<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended September 30, 1997 Commission File No. 1-4368
THE LTV CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-1070950
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
200 Public Square 44114-2308
Cleveland, Ohio (Zip Code)
Registrant's telephone number, including area code: (216)622-5000
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 periods 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.
102,742,683 shares of common stock
(as of September 30, 1997)
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE LTV CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- -------------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SALES $ 1,135.0 $ 1,048.9 $ 3,299.1 $ 3,117.1
Costs and expenses:
Cost of products sold 957.7 912.0 2,827.7 2,720.9
Depreciation and amortization 62.3 66.2 198.1 201.2
Selling, general and administrative 43.3 36.0 119.6 106.4
Results of affiliates operations 14.8 - 26.3 -
Net interest and other income (7.1) (10.0) (26.4) (27.9)
Special charge 150.0 - 150.0 -
------------ ------------ ------------ ------------
Total 1,221.0 1,004.2 3,295.3 3,000.6
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (86.0) 44.7 3.8 116.5
Income tax provision (credit):
Taxes payable (2.9) (1.3) 0.6 0.2
Taxes not payable in cash (31.5) 16.6 0.9 41.6
------------ ------------ ------------ ------------
Total (34.4) 15.3 1.5 41.8
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE EXTRAORDINARY LOSS (51.6) 29.4 2.3 74.7
Extraordinary loss on early extinguishment
of debt (net of income taxes of $2.6) (3.8) - (3.8) -
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (55.4) $ 29.4 $ (1.5) $ 74.7
=========== =========== =========== ===========
Earnings (loss) per share:
Primary $ (0.50) $ 0.27 $ 0.01 $ 0.69
Extraordinary loss (0.04) - (0.04) -
----------- ----------- ----------- -----------
Total $ (0.54) $ 0.27 $ (0.03) $ 0.69
=========== =========== =========== ===========
Fully diluted $ (0.50) $ 0.27 $ 0.01 $ 0.69
Extraordinary loss (0.04) - (0.04) -
----------- ----------- ----------- -----------
Total $ (0.54) $ 0.27 $ (0.03) $ 0.69
=========== =========== =========== ===========
Cash dividends per common share $ 0.03 $ 0.03 $ 0.09 $ 0.06
</TABLE>
- ----------
See notes to consolidated financial statements.
I-1
<PAGE> 3
THE LTV CORPORATION
CONSOLIDATED BALANCE SHEET
(in millions, except per share data)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 256.9 $ 107.4
Marketable securities 401.0 566.4
----------- -----------
Total cash and marketable securities 657.9 673.8
Receivables, less allowance for doubtful accounts 497.1 400.3
Inventories:
Products 613.1 570.6
Materials, purchased parts and supplies 248.4 231.7
----------- -----------
Total inventories 861.5 802.3
Prepaid expenses, deposits and other 21.0 11.9
----------- -----------
Total current assets 2,037.5 1,888.3
----------- -----------
INVESTMENTS IN AFFILIATES 310.0 256.3
OTHER NONCURRENT ASSETS 257.2 149.1
PROPERTY, PLANT AND EQUIPMENT 4,107.4 3,871.3
Allowance for depreciation (940.2) (754.5)
----------- -----------
Total property, plant and equipment 3,167.2 3,116.8
----------- -----------
$ 5,771.9 $ 5,410.5
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 346.7 $ 351.1
Accrued employee compensation and benefits 376.8 372.9
Other accrued liabilities 327.8 175.0
----------- -----------
Total current liabilities 1,051.3 899.0
----------- -----------
NONCURRENT LIABILITIES
Long-term debt 354.2 152.6
Postemployment health care and other insurance benefits 1,564.0 1,596.0
Pension benefits 608.4 647.9
Other 531.6 404.3
----------- -----------
Total noncurrent liabilities 3,058.2 2,800.8
----------- -----------
SHAREHOLDERS' EQUITY
Convertible preferred stock (stated value $50.0) 0.5 0.5
Common stock (par value $0.50 per share) 52.8 52.8
Additional paid-in capital 1,019.5 1,021.1
Retained earnings 634.1 646.7
Treasury stock (2,618,700 shares at cost) (34.7) -
Minimum pension liability adjustment and other (9.8) (10.4)
----------- -----------
Total shareholders' equity 1,662.4 1,710.7
----------- -----------
$ 5,771.9 $ 5,410.5
=========== ===========
</TABLE>
- ----------
See notes to consolidated financial statements.
I-2
<PAGE> 4
THE LTV CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------------------
1997 1996
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (1.5) $ 74.7
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Extraordinary loss 3.8 -
Special charge 150.0 -
Depreciation and amortization 198.1 201.2
Income tax provision not payable in cash 0.9 41.6
Defined benefit pension expense 21.3 51.3
Postemployment benefit payments
less (more) than related expense (22.0) (0.3)
VEBA Trust contributions (10.0) (11.3)
Changes in assets, liabilities and other (82.6) (29.1)
----------- -----------
Net cash provided by operating activities 258.0 328.1
----------- -----------
INVESTING ACTIVITIES
Capital expenditures (215.4) (139.1)
VP Buildings acquisition (187.5) -
Investment in affiliates (69.5) (69.1)
Net sales (purchases) of marketable securities 165.4 (76.2)
Other 14.6 (1.8)
----------- -----------
Net cash used in investing activities (292.4) (286.2)
----------- -----------
FINANCING ACTIVITIES
Proceeds from debt offering 289.8 -
Pension funding to restored plans (60.2) (144.2)
Preferred dividends paid (1.7) (1.7)
Common dividends paid (9.3) (6.3)
Share repurchases (34.7) -
----------- -----------
Net cash provided by (used in) financing activities 183.9 (152.2)
----------- -----------
Net increase (decrease) in cash and cash equivalents 149.5 (110.3)
Cash and cash equivalents at beginning of period 107.4 265.9
----------- -----------
Cash and cash equivalents at end of period $ 256.9 $ 155.6
=========== ===========
Supplemental cash flow information is presented as follows:
Interest payments $ 6.1 $ 8.4
Income tax payments 5.5 1.9
Capitalized interest 11.9 7.2
Purchases of marketable securities 5,591.2 3,279.4
Sales and maturities of marketable securities 5,756.6 3,205.9
</TABLE>
- ----------
See notes to consolidated financial statements.
I-3
<PAGE> 5
THE LTV CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
NOTE (1) - The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and disclosures required by generally accepted accounting principles for
complete financial statements. All adjustments that are, in the opinion of
management, necessary for a fair presentation have been made and are of a
recurring nature unless otherwise disclosed herein. Certain prior period amounts
have been reclassified to conform with the current period presentation. The
results of operations for the interim periods are not necessarily indicative of
results of operations for a full year. For further information, refer to the
consolidated financial statements and the notes thereto for the year ended
December 31, 1996 included in the LTV Annual Report to Shareholders incorporated
by reference into the 1996 Annual Report on Form 10-K filed with the Securities
and Exchange Commission.
NOTE (2) - In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement No. 128, "Earnings per Share," which requires changes to the
method currently used to compute earnings per share and becomes effective at
December 31, 1997. The impact of Statement No. 128 on the calculation of primary
and fully diluted earnings per share is not expected to be material.
NOTE (3) - On July 2, 1997, the Company, through its new wholly-owned subsidiary
VP Buildings, Inc., purchased substantially all of the assets and certain
liabilities of Varco-Pruden Building Products Division of United Dominion
Industries, Inc., for cash of approximately $187.5 million, subject to final
closing adjustments and expenses. Varco-Pruden engineers and manufactures
pre-engineered, non-residential, low-rise steel building systems for
manufacturing, warehousing, school and commercial applications. This transaction
was accounted for under the purchase method of accounting and, accordingly, the
results of operations of the acquired company are included in the consolidated
financial statements from the date of acquisition.
I-4
<PAGE> 6
The following unaudited pro forma financial information for the Company gives
effect to the VP Buildings acquisition as if it had occurred on January 1, 1997,
with comparable pro forma information for 1996. These pro forma results have
been prepared for comparative purposes only and are not necessarily
representative of the results of operations that would have resulted if the
acquisition occurred at the beginning of the year or that may result in the
future. The pro forma results for the Company are as follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1997 1996
---------- ----------
<S> <C> <C>
Net sales $ 3,443.6 $ 3,345.0
Income before extraordinary loss 5.5 84.7
Net income 1.7 84.7
Earnings per share:
Primary $ 0.00 $ 0.78
Fully diluted $ 0.00 $ 0.78
</TABLE>
NOTE (4) - In July 1997, LTV announced its intention to close permanently its
Pittsburgh coke and by-product plant by the end of 1997. Closure of the plant,
which has been in operation for over a century and has reached the end of its
useful life, resulted in a special charge in the third quarter of 1997 of $150
million for employee costs, demolition, environmental matters and facilities
write-down. Approximately two-thirds is payable in cash over a period of several
years. The Company has engaged a consultant to study the environmental clean-up
of the facility.
In August 1997, the United Steelworkers of America ("USWA") filed a grievance
contesting the intended plant closing. The arbitration proceeding began October
13, 1997, and the arbitrator's decision is expected sometime after November
1997. (See Part II, Item 1, "Legal Proceedings.")
NOTE (5) - In September 1997, LTV issued $298.2 million Senior Notes ($300
million face amount) due September 2007 at 8.20% interest payable semiannually
and guaranteed by LTV's wholly-owned subsidiary, LTV Steel Company, Inc. The
unamortized original issue discount results in an effective interest rate of
8.25%. Proceeds of the offering were used to finance the acquisition of VP
Buildings and to redeem $100 million principal amount of Senior Secured
Convertible Notes due June 2003. At September 30, 1997, the $100 million Senior
Secured Convertible Notes were reclassified as current other accrued liabilities
and were redeemed, pursuant to a binding contract, in October 1997. The premium
associated with the early redemption resulted in an extraordinary loss of $3.8
million net of tax.
I-5
<PAGE> 7
NOTE (6)
LTV's wholly-owned subsidiary, LTV Steel Company, Inc., has fully and
unconditionally guaranteed the Company's obligation to pay principal, premium,
if any, and interest with respect to the Senior Notes due September 2007.
The following supplemental consolidating condensed financial statements of The
LTV Corporation present: the balance sheets as of September 30, 1997 and
December 31, 1996; statements of operations for the three months ended and nine
months ended September 30, 1997 and 1996; and statements of cash flows for the
nine months ended September 30, 1997 and 1996. The LTV Corporation (Parent),
LTV Steel Company, Inc. (Guarantor) and the combined Non-Guarantor
Subsidiaries' investments in subsidiaries are accounted for using the equity
method. Necessary elimination entries have been made to consolidate the Parent
and all of its subsidiaries.
