<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996 Commission File Number 1-4368
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THE LTV CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-1070950
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation)
200 Public Square
Cleveland, Ohio 44114-2308
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (216) 622-5000
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Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -------------------
Common Stock, par value $0.50 New York Stock Exchange
Series A Warrants New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
--- ---
State the aggregate market value of the voting stock held by non-affiliates of
the registrant.
Approximately $1.26 Billion
(As of February 20, 1997)
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
104,884,818 shares of Common Stock
(As of February 20, 1997)
Documents Incorporated by Reference: Annual Report to Shareholders for fiscal
year 1996 (Part II); Annual Proxy Statement for 1996 Annual Meeting (Part III)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ x ]
<PAGE> 2
PART I
ITEM 1. BUSINESS.
INTRODUCTION
The LTV Corporation ("LTV") was organized as a Delaware corporation in
November 1958 as a successor to a California corporation organized in 1953.
LTV's principal office is located at 200 Public Square, Cleveland, Ohio
44114-2308 and its telephone number is (216) 622-5000. LTV is engaged in the
steel industry through its subsidiaries, LTV Steel Company, Inc. ("LTV Steel")
and LTV Steel Tubular Products Company. LTV and its subsidiaries are
collectively referred to herein as "LTV" or the "Company" unless the context
otherwise requires.
LTV is a fully integrated steel producer that manufactures coated sheet
and cold rolled and hot rolled sheet and strip, as well as tubular and tin mill
products. Based on 1996 shipments (as compiled by LTV based primarily on
publicly filed data), LTV believes it is the third largest domestic integrated
steel producer, the second largest producer of flat rolled steel and a leading
supplier of quality-critical, flat rolled steel to the transportation, appliance
and electrical equipment industries in the United States. LTV operates two
integrated steel mills (Cleveland Works and Indiana Harbor Works) and various
finishing and processing facilities, as well as tubular and tin mill operations.
The Company's energy products group (Continental Emsco Company and Continental
Emsco Company Limited) was sold in August 1995 and is treated herein as a
discontinued operation for all periods presented.
Coated sheet and cold rolled and hot rolled sheet and strip are used to
make products such as automobile bodies, appliances and other consumer durable
goods, farm equipment, industrial machinery, office equipment, machine parts and
tubular products. Tin mill products are used by the container industry in the
manufacture of cans and closures. Tubular products are used primarily in the
electrical, automotive, construction and oil and gas industries.
SIGNIFICANT DEVELOPMENTS
Trico Steel Company, L.L.C. ("Trico Steel"), a joint venture involving
international partners, is nearing completion of the construction phase of its
new mini-mill in Decatur, Alabama. The mini-mill, which is expected to commence
start-up operations later in the first quarter of 1997 and become fully
operational in 1998, is owned 50% by a subsidiary of LTV and 25% each by
subsidiaries of Sumitomo Metal Industries, Ltd. ("Sumitomo") and British Steel
plc ("British Steel"). When fully operational, the mini-mill will have an
estimated annual capacity of 2.2 million tons. Trico Steel's high quality steel
products will compete in the hot rolled product and a portion of the cold rolled
product segments of the southeastern region of the United States.
In May 1996, LTV Steel entered into an international joint venture
agreement with Cleveland-Cliffs Inc and Lurgi AG ("Lurgi") to construct and
operate a facility in Trinidad and Tobago to produce direct reduced iron ("DRI")
briquettes (a substitute for steel scrap) for use in electric furnace
steelmaking operations. The joint venture is owned 46.5% by a subsidiary of LTV
with the remainder owned by subsidiaries of Cleveland-Cliffs Inc (46.5%) and
Lurgi (7%). The project, which will use the new Circored(R) process, will have
an estimated annual capacity of 500,000 metric tons and is expected to cost an
aggregate $150 million. Site preparation work began in late 1996 and production
is scheduled to begin in the second half of 1998. The facility will be operated
by a subsidiary of Cleveland-Cliffs Inc.
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FORWARD LOOKING STATEMENTS
Item 1. Business, Item 2. Properties and Item 3. Legal Proceedings of
this report include forward-looking statements. The use of the words "outlook,"
"believes," "estimate," "expect" and similar words are intended to identify
these statements as forward looking. These statements represent the Company's
current judgment on what the future holds. While the Company believes 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 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 or
unanticipated results in pending legal proceedings.
INDUSTRY SEGMENTS
The Company operates in a single industry segment - steel.
STEEL OPERATIONS
STEEL MILL PRODUCTS
During the years 1996, 1995 and 1994, LTV's operations accounted for
8.1%, 8.2% and 8.4%, respectively, of total domestic industry shipments of steel
mill products, based on American Iron and Steel Institute ("AISI") reports. The
net tons of steel mill products shipped by LTV's steel operations during these
periods were: 1996-8,080,000; 1995-7,961,000 and 1994-7,969,000.
LTV's steel mill product mix is reflected in the following table which
shows the revenue dollars for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
(DOLLARS IN MILLIONS)
1996 1995 1994
REVENUE REVENUE REVENUE
------- ------- -------
<S> <C> <C> <C>
Hot and cold flat rolled products $2,017 $2,146 $2,100
Galvanized products 1,203 1,221 1,212
Tin mill products 453 449 474
Tubular products 319 314 293
All other 143 153 154
------ ------ ------
Total $4,135 $4,283 $4,233
</TABLE>
Demand for hot and cold flat rolled products and galvanized products
was strong during the three years shown due to strength in the U.S. economy and
continuing strong demand for steel products. LTV realized increases in steel
prices in 1994 through the first half of 1995. During the second half of 1995,
however, flat rolled steel prices declined, recovering only partially during the
latter half of 1996. The increase in tin mill revenue in 1996 from 1995 was due
to stronger demand from the packing industry, offset partially by lower prices.
The decrease in tin mill revenue in 1995 was due primarily to lower shipment
levels, lower demand primarily from the packing industry, offset partially by
higher prices. Shipments of electrical conduit tubular product continued strong
during the three years due to strength in the construction market; shipments of
mechanical tubing declined in 1996 due to weaker demand from
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the market segments served by the Company's tubular operations; shipments of
electric weld pipe products recovered in 1996 from the depressed levels in the
prior two years.
STEEL PRODUCTION
The following table sets forth raw steel production and estimated
capability information for both LTV and the domestic steel industry during the
periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Capability (net tons in thousands)
LTV 8,400 8,300 8,300
Industry(b) 116,100 112,500 108,200
Percent of industry 7.2% 7.4% 7.7%
Production (net tons in thousands)
LTV 8,780 8,460 8,250
Industry(b) 104,400 104,900 100,600
Percent of industry 8.4% 8.1% 8.2%
Production as a percentage of capability
LTV(a) 105.0% 102.0% 99.4%
Industry(b) 89.9% 93.3% 93.0%
<FN>
(a) The Company follows industry standards in calculating its operating
rate which is based on 95% of blast furnace capacity. The 5% adjustment
recognizes the average effect of blast furnace relines.
(b) The information relating to the domestic steel industry is as reported
by or is derived from data reported by the AISI and is preliminary for
1996. A net ton is 2,000 pounds.
</TABLE>
LTV produces its steel using the basic oxygen furnace process at its
Cleveland Works and Indiana Harbor Works. With three continuous casters, LTV
continuously casts 100% of its flat rolled steel production. LTV has
supplemented its own steel production in recent years with purchases of
semi-finished steel. In 1996, 1995 and 1994, LTV purchased approximately 168,000
tons, 279,000 tons and 514,000 tons, respectively, of semi-finished slabs from
other domestic and foreign steel producers.
