twenty-Fifth Supplemental Indenture,
said Twenty-Sixth Supplemental Indenture, said Twenty-Seventh Supplemental
Indenture, and said Twenty-Eighth Supplemental Indenture have been duly recorded
or registered in the office of the proper public official of each of said
counties (except Cook County, Illinois, Floyd County, Kentucky, Pike County,
Kentucky, Knott County, Kentucky, Letcher County, Kentucky, Iron County,
Michigan, Marquette County, Michigan, Crow Wing County,
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<PAGE>
Minnesota, St. Louis County, Minnesota and Raleigh County, West Virginia) in
which said First Mortgage Indenture has been recorded or registered, and (r)
said Twenty-Ninth Supplemental Indenture and said Thirtieth Supplemental
Indenture have been duly recorded or registered in the office of the proper
public official of each of said counties (except Cook County, Illinois,
Jefferson County, Illinois, Porter County, Indiana, Floyd County, Kentucky, Pike
County, Kentucky, Knott County, Kentucky, Letcher County, Kentucky, Iron County,
Michigan, Marquette County, Michigan, Crow Wing County, Minnesota, St. Louis
County, Minnesota and Raleigh County, West Virginia) in which said First
Mortgage Indenture has been recorded or registered, and (s) said Thirty-First
Supplemental Indenture has been duly recorded or registered in the office of the
proper public official of Lake County, Indiana in which said First Mortgage
Indenture has been recorded, and (t) said Thirty-Second Supplemental Indenture
has been duly recorded or registered in the office of the proper public official
of Lake County, Indiana in which said First Mortgage Indenture has been
recorded, and (u) said Thirty-Third Supplemental Indenture has been duly
recorded or registered in the office of the proper public official of Lake
County, Indiana in which said First Mortgage Indenture has been recorded, and
(v) said Thirty-Fourth Supplemental Indenture has been duly recorded or
registered in the office of the proper public official of Lake County, Indiana
in which said First Mortgage Indenture has been recorded; and
Whereas, Section 20(m) of Article Six of the First Mortgage provides, among
other things, that the holders of a majority in aggregate principal amount of
the Outstanding Series T Bonds may, with the agreement of the Company, amend the
covenants set forth in Sections 20(a) through 20(h), Section 20(k), and Section
20(l) of Article Six of the First Mortgage; and
Whereas, the holders of at least a majority in aggregate principal amount
of the Outstanding Series T Bonds on the date of this Indenture have consented,
with the agreement of the Company, to the deletion of the covenants set forth in
Sections 20(a) through 20(h), Section 20(k), and Section 20(l) of Article Six of
the First Mortgage; and
Whereas, the Company and the Trustees desire to modify the First Mortgage
to delete the covenants set forth in Sections 20(a) through 20(h), Section
20(k), and Section 20(l) of Article Six of the First Mortgage; and
Whereas, the form, terms and provisions of this Indenture and the execution
thereof by the Company have been duly authorized; and
Whereas, all acts and things prescribed by law and by the Certificate of
Incorporation and by-laws, as amended, of the Company and by the First Mortgage
have been duly complied with and the Company has executed this Indenture in the
exercise of legal rights and powers vested in it, and all things necessary to
make this Indenture the valid and binding obligation of the Company and a valid
and binding agreement supplemental to the First Mortgage have been done and
performed;
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<PAGE>
Now, Therefore, This Indenture Witnesseth:
That, in order to amend the terms of the First Mortgage as aforesaid, the
Company has executed and delivered this Indenture and hereby agrees with the
Trustees as hereinafter provided:
ARTICLE ONE
AMENDMENTS TO THE FIRST MORTGAGE
From and after the Acceptance Date (as defined herein), Article Six of the
First Mortgage, as heretofore amended, is hereby further automatically amended
by deleting in their entirety the following Sections therefrom:
(a) SECTION 20(a). Limitation on Debt.
(b) SECTION 20(b). Limitation on Restricted Subsidiary Debt and
Preferred Stock.
(c) SECTION 20(c). Limitation on Restricted Payments.
(d) SECTION 20(d). Distributions by Restricted Subsidiaries.
(e) SECTION 20(e). Limitation on Liens.
(f) SECTION 20(f). Limitation on Sale and Leaseback Transactions.
(g) SECTION 20(g). Limitation on Investments in Unrestricted
Subsidiaries.
(h) SECTION 20(h). Limitation on Transactions with Affiliates.
(i) SECTION 20(k). Limitation on Mergers, Consolidations and Certain
Sales and Purchases of Assets.
(j) SECTION 20(l). Provision of Financial Information.
ARTICLE TWO
THE TRUSTEES
Section 1. The Trustees hereby accept and enter into this Indenture and
the trusts hereby created.