Consolidating Condensed Balance Sheet
(in millions)
<TABLE>
<CAPTION>
September 30, 1997
-----------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash, cash equivalents and marketable securities $ 617.2 $ (29.6) $ 70.3 $ - $ 657.9
Receivables 3.5 (15.2) 508.8 - 497.1
Inventories:
Finished goods - 570.4 42.7 - 613.1
Raw materials and supplies - 215.0 33.4 - 248.4
Other current assets 4.3 12.3 4.4 - 21.0
-------- --------- -------- --------- ---------
Total current assets 625.0 752.9 659.6 - 2,037.5
Intercompany, net 111.9 446.9 (558.8) - -
Investments and other noncurrent assets 1,385.9 249.9 431.8 (1,500.4) 567.2
Property, plant and equipment, net - 2,947.3 219.9 - 3,167.2
-------- --------- -------- -------- ---------
Total assets $2,122.8 $ 4,397.0 $ 752.5 $(1,500.4) $ 5,771.9
======== ========= ======== ========= =========
Total current liabilities $ 135.5 $ 773.6 $ 142.2 $ - $ 1,051.3
Long-term debt 298.2 56.0 - - 354.2
Postemployment health care and other insurance benefits - 1,392.3 171.7 - 1,564.0
Pension benefits - 576.7 31.7 - 608.4
Other 26.7 479.5 25.4 - 531.6
Shareholders' equity 1,662.4 1,118.9 381.5 (1,500.4) 1,662.4
-------- --------- -------- --------- ---------
Total liabilities and shareholders' equity $2,122.8 $ 4,397.0 $ 752.5 $(1,500.4) $ 5,771.9
======== ========= ======== ========= =========
</TABLE>
I-6
<PAGE> 8
<TABLE>
<CAPTION>
December 31, 1996
-------------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash, cash equivalents and marketable securities $ 628.6 $ (15.1) $ 60.3 $ - $ 673.8
Receivables 5.1 (16.0) 411.2 - 400.3
Inventories:
Finished goods - 531.3 39.3 - 570.6
Raw materials and supplies - 207.9 23.8 - 231.7
Other current assets 3.1 7.2 1.6 - 11.9
-------- --------- -------- --------- ---------
Total current assets 636.8 715.3 536.2 - 1,888.3
Intercompany, net 15.1 475.5 (490.6) - -
Investments and other noncurrent assets 1,200.3 359.0 281.3 (1,435.2) 405.4
Property, plant and equipment, net - 2,933.9 182.9 - 3,116.8
-------- --------- -------- --------- ---------
Total assets $1,852.2 $ 4,483.7 $ 509.8 $(1,435.2) $ 5,410.5
======== ========= ======== ========= =========
Total current liabilities $ 24.4 $ 759.1 $ 115.5 $ - $ 899.0
Long-term debt 100.0 52.6 - - 152.6
Postemployment health care and other insurance benefits - 1,430.5 165.5 - 1,596.0
Pension benefits - 621.3 26.6 - 647.9
Other 17.1 362.2 25.0 - 404.3
Shareholders' equity 1,710.7 1,258.0 177.2 (1,435.2) 1,710.7
-------- --------- -------- --------- ---------
Total liabilities and shareholders' equity $1,852.2 $ 4,483.7 $ 509.8 $(1,435.2) $ 5,410.5
======== ========= ======== ========= =========
</TABLE>
Consolidating Condensed Statement of Operations
(in millions)
<TABLE>
<CAPTION>
Three Months Ended September 30, 1997
------------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
-------- --------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ - $ 974.3 $ 336.5 $ (175.8) $ 1,135.0
Costs and expenses:
Cost of products sold - 842.8 290.7 (175.8) 957.7
Depreciation and amortization - 55.7 6.6 - 62.3
Selling, general and administrative 2.9 29.6 10.8 - 43.3
Results of affiliates operations 85.1 (7.1) 14.8 (78.0) 14.8
Net interest and other (2.0) (0.2) (4.9) - (7.1)
Special charge - 150.0 - - 150.0
-------- --------- -------- --------- ---------
Total 86.0 1,070.8 318.0 (253.8) 1,221.0
-------- --------- -------- --------- ---------
Income (loss) before income taxes (86.0) (96.5) 18.5 78.0 (86.0)
Income tax provision (credit) (34.4) (38.4) 7.2 31.2 (34.4)
-------- --------- -------- --------- ---------
Income before extraordinary loss (51.6) (58.1) 11.3 46.8 (51.6)
Extraordinary loss (3.8) - - - (3.8)
-------- --------- -------- --------- ---------
Net income (loss) $ (55.4) $ (58.1) $ 11.3 $ 46.8 $ (55.4)
======== ========= ======== ========= =========
<CAPTION>
Three Months Ended September 30, 1996
------------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
-------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ - $ 974.4 $ 252.1 $ (177.6) $ 1,048.9
Costs and expenses:
Cost of products sold - 854.6 235.0 (177.6) 912.0
Depreciation and amortization - 62.0 4.2 - 66.2
Selling, general and administrative 2.6 29.1 4.3 - 36.0
Results of affiliates operations (39.7) (3.8) - 43.5 -
Net interest and other (7.6) 0.9 (3.3) - (10.0)
-------- --------- -------- --------- ---------
Total (44.7) 942.8 240.2 (134.1) 1,004.2
-------- --------- -------- --------- ---------
Income before income taxes 44.7 31.6 11.9 (43.5) 44.7
Income tax provision 15.3 10.9 4.1 (15.0) 15.3
-------- --------- -------- --------- ---------
Net income (loss) $ 29.4 $ 20.7 $ 7.8 $ (28.5) $ 29.4
======== ========= ======== ========= =========
</TABLE>
I-7
<PAGE> 9
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1997
------------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
-------- --------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ - $ 2,990.1 $ 834.1 $ (525.1) $ 3,299.1
Costs and expenses:
Cost of products sold - 2,603.3 749.5 (525.1) 2,827.7
Depreciation and amortization - 182.5 15.6 - 198.1
Selling, general and administrative 8.7 91.5 19.4 - 119.6
Results of affiliates operations 13.9 (19.6) 26.3 5.7 26.3
Net interest and other (26.4) 5.1 (5.1) - (26.4)
Special charge - 150.0 - - 150.0
-------- --------- -------- --------- ---------
Total (3.8) 3,012.8 805.7 (519.4) 3,295.3
-------- --------- -------- --------- ---------
Income (loss) before income taxes 3.8 (22.7) 28.4 (5.7) 3.8
Income tax provision (credit) 1.5 (8.9) 11.1 (2.2) 1.5
-------- --------- -------- --------- ---------
Income (loss) before extraordinary loss 2.3 (13.8) 17.3 (3.5) 2.3
Extraordinary loss (3.8) - - - 3.8
-------- --------- -------- --------- ---------
Net income (loss) $ (1.5) $ (13.8) $ 17.3 $ (3.5) $ (1.5)
======== ========= ======== ========= =========
<CAPTION>
Nine Months Ended September 30, 1996
------------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
--------- --------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ - $ 2,922.0 $ 715.2 $ (520.1) $ 3,117.1
Costs and expenses:
Cost of products sold - 2,571.9 669.1 (520.1) 2,720.9
Depreciation and amortization - 189.0 12.2 - 201.2
Selling, general and administrative 8.3 86.2 11.9 - 106.4
Results of affiliates operations (96.7) (1.3) - 98.0 -
Net interest and other (28.1) 5.0 (4.8) - (27.9)
-------- --------- -------- --------- ---------
Total (116.5) 2,850.8 688.4 (422.1) 3,000.6
-------- --------- -------- --------- ---------
Income before income taxes 116.5 71.2 26.8 (98.0) 116.5
Income tax provision 41.8 25.6 9.6 (35.2) 41.8
-------- --------- -------- ---------- ---------
Net income (loss) $ 74.7 $ 45.6 $ 17.2 $ (62.8) $ 74.7
======== ========= ======== ========= =========
</TABLE>
Consolidating Condensed Cash Flows Statement
(in millions)
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1997
-------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
-------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash provided by (used in) operating activities $ (61.6) $ 257.2 $ 62.4 $ - $ 258.0
-------- -------- -------- ------- --------
Investing activities:
Capital expenditures - (213.9) (1.5) - (215.4)
Investment in VP Buildings (187.5) - - - (187.5)
Investment in affiliates - - (69.5) - (69.5)
Net sales of marketable securities 165.4 - - - 165.4
Other (6.3) 0.3 20.6 - 14.6
-------- -------- -------- ------- --------
Net cash used in investing activities (28.4) (213.6) (50.4) - (292.4)
-------- -------- -------- ------- --------
Financing activities:
Proceeds from offering 289.8 - - - 289.8
Pension funding to restored plans - (58.1) (2.1) - (60.2)
Dividends paid:
Preferred (1.7) - - - (1.7)
Common (9.3) - - - (9.3)
Shares repurchased (34.7) - - - (34.7)
-------- -------- -------- ------- --------
Net cash provided by (used in) financing activities 244.1 (58.1) (2.1) - 183.9
-------- -------- -------- ------- --------
Net increase (decrease) in cash and cash equivalents 154.1 (14.5) 9.9 - 149.5
Cash and cash equivalents at beginning of period 62.1 (15.1) 60.4 - 107.4
-------- -------- -------- ------- --------
Cash and cash equivalents at end of period $ 216.2 $ (29.6) $ 70.3 $ - $ 256.9
======== ======== ======== ======= ========
</TABLE>
I-8
<PAGE> 10
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1996
--------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
-------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash provided by (used in) operating activities $ (69.2) $ 339.9 $ 57.4 $ - $ 328.1
-------- -------- -------- -------- --------
Investing activities:
Capital expenditures - (138.4) (0.7) - (139.1)
Investment in affiliates - - (69.1) - (69.1)
Net sales (purchases) of marketable securities (76.2) - - - (76.2)
Other 3.3 4.5 (9.6) - (1.8)
-------- -------- -------- -------- --------
Net cash used in investing activities (72.9) (133.9) (79.4) - (286.2)
-------- -------- -------- -------- --------
Financing activities:
Pension funding to restored plans - (140.8) (3.4) - (144.2)
Dividends paid (8.0) - - - (8.0)
-------- -------- -------- -------- --------
Net cash used in financing activities (8.0) (140.8) (3.4) - (152.2)
-------- -------- -------- -------- --------
Net increase (decrease) in cash and cash equivalents (150.1) 65.2 (25.4) - (110.3)
Cash and cash equivalents at beginning of period 276.8 (89.9) 79.0 - 265.9
-------- -------- -------- -------- --------
Cash and cash equivalents at end of period $ 126.7 $ (24.7) $ 53.6 $ - $ 155.6
======== ======== ======== ======== ========
</TABLE>
I-9
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS - COMPARISON OF THIRD QUARTER AND FIRST NINE MONTHS 1997
AND 1996
Sales
- -----
Sales of $1.135 billion in the third quarter of 1997 increased by $86.1
million (8%) from the third quarter of 1996. Third quarter 1997 steel shipments
of 2.0 million tons decreased by 20,000 tons (1%) from the third quarter of
1996. The overall sales increase in the third quarter of 1997 resulted from the
VP Buildings sales of $84.7 million included since its acquisition on July 2,
1997 and also included higher average steel selling prices of 1%.