Individual facilities are operated at rates that best serve LTV's
overall need at the time and can be significantly higher or lower than LTV's
average operating rate. LTV does not believe data regarding the utilization of
individual facilities is necessarily meaningful.
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CUSTOMERS
The following table sets forth the percentage of shipments by tonnage
distributed among LTV's various markets for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Steel service centers 32% 29% 28%
Transportation 22 25 26
Converters and processors 16 14 13
Electrical, agricultural and other machinery 10 9 9
Household appliances and office equipment 6 6 7
Containers and packaging 7 6 8
Construction 5 5 6
Exports 2 5 2
All other - 1 1
---- ---- ----
Total 100% 100% 100%
</TABLE>
Sales to LTV's largest unaffiliated customer, General Motors
Corporation, represented approximately 11%, 12% and 11%, respectively, of LTV's
sales dollars during 1996, 1995 and 1994.
SALES AND MARKET DISTRIBUTION
Approximately 60% of LTV's steel products are sold under long-term
contracts, most of which are negotiated on an annual basis. Almost all of LTV's
flat rolled steel sales to its larger customers in the transportation,
appliance, electrical equipment and food and beverage can markets are made
pursuant to such contracts. These contracts generally provide for set prices for
the products ordered during the period that the contract is in effect. As a
result, LTV may experience a delay in realizing price changes related to its
contract steel products business. Much of the remainder of LTV's flat rolled
product is sold under contracts covering shorter periods at the then prevailing
market prices for such product.
During 1996, the Company reorganized its flat rolled sales
organization, including all sales processing functions previously handled in the
field, consolidating such functions at LTV's headquarters. As part of that
reorganization, employees performing commercial, marketing and customer service
functions were combined and reorganized along market lines. LTV will continue to
maintain regional offices for flat rolled sales functions.
Tubular and tin mill products are sold primarily through separate sales
organizations divided into four regions.
Internationally, LTV has information and technical liaison offices for
flat rolled products in Mexico City and in Tokyo. The Tokyo office assists the
flat rolled and tubular products sales groups to service their respective
Japanese customers that have operations in the U.S. The Tokyo office has been
particularly effective in enabling LTV to become a qualified supplier to the
U.S.-based manufacturing operations of various Japanese companies.
LTV's export sales of steel product were 2.1% of total dollar sales in
1996, 4.2% in 1995 and 2.0% in 1994.
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COMPETITION
LTV competes directly with domestic and foreign flat rolled carbon
steel producers and indirectly with producers of plastics, aluminum and other
materials such as ceramics and wood which sometimes can be substituted for flat
rolled carbon steel in manufactured products. The primary factors which have
affected competition include price, quality, delivery performance and customer
service. LTV targets quality-critical, value-added applications and believes it
is able to differentiate certain of its products from those of its competitors
on the basis of product quality, technology, modern facilities and customer
product and technical support. In order to further enhance the Company's
customer service, the Company is reengineering its business processes in an
effort to shorten customer response time and is making significant investments
in new information systems to support those reengineered business processes.
Foreign
Domestic steel producers have faced 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
domestic intensity of foreign competition is affected by, among other things,
capacity in the global marketplace, worldwide steel demand and fluctuations in
the value of the U.S. dollar against foreign currencies. Steel imports may
increase should worldwide demand decline, the value of the dollar rise in
relation to foreign currencies or U.S. trade laws not be strictly enforced. Many
foreign steel producers are owned, controlled or subsidized by their
governments. Accordingly, decisions by these 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. Further,
the U.S. has enacted legislation which implements the GATT Uruguay Round
agreement, which weakens prior U.S. trade laws in some respects. This
legislation over time could also result in increased steel imports from foreign
producers.
Based on AISI reports, imports of flat rolled products increased
significantly during the second half of 1996, totaling 6.5 million net tons
(over five months) and averaging 26% of domestic steel consumption for the
period. Based on AISI reports, during the three years 1996, 1995 and 1994,
imports of steel mill products totaled approximately 26.6 million (eleven
months), 24.4 million and 30.1 million net tons, respectively, or approximately
23% of total domestic steel consumption in 1996 (eleven months), approximately
21% in 1995 and 25% in 1994. Of this amount, 6.9 million net tons (eleven
months) or 26% of the imports in 1996 compared with 5.2 million net tons in 1995
and 7.9 million tons in 1994 consisted of semi-finished product purchased by
domestic steel producers for further finishing and resale. The market for
tubular products was most affected by imports, where foreign products accounted
for 35% of the market in 1996 (eleven months), 35% in 1995 and 40% in 1994. Flat
rolled imports (including tin mill products) comprised 16% of the flat rolled
market in 1996 (eleven months), 16% in 1995 and 19% in 1994. For a description
of the final dumping and subsidy decisions relating to foreign competition
issued by the International Trade Commission ("ITC"), some of which are the
subject of pending appeals, see "Trade Cases" below.
Domestic
LTV also competes with other domestic integrated producers and also
mini-mills 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 mini-mill producers to enter
certain sectors of the flat rolled market, which have traditionally been
supplied by integrated producers, and others have announced their intention to
do the same. Because of their technology, mini-mills are currently highly
dependent upon scrap and susceptible to fluctuating scrap prices.
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Industry experts estimate that current domestic raw steel production
capacity will be increased by more than 8% during the next two years as new
mini-mills, now under construction, engaged in start-up operations or otherwise
proposed, begin operation. See "Significant Developments" regarding LTV's 50%
participation in Trico Steel with international partners, a new mini-mill joint
venture, which is scheduled to commence operations later in the first quarter of
1997. When fully operational, the mini-mill will have an estimated annual
capacity of 2.2 million tons.
TRADE CASES
U.S.-Certain ITC Determinations
In June 1992, certain members of the U.S. steel industry filed 84 cases
against 21 foreign countries alleging that steel imports from these countries
were being dumped and/or subsidized in the United States' steel market and
causing or threatening to cause material injury to U.S. steel producers. The
products involved included cut-to-length plates, hot rolled sheet, cold rolled
sheet and corrosion resistant products. In July 1993, the International Trade
Commission (the "ITC") made final determinations that material injury had
occurred in approximately 83% of the total import tonnage in 1992 of corrosion
resistant products, 36% of the total import tonnage in 1992 of cold rolled
products and none of the hot rolled products. In January 1995, these findings
were affirmed by the Court of International Trade (or, in the case of Canada, a
bi-national panel), and in 1996 those issues in the cases which were appealed
were affirmed by the U.S. Court of Appeals for the Federal Circuit. The time
period in which the parties could seek a further review by the U.S. Supreme
Court has expired. These decisions remain, however, subject to review annually
at an administrative level with respect to the amount of the margins and also
subject to review by the ITC with regard to the existence of material injury
(although only upon a finding of "changed circumstances"). Cash deposits equal
to estimated antidumping and/or countervailing duty margins continue to be
required from importers to pay additional duties on those steel imports where
there was a final affirmative injury decision.
Since the ITC decisions, imports of hot and cold rolled product have
increased significantly while corrosion resistant imports have increased to a
lesser extent. During 1996, 29% of the Company's steel-related revenues were
derived from the shipment of corrosion resistant steel, 27% from the shipment of
cold rolled steel and 22% from the shipment of hot rolled steel.
Canada and Mexico
In Canada and Mexico, administrative orders imposing dumping duties are
in effect covering various steel product produced by LTV. Administrative
reviews on certain steel products are pending in both Mexico and Canada.
During 1996, LTV exported less than 120,000 tons of such steel products into
Canada and Mexico that are subject to dumping duties.
EMPLOYEES AND LABOR MATTERS
As of December 31, 1996, LTV had approximately 14,000 active employees.