Section 2. The Trustees shall be entitled, in connection with this
Indenture, to all of the exemptions and immunities granted to them, or either of
them, by the terms of the First Mortgage.
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<PAGE>
ARTICLE THREE
EFFECT OF THIS INDENTURE ON THE FIRST MORTGAGE
This Indenture shall take effect and be binding upon execution and delivery
by the parties of this Indenture, and the First Mortgage shall thereupon be
deemed to be amended as set forth in this Indenture, as fully and with the same
effect as if the respective provisions of the First Mortgage, as amended by this
Indenture, had been set forth in said First Mortgage Indenture, dated April 1,
1928, as originally executed; provided, however, that the provisions of the
First Mortgage referred to in Article One above (such provisions being referred
to as the "Amended Provisions") will remain in effect in the form they existed
prior to the execution of this Indenture, the deletions and amendments of the
Amended Provisions contemplated in Article One above will not become operative,
and the terms of the Amended Provisions will not be amended, modified, waived,
or deleted, in each case until the date and time (the "Acceptance Date") that
the Company accepts for payment pursuant to the Company's Offer to Purchase and
Consent Solicitation dated July 1, 1996, as the same may be amended and
supplemented through the date hereof, at least a majority of the aggregate
principal amount of the Series T Bonds that are Outstanding immediately prior to
such acceptance (it being understood that Series T Bonds tendered to, but not
yet accepted for payment by, the Company shall not be treated as owned by the
Company for purposes of the definition of "Outstanding" herein and in the First
Mortgage). Upon the Acceptance Date, the Amended Provisions will be
automatically deleted as contemplated in Article One above.
Any good faith determination by the Company concerning any conditions of
the Company's offer to purchase for cash all of the Outstanding Series T Bonds,
or the satisfaction thereof, and any waiver by the Company of any such
conditions shall be conclusive and binding upon all persons.
Except as specifically amended or supplemented by this Indenture, all of
the provisions of the First Mortgage shall remain and continue in full force and
effect and unaffected by the execution of this Indenture.
This Indenture shall be construed in connection with, and as a part of, the
First Mortgage, and the covenants hereof shall be deemed, as to the subject
matter of such covenants, covenants of the First Mortgage. Capitalized terms
used but not defined in this Indenture shall have the respective meanings
assigned to them in the First Mortgage.
This Indenture may be executed in two or more counterparts, each of which
shall be and shall be taken to be an original, and all collectively but one
instrument.
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<PAGE>
In Witness Whereof, said Inland Steel Company, the party of the first part,
has caused this Indenture to be signed in its corporate name by its President or
one of its Vice Presidents and its corporate seal to be hereunto affixed and
attested by its Secretary or one of its Assistant Secretaries, and said The
First National Bank of Chicago, one of the parties of the second part, has
caused this Indenture to be signed in its corporate seal to be hereunto affixed
and attested by one of its Trust Officers, and said John G. Finley, the other of
the parties of the second part, has hereunto set his hand and seal, all as of
the day and year first above written.
Inland Steel Company
By: /s/ CYNTHIA C. HEATH
---------------------
Vice President
Attest:
/s/ MARC JESKE
- --------------------
Assistant Secretary
Signed, sealed and delivered
by Inland Steel Company
in the presence of:
/s/ PAMELA M. GOLON
- ----------------------
/s/ BONNIE L. PAYETTE
- ----------------------
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<PAGE>
The First National Bank of Chicago
By: /s/ R. D. MANELLA
-------------------
Vice President
Attest:
/s/ NOREEN SCAIFE
- --------------------
Trust Officer
Signed, sealed and delivered
by The First National Bank of
Chicago in the presence of:
/s/ S. R. TEGULAPALA
- --------------------
/s/ A. LONGINO
- --------------------
By: /s/ JOHN G. FINLEY (Seal)
---------------------------------
John G. Finley
Signed, sealed and delivered
by John G. Finley
in the presence of:
/s/ S. R. TEGULAPALA
- --------------------
/s/ A. LONGINO
- --------------------
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<PAGE>
State of Illinois )
) ss:
County of Cook )
I, Regina L. Holland, a Notary Public in and for the County and State
aforesaid, Do Hereby Certify that on this 29th day of July, 1996, before me
personally came and appeared in person Cynthia C. Heath, a Vice President, and
Marc Jeske, Assistant Secretary, respectively, of Inland Steel Company, one of
the corporations described in the within, annexed and foregoing indenture, each
to me personally known and personally known to me to be a Vice President and an
Assistant Secretary, respectively, of said Inland Steel Company, and personally
known to me to be the same persons whose names are subscribed to said indenture,
who subscribed the same in my presence and who severally acknowledged, and,
being by me severally duly sworn, deposed and said: That said Cynthia C. Heath
resides in Frankfort, in the State of Illinois, and that she is a Vice President
of said Inland Steel Company, one of the corporations described in and which
executed the foregoing indenture; that said Marc Jeske resides in Wheaton, in
the State of Illinois, and that he is an Assistant Secretary of said Inland
Steel Company, one of the corporations described in and which executed the
foregoing indenture; that they know the seal of said corporation; that the seal
affixed to said indenture is such corporate seal; that said indenture was
executed in behalf of said corporation by authority of its board of directors;
that said seal was so affixed by authority of the board of directors of said
corporation; that they did sign their respective names thereto by like
authority; and they further severally acknowledged to me the signing, sealing
and delivering of said indenture, and said indenture itself, to be the free and
voluntary act and deed of said Inland Steel Company, and of themselves as such
officers thereof, for the uses and purposes therein set forth.