Sales of $3.299 billion in the first nine months of 1997 increased by
$182.0 million (6%) from the first nine months of 1996. Steel shipments in the
first nine months of 1997 of 6.1 million tons were equal to the first nine
months of 1996. The overall sales increase in the first nine months of 1997
included higher average steel selling prices of 3% and the inclusion of VP
Buildings sales.
Nonsteel sales in the third quarter of 1997 of $122 million and $188
million in the first nine months of 1997 were higher than the comparable 1996
periods, primarily due to VP Buildings sales.
Production and Costs
- --------------------
Raw steel production of 2.1 million tons in the third quarter of 1997
decreased by 37,000 tons compared with the third quarter of 1996. The average
operating rate (of AISI defined capacity) at the Company's steelmaking
facilities during the third quarter of 1997 was 101% compared with 103% in 1996.
Raw steel production of 6.6 million tons in the first nine months of
1997 increased by 43,000 tons compared with the first nine months of 1996. The
average operating rate (of AISI defined capacity) at the Company's steelmaking
facilities during the first nine months of 1997 was 106% compared with 105% in
1996.
Cost of products sold as a percentage of sales decreased to 84% in the
third quarter of 1997 and decreased to 86% in the first nine months of 1997 from
87% in the comparable 1996 periods. The decrease in the first nine months of
1997 is primarily due to the higher average selling prices in the 1997 period,
partially offset by increased ore production costs and higher steel costs
primarily due to a shift in the mix of products sold. In the third quarter of
1997, the Company completed a required periodic actuarial valuation and
recognized the effect of favorable experience in part from the Company's
continuing efforts to contain medical cost escalation and the benefit of pension
plan funding and earnings. This resulted in an after-tax reduction of $14
million in retiree costs related to the first half of the year.
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Results of Affiliates Operations
- --------------------------------
Results of affiliates operations consists principally of LTV's share of
start-up operating losses from its 50% interest in Trico Steel Company, L.L.C.
("Trico"), which commenced commercial operations in the second quarter of 1997.
Trico continues to incur expenses in excess of revenues as part of its start-up
process.
LIQUIDITY AND CAPITAL RESOURCES
The Company's sources of liquidity include cash and cash equivalents,
marketable securities, cash from operations, amounts available under credit
facilities and other external sources of funds. Management believes that these
sources are sufficient to fund the current requirements of working capital,
capital expenditures, investments in joint ventures, pensions and postemployment
health care.
During the first nine months of 1997, cash provided by operating
activities amounted to $258.0 million. In the first nine months of 1997, total
cash and cash equivalents increased by $149.5 million. Major uses of cash during
the first nine months of 1997 included the VP Buildings acquisition of $187.5
million subject to final closing adjustments and expenses; capital expenditures
of $215.4 million; pension plan contributions of $60.2 million, which prefunds a
portion of the 1998 required contributions; investments in steel-related
businesses of $69.5 million; and $34.7 million for the repurchase of Company
stock. With the pension plan contributions made this year, LTV's restored plans
are more than 100% funded at September 30, 1997, on an economic basis using an
8.5% discount rate. Since December 31, 1996, total cash, cash equivalents and
marketable securities have decreased by $15.9 million to $657.9 million at
September 30, 1997.
In September 1997, LTV issued $298.2 million Senior Notes ($300
million face value) due September 2007 at 8.20% interest payable semiannually
and guaranteed by LTV's wholly-owned subsidiary, LTV Steel Company, Inc.
Proceeds of the offering were used to finance the acquisition of VP Buildings
and to redeem $100 million principal amount of Senior Secured Convertible Notes
due June 2003. At September 30, 1997, pursuant to a binding contract, the $100
million Senior Secured Convertible Notes were reclassified as current other
accrued liabilities with the actual redemption occurring in October 1997. The
premium associated with the early redemption resulted in an extraordinary loss
of $3.8 million net of tax.
The Company's receivables credit facility permits borrowings of up to
$320 million for working capital requirements and general corporate purposes,
$100 million of which may be used to issue letters of credit. At September 30,
1997, $320 million was permitted to be borrowed; however, no borrowings were
outstanding and letters of credit outstanding amounted to $24.1 million under
this facility. The Company also has a separate letter of credit facility that
provides for the issuance of up to $150 million in letters of credit. At
September 30, 1997, letters of credit totaling $75.5 million were outstanding
under this facility.
The Company's Senior Notes, long-term debt and credit facilities'
agreements contain various covenants that require the Company to maintain
certain financial ratios and amounts. These agreements, as well as the Company's
agreement with the Pension Benefit Guaranty Corporation (the "PBGC Agreement"),
place certain restrictions on payments of dividends, share repurchases, capital
expenditures,
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investments in subsidiaries and borrowings. Under the terms of the most
restrictive debt covenant, approximately $73 million of retained earnings are
available for common stock dividend payments at September 30, 1997.
Substantially all of the Company's receivables and inventories are pledged as
collateral under these debt agreements. The Company does not believe that the
restrictions contained in these financial and operating covenants will cause
significant limitations on its financial flexibility.
Domestic steel producers face significant competition from foreign
producers. Foreign competition is intense and has adversely affected product
prices in the United States and tonnage sold by domestic producers. The
intensity of foreign competition is substantially affected by the relative
strength of foreign economics and fluctuations in the value of the United States
dollar against foreign currencies. Steel imports have increased as the value of
the dollar has risen in relation to foreign currencies. Further, some foreign
steel producers are owned, controlled or subsidized by their governments.
Decisions by some foreign producers with respect to production and sales may be
influenced to a greater degree by political and economic policy considerations
than by prevailing market conditions. Based on reports by the American Iron and
Steel Institute ("AISI"), imports of flat rolled product increased approximately
41% in the first eight months of 1997 from the comparable period in 1996 to
approximately 9.8 million tons, or 20% of domestic steel consumption.
LTV also competes with other domestic integrated producers, some of
which have greater resources than the Company, and with minimills, which are
relatively efficient, low-cost producers that generally produce steel from scrap
in electric furnaces, have lower employment and environmental costs and
generally target regional markets. Recently developed thin slab casting
technologies have allowed some minimill producers to enter certain sectors of
the flat rolled market that have traditionally been supplied by integrated
producers, and other producers have announced their intention to do the same.
Industry experts estimate that current domestic raw steel production capacity
will be increased by more than 8% during the next two years as new minimills,
now under construction, engaged in start-up operations or otherwise proposed,
begin operation.
In the case of many steel products, there is substantial competition
from manufacturers of other products, including plastics, aluminum, ceramics,
glass, wood and concrete.
Joint ventures have in the past been one of the Company's primary
means for expanding its operations, and the Company expects to continue to make
investments in joint ventures. Many of the joint venture opportunities that the
Company is pursuing are start-up operations and require significant investments
before becoming operational. The development, construction and start-up of such
operations are themselves subject to numerous risks. After start-up, further
investments may be required and significant losses could be incurred before any
profits are realized.
On July 14, 1997, the Company announced its intent to close its
Pittsburgh coke facility by the end of the year, which resulted in a special
charge of $150 million in the third quarter of 1997. Approximately two-thirds of
this charge is payable in cash over a period of several years. The Company has
entered into long-term supply contracts, which when combined with the Company's
own coke production capability, will fulfill all the Company's coke
requirements. In August 1997, the USWA filed a grievance contesting the intended
plant closing. The grievance, subject to binding arbitration, began in October
1997, and a decision is expected sometime after November 1997.
The Company's two electro-galvanizing facilities negotiated new labor
agreements with the United Steelworkers of America that expire on August 1,
1999.
ENVIRONMENTAL LIABILITIES AND OTHER
LTV is subject to changing and increasingly stringent environmental
laws and regulations concerning air emissions, water discharges and waste
disposal, as well as remediation activities that involve the clean-up of
environmental media such as soils and groundwater ("remediation liabilities").
As a consequence, the Company has incurred, and will continue to incur,
substantial capital expenditures and operating and maintenance expenses in order
to comply with such requirements. Additionally, if any of the Company's
facilities are unable to meet required environmental standards or laws, those
operations could be temporarily or permanently closed.
The Company spent $8.4 million during the first nine months of 1997 for
environmental clean-up and related matters at operating and idled facilities,
and at September 30, 1997, has a recorded
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<PAGE> 14
liability of $96.6 million for known and identifiable environmental and related
matters. As the Company becomes aware of additional matters or obtains more
information, it may be required to record additional liabilities for
environmental remediation. The Company also spent $22.9 million in the first
nine months of 1997 for environmental compliance-related capital expenditures
and expects it will be required to spend an average of approximately $35 million
annually in capital expenditures during the next five years to meet
environmental standards.
As is the case with most other companies using computers in their
operations, the Company is faced with the task of addressing the Year 2000
problem during the next two years. The Company is currently engaged in a
comprehensive project to upgrade its computer software in its information
technology, manufacturing and facilities systems to programs that will be Year
2000 compliant. In addition, over a three-year period, the Company currently
estimates that it will expense approximately $50 million related to Year 2000
compliant work. Approximately $10 million will be expensed in 1997. Failure by
the Company and/or vendors working on this project to complete the Year 2000
compliance work in a timely manner could have a material adverse effect on the
Company's operations.
OUTLOOK
Through the end of the third quarter of 1997, the Company has continued
to experience a high demand for its products and a strong rate of incoming
orders, although this may not continue in the future due to high import levels
and increased domestic capacity and competition. These could negatively affect
future market prices for the Company's products.
This report includes forward-looking statements. Our use of the words
"outlook," "believes," "estimate," "expect" and similar words are intended to
identify these statements as forward looking. These statements represent our
current judgment on what the future holds. While we believe them to be
reasonable, a number of important factors could cause actual results to differ
materially from those projected. These factors include relatively small changes
in market price or market demand; changes in domestic capacity; changes in raw
material costs; increased operating costs; loss of business from major
customers, especially for high value-added product; unanticipated expenses;
substantial changes in financial markets; labor unrest; unfair foreign
competition; major equipment failure; unanticipated results in pending legal
proceedings; or difficulties in implementing information technology, including
Year 2000 compliant systems. In this regard, we also direct your attention to
factors discussed above in the Management's Discussion and Analysis.
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<PAGE> 15
PART II
ITEM 1. LEGAL PROCEEDINGS.
In August 1997, the United Steelworkers of America ("USWA") filed a
grievance, which is subject to binding arbitration, alleging that the Company's
actions in connection with its recently announced intention to close
permanently its Pittsburgh Coke Plant violated the terms of the Company's labor
agreement with the USWA. The USWA seeks a ruling which would require the
Company to rescind the shutdown notice and prohibit it from contracting out the
production of the Pittsburgh Coke Plant. The USWA also seeks compensation for
any damages that the employees at the plant may have suffered.