Approximately 10,900 active employees, primarily hourly workers, are represented
by unions. Of these employees, approximately 10,500 are represented by the
United Steelworkers of America ("USWA").
In June 1994, the Company and the USWA entered into a labor agreement
which expires on August 1, 1999 (the "Labor Agreement"). The Labor Agreement
provided for a reopener with respect to wage provisions in mid-1996, subject to
binding, baseball-type arbitration (a procedure whereunder the arbitrator
selects either the final Company or the final union offer). After final offers
were presented by each party, in November 1996 the arbitrator chose the
Company's final offer. The new wage package for USWA-represented LTV employees,
which is comparable to the packages awarded recently at other
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domestic integrated steel producers, provides for aggregate wage increases
totaling $1.00 an hour and lump sum payments totaling $1,000 per employee (plus
up to an additional $1,000 if certain corporate financial results are met) over
the remainder of the term of the Labor Agreement as well as continuing one
additional holiday in each of the last two years of the agreement.
In the latter half of 1997, other labor agreements covering
approximately 230 USWA-represented employees expire at the two electro-
galvanizing lines in which LTV has a partnership interest and at one of the
Company's tubular plants. Labor agreements covering certain railroad employees
are in various stages of negotiation.
OTHER ASPECTS OF LTV
RESEARCH AND DEVELOPMENT
LTV's research and development efforts focus on developing new
production processes to improve the quality and reduce the cost of LTV's product
lines, provide product and technical support to customers and create new steel
products.
LTV operates a research and development facility and customer technical
center in Cleveland to develop new steel products, improve existing steel
products and develop more efficient operating procedures to meet the continually
increasing demands of the transportation, appliance, electrical equipment and
container markets. The employees of LTV's research and development facilities
include chemists, metallurgists and engineers. In addition, LTV offices in Tokyo
and Mexico City provide technical support to Company customers in those
countries and their U.S. manufacturing operations.
LTV also has a product application office in Detroit that works closely
with customers in identifying optimum steel and manufacturing methods,
evaluating steel product performance and solving customer manufacturing
problems.
Expenditures for research and development totaled $15.1 million in
1996, $14.8 million in 1995 and $15.1 million in 1994. These expenditures do not
include the efforts of sales and manufacturing employees in working to meet
customer technical demands.
ENVIRONMENTAL MATTERS
LTV is subject to changing and increasingly stringent environmental
laws and regulations concerning air emissions, water discharges and waste
disposal.
The Company spent approximately $27 million in 1996 and $19 million in
1995 for compliance-related capital expenditures and expects to spend an average
of approximately $35 million annually in capital expenditures for the next
five-year period to meet environmental standards (including requirements of the
1990 Clean Air Act Amendments). Estimates for future capital expenditures and
operating costs required for environmental compliance are difficult to
determine, however, due to numerous uncertainties, including the evolving nature
of the regulations, the possible imposition of more stringent requirements and
the availability of new technologies.
Also, the Company spent approximately $18 million during 1996 and $17
million during 1995 for environmental clean-up and related matters at operating
and idled facilities and had a recorded liability of $84 million at December 31,
1996 and $98 million at December 31, 1995 for known and identifiable
environmental clean-up and related matters that are probable to occur, based on
current law and existing technology. Most of these expenditures are expected to
be incurred over the next five-year
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period. Other requirements for environmental matters, which could increase these
costs, may arise in the future. See the discussion of "Environmental Liabilities
and Related Costs" included in Management's Discussion and Analysis included in
the Company's 1996 Annual Report to Shareholders which is incorporated herein by
reference.
EPA AND STATE ENVIRONMENTAL SETTLEMENT AGREEMENTS
At the time of the Company's reorganization, the U.S. Environmental
Protection Agency ("EPA"), several states and the Company entered into
settlement agreements which resolved, or provided a mechanism for resolving,
environmental claims arising from prior activities at previously owned Company
properties and superfund sites. However, environmental claims relating to
property owned by the Company on or after the date of reorganization were not
affected, and the Company is in a business that has incurred and will continue
to incur substantial expense as a result of environmental laws and regulations.
The Company does not believe, however, that these future costs will have a
material adverse effect on its financial position, liquidity and competitive
position.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with respect to the
executive officers of LTV.
<TABLE>
<CAPTION>
NAME AGE* OFFICE
<S> <C> <C>
David H. Hoag 57 Chairman of the Board, President and Chief Executive Officer
J. Peter Kelly 55 Group Vice President-Steel
James F. Haeck 50 Senior Vice President-Commercial
Richard J. Hipple 44 Senior Vice President-Purchasing, Engineering and Strategic Planning
Arthur W. Huge 51 Senior Vice President and Chief Financial Officer
Glenn J. Moran 49 Senior Vice President, General Counsel and Secretary
Richard A. Veitch 56 Senior Vice President-Flat Rolled Operations
George T. Henning 55 Vice President and Controller
John C. Skurek 52 Vice President and Treasurer
<FN>
* As of December 31, 1996.
</TABLE>
OFFICERS
The only employee of LTV and its subsidiaries who is also a director of
LTV is Mr. Hoag, Chairman of the Board, President and Chief Executive Officer of
LTV.
All officers, except Mr. Henning, have been employed by LTV or its
subsidiaries for more than the last five years.
Mr. Hoag has been Chairman of the Board of LTV since June 1991 and
President and Chief Executive Officer of LTV since February 1991. He has also
been a director of LTV since June 1986. He also is the Chairman of the Board and
Chief Executive Officer and a director of LTV Steel Company, Inc. He also is a
director of The Lubrizol Corporation (chemical manufacturing), Karrington
Health, Inc. and The Chubb Corporation (insurance). He also is Chairman of the
Board of Trustees of Allegheny College.
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Mr. Kelly became a Group Vice President of LTV in February 1991. He has
been President and a director of LTV Steel since February 1991 and Chief
Operating Officer of LTV Steel since January 1993. Prior thereto, since
September 1987, Mr. Kelly was Executive Vice President of LTV Steel. He also
serves as a director of National City Bank and is Chairman of the Board of
Trustees of Notre Dame College in South Euclid, Ohio.
Mr. Haeck was elected Senior Vice President-Commercial of LTV in
January 1996. During the last five years, Mr. Haeck has also served as Senior
Vice President-Commercial and Senior Vice President-Flat Rolled Operations at
LTV Steel, Vice President and General Manager of Cleveland Works and Vice
President and General Manager of Tubular Products at LTV Steel.
Mr. Hipple was elected Senior Vice President-Purchasing, Engineering
and Strategic Planning of LTV in February 1997. Prior thereto, from January
1996, he served as Vice President-Purchasing, Engineering and Strategic
Planning of LTV. During the last five years, Mr. Hipple has served in a variety
of officer positions at LTV Steel with responsibilities in the purchasing,
engineering, environmental and strategic planning areas.
Mr. Huge became Senior Vice President and Chief Financial Officer of
LTV in June 1993. Mr. Huge has also served as Vice President and Chief Financial
Officer of LTV Steel for more than the past five years.
Mr. Moran has been Senior Vice President and General Counsel of LTV
since September 1992 and Secretary since July 1993. He has also served for the
last five years as Vice President and Group Counsel of LTV Steel.
Mr. Veitch was elected Senior Vice President-Flat Rolled Operations of
LTV in January 1996. During the past five years, Mr. Veitch has also served as
Senior Vice President-Flat Rolled Operations at LTV Steel and Vice President and
General Manager of Indiana Harbor Works and Hennepin.
Mr. Henning was elected Vice President and Controller of LTV in
September 1995. Prior thereto, Mr. Henning was Vice President and Chief
Financial Officer of Pioneer Companies, Inc., a manufacturer of chlorine,
caustic soda and related products.