Given under my hand and official seal this 29th day of July, A.D. 1996.
/s/ REGINA L. HOLLAND ,
-----------------------------------
a resident of Cook County, Illinois
Notary Public
My commission expires October 7, 1996.
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<PAGE>
State of Illinois )
) ss:
County of Cook )
I, Somsri Helmer, a Notary Public in and for the County and State
aforesaid, Do Hereby Certify that on this 29th day of July, 1996, before me
personally came and appeared in person, R. D. Manella, a Vice President, and
Noreen Scaife, a Trust Officer, respectively, of The First National Bank of
Chicago, one of the corporations described in the within, annexed and foregoing
indenture, each to me personally known and personally known to me to be a Vice
President and a Trust Officer, respectively, of said The First National Bank of
Chicago, and personally known to me to be the same persons whose names are
subscribed to said indenture, who subscribed the same in my presence and who
severally acknowledged, and, being by me severally duly sworn, deposed and said:
That said R. D. Manella resides in Buffalo Grove, in the State of Illinois, and
that he is a Vice President of said The First National Bank of Chicago, one of
the corporations described in and which executed the foregoing indenture; that
said Noreen Scaife resides in Chicago, in the State of Illinois, and that he is
a Trust Officer of said The First National Bank of Chicago, one of the
corporations described in and which executed the foregoing indenture; that they
know the seal of said corporation; that the seal affixed to said indenture is
such corporate seal; that said indenture was executed in behalf of said
corporation by authority of its By-Laws; that said seal was so affixed by
authority of the By-Laws of said corporation; that they did sign their
respective names thereto by like authority; and they further severally
acknowledged to me the signing, sealing and delivering of said indenture, and
said indenture itself, to be the free and voluntary act and deed of said The
First National Bank of Chicago, and of themselves as such officers thereof, for
the uses and purposes therein set forth.
Given under my hand and official seal this 29th day of July, A.D. 1996.
/s/ SOMSRI HELMER ,
-----------------------------------
a resident of Cook County, Illinois
Notary Public
My commission expires January 14, 1999.
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<PAGE>
State of Illinois )
) ss:
County of Cook )
I, Somsri Helmer, a Notary Public in and for the County and State
aforesaid, Do Hereby Certify that on this 29th day of July, 1996, before me
personally came and appeared in person John G. Finley, to me personally known
and personally known to me to be the person described in, and who executed, and
the same person whose name is subscribed to, the within, annexed and foregoing
indenture, and acknowledged the execution of, and that he signed, sealed,
executed and delivered said Indenture as his free and voluntary act and deed for
the uses and purposes therein set forth.
Given under my hand and official seal this 29th day of July, A.D. 1996.
/s/ SOMSRI HELMER ,
-----------------------------------
a resident of Cook County, Illinois
Notary Public
My commission expires January 14, 1999.
-14-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the consolidated statement of operations, the consolidated balance sheet, and
the summary of stockholders' equity contained in the quarterly report on Form
10-Q to which this exhibit is attached and is qualified in its entirety by
reference to such financial schedules.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 256,700
<ALLOWANCES> 18,600
<INVENTORY> 153,300
<CURRENT-ASSETS> 421,600
<PP&E> 3,927,500
<DEPRECIATION> 2,587,800
<TOTAL-ASSETS> 2,299,200
<CURRENT-LIABILITIES> 507,700
<BONDS> 404,900
<COMMON> 0
0
0
<OTHER-SE> 236,800
<TOTAL-LIABILITY-AND-EQUITY> 2,299,200
<SALES> 1,219,100
<TOTAL-REVENUES> 1,220,600
<CGS> 1,174,100
<TOTAL-COSTS> 1,175,300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,800
<INCOME-PRETAX> (7,700)
<INCOME-TAX> (2,900)
<INCOME-CONTINUING> (4,800)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,800)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