In September 1997, the Company and Kawasaki Steel Corporation reached a
settlement in the patent litigation described under the heading "Kawasaki
Litigation" in Item 3, Legal Proceedings, in the Company's Report on Form 10-K
for the year ended December 31, 1996. The agreement provides for a payment of
$2 million by the Company and a royalty-free license of certain patents owned
by Kawasaki.
In October 1997, the Company was notified that the U.S. Environmental
Protection Agency ("EPA") had recommended that a lawsuit be filed by the U.S.
Department of Justice in federal court against LTV Steel Company, Inc. alleging
past violations at the Company's Pittsburgh Coke Plant of particulate matter
emission limits under the Clean Air Act. The EPA indicated that the government
would seek both injunctive relief to prevent future violations and substantial
civil penalties and that it would be willing to enter into settlement
negotiations with the Company prior to filing the suit. The EPA also suggested
that a complete rebuild of the coke oven batteries "may not be necessary or
appropriate"......"for some time to come." However, the EPA acknowledged that
it had only limited information in its possession and had not had the
opportunity to review the results of recent evaluations by the Company's
consultants which indicated that a complete rebuild of the batteries would be
necessary. For information relating to the pending arbitration proceeding with
the USWA concerning the Company's recently announced intention to close
permanently the Pittsburgh Coke Plant, see above.
ITEM 5. OTHER INFORMATION
BY-LAW AMENDMENTS:
ADVANCE STOCKHOLDER NOTICE REQUIREMENTS AND OTHER PROVISIONS
LTV has provisions in its By-Laws intended to promote the efficient
functioning of its annual meetings. The provisions describe LTV's right to
determine the time, place and conduct of stockholder meetings, require advance
notice by mail or delivery to LTV of stockholder proposals or director
nominations for annual meetings and require persons wishing to conduct a
solicitation of written consents of stockholders or to call a special meeting of
stockholders to apply to the Board of Directors to set a record date for the
consent solicitation or to determine whether the requisite number of
stockholders desire to call a special meeting.
Under the By-Laws, stockholders must provide LTV with at least 60 days, but
no more than 90 days, notice prior to the announced Tentative Meeting Date of
(i) business the stockholder is proposing for consideration at that meeting and
(ii) persons the stockholder intends to nominate for election as directors at
that meeting.
The LTV Board of Directors has selected April 24, 1998 as the Tentative
Meeting Date for the next Annual Meeting of Stockholders. Accordingly,
stockholders who intend to propose business for consideration, or to nominate
persons for election as directors at the 1998 Annual Meeting, must provide
notice and the required information to the Company no earlier than January 24,
1998 and no later than February 23, 1998.
REQUIRED APPROVAL FOR CERTAIN PURCHASES OF
COMMON STOCK AND SERIES A WARRANTS
For the purpose of preserving LTV's ability to utilize certain favorable
tax attributes, Article Ninth of LTV's Restated Certificate of Incorporation
prohibits, with certain limited exceptions, any unapproved acquisition of Common
Stock or Series A Warrants that would cause the ownership
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<PAGE> 16
interest percentage of the acquirer or any other person to increase to 4.5% or
above. A person's ownership interest percentage for purposes of Article Ninth is
determined by reference to specified federal income tax principles, including
attribution of shares from certain related parties, deemed exercise of rights to
acquire stock (such as the Company's Series A Warrants) and aggregation of
shares purchased by persons acting in concert. PURCHASES OF COMMON STOCK OR
SERIES A WARRANTS FROM ANY PERSON OTHER THAN THE COMPANY ARE SUBJECT TO THE
LIMITATIONS IMPOSED BY ARTICLE NINTH, AND ANY UNAPPROVED PURCHASE IN EXCESS OF
THE AMOUNTS PERMITTED BY ARTICLE NINTH WILL BE VOID AB INITIO. A PROSPECTIVE
PURCHASER OF COMMON STOCK OR SERIES A WARRANTS WHO BELIEVES THAT IT MAY BE
SUBJECT TO THE LIMITATIONS IMPOSED BY ARTICLE NINTH SHOULD CONSULT WITH THEIR
ADVISORS OR LTV IN ADVANCE OF ACQUIRING SUCH SECURITIES TO DETERMINE IF ADVANCE
APPROVAL MUST BE OBTAINED FROM LTV'S BOARD OF DIRECTORS.
LTV's Board of Directors was required by Article Ninth of LTV's Restated
Certificate of Incorporation to consider during 1996 whether to waive the
transfer restrictions in Article Ninth with respect to all future transfers of
securities. At its October 1996 meeting, the Board of Directors, after
considering all relevant factors, determined not to waive Article Ninth at that
time.
ITEM 6. EXHIBITS AND REPORTS ON 8-K
(a) Exhibits
Certain of the exhibits to this Report are hereby incorporated by
reference, as specified below, to other documents filed with the Commission by
LTV. Exhibit designations below correspond to the numbers assigned to exhibit
classifications in Regulation S-K.
(2)-(1) - The LTV Second Modified Joint Plan of Reorganization
(incorporated herein by reference to Exhibit (28)(a)-(3) to
LTV's Annual Report on Form 10-K for the Fiscal Year ended
December 31, 1992, filed with the Commission (File No. 1-4368)
on March 31, 1993)
(2)-(2) - Confirmation Order of the United States Bankruptcy Court for
the Southern District of New York entered on May 27, 1993,
confirming the LTV Second Modified Joint Plan of
Reorganization (which includes, as Exhibit C to the
Confirmation Order, amendments to the LTV Second Modified
Joint Plan of Reorganization) (incorporated herein by
reference to Exhibit 2(2) to LTV's Current Report on Form 8-K,
filed with the Commission (File No. 1-4368) on June 7, 1993)
(3)-(1) - Restated Certificate of Incorporation of LTV dated June 28,
1993 (incorporated herein by reference to Exhibit 3.1 to LTV's
Registration Statement on Form S-1 [Registration No.
33-50217])
(3)-(2) - Certificate of Designations for Series B Preferred Stock
(incorporated herein by reference to Exhibit 4 to SMI America,
Inc.'s 13D Filing)
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<PAGE> 17
(3)-(3) - Amendments to LTV's By-Laws adopted on October 25, 1996
(incorporated herein by reference to Exhibit (3)-(1) to LTV's
Report on Form 10-Q for the quarter ended September 30, 1996)
(10)-(1) - LTV Executive Benefit Plan as amended and restated effective
January 1, 1985 (incorporated herein by reference to Exhibit
(10)(c)-(2) to LTV's Report on Form 10-K for the year ended
December 31, 1985)
(10)-(2) - Amendment to LTV Executive Benefit Plan adopted November 20,
1987 (incorporated herein by reference to Exhibit (10)(c)-(3)
to LTV's Report on Form 10-K for the year ended December 31,
1987)
(10)-(3) - LTV Excess Benefit Plan dated as of January 1, 1985
(incorporated herein by reference to Exhibit (10)(c)-(5) to
LTV's Report on Form 10-K for the year ended December 31,
1984)
(10)-(4) - Settlement Agreement dated as of June 28, 1993 between LTV,
the PBGC, the Initial LTV Group (as defined in the Settlement
Agreement) and LTV, as Administrator of the Restored Plans
(incorporated herein by reference to Exhibit 10.10 to LTV's
Report on Form 10-Q for the quarter ended June 30, 1993)
(10)-(5) - Assignment, Pledge and Security Agreement dated as of June
28, 1993 between LTV Steel Company, Inc. and the PBGC
(incorporated herein by reference to Exhibit 10.11 to LTV's
Report on Form 10-Q for the quarter ended June 30, 1993)
(10)-(6) - Securities Purchase Agreement dated as of May 26, 1993 by
and among LTV, LTV Steel Company, Inc. and SMI America, Inc.
(incorporated herein by reference to Exhibit 2 to SMI America,
Inc.'s 13D Filing)
(10)-(7) - Common Stock Registration Rights Agreement dated as of June
28, 1993 by and between LTV and SMI America, Inc.
(incorporated herein by reference to Exhibit 5 to SMI America,
Inc.'s 13D Filing)
(10)-(8) - Consultation and Management Participation Agreement dated as
of June 28, 1993 between LTV and Sumitomo Metal Industries,
Ltd. (incorporated herein by reference to Exhibit 6 to SMI
America, Inc.'s 13D Filing)
(10)-(9) - L-S Exchange Right and Security Agreement dated as of June
28, 1993 by and among LTV/EGL Holding Company, Sumikin EGL
Corp., LTV, SMI America Inc., and Sumitomo Metal USA
Corporation (incorporated herein by reference to Exhibit 7 to
SMI America, Inc.'s 13D Filing)
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<PAGE> 18
(10)-(10) - Letter of Credit Agreement dated as of October 12, 1994
among LTV Steel Company, Inc., Continental Emsco Company, LTV
Steel Mining Company, LTV Steel Tubular Products Company, LTV,
various financial institutions and BT Commercial Corporation
(incorporated herein by reference to Exhibit (10)-(12) to
LTV's Report on Form 10-Q for the quarter ended September 30,
1994)
(10)-(11) - Subsidiary Guaranty dated as of October 12, 1994 by Georgia
Tubing Corporation, Youngstown Erie Corporation, Erie B
Corporation and Erie I Corporation for the benefit of BT
Commercial Corporation as agent (incorporated herein by
reference to Exhibit (10)-(13) to LTV's Report on Form 10-Q
for the quarter ended September 30, 1994)
(10)-(12) - Collateral Account Agreement dated as of October 12, 1994
among LTV Steel Company, Inc., Continental Emsco Company, LTV
Steel Mining Company, LTV Steel Tubular Products, LTV and BT
Commercial Corporation as collateral agent (incorporated
herein by reference to Exhibit (10)-(14) to LTV's Report on
Form 10-Q for the quarter ended September 30, 1994)
(10)-(13) - Inventory Security Agreement dated as of June 28, 1993 and
amended and restated as of October 12, 1994 among LTV, LTV
Steel Company, Inc., LTV Steel Mining Company, Continental
Emsco Company, LTV Steel Tubular Products Company and BT
Commercial Corporation as agent (incorporated herein by
reference to Exhibit (10)-(15) to LTV's Report on Form 10-Q
for the quarter ended September 30, 1994)
(10)-(14) - Inventory Intercreditor Agreement dated as of June 28, 1993
and amended and restated as of October 12, 1994 among BT
Commercial Corporation as agent for the Lenders and SMI
America, Inc. as agent for the Noteholders (incorporated
herein by reference to Exhibit (10)-(16) to LTV's Report on
Form 10-Q for the quarter ended September 30, 1994)
(10)-(15) - Intercreditor Collateral Account Agreement dated as of
October 12, 1994 by and among LTV Steel Company, Inc., LTV and
BT Commercial Corporation (incorporated herein by reference to
Exhibit (10)-(17) to LTV's Report on Form 10-Q for the quarter
ended September 30, 1994)
(10)-(16) - Pledge Agreement dated as of October 12, 1994 between LTV,
LTV Steel Company, Inc., Continental Emsco Company, LTV Steel
Tubular Products Company, Georgia Tubing Corporation and BT
Commercial Corporation (incorporated herein by reference to
Exhibit (10)-(18) to LTV's Report on Form 10-Q for the quarter
ended September 30, 1994)
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<PAGE> 19
(10)-(17) - Amended and Restated Subordination Agreement dated as of
June 28, 1993 and amended and restated as of October 12, 1994
among the PBGC, BT Commercial Corporation and Chemical Bank
(incorporated herein by reference to Exhibit (10)-(19) to
LTV's Report on Form 10-Q for the quarter ended September 30,
1994)
(10)-(18) - Amendments Nos. 1 and 2 to the Securities Purchase Agreement
dated as of May 26, 1993 among LTV, LTV Steel Company, Inc.