Mr. Skurek has been Vice President and Treasurer of LTV since February
1993. Mr. Skurek has also served as Vice President and Treasurer of LTV Steel
since September 1992 and as Vice President-Public Affairs of LTV Steel from July
1991 to September 1992. Prior thereto, he was the Assistant Treasurer of LTV
Steel.
ITEM 2. PROPERTIES.
CORPORATE HEADQUARTERS
In December 1996, LTV moved its corporate headquarters to a new
location in Cleveland, Ohio and currently occupies 238,000 square feet under a
new lease expiring in 2011. The lease provides LTV three consecutive five-year
renewal options to extend the lease term through 2026.
STEEL PRODUCING FACILITIES
The Company has two integrated steel mills, Cleveland Works and Indiana
Harbor Works, and various finishing, galvanizing and processing facilities as
well as stand alone tin mill and tubular operations. During the last five years,
the Company has spent approximately $1.3 billion to modernize and upgrade these
core facilities.
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The Cleveland Works at Cleveland, Ohio produces a variety of flat
rolled products. Major facilities include blast furnaces, basic oxygen furnaces,
two continuous slab casters, vacuum degassing and ladle metallurgy systems, hot
strip mills, cold reducing mills, a continuous annealing line, sheet finishing
facilities and an electroplate line.
The Indiana Harbor Works at East Chicago, Indiana produces a variety of
flat rolled products. Major facilities include blast furnaces, basic oxygen
furnaces, a continuous slab caster, vacuum degassing and ladle reheating
systems, a hot strip mill, a cold reducing mill, sheet finishing facilities,
hot-dipped galvanizing lines and a tin mill.
LTV also operates a tin mill in Aliquippa, Pennsylvania. The Company's
two tin mills (which includes one at Indiana Harbor Works as described above)
have a combined operating capacity aggregating 840,000 tons and operated at a
combined rate of 99% of capacity during 1996.
LTV also operates finishing operations in Hennepin, Illinois. The
Hennepin facilities, which receive semi-finished products from the steel
producing facilities, include a cold reducing mill, a sheet finishing mill and a
hot-dipped galvanizing line. LTV also operates coke batteries in Chicago,
Illinois, Pittsburgh, Pennsylvania and Warren, Ohio.
Tubular products facilities in Ferndale, Michigan; Cleveland,
Youngstown and Elyria, Ohio; Counce, Tennessee; and Cedar Springs, Georgia
manufacture electric weld pipe and welded tubing (pressure tubing, mechanical
tubing, cold drawn tubing and electrical metallic conduit).
Railroads
LTV owns all of the capital stock of the following six terminal
switching railroad companies: Aliquippa and Southern Railroad Company, serving
the Aliquippa tin mill; The Cuyahoga Valley Railway Company and The River
Terminal Railway Company, serving the Cleveland Works; The Mahoning Valley
Railway Company, serving the Youngstown electric weld pipe mill; The Monongahela
Connecting Railroad Company, serving the Pittsburgh coke plant; and the Chicago
Short Line Railway Company, serving the Indiana Harbor Works. All are common
carriers subject to regulation by the Interstate Commerce Commission and are
used primarily by LTV.
Suitability
LTV's steel-related facilities are well maintained, considered adequate
for their intended purposes and being utilized for their intended purposes.
USWA Collateral Arrangement
LTV has agreed with the USWA to grant liens on property with an
appraised value of $500 million to secure payment of (i) certain retiree health
benefits to salaried and hourly employees and retirees and (ii) certain employer
contributions under a defined contribution plan for hourly employees
(collectively, the "Secured Obligations"). The maximum amount recoverable to pay
the Secured Obligations upon foreclosure of the collateral is $250 million.
Pursuant to such agreement, LTV has granted liens on certain plant, property and
equipment at its Cleveland Works and a royalty free license or sublicense with
respect to intellectual properties used in connection with the manufacture of
products at such facilities.
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<PAGE> 12
RAW MATERIALS
Iron Ore
LTV owns interests in two iron ore mining operations. LTV's share of
production at these mines during 1996 was sufficient to meet 100% of its iron
ore requirements. LTV's share of reserves at these mines is sufficient to meet
its anticipated iron ore requirements in the near term.
LTV estimates that as of January 1, 1997, the total of its proven crude
ore reserves and of its proportionate share of such reserves of the companies in
which it has an ownership interest was such that, when mined and beneficiated,
there could be produced for use by LTV approximately 466,000,000 gross tons (a
gross ton is equivalent to 2,240 pounds) of merchantable ore averaging
approximately 64% iron content. These ore reserves at the end of 1996, and 1996
activity, were as follows:
<TABLE>
<CAPTION>
PROVEN 1996
NET ANNUAL SHARE OF DELIVERIES
INTEREST IN IRON ORE 1996 TO STEEL
RESERVES(a) CONTENT ENTITLEMENT PRODUCTION PLANTS(b)
----------- ------- ----------- ---------- ---------
(GROSS TONS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Properties:
LTV Steel Mining Company............. 421,000 64% 7,500(c) 7,457 7,410
Empire Iron Mining Partnership(d).... 45,000 64% 2,000 2,018 1,891
------- ----- ----- -----
Total Properties.......................... 466,000 9,500 9,475 9,301
<FN>
(a) LTV's ownership interest in reserves is stated in gross tons of
concentrates or pellets.
(b) "1996 Deliveries to Steel Plants" does not include the sale of ore
products to third parties.
(c) LTV owns 100% of LTV Steel Mining Company located in Minnesota. The
entitlement is based on normal annual plant capacity, and the
production level can be reduced at LTV's discretion.
(d) LTV holds a 25% interest in Empire Iron Mining Partnership which
operates an iron ore mine and pellet facility in Michigan. LTV can
reduce its annual ore purchase requirements. Minimum ore purchase
requirements in 1996 totaled 1,333,333 gross tons.
</TABLE>
Ore reserves are expected to be exhausted prior to the expiration dates
of the various leases associated with LTV's mining properties. LTV is committed
to pay its share of the annual cost of the Empire Iron Mining operations either
through cash advances or purchases of ore at market prices.
During 1996, the average blast furnace charge consisted of
approximately 90% pellets and 10% sinter. During 1996, 92.3% of LTV's pellet and
sinter requirements came from affiliated sources.
Metallurgical Coal and Coke
Metallurgical coal is used to make coke which is used in blast furnaces
to make iron in the raw steelmaking process. All LTV's metallurgical coal
requirements are purchased from unaffiliated third parties under a number of
short and intermediate term contracts.
LTV produced 78% of its coke requirements during 1996 and expects to
produce 84% of its anticipated requirements for 1997 at its owned coke batteries
located at Warren, Ohio; Chicago, Illinois; and Pittsburgh, Pennsylvania. The
operational life of these batteries could be adversely affected by increasingly
stringent environmental regulations or their inability to continue to meet
existing environmental standards. See Item 3. Legal Proceedings for information
relating to existing and threatened environmental proceedings involving certain
of the Company's coke batteries. LTV anticipates, however, that its internal
coke supply, together with coke purchased from third parties, will meet
substantially all of its near-term coke requirements.
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<PAGE> 13
Other Raw Materials
LTV has a 53.5% interest in Presque Isle Corporation which operates a
limestone quarry located in Michigan. LTV's share of Presque Isle Corporation's
proven limestone reserves was approximately 132,668,000 gross tons as of
December 31, 1996. In 1996, LTV used approximately 461,000 gross tons of
limestone from Presque Isle and other sources in its steelmaking operations. LTV
owns a burnt lime processing plant at Grand River, Ohio, which processes
limestone from Presque Isle and other sources into burnt lime. In 1996,
approximately 44% of the 325,000 net tons of high calcite burnt lime consumed by
LTV came from these sources.