and SMI America, Inc. (incorporated herein by reference to
Exhibit (10)-(20) to LTV's Report on Form 10-Q for the quarter
ended September 30, 1994)
(10)-(19) - Amendments Nos. 1 through 4 to the Settlement Agreement
dated as of June 28, 1993 by and among the PBGC, LTV, the
Initial LTV Group (as defined in the Settlement Agreement) and
LTV, as Administrator of the Restored Plans (incorporated
herein by reference to Exhibit (10)-(21) to LTV's Report on
Form 10-Q for the quarter ended September 30, 1994)
(10)-(20) - Revolving Credit Agreement dated as of October 12, 1994
among LTV Sales Finance Company, the financial institutions
parties thereto as banks, the issuing banks, the facility
agent and collateral agent (incorporated herein by reference
to Exhibit (10)-(22) to LTV's Report on Form 10-Q for the
quarter ended September 30, 1994)
(10)-(21) - Receivables Purchase and Sale Agreement dated as of October
12, 1994 among LTV, LTV Steel Company, Inc., Continental Emsco
Company, LTV Steel Tubular Products Company, Georgia Tubing
Corporation and LTV Sales Finance Company (incorporated herein
by reference to Exhibit (10)-(23) to LTV's Report on Form 10-Q
for the quarter ended September 30, 1994)
(10)-(22) - Accession Agreement dated as of October 12, 1994 among LTV
Sales Finance Company, the financial institutions listed on
the signature pages thereof, the issuing bank named thereon,
and Bankers Trust Company as facility agent and collateral
agent (incorporated herein by reference to Exhibit (10)-(24)
to LTV's Report on Form 10-Q for the quarter ended September
30, 1994)
(10)-(23) - Trust Termination Acknowledgment and Agreement, dated
October 12, 1994, between LTV Sales Finance Company and
Wilmington Trust Company (incorporated herein by reference to
Exhibit (10)-(25) to LTV's Report on Form 10-Q for the quarter
ended September 30, 1994)
(10)-(24) - Assignment and Transfer Agreement, dated as of October 12,
1994, by and between LTV Master Receivables Trust and LTV
Sales Finance Company (incorporated herein by reference to
Exhibit (10)-
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<PAGE> 20
(26) to LTV's Report on Form 10-Q for the quarter ended
September 30, 1994)
(10)-(25) - Collateral Trust Agreement dated as of May 25, 1993 among
LTV, LTV Steel Company, Inc., United Steelworkers of America
and Bank One Ohio Trust Company, NA, as Collateral Trustee
(incorporated herein by reference to Exhibit 10.33 to LTV's
Report on Form 10-Q for the quarter ended June 30, 1993)
(10)-(26) - Open-2nd Mortgage, Security Agreement and Fixture Filing
dated as of June 28, 1993 by LTV Steel Company, Inc. to Bank
One Ohio Trust Company, N.A. (incorporated herein by reference
to Exhibit 10.34 to LTV's Report on Form 10-Q for the quarter
ended June 30, 1993)
(10)-(27) - License Agreement dated as of June 28, 1993 between LTV
Steel Company, Inc. and Bank One Ohio Trust Company, N.A.
(incorporated herein by reference to Exhibit 10.35 to LTV's
Report on Form 10-Q for the quarter ended June 30, 1993)
(10)-(28) - Warrant Agreement dated as of June 28, 1993 between LTV and
Society National Bank, as Warrant Agent (incorporated herein
by reference to Exhibit 10.37 to LTV's Report on Form 10-Q for
the quarter ended June 30, 1993)
(10)-(29) - Settlement Agreement and Stipulated Order on behalf of the
United States of America on behalf of the United States
Environmental Protection Agency approved by the United States
Bankruptcy Court Southern District of New York (the "Court")
on April 15, 1993 and supplemented by Exhibit 10.38 below
(incorporated herein by reference to Exhibit 10.38 to LTV's
Report on Form 10-Q for the quarter ended June 30, 1993)
(10)-(30) - Second Settlement Agreement and Stipulated Order
supplementing 10.36 above and approved by the Court on May 19,
1993 (incorporated by reference to Exhibit 10.39 to LTV's
Registration Statement on Form S-1 [Registration No.
33-50217])
(10)-(31) - Settlement Agreement and Stipulated Order on behalf of the
State of Minnesota approved by the Court on May 19, 1993
(incorporated herein by reference to Exhibit 10.39 to LTV's
Report on Form 10-Q for the quarter ended June 30, 1993)
(10)-(32) - Settlement Agreement and Stipulated Order on behalf of the
State of Indiana on behalf of the Indiana Department of
Environmental Management approved by the Court on May 24, 1993
(incorporated herein by reference to Exhibit 10.40 to LTV's
Report on Form 10-Q for the quarter ended June 30, 1993)
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<PAGE> 21
(10)-(33) - Settlement Agreement and Stipulated Order on behalf of the
State of New York and approved by the Court on May 24, 1993
(incorporated herein by reference to Exhibit 10.42 to LTV's
Report on Form 10-Q for the quarter ended June 30, 1993)
(10)-(34) - Settlement Agreement and Stipulated Order on behalf of the
State of Connecticut and approved by the Court on May 19, 1993
(incorporated herein by reference to Exhibit 10.43 to LTV's
Report on Form 10-Q for the quarter ended June 30, 1993)
(10)-(35) - Settlement Agreement and Stipulated Order on behalf of the
Commonwealth of Pennsylvania and approved by the Court on May
24, 1993 (incorporated herein by reference to Exhibit 10.44 to
LTV's Report on Form 10-Q for the quarter ended June 30, 1993)
(10)-(36) - Settlement Agreement and Stipulated Order on behalf of the
State of Ohio on behalf of the Ohio Environmental Protection
Agency and approved by the Court on May 24, 1993 (incorporated
herein by reference to Exhibit 10.45 to LTV's Report on Form
10-Q for the quarter ended June 30, 1993)
(10)-(37) - Settlement Agreement and Stipulated Order on behalf of the
State of Georgia and approved by the Court on May 24, 1993
(incorporated herein by reference to Exhibit 10.46 to LTV's
Report on Form 10-Q for the quarter ended June 30, 1993)
(10)-(38) - Closing Agreement Between LTV, its subsidiaries and the
Commissioner of Internal Revenue as filed with the United
States Bankruptcy Court for the Southern District of New York
on May 14, 1993 (incorporated herein by reference to Exhibit
10.47 to LTV's Report on Form 10-Q for the quarter ended June
30, 1993)
(10)-(39) - The LTV Corporation Non-Employee Directors Stock Option Plan
adopted on October 22, 1993 (incorporated herein by reference
to Exhibit 10.49 to Amendment No. 2 to LTV's Registration
Statement on Form S-1 [Registration No. 33-50217])
(10)-(40) - Amendment to LTV Executive Benefit Plan adopted October 22,
1993 (incorporated herein by reference to Exhibit 10.50 to
Amendment No. 2 to LTV's Registration Statement on Form S-1
[Registration No. 33-50217])
(10)-(41) - LTV Executive Benefit Trust Agreement approved on October
22, 1993 (incorporated herein by reference to Exhibit 10.51 to
Amendment No. 2 to LTV's Registration Statement on Form S-1
[Registration No. 33-50217])
(10)-(42) - The LTV Corporation Supplemental Management Retirement Plan
adopted on October 22, 1993 (incorporated herein by reference
to
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<PAGE> 22
Exhibit 10.52 to Amendment No. 2 to LTV's Registration
Statement on Form S-1 [Registration No. 33-50217])
(10)-(43) - The LTV Corporation Supplemental Management Retirement Trust
Agreement approved on October 22, 1993 (incorporated herein by
reference to Exhibit 10.53 to Amendment No. 2 to LTV's
Registration Statement on Form S-1 [Registration No.
33-50217])
(10)-(44) - The LTV Corporation Management Incentive Program as amended
on January 28, 1994 (incorporated by reference to Exhibit
(10)-(53) to LTV's Report on Form 10-K for the year ended
December 31, 1993)
(10)-(45) - Amendment to The LTV Corporation Supplemental Management
Retirement Plan adopted on January 28, 1994 (incorporated by
reference to Exhibit (10)-(54) to LTV's Report on Form 10-K
for the year ended December 31, 1993)
(10)-(46) - Amendment to LTV Executive Benefit Plan adopted October 28,
1994 (incorporated herein by reference to Exhibit (10)-(48) to
LTV's Report on Form 10-Q for the quarter ended September 30,
1994)
(10)-(47) - Amendment to The LTV Corporation Management Incentive
Program adopted October 28, 1994 (incorporated herein by
reference to Exhibit (10)-(49) to LTV's Report on Form 10-Q
for the quarter ended September 30, 1994)
(10)-(48) - Amendment to The LTV Corporation Supplemental Management
Retirement Plan adopted on October 28, 1994 (incorporated
herein by reference to Exhibit (10)-(51) to LTV's Report on
Form 10-Q for the quarter ended September 30, 1994)
(10)-(49) - Amendment No. 5 to the Settlement Agreement dated as of June
28, 1993 by and among the PBGC, LTV, the Initial LTV Group and
LTV, as Administrator of the Restored Plans (incorporated
herein by reference to Exhibit (10)-(55) to LTV's Report on
Form 10-K for the year ended December 31, 1994)
(10)-(50) - The Hourly Employee Stock Payment Alternative Plan
(incorporated herein by reference to Exhibit 4.3 to LTV's
Registration Statement on Form S-8 [Registration No.