Substantially all other raw materials are purchased in the open market
from domestic and foreign sources. Most of such raw materials, including scrap,
nickel, tin, zinc and ferroalloys, are expected to continue to be in sufficient
supply, although market prices have historically been subject to wide
fluctuations.
During the past three years, the Company has purchased a significant
amount of semi-finished slabs from other steel producers to supplement its own
production. The availability of such slabs, and the prices at which they can be
purchased, may vary, especially during periods of peak production in the steel
industry. See "Steel Production" above.
JOINT VENTURES
LTV also participates in a number of joint ventures, the largest of
which involve international partners and are described below.
MINI-MILL. The Company through a subsidiary owns a 50% interest in a
new mini-mill in Decatur, Alabama which is scheduled to commence start-up
operations in the first quarter of 1997. The joint venture, which is also owned
25% each by subsidiaries of Sumitomo Metal Industries, Ltd. and British Steel
plc, will produce commercial and higher quality hot rolled steel. When the mill
becomes fully operational (scheduled for 1998), it will have an annual capacity
of 2.2 million tons. The steel produced by Trico Steel will be sold by a sales
force of a wholly-owned subsidiary of LTV which will be dedicated solely to the
sale of Trico Steel product.
DRI FACILITY. This international joint venture with Cleveland-Cliffs
Inc and Lurgi AG was formed to construct and operate a facility in Trinidad and
Tobago to produce direct reduced iron ("DRI") briquettes (a substitute for
steel scrap) for use in electric furnace steelmaking operations. The joint
venture, Cliffs and Associates Limited, is 46.5% owned by a subsidiary of LTV
with the remainder owned by subsidiaries of Cleveland-Cliffs Inc (46.5%) and
Lurgi AG (7%). The project, which will utilize the new CIRCORED process, will
have an estimated annual capacity of 500,000 metric tons and the cost of
construction is expected to aggregate approximately $150 million. Site
preparation activities began in late 1996, and production is scheduled to begin
in the second half of 1998. The facility will be operated by Cliffs Reduced
Iron Management Company, a subsidiary of Cleveland-Cliffs Inc.
ELECTRO-GALVANIZING LINES. LTV owns joint venture interests in two
electro-galvanizing lines. The first, involving a joint venture owned 60% by a
subsidiary of LTV and 40% by a subsidiary of Sumitomo, was built at LTV's
Cleveland Works. The line produces one-sided and two-sided zinc-coated flat
rolled steel products, utilizing an electrolytic galvanizing process, and has an
annual capacity of approximately 420,000 tons of coated products. The second
line, involving a joint venture which is owned equally by subsidiaries of LTV
and Sumitomo, produces zinc, nickel/zinc and nickel/zinc/organic coated products
and has an annual capacity of approximately 360,000 tons of coated product. The
second line is located in Columbus, Ohio. Most of the cold rolled steel that is
coated at these facilities is
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<PAGE> 14
produced by LTV, and LTV is responsible for all sales and marketing of coated
products processed by the joint ventures. The two electro-galvanizing lines
operated at a combined rate of 87% of capacity during 1996.
LTV continues to study opportunities to invest in domestic and
international growth opportunities with attractive profit potential, including
opportunities designed to support and enhance its core business.
PROPERTY ADDITIONS AND CAPITAL EXPENDITURES
Capital expenditures and depreciation and amortization for the periods
indicated are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Capital Expenditures....................... $242,865 $204,890 $233,936
Depreciation and Amortization.............. $265,734 $251,876 $241,764
</TABLE>
The expenditures during 1996, 1995 and 1994 were mainly to refurbish blast
furnaces and for equipment and facilities which are designed to reduce cost,
increase production efficiency and improve quality and for environmental control
projects. In 1996 and 1995, the Company also made initial expenditures for the
development of a new information systems project to support the Company's
business processes. LTV is currently engaged in the implementation phase of the
project which is expected to extend through the end of 1998 and will require
substantial additional funds in 1998 and 1999 as LTV integrates its information
technology (while resolving its year 2000 software issues) and reengineers the
organization to use new processes. All existing and future information systems
supporting these business processes are being maintained by outside information
systems providers under a long-term contract. Capital expenditures in 1997 are
expected to aggregate approximately $320 million, which includes the cost of a
blast furnace reline at Indiana Harbor. Capital spending for environmental
control projects constructed during 1996, 1995 and 1994 was $26,662,000;
$18,981,000 and $30,187,000, respectively.
LTV also made investments in affiliates in steel related businesses
totaling $78.5 million in 1996, $89.2 million in 1995 and $0.9 million in 1994,
primarily for construction.
ITEM 3. LEGAL PROCEEDINGS.
In addition to matters specifically discussed below, LTV is involved in
various legal proceedings occurring in the normal course of its business. LTV
cannot predict with certainty the outcome of any legal proceedings to which it
is subject. However, in the opinion of LTV's management, adequate provision has
been made for losses for which management can make a reasonable estimate of the
range of possible outcomes that are likely to result from these actions. To the
extent that such reserves prove to be inadequate, LTV would incur a charge to
earnings, which could have a material adverse effect on LTV's results of
operations for the applicable period. The outcome of these proceedings, however,
is not currently expected to have a material adverse effect on the financial
position of LTV.
Trade Cases
For information concerning trade cases covering flat rolled steel
products and other steel products, see "Business-Trade Cases."
-13-
<PAGE> 15
Environmental Proceedings
Legal and administrative actions have been taken or are being
threatened against LTV and its subsidiaries, as discussed below, by the EPA and
the States of Indiana and Illinois or their state and local environmental
agencies for alleged violations of various federal, state and local
environmental laws and regulations. The Company has accrued for losses and costs
associated with these actions that are likely to occur and estimable or
otherwise provided for studies which will permit estimation upon completion of
the study.
EPA - Chicago Coke Battery. LTV Steel and the United States,
represented by the U.S. Department of Justice and U.S. EPA, have reached a
tentative settlement agreement for alleged violations of air quality standards
at the Chicago Coke Battery for the years 1993 through 1995. The settlement
agreement, which has been filed with the U.S. District Court for the Northern
District of Illinois for approval, provides for the assessment of a civil
penalty of $1.6 million. LTV Steel is to receive a credit of $350,000 against
that civil penalty in exchange for carrying out a supplemental environment
project directed to controlling pushing emissions.
EPA - Cleveland Works. In February 1997, LTV Steel received a Notice
of Violation ("NOV") issued by the U.S. EPA alleging violations of certain air
emission standards at three of its blast furnaces, the precipitator stacks at a
basic oxygen furnace shop and a boiler located at LTV Steel's Cleveland Works.
The NOV alleges numerous violations over various periods of time extending in
some cases as far back as 1992. LTV Steel is subject to a maximum statutory
penalty of $27,500 per day for each violation.
State of Indiana. In April 1995, LTV Steel received a NOV issued by
the Indiana Department of Environmental Management ("IDEM") which alleges that
releases of contaminants onto and beneath the ground have occurred at the
Indiana Harbor Works in violation of applicable environmental regulations. IDEM
is seeking to have the Company undertake a comprehensive remediation program to
clean up the alleged on-ground and below-ground contamination at the facility.
The NOV is broad-based and, depending upon the nature of the remediation
program that might be imposed upon the subsidiary and IDEM's authority to
require a comprehensive clean-up, the cost of such work could be substantial.
IDEM has also issued NOVs to LTV Steel relating to BOF precipitator
stack fugitive emissions from the BOF roof monitors at the Indiana Harbor Works.
LTV Steel is subject to a maximum statutory penalty of $25,000 per day for each
violation.
In November 1996, IDEM and the U.S. Department of Interior informed the
Company and 15 other companies of their intent to perform a National Resource
Damage Assessment of the Grand Calumet River System. Each of the 16 entities was
asked to contribute an unspecified amount of funding for the study. The
government has not provided any cost estimate or schedule for implementation of
the study. The Company is unable to predict what, if any, action might be
recommended or required as a result of this study or what the potential cost to
the Company of such action might be.
State of Illinois. After notifying the Illinois EPA ("IEPA") of
hazardous wastes discovered at an area of the ore yard at LTV Steel's Chicago
plant, LTV submitted to IEPA a remedial plan for clean-up. The cost of the plan,
now being reviewed by IEPA, is expected to be immaterial.
Joint Plan
Remaining Proceedings Relating to Status of Claims. Aetna Casualty and
Surety Company ("Aetna") filed 10 appeals to the U.S. District Court for the
Southern District of New York ("District Court") from various orders of the U.S.
Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"),
including the order confirming the Joint Plan. In some of these appeals, Aetna
sought priority for certain of its claims that were classified as general
unsecured claims under the Joint Plan, and, if Aetna had prevailed on these
appeals, Aetna would have sought cash payments for various claims that (i) were
disallowed by the Bankruptcy Court or (ii) have received distributions of
non-cash consideration (including stock, warrants and contingent value rights)
in accordance with the Joint Plan. In January 1995, the District Court affirmed
the Bankruptcy Court's decision denying administrative or
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<PAGE> 16
excise tax priority to Aetna's claims based upon certain bonds totaling
approximately $38 million of its aggregate $45 million of claims. Aetna appealed
such decision to the U.S. Court of Appeals for the Second Circuit, which
affirmed the District Court decision in July 1996. The time during which Aetna
could have sought a further review of the decision by the U.S. Supreme Court has
expired. Three matters on appeal are still pending. The U.S. Court of Appeals
for the Second Circuit reversed in September 1996 the prior decisions of two
lower courts and held that Aetna had a right to recover from LTV in the Chapter
11 proceedings amounts that Aetna had paid out for black lung benefits pursuant
to a surety bond. A motion for rehearing on this issue before the Second
Circuit was denied in February 1997. This claim for recovery is estimated to
aggregate approximately $3 million. The U.S. District Court reversed an order
and remanded to Bankruptcy Court to determine the discount rate to use to
determine the amount of Aetna's claims after discounting to the Bankruptcy
Filing Date. Unless reversed on appeal, Aetna will have to return to LTV the
difference in the amount Aetna has received in distribution on its general
unsecured claims and the discounted amount, which may be approximately $4
million. In addition to what it has already received, if Aetna were ultimately
to prevail in all of the remaining matters still on appeal, Aetna would seek
payments, in addition to what it has already received, of approximately $8
million.
Aerospace-Related Litigation
Thomson Litigation. In August 1992, the Company filed suit against
Thomson CSF, S.A. ("Thomson"), in the Bankruptcy Court alleging that Thomson
breached its promise to pay the Company $20 million in the event that Thomson
was unable to purchase the missiles division from the Company by July 31, 1992
for reasons relating directly or indirectly to Thomson's failure to obtain
certain U.S. government authorizations to purchase and operate such division.
Thomson denied the allegations and countersued for damages of not less than $250
million plus costs, expenses and attorneys fees, alleging that the Company
breached the contract of sale for the missiles division by failing to use
"reasonable efforts" to assist Thomson in obtaining the necessary government
approvals. Thomson also claimed the Company breached express and implied
warranties under the purchase agreement by failing to disclose accurate
information regarding certain security requirements for missiles division
contracts and thereby fraudulently induced Thomson to enter into such agreement.
The counterclaims also sought an order declaring that Thomson was not obligated
to pay the Company the $20 million reverse break-up fee. In June 1993, the
Bankruptcy Court granted the Company's motion for summary judgment as to
Thomson's claims of breach of express and implied warranties and fraud. In
September 1995, the Bankruptcy Court ruled following a trial that Thomson had
breached its promise to pay the Company $20 million as a result of Thomson's
inability to complete the purchase of the Company's missiles division by July
31, 1992 and that the Company had not breached the contract with Thomson by
failing to use "reasonable efforts" to assist Thomson in obtaining the necessary
government approvals. Thomson appealed the rulings to the U.S. District Court
for the Southern District of New York and provided security for the monetary
judgment, including allowed interest (estimated to aggregate approximately $8
million as of year-end 1996), pending a final resolution of the litigation. In
July 1996, the District Court affirmed the ruling of the Bankruptcy Court, and
this ruling was appealed further by Thomson to the U.S. Court of Appeals for the
Second Circuit. In connection with the Joint Plan, the Company has provided a
guarantee to contribute to an aerospace creditor trust up to $10 million
following a final judgment in this lawsuit. The Company proposes to use the
proceeds from this lawsuit to satisfy this obligation. In the event the proceeds
from this litigation are less than $10 million, the Company will be required to
make a payment to the trust in the amount necessary to make up any difference.
The aerospace creditors trust is also entitled to half of all allowed interest
on any judgment against Thomson in favor of the Company.
Patent Litigation
In July 1991, Inland Steel Company ("Inland") filed an action against
LTV Steel and another domestic steel producer in the U.S. District Court for the
Northern District of Illinois, Eastern Division,
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<PAGE> 17
alleging defendants infringed two of Inland's steel-related patents. Inland
seeks monetary damages of up to approximately $600 million and an injunction
against future infringement. LTV Steel in its answer and counterclaim alleges
the patents are invalid and not infringed and seeks a declaratory judgment to
such effect. In May 1993, at a jury trial, LTV Steel was found to have infringed
the patents. The District Court proceeding on the validity of the patents has
been stayed informally pending the conclusion of proceedings in the U.S. Patent
Office described below, and the decision on infringement is not appealable until
the validity issue is tried. In July 1993, the U.S. Patent Office rejected the
claims of the two Inland patents upon a reexamination at the request of LTV
Steel and another domestic steel producer, in essence concluding that the
patents should not have been granted and are invalid. Inland filed a response
which sought to have the U.S. Patent Office reverse its decision; however, in
July 1994, the U.S. Patent Office affirmed its decision. Inland is entitled to a
hearing before the Patent Office Board of Appeals, and any decision by the Board
of Appeals would be subject to a federal judicial appeal.
Kawasaki Litigation
In March 1996, Kawasaki Steel Corporation ("Kawasaki") filed an action in
the U.S. District Court for the Northern District of Ohio, Eastern Division,
alleging that the continuous annealing line at the Cleveland Works of LTV Steel
infringes five patents owned by Kawasaki. The action (currently in the discovery
phase) seeks to enjoin LTV Steel from future infringement of the patents and
unspecified damages (which Kawasaki alleges are substantial in amount), interest
and costs for the alleged prior infringement of the patents.
Asbestos-Related Litigation
During 1994, individuals filed 54 separate asbestos-related lawsuits in
the U.S. District Court for the Northern District of Ohio against a past
affiliate of LTV and approximately 100 other companies. Each plaintiff claims to
have suffered bodily harm as a result of exposure to asbestos fibers while
sailing on ships owned by such affiliate of LTV and alleges unspecified damages
in excess of $50,000. In November 1994, the Company commenced a proceeding in
the Bankruptcy Court seeking, among other things, a judgment declaring all such
claims to be permanently barred as a result of the Company's bankruptcy
proceedings which were concluded in June 1993.