33-56861])
(10)-(51) - Amendments Nos. 1 through 4 to the Letter of Credit
Agreement dated as of October 12, 1994 among LTV Steel
Company, Inc., Continental Emsco Company, LTV Steel Mining
Company, LTV Steel Tubular Products Company, LTV, various
financial institutions and BT Commercial Corporation
(incorporated herein by reference to Exhibit (10)-(56) to
LTV's Report on Form 10-Q for the quarter ended September 30,
1995)
II-8
<PAGE> 23
(10)-(52) - Amendment No. 1 to the Receivables Purchase and Sale
Agreement dated as of October 12, 1994 among LTV, LTV Steel
Company, Inc., Continental Emsco Company, LTV Steel Tubular
Products Company, Georgia Tubing Corporation and LTV Sales
Finance Company (incorporated herein by reference to Exhibit
(10)-(57) to LTV's Report on Form 10-Q for the quarter ended
September 30, 1995)
(10)-(53) - Amendments Nos. 6 and 7 to the Settlement Agreement dated as
of June 28, 1993 by and among the PBGC, LTV, the Initial LTV
Group (as defined in the Settlement Agreement) and LTV, as
Administrator of the Restored Plans (incorporated herein by
reference to Exhibit (10)-(58) to LTV's Report on Form 10-Q
for the quarter ended September 30, 1995)
(10)-(54) - Amendment No. 8 to the Settlement Agreement dated as of June
28, 1993 by and among the PBGC, LTV, the Initial LTV Group (as
defined in the Settlement Agreement) and LTV as Administrator
of the Restated Plans (incorporated herein by reference to
Exhibit (10)-(59) to LTV's Report on Form 10-K for the year
ended December 31, 1995)
(10)-(55) - Amendment No. 5 dated as of November 15, 1995 to the Letter
of Credit Agreement dated as of October 12, 1994 among LTV,
LTV Steel Company, Inc., Continental Emsco Company, LTV Steel
Mining Company, LTV Steel Tubular Products Company, various
financial institutions and BT Commercial Corporation
(incorporated herein by reference to Exhibit (10)-(60) to
LTV's Report on Form 10-Q for the quarter ended March 31,
1996)
(10)-(56) - Amendment No. 6 dated as of February 14, 1996 to the Letter
of Credit Agreement dated as of October 12, 1994 among LTV,
LTV Steel Company, Inc., Continental Emsco Company, LTV Steel
Mining Company, LTV Steel Tubular Products Company, various
financial institutions and BT Commercial Corporation
(incorporated herein by reference to Exhibit (10)-(61) to
LTV's Report on Form 10-Q for the quarter ended March 31,
1996)
(10)-(57) - Amendment No. 7 dated as of June 30, 1996 to the Letter of
Credit Agreement dated as of October 12, 1994 among LTV, LTV
Steel Company, Inc., Continental Emsco Company, LTV Steel
Mining Company, LTV Steel Tubular Products Company, various
financial institutions and BT Commercial Corporation
(incorporated herein by reference to Exhibit (10)-(61) to
LTV's Report on Form 10-Q for the quarter ended June 30, 1996)
(10)-(58) - The LTV Corporation Amended and Restated Non-Employee
Directors' Equity Compensation Plan adopted on November 22,
II-9
<PAGE> 24
1996 (incorporated herein by reference to Exhibit (10)-(58) to
LTV's Report on Form 10-K for the year ended December 31,
1996)
(10)-(59) - The LTV Corporation Amended and Restated Non-Employee
Directors' Deferred Compensation Plan adopted on November 22,
1996 (incorporated herein by reference to Exhibit (10)-(59) to
LTV's Report on Form 10-K for the year ended December 31,
1996)
(10)-(60) - The LTV Corporation Amended and Restated Executive Deferred
Compensation Plan adopted on October 25, 1996 (incorporated
herein by reference to Exhibit (10)-(60) to LTV's Report on
Form 10-K for the year ended December 31, 1996)
(10)-(61) - Amendment No. 9 to the Settlement Agreement dated as of June
28, 1993 by and among the PBGC, LTV, the Initial LTV Group (as
defined in the Settlement Agreement) and LTV as Administrator
of the Restated Plans (incorporated herein by reference to
Exhibit (10)-(61) to LTV's Report on Form 10-K for the year
ended December 31, 1996)
(10)-(62) - Amendment No. 10 to the Settlement Agreement dated as of
June 28, 1993 by and among the PBGC, LTV, the Initial LTV
Group (as defined in the Settlement Agreement) and LTV as
Administrator of the Restated Plans (incorporated herein by
reference to Exhibit (10)-(62) to LTV's Report on Form 10-Q
for the quarter ended March 31, 1997)
(10)-(63) - Amendments Nos. 8, 9 and 10 to the Letter of Credit
Agreement dated as of October 12, 1994 among LTV, LTV Steel
Company, Inc., LTV Steel Mining Company, LTV Steel Tubular
Products Company, various financial institutions and BT
Commercial Corporation (filed herewith)
(11) - Statement re Computation of Per Share Earnings (filed
herewith)
(27) - Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
No report on Form 8-K was filed by the registrant for the relevant
period.
II-10
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE LTV CORPORATION
----------------------------------
(Registrant)
By /s/ Arthur W. Huge
----------------------------------
Arthur W. Huge
Senior Vice President
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: November , 1997
--------------------------
<PAGE> 1
EIGHTH AMENDMENT TO LETTER OF CREDIT AGREEMENT
----------------------------------------------
EIGHTH AMENDMENT (the "Amendment"), dated as of June 23, 1997, among
The LTV Corporation, a Delaware corporation ("LTV"), LTV Steel Company, Inc., a
New Jersey corporation ("LTVSC"), LTV Steel Mining Company, a Minnesota limited
partnership ("LTVSM"), LTV Steel Tubular Products Company, a Delaware
corporation ("LTVSTP", and together with LTVSC and LTVSM, the "Borrowers"), the
financial institutions party to the Credit Agreement referred to below (the
"Lenders") and BT Commercial Corporation, acting as Agent (the "Agent") in the
manner and to the extent described in Article 9 of the Credit Agreement referred
to below. All capitalized terms used herein and not otherwise defined shall have
the respective meanings provided such terms in the Credit Agreement.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, LTV, the Borrowers, the Lenders and the Agent are parties
to a Credit Agreement, dated as of October 12, 1994 (as amended, modified or
supplemented to the date hereof, the "Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement as
herein provided;
1. Section 1.1 of the Credit Agreement is hereby amended by (i)
deleting the reference to "or" in the first parenthetical in the definition of
"Material Subsidiary" and inserting a comma in lieu thereof and (ii) inserting
the following text immediately after the reference to "Interstate Commerce
Commission" in the first parenthetical in the definition of "Material
Subsidiary":
", or any Varco Pruden Company".
2. Section 1.1 of the Credit Agreement is hereby further amended by
inserting therein in the appropriate alphabetical order the following new
definitions:
"VARCO PRUDEN ASSET PURCHASE AGREEMENT shall mean the Asset Purchase
Agreement, dated as of May 21, 1997, as amended from time to time, among
The LTV Corporation, United Dominion Industries, Inc. and United Dominion
Industries Limited.
VARCO PRUDEN ASSETS shall mean (i) all or substantially all of the
assets (which may include certain equity interests) comprising the Varco
Pruden division and the AEP-Span division of United Dominion Industries,
Inc., (ii) certain other assets of United Dominion Industries, Inc.'s
affiliates, including, without limitation equity interests in certain
joint ventures in China, Brazil (Medabil), Argentina and
<PAGE> 2
Egypt in which Varco-Pruden International Limited or Span Holdings
Limited, each a Bahamian corporation and wholly owned subsidiary of United
Dominion Industries Limited, holds an equity interest, and (iii) other
assets acquired by any Varco Pruden Company subsequent to the initial
acquisition pursuant to the Varco Pruden Asset Purchase Agreement.
VARCO PRUDEN COMPANIES shall mean VP Buildings Inc. and any direct
or indirect subsidiary thereof which owns any of the Varco Pruden
Assets.".
3. Section 7.2 of the Credit Agreement is hereby amended by (i)
deleting the reference to "and" appearing at the end of clause (xiv), (ii)
deleting the period appearing at the end of clause (xv) and inserting "; and "
in lieu thereof and (iii) inserting the following new clause (xvi) at the end
thereof:
"(xvi) Liens on any Varco Pruden Assets owned by a Varco Pruden
Company.".
4. Section 7.3 of the Credit Agreement is hereby amended by (i)
deleting the reference to "and" appearing at the end of clause (xv), (ii)
deleting the period appearing at the end of clause (xvi) and inserting "; and"
in lieu thereof and (iii) inserting the following new clause (xvii) at the end
of thereof:
"(xvii) any Varco Pruden Company may create, incur, assume or
guaranty, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, PROVIDED that such Indebtedness is
non-recourse to LTV or any Subsidiary of LTV (other than any Varco Pruden
Company).".
5. Section 7.6 of the Credit Agreement is hereby amended by deleting
clause (v) in its entirety and inserting the following new clause (v) in lieu
thereof:
"(v) LTV and its Wholly-Owned Subsidiaries may make and own
Investments in their respective Wholly-Owned Subsidiaries; PROVIDED that
(x) LTV and/or its Subsidiaries may make Investments in the Varco Pruden
Companies in the amount required to accomplish the initial acquisition of
the Varco Pruden Assets, pursuant to the Varco Pruden Asset Purchase
Agreement, on the date of the acquisition thereof and (y) the aggregate
amount of Investments made by LTV and its Subsidiaries after the Closing
Date pursuant to this clause (v)(y) in (i) Material Subsidiaries which are
not Credit Parties (other than LTV Finance) (and including Contingent
Obligations with respect thereto) and (ii) the Varco Pruden Companies
after the initial Investments therein pursuant to clause (v)(x) above, in
the case of clauses (v)(y)(i) and (v)(y)(ii) shall not exceed $50,000,000
at any time;".
6. Section 7.9 of the Credit Agreement is hereby amended by (i)
deleting the word "and" appearing before clause (ii) therein and (ii) inserting
the following new clause (iii) immediately before the semicolon at the end of
clause (ii):
-2-
<PAGE> 3
"and (iii) the lines of business engaged in by the Varco Pruden Companies
as a result of the initial acquisition by LTV of the Varco Pruden Assets
pursuant to the Varco Pruden Asset Purchase Agreement".
7. Section 7.16 of the Credit Agreement is hereby amended by
deleting the first proviso appearing therein in its entirety and inserting the
following new proviso in lieu thereof:
"provided that if (A) J&L Empire, Inc. incurs non-recourse Indebtedness
or (B) any Varco Pruden Company incurs Indebtedness (which Indebtedness
shall be non- recourse to LTV or any Subsidiary of LTV (other than any
Varco Pruden Company)), as the case may be, that is otherwise permitted
under this Agreement, the documents pursuant to which such Indebtedness is
incurred may contain restrictions otherwise prohibited under this Section
7.16;".
8. Section 7.19 of the Credit Agreement is hereby amended by
inserting the following new parenthetical immediately after the reference to
"Subsidiaries" in the last sentence therein:
"(other than a Varco Pruden Company)".