Also, in February 1997, a purported class action was filed in the Court of
Common Pleas, Cuyahoga County, Ohio by four individual representatives against
LTV Steel and more than fifty other companies on behalf of a large class of
individuals who allegedly were exposed to asbestos since 1950. LTV Steel's
liability, if any, allegedly arises as an owner of property where exposure to
asbestos occurred. Plaintiffs seek unspecified monetary damages and a fund to
pay for the costs of medical monitoring of class members. A hearing on
certification of the suit as a class action is scheduled for July 1997.
Other
Also in 1996, LTV Steel filed an action in the U.S. Court of Federal Claims
seeking recovery of approximately $25 million in Federal Insurance Contribution
Act ("FICA") and Federal Unemployment Tax Act ("FUTA") taxes which were paid by
LTV Steel to the U.S. government during the period 1987 through 1993 in
connection with certain pension make-up payments made to certain hourly and
salaried retirees. The Company's position is that these pension payments are not
subject to FICA and FUTA taxes.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
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<PAGE> 18
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
"Shareholders' Information" on the inside back cover, "Five Year Financial
Summary" on page 56, "Quarterly Financial Information" on page 57 and "Liquidity
and Financial Resources" on page 33 of the 1996 Annual Report to Shareholders
are incorporated herein by reference.
STOCK REPURCHASE PLAN
In January 1997, the Board of Directors authorized a stock repurchase plan,
whereunder the Company would purchase from time to time in the open market up to
$75 million of the outstanding shares of Common Stock of the Company.
BY-LAW AMENDMENTS:
ADVANCE STOCKHOLDER NOTICE REQUIREMENTS AND OTHER PROVISIONS
In 1996, LTV adopted amendments to its By-Laws intended to promote the
efficient functioning of its annual meetings. The amendments confirm 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 amended 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.
In December 1996, LTV's Board of Directors selected April 22, 1997 as the
Tentative Meeting Date for the next annual meeting of stockholders. The Company
has now finalized the date of the meeting as April 24, 1997. The change does
not, however, change the previously announced time periods for notice of
stockholder proposals or director nominations. Stockholders who intend to
propose business for consideration or to nominate persons for election as
directors at the 1997 annual meeting must provide notice and the required
information to LTV no earlier than January 22, 1997 and no later than February
21, 1997.
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 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
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<PAGE> 19
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 such
time.
ITEM 6. SELECTED FINANCIAL DATA.
"Five Year Financial Summary" on page 56 of the 1996 Annual Report to
Shareholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
"Management's Discussion and Analysis" on pages 30 through 37 of the 1996
Annual Report to Shareholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The listing on page F-1 lists all financial statements which are filed as
a part of this Report and which are incorporated herein by reference.
"Quarterly Financial Information" on page 57 of the 1996 Annual Report to
Shareholders is incorporated herein by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information relating to the directors of LTV to be included in LTV's Annual
Proxy Statement for the 1997 Annual Meeting of Stockholders, which LTV plans to
file with the Commission in final form in early 1997, is incorporated herein by
reference. Information relating to the executive officers of LTV is included in
"Item 1.
Business-Executive Officers of the Registrant."
ITEM 11. EXECUTIVE COMPENSATION.
Information relating to management remuneration and transactions included
in LTV's Annual Proxy Statement for the 1997 Annual Meeting of Stockholders,
which LTV plans to file with the Commission in final form in early 1997, is
incorporated herein by reference.
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<PAGE> 20
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information relating to ownership of LTV stock by the directors and
officers of LTV and owners of more than 5% of any class of LTV stock to be
included in LTV's Annual Proxy Statement for the 1997 Annual Meeting of
Stockholders, which LTV plans to file with the Commission in final form in early
1997, is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information relating to certain relationships and related transactions to
be included in LTV's Annual Proxy Statement for the 1997 Annual Meeting of
Stockholders, which LTV plans to file with the Commission in final form in early
1997, is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) and (2) List of Consolidated Financial Statements and Financial
Statement Schedules.
Reference is made to the listing preceding the financial statements and
financial statement schedules attached hereto on page F-1 for a list of all
financial statements and financial statement schedules filed as exhibits and
part of this Report.
(a)(3) List of Exhibits.
Reference is made to the listing in (c) below for a list of all other
exhibits filed as part of this Report.
(b) Reports on Form 8-K.
None to report.
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<PAGE> 21
(c) 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.
(d) Financial Statement Schedules.
The response to this portion of Item 14 is submitted as a separate section
of this Report on page F-1.
<TABLE>
<S> <C>
(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)
(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)
</TABLE>
-20-
<PAGE> 22
<TABLE>
<S> <C>
(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)
(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)
</TABLE>
-21-
<PAGE> 23
<TABLE>
<S> <C>
(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)
(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)
</TABLE>
-22-
<PAGE> 24
<TABLE>
<S> <C>
(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)-(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])
</TABLE>
-23-
<PAGE> 25
<TABLE>
<S> <C>
(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)
(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])
</TABLE>
-24-
<PAGE> 26
<TABLE>
<S> <C>
(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 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])
</TABLE>
-25-
<PAGE> 27
<TABLE>
<S> <C>
(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)
(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)
</TABLE>
-26-
<PAGE> 28
<TABLE>
<S> <C>
(10)-(58) - The LTV Corporation Amended and Restated Non-Employee Directors' Equity
Compensation Plan adopted on November 22, 1996 (filed herewith)
(10)-(59) - The LTV Corporation Amended and Restated Non-Employee Directors' Deferred
Compensation Plan adopted on November 22, 1996 (filed herewith)
(10)-(60) - The LTV Corporation Amended and Restated Executive Deferred Compensation Plan
adopted on October 25, 1996 (filed herewith)
(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 (filed herewith)
(11) - Statement re Computation of Per Share Earnings (filed herewith)
(13) - Portions of the 1996 Annual Report to Shareholders incorporated into this
Report by reference (filed herewith)
(21) - List of subsidiaries (filed herewith)
(23) - Consent of Ernst & Young LLP (filed herewith)
(27) - Financial Data Schedule (filed herewith)
</TABLE>
-27-
<PAGE> 29
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, in Palm
Beach, Florida, as of the 28th day of February 1997.
THE LTV CORPORATION
By /s/ Glenn J. Moran
------------------------------
(Glenn J. Moran)
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ DAVID H. HOAG Chairman of the Board, President February 28, 1997
- ------------------------------------ Chief Executive Officer and Director
(David H. Hoag) (Principal Executive Officer)
/s/ ARTHUR W. HUGE Senior Vice President and Chief February 28, 1997
- ------------------------------------ Financial Officer
(Arthur W. Huge) (Principal Financial Officer and
Principal Accounting Officer)
/s/ GEORGE T. HENNING Vice President and Controller February 28, 1997
- ------------------------------------
(George T. Henning)
/s/ EDGAR L. BALL Director February 28, 1997
- ------------------------------------
(Edgar L. Ball)
/s/ DR. COLIN C. BLAYDON Director February 28, 1997
- ------------------------
(Dr. Colin C. Blaydon)
/s/ WILLIAM H. BRICKER Director February 28, 1997
- ------------------------------------
(William H. Bricker)
</TABLE>
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<PAGE> 30
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ JOHN C. EVANS Director February 28, 1997
- -----------------------------
(John C. Evans)
/s/ JOHN E. JACOB Director February 28, 1997
- -----------------------------
(John E. Jacob)
/s/ EDWARD C. JOULLIAN III Director February 28, 1997
- -----------------------------
(Edward C. Joullian III)
/s/ M. THOMAS MOORE Director February 28, 1997
- -----------------------------
(M. Thomas Moore)
/s/ HAROLD A. POLING Director February 28, 1997
- -----------------------------
(Harold A. Poling)
/s/ VINCENT A. SARNI Director February 28, 1997
- -----------------------------
(Vincent A. Sarni)
/s/ SAMUEL K. SKINNER Director February 28, 1997
- -----------------------------
(Samuel K. Skinner)
/s/ DR. PAUL G. STERN Director February 28, 1997
- -----------------------------
(Dr. Paul G. Stern)
/s/ STEPHEN B. TIMBERS Director February 28, 1997
- -----------------------------
(Stephen B. Timbers)
/s/ FARAH M. WALTERS Director February 28, 1997
- -----------------------------
(Farah M. Walters)
</TABLE>
<PAGE> 31
THE LTV CORPORATION
FORM 10-K - ITEM 14 (a)(1) and (2)
LIST OF CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
The following is a listing of the consolidated financial statements
which are incorporated herein by reference. The consolidated financial
statements of LTV and subsidiaries and Ernst & Young LLP's report thereon,
included in the 1996 Annual Report to Shareholders, are incorporated herein by
reference in Item 8. With the exception of the pages listed in this index and
the pages listed in Items 5, 6, 7 and 8, the 1996 Annual Report to Shareholders
is not deemed to be filed as part of this Form 10-K.