9. In order to induce the undersigned . Lenders to enter into this
Amendment, LTV and the Borrowers hereby represent and warrant that:
(a) No Default or Event of Default exists as of the Eighth Amendment
Effective Date and after giving effect to this Amendment;
(b) On the Eighth Amendment Effective Date after giving effect to
this Amendment, all representations and warranties contained in the Credit
Agreement and the other Credit Documents are true and correct in all
material respects; and
(c) On and after the Eighth Amendment Effective Date, this
Amendment, and the transactions permitted hereby, shall be permitted by,
and shall not violate any material term of or cause a breach of, any of
the Related Agreements.
10. This Amendment is limited as specified and shall not constitute
a modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
11. This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with LTV, the Borrowers and the Agent.
-3-
<PAGE> 4
12. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
13. This Amendment shall become effective on the date (the "Eighth
Amendment Effective Date") on which LTV, the Borrowers and the Required Lenders
shall have signed a copy hereof (whether the same or different copies) and shall
have delivered (including by way of facsimile device) the same to the Agent.
14. From and after the Eighth Amendment Effective Date, all
references in the Credit Agreement and each of the Credit Documents to the
Credit Agreement shall be deemed to be references to such Credit Agreement as
amended hereby.
* * *
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed and delivered by their proper and duly authorized officers as of the
date set forth above.
THE LTV CORPORATION
By: /s/ J.C. Skurek
-------------------------------------
Name: J. C. Skurek
Title: Vice President & Treasurer
LTV STEEL COMPANY, INC.
By: /s/ J.C. Skurek
-------------------------------------
Name: J. C. Skurek
Title: Vice President & Treasurer
LTV STEEL MINING CO.
By: Youngstown Erie Corporation
By: /s/ J.C. Skurek
-------------------------------------
Name: J. C. Skurek
Title: Vice President & Treasurer
By: Erie B Corporation
By: /s/ J.C. Skurek
-------------------------------------
Name: J. C. Skurek
Title: Vice President & Treasurer
<PAGE> 6
By: Erie I Corporation
By: /s/ J.C. Skurek
-------------------------------------
Name: J. C. Skurek
Title: Vice President & Treasurer
LTV STEEL TUBULAR PRODUCTS
COMPANY
By: /s/ J.C. Skurek
-------------------------------------
Name: J. C. Skurek
Title: Vice President & Treasurer
BT COMMERCIAL CORPORATION,
individually and as Agent
and Collateral Agent
By: /s/ Bruce W. Addison
-------------------------------------
Name: Bruce W. Addison
Title: Vice President
THE CHASE MANHATTAN BANK,
as a Lender
By: /s/ James H. Ramage
-------------------------------------
Name: James H. Ramage
Title: Vice President
<PAGE> 7
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., CHICAGO BRANCH,
as a Lender
By: /s/ Brady S. Sadek
-------------------------------------
Name: Brady S. Sadek
Title: Vice President & Deputy
General Manager
MELLON BANK N.A., as a Lender
By: /s/ Richard K. James
-------------------------------------
Name: Richard K. James
Title: Vice President
THE SUMITOMO BANK, LTD.,
CHICAGO BRANCH, as a Lender
By: /s/ John Kemper
-------------------------------------
Name: John Kemper
Title: Senior Vice President
PNC BANK NATIONAL ASSOCIATION,
as a Lender
By: /s/ MARK RUTHERFORD
-------------------------------------
Name: MARK RUTHERFORD
Title: Vice-President
<PAGE> 8
CREDIT LYONNAIS CHICAGO
BRANCH, as a Lender
By: /s/ Julie T. Kanak
-------------------------------------
Name: Julie T. Kanak
Title: Vice President
CAISSE NATIONALE DE CREDIT
AGRICOLE, as a Lender
By: /s/ David Bouhl
-------------------------------------
Name: DAVID BOUHL, F.V.P.
Title: HEAD OF CORPORATE BANKING
CHICAGO
NATIONAL CITY BANK, as a Lender
By: /s/ Davis R. Bonner
-------------------------------------
Name: Davis R. Bonner
Title: Vice President/Senior Lending
Officer
KEYBANK NATIONAL ASSOCIATION, as a
Lender
By: /s/ Richard A. Pohle
-------------------------------------
Name: Richard A. Pohle
Title: Vice President
<PAGE> 9
NINTH AMENDMENT TO LETTER OF CREDIT AGREEMENT
---------------------------------------------
NINTH AMENDMENT (the "Amendment"), dated as of August 28, 1997,
among The LTV Corporation, a Delaware corporation ("LTV"), LTV Steel Company,
Inc., a New Jersey corporation ("LTVSC"), LTV Steel Mining Company, a Minnesota
limited partnership ("LTVSM"), LTV Steel Tubular Products Company, a Delaware
corporation ("LTVSTP", and together with LTVSC and LTVSM, the "Borrowers"), the
financial institutions party to the Credit Agreement referred to below (the
"Lenders") and BT Commercial Corporation, acting as Agent (the "Agent") in the
manner and to the extent described in Article 9 of the Credit Agreement referred
to below. All capitalized terms used herein and not otherwise defined shall have
the respective meanings provided such terms in the Credit Agreement.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, LTV, the Borrowers, the Lenders and the Agent are parties
to a Credit Agreement, dated as of October 12, 1994 (as amended, modified or
supplemented to the date hereof, the "Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement as
herein provided;
1. Section 7.3 of the Credit Agreement is hereby amended by deleting
the reference to "$150,000,000" in subsection (xv) and inserting "$300,000,000"
in lieu thereof.
2. Section 7.19 of the Credit Agreement is hereby amended by
inserting the following sentence at the end thereof:
"Notwithstanding anything to the contrary contained in this Agreement, the
existence of an "equal and ratable" clause in any indenture or other
agreement evidencing other Indebtedness shall not in and of itself result
in a violation of this Section 7.19 and Section 7.2 of the Credit
Agreement, PROVIDED, HOWEVER, that (i) the existence of such "equal and
ratable" clause shall not give any of the Credit Parties or any of their
Subsidiaries the right to create or suffer to exist any Lien on their
assets that is not otherwise permitted by Section 7.2 of the Credit
Agreement and (ii) such "equal and ratable" clause shall except from its
operation the creation or assumption of any Lien on the Collateral with
respect to this Agreement and any extension, revision, refinancing or
replacement thereof by a lender or syndicate of lenders.".
3. In order to induce the undersigned Lenders to enter into this
Amendment, LTV and the Borrowers hereby represent and warrant that:
<PAGE> 10
(a) No Default or Event of Default exists as of the Ninth Amendment
Effective Date (as defined below in Section 7), and after giving effect to
this Amendment;
(b) On the Ninth Amendment Effective Date after giving effect to
this Amendment, all representations and warranties contained in the Credit
Agreement and the other Credit Documents are true and correct in all
material respects; and
(c) On and after the Ninth Amendment Effective Date, this Amendment
shall be permitted by, and shall not violate any material term of or cause
a breach of, any of the Related Agreements.
4. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
5. This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with LTV, the Borrowers and the Agent.
6. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
7. This Amendment shall become effective on the date (the "Ninth
Amendment Effective Date") on which LTV, the Borrowers and the Required Lenders
shall have signed a copy hereof (whether the same or different copies) and shall
have delivered (including by way of facsimile device) the same to the Agent.
8. From and after the Ninth Amendment Effective Date, all references
in the Credit Agreement and each of the Credit Documents to the Credit Agreement
shall be deemed to be references to such Credit Agreement as amended hereby.
* * *
-2-
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed and delivered by their proper and duly authorized officers as of the
date set forth above.
THE LTV CORPORATION
By: /s/ Arthur W. Huge
-------------------------------------
Name: Arthur W. Huge
Title: Senior Vice President and
Chief Financial Officer
LTV STEEL COMPANY, INC.
By: /s/ Arthur W. Huge
-------------------------------------
Name: Arthur W. Huge
Title: Senior Vice President and
Chief Financial Officer
LTV STEEL MINING CO.
By: Youngstown Erie Corporation
By: /s/ Arthur W. Huge
-------------------------------------
Name: Arthur W. Huge
Title: Vice President and Controller
By: Erie B Corporation
By: /s/ Arthur W. Huge
-------------------------------------
Name: Arthur W. Huge
Title: Vice President and Controller
<PAGE> 12
By: Erie I Corporation
By: /s/ Arthur W. Huge
-------------------------------------
Name: Arthur W. Huge
Title: Vice President and Controller
LTV STEEL TUBULAR PRODUCTS
COMPANY
By: /s/ Arthur W. Huge
-------------------------------------
Name: Arthur W. Huge
Title: Vice President and Controller
BT COMMERCIAL CORPORATION,
individually and as Agent
and Collateral Agent
By: /s/ Bruce W. Addison
-------------------------------------
Name: Bruce W. Addison
Title: Vice President
CAISSE NATIONALE DE CREDIT
AGRICOLE, as a Lender
By: /s/ David Bouhl
-------------------------------------
Name: DAVID BOUHL, F.V.P.
Title: HEAD OF CORPORATE BANKING
CHICAGO
<PAGE> 13
THE CHASE MANHATTAN BANK,
as a Lender
By: /s/ Peter M. Ling
-------------------------------------
Name: Peter M. Ling
Title: Vice President
CREDIT LYONNAIS CHICAGO
BRANCH, as a Lender
By: /s/ Julie T. Kanak
-------------------------------------
Name: Julie T. Kanak
Title: Vice President
KEYBANK NATIONAL ASSOCIATION, as a
Lender
By: /s/ Richard A. Pohle
-------------------------------------
Name: Richard A. Pohle
Title: Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., CHICAGO BRANCH,
as a Lender
By: /s/ Brady S. Sadek
-------------------------------------
Name: Brady S. Sadek
Title: Senior Vice President
<PAGE> 14
MELLON BANK N.A., as a Lender
By: /s/ Richard K. James
-------------------------------------
Name: Richard K. James
Title: Vice President
NATIONAL CITY BANK, as a Lender
By: /s/ Renold D. Thompson, Jr.
-------------------------------------
Name: Renold D. Thompson, Jr.
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By: /s/ MARK W. RUTHERFORD
-------------------------------------
Name: MARK W. RUTHERFORD
Title: Vice-President
THE SUMITOMO BANK, LTD.,
CHICAGO BRANCH, as a Lender
By:
-------------------------------------
Name:
Title:
<PAGE> 15
TENTH AMENDMENT TO LETTER OF CREDIT AGREEMENT
---------------------------------------------
TENTH AMENDMENT (the "Amendment"), dated as of September 4, 1997,
among The LTV Corporation, a Delaware corporation ("LTV"), LTV Steel Company,
Inc., a New Jersey corporation ("LTVSC"), LTV Steel Mining Company, a Minnesota
limited partnership ("LTVSM"), LTV Steel Tubular Products Company, a Delaware
corporation ("LTVSTP", and together with LTVSC and LTVSM, the "Borrowers"), the
financial institutions party to the Credit Agreement referred to below (the
"Lenders") and BT Commercial Corporation, acting as Agent (the "Agent") in the
manner and to the extent described in Article 9 of the Credit Agreement referred
to below. All capitalized terms used herein and not otherwise defined shall have
the respective meanings provided such terms in the Credit Agreement.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, LTV, the Borrowers, the Lenders and the Agent are parties
to a Credit Agreement, dated as of October 12, 1994 (as amended, modified or
supplemented to the date hereof, the "Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement as
herein provided;
1. Section 1.1 of the Credit Agreement is hereby amended by
inserting the following new definition in alphabetical order:
"INDENTURE shall mean the indenture containing provisions
substantially in the form of the provisions in the preliminary Offering
Memorandum of LTV, dated August 29, 1997.".
2. Section 7,3 of the Credit Agreement is hereby amended by
inserting the following text at the end of clause (xi) thereof:
"; PROVIDED FURTHER that the Indebtedness permitted under clause (vii) of
this Section, including any redemption premium payable with respect
thereto, may be refinanced with the proceeds of the offering of notes
contemplated by the preliminary Offering Memorandum of LTV dated August
29, 1997.".
3. Section 7.16 of the Credit Agreement is hereby amended by
deleting the period at the end thereof and inserting the following text in lieu
thereof:
"; PROVIDED FURTHER that this Section 7.16 shall not prohibit the creation
of restrictions affecting Subsidiaries as are set out in the Indenture.".
<PAGE> 16
4. In order to induce the undersigned Lenders to enter into this
Amendment, LTV and the Borrowers hereby represent and warrant that:
(a) No Default or Event of Default exists as of the Tenth Amendment
Effective Date (as defined below in Section 8), and after giving effect to
this Amendment;
(b) On the Tenth Amendment Effective Date after giving effect to
this Amendment, all representations and warranties contained in the Credit
Agreement and the other Credit Documents are true and correct in all
material respects;
(c) On and after the Tenth Amendment Effective Date, this Amendment
shall be permitted by, and shall not violate any material term of or cause
a breach of, any of the Related Agreements; and
(d) As of the Tenth Amendment Effective Date, all Guarantors (except
LTV) are direct or indirect, wholly-owned Subsidiaries of LTV which would
be considered to be Restricted Subsidiaries (as defined in the Indenture)
for purposes of the Indenture.
5. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
6. This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with LTV, the Borrowers and the Agent.
7. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
8. This Amendment shall become effective on the date (the "Tenth
Amendment Effective Date") on which LTV, the Borrowers and the Required Lenders
shall have signed a copy hereof (whether the same or different copies) and shall
have delivered (including by way of facsimile device) the same to the Agent.
9. From and after the Tenth Amendment Effective Date, all references
in the Credit Agreement and each of the Credit Documents to the Credit Agreement
shall be deemed to be references to such Credit Agreement as amended hereby.
* * *
-2-
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed and delivered by their proper and duly authorized officers as of the
date set forth above.
THE LTV CORPORATION
By: /s/ J.C. Skurek
-------------------------------------
Name: John C. Skurek
Title: Vice President and Treasurer
LTV STEEL COMPANY, INC.
By: /s/ J.C. Skurek
-------------------------------------
Name: John C. Skurek
Title: Vice President and Treasurer
LTV STEEL MINING CO.
By: Youngstown Erie Corporation
By: /s/ J.C. Skurek
-------------------------------------
Name: John C. Skurek
Title: Vice President and Treasurer
By: Erie B Corporation
By: /s/ J.C. Skurek
-------------------------------------
Name: John C. Skurek
Title: Vice President and Treasurer
<PAGE> 18
By: Erie I Corporation
By: /s/ J.C. Skurek
-------------------------------------
Name: John C. Skurek
Title: Vice President and Treasurer
LTV STEEL TUBULAR PRODUCTS
COMPANY
By: /s/ J.C. Skurek
-------------------------------------
Name: John C. Skurek
Title: Vice President and Treasurer
BT COMMERCIAL CORPORATION,
individually and as Agent
and Collateral Agent
By: /s/ Bruce W. Addison
-------------------------------------
Name: Bruce W. Addison
Title: Vice President
CAISSE NATIONALE DE CREDIT
AGRICOLE, as a Lender
By: /s/ David Bouhl
-------------------------------------
Name: David Bouhl, F.V.P.
Title: Head of Corporate Banking
Chicago
<PAGE> 19
THE CHASE MANHATTAN BANK,
as a Lender
By: /s/ James H. Ramage
-------------------------------------
Name: James H. Ramage
Title: Vice President
CREDIT LYONNAIS CHICAGO
BRANCH, as a Lender
By: /s/ Julie T. Kanak
-------------------------------------
Name: Julie T. Kanak
Title: Vice President
KEYBANK NATIONAL ASSOCIATION, as a
Lender
By: /s/ Richard A. Pohle
-------------------------------------
Name: Richard A. Pohle
Title: Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., CHICAGO BRANCH,
as a Lender
By: /s/ Brady S. Sadek
-------------------------------------
Name: Brady S. Sadek
Title: Senior Vice President
<PAGE> 20
MELLON BANK N.A., as a Lender
By: /s/ Richard K. James
-------------------------------------
Name: Richard K. James
Title: Vice President
NATIONAL CITY BANK, as a Lender
By: /s/ Davis R. Bonner
-------------------------------------
Name: Davis R. Bonner
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By: /s/ Mark W. Rutherford
-------------------------------------
Name: Mark W. Rutherford
Title: Vice President
THE SUMITOMO BANK, LTD.,
CHICAGO BRANCH, as a Lender
By: /s/ John H. Kemper
-------------------------------------
Name: John H. Kemper
Title: Senior Vice President
<PAGE> 1
Page 1 of 2
Exhibit (11)
THE LTV CORPORATION
Calculation of Primary Earnings Per Share (EPS)
(Dollar amounts in millions except for EPS)
(Share data in thousands)
<TABLE>
<CAPTION>
Three Months Ended September 30,
----------------------------------------------------------------
1997 1996
------------------------------- ------------------------------
Shares Amount EPS Shares Amount EPS
---------- -------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) $ (55.4) $ 29.4
Preferred stock dividend
requirements (0.6) (0.6)
------- ------
(56.0) 28.8
Share base:
Average common
stock outstanding 103,096 105,360
Common Stock equivalent shares
resulting from outstanding
Series A Warrants, Stock
Options and Restricted Stock (A) 76
Common Stock issuable upon
conversion of Series B
Preferred Stock (A) 2,926 0.6
------- ------- ------- ------
103,096 $ (56.0) 108,362 $ 29.4
======= ======= ======= ======
PRIMARY EARNINGS PER SHARE
Primary $ (0.50) $ 0.27
Extraordinary loss (0.04) -
----- ------
Net income (loss) $ (0.54) $ 0.27
======= ======
<CAPTION>
Nine Months Ended September 30,
----------------------------------------------------------------
1997 1996
------------------------------- ------------------------------
Shares Amount EPS Shares Amount EPS
---------- -------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) $ (1.5) $ 74.7
Preferred stock dividend
requirements (1.7) (1.7)
------ ------
(3.2) 73.0
Share base:
Average common
stock outstanding 104,092 105,360
Common Stock equivalent shares
resulting from outstanding
Series A Warrants, Stock
Options and Restricted Stock (A) 61
Common Stock issuable upon
conversion of Series B
Preferred Stock (A) 2,926 1.7
------- ------ ------- ------
104,092 $ (3.2) 108,347 $ 74.7
======= ====== ======= ======
PRIMARY EARNINGS PER SHARE
Primary $ 0.01 $ 0.69
Extraordinary loss (0.04) -
----- ------
Net income (loss) $ (0.03) $ 0.69
======= ======
<FN>
(A) Addition of these shares would result in antidilution.
</TABLE>
<PAGE> 2
Page 2 of 2
Exhibit (11)
THE LTV CORPORATION
Calculation of Fully Diluted Earnings Per Share (EPS)
(Dollar amounts in millions except for EPS)
(Share data in thousands)
<TABLE>
<CAPTION>
Three Months Ended September 30,
----------------------------------------------------------------
1997 1996
------------------------------- ------------------------------
Shares Amount EPS Shares Amount EPS
---------- --------- --------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Net income $(55.4) $ 29.4
Preferred stock dividend
requirements (0.6) (0.6)
------ ------
(56.0) 28.8
Share base:
Average common
stock outstanding 103,096 105,360
Common Stock equivalent shares
resulting from outstanding
Series A Warrants, Stock
Options and Restricted Stock (A) 78
Common Stock issuable upon
conversion of Series B
Preferred Stock (A) 2,926 0.6
Common Stock issuable upon
conversion of Senior
Secured Convertible Notes (A) 5,128 1.4
------- ------ ------- ------
103,096 $(56.0) 113,492 $ 30.8
======= ====== ======= ======
FULLY DILUTED EARNINGS PER SHARE
Fully diluted $ (0.50) $ 0.27
Extraordinary loss (0.04) -
------- ------
Net income (loss) $ (0.54) $ 0.27
======= ======
<CAPTION>
Nine Months Ended September 30,
----------------------------------------------------------------
1997 1996
------------------------------- ------------------------------
Shares Amount EPS Shares Amount EPS
---------- --------- --------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Net income $ (1.5) $ 74.7
Preferred stock dividend
requirements (1.7) (1.7)
------ ------
(3.2) 73.0
Share base:
Average common
stock outstanding 104,092 105,360
Common Stock equivalent shares
resulting from outstanding
Series A Warrants, Stock
Options and Restricted Stock (A) 76
Common Stock issuable upon
conversion of Series B
Preferred Stock (A) 2,926 1.7
Common Stock issuable upon
conversion of Senior
Secured Convertible Notes (A) (A)
------- ------ ------- ------
104,092 $ (3.2) 108,362 $ 74.7
======= ====== ======= ======
FULLY DILUTED EARNINGS PER SHARE
Fully diluted $ 0.01 $ 0.69
Extraordinary loss (0.04) -
------- ------
Net income (loss) $(0.03) $ 0.69
======= ======
<FN>
(A) Addition of these shares would result in antidilution.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 257
<SECURITIES> 401
<RECEIVABLES> 497
<ALLOWANCES> 18
<INVENTORY> 862
<CURRENT-ASSETS> 2,038
<PP&E> 4,107
<DEPRECIATION> 940
<TOTAL-ASSETS> 5,772
<CURRENT-LIABILITIES> 1,051
<BONDS> 298
0
1
<COMMON> 53
<OTHER-SE> 1,608
<TOTAL-LIABILITY-AND-EQUITY> 5,772
<SALES> 3,299
<TOTAL-REVENUES> 3,299
<CGS> 2,828
<TOTAL-COSTS> 3,295
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4
<INCOME-TAX> 2
<INCOME-CONTINUING> 2
<DISCONTINUED> 0
<EXTRAORDINARY> (4)
<CHANGES> 0
<NET-INCOME> (2)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