Reference Page
--------------
1996 Annual
Report to
Shareholders
Incorporated
by Reference
------------
Report of Ernst & Young LLP, independent auditors................ 55
At December 31, 1996 and 1995:
Consolidated balance sheet.................................. 40
For the years ended December 31, 1996, 1995 and 1994:
Consolidated statement of income............................ 38
Consolidated statement of cash flows........................ 39
For the years ended December 31, 1996, 1995 and 1994:
Consolidated statement of shareholders' equity.............. 42
Notes to consolidated financial statements....................... 43
All schedules for which provision is made in the applicable regulation
of the Securities and Exchange Commission have been omitted as the schedules are
not required under the related instructions, are inapplicable, or the
information required thereby is set forth in the financial statements or the
notes thereto.
F-1
<PAGE> 1
EXHIBIT (10)-(58)
THE LTV CORPORATION
NON-EMPLOYEE DIRECTORS'
EQUITY COMPENSATION PLAN
(AS AMENDED AND RESTATED AS OF
DECEMBER 1, 1996)
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I. DEFINITIONS......................................................................................... 1
1.1 DEFINITIONS............................................................................ 1
ARTICLE II. PURPOSE............................................................................................ 3
2.1 PURPOSE................................................................................ 3
ARTICLE III. SHARE AWARDS AND VOLUNTARY AMOUNTS................................................................ 3
3.1 SHARE AWARD AND VOLUNTARY AMOUNT....................................................... 3
ARTICLE IV. DEFERRAL OF SHARE AWARDS........................................................................... 4
4.1 DEFERRALS.............................................................................. 4
4.2 DEFERRED SHARE ACCOUNT................................................................. 4
4.3 INITIAL YEAR OF PARTICIPATION.......................................................... 4
4.4 TERMINATION OF PARTICIPATION........................................................... 4
4.5 NO MODIFICATION OF DEFERRAL COMMITMENTS................................................ 4
4.6 WITHHOLDING TAXES...................................................................... 4
ARTICLE V. DEFERRED SHARE ACCOUNT.............................................................................. 5
5.1 DETERMINATION OF DEFERRED SHARE ACCOUNT................................................ 5
5.2 CREDITING OF DIVIDEND EQUIVALENTS...................................................... 5
5.3 STATEMENT OF ACCOUNTS.................................................................. 5
5.4 VESTING OF DEFERRED SHARE ACCOUNT...................................................... 5
ARTICLE VI. DISTRIBUTION OF SHARES............................................................................. 5
6.1 SETTLEMENT DATE........................................................................ 5
6.2 SHARES TO BE DISTRIBUTED............................................................... 5
6.3 IN-SERVICE DISTRIBUTION................................................................ 6
6.4 DISTRIBUTION FOLLOWING TERMINATION AS A
DIRECTOR............................................................................... 6
6.6 SPECIAL DISTRIBUTIONS.................................................................. 7
6.7 BENEFICIARY DESIGNATION................................................................ 7
6.8 FACILITY OF PAYMENT.................................................................... 7
ARTICLE VII. ADMINISTRATION, AMENDMENT AND TERMINATION......................................................... 8
7.1 ADMINISTRATION......................................................................... 8
7.2 AMENDMENT AND TERMINATION.............................................................. 8
ARTICLE VIII. FINANCING OF BENEFITS............................................................................ 9
8.1 FINANCING OF BENEFITS.................................................................. 9
8.2 SECURITY FOR BENEFITS.................................................................. 9
ARTICLE IX. SHARES SUBJECT TO PLAN............................................................................. 9
9.1 SHARES SUBJECT TO PLAN................................................................. 9
ARTICLE X. GENERAL PROVISIONS.................................................................................. 9
10.1 GENERAL PROVISIONS..................................................................... 9
</TABLE>
<PAGE> 3
THE LTV CORPORATION NON-EMPLOYEE
DIRECTORS' EQUITY COMPENSATION PLAN
(AS AMENDED AND RESTATED AS OF DECEMBER 1, 1996)
The LTV Corporation Non-Employee Directors' Equity
Compensation Plan ("Plan"), originally effective April 1, 1995, and amended and
restated effective January 1, 1996, is hereby amended and restated as of
December 1, 1996.
ARTICLE I. DEFINITIONS
1.1 DEFINITIONS. Whenever the following terms are used in this
Plan they shall have the meanings specified below unless the context clearly
indicates to the contrary:
(a) "Administrator": The Board.
(b) "Beneficiary": The person or persons (natural or
otherwise) designated pursuant to Section 6.7.
(c) "Board": The Board of Directors of the Corporation.
(d) "Code": The Internal Revenue Code of 1986, as amended.
(e) "Common Stock": The Corporation's Common Stock, par value
$.50 per share.
(f) "Corporation": The LTV Corporation or any successor or
successors thereto.
(g) "Deferral Commitment": An agreement made by a Director in
a Participation Agreement to have a specified portion of his or her
Share Award deferred under the Plan for a specified period in the
future.
(h) "Deferral Period": Means the Plan Year for which a
Director has elected to defer a portion of his or her Share Award.
(i) "Deferred Shares": The Shares credited to a Director's
Deferred Share Account in accordance with Article IV and payable in
accordance with Article VI.
(j) "Deferred Share Account": The account maintained for each
Director who elects to defer Shares under Article IV.
(k) "Director": An individual duly elected or chosen as a
Director of the Corporation who is not also an employee of the
Corporation or its subsidiaries.
<PAGE> 4
(l) "Fair Market Value": With respect to a share of Common
Stock, (i) the last reported closing price for a share of Common Stock
on the New York Stock Exchange (or any appropriate over-the-counter
market if the Common Stock is no longer listed on such Exchange) for
the Quarter Date, or if there was no sale of Common Stock so reported
for such day, on the most recently preceding day on which there was
such a sale or (ii) if greater, the lowest price necessary to avoid any
adjustment in the exercise price or exercise quantity of the Series A
Warrants pursuant to the Warrant Agreement dated as of June 28, 1993
between the Corporation and Society National Bank.
(m) "Fees": The portion of the annual retainer and other
Director compensation payable in cash.
(n) "Participation Agreement": The agreement submitted by a
Director to the Administrator in which a Director may specify a
Voluntary Amount, or may elect to defer receipt of a portion of his or
her Share Award for a specified period in the future.
(o) "Plan": The Plan set forth in this instrument as it may,
from time to time, be amended.
(p) "Plan Year": The 12-month period beginning January 1
through December 31.
(q) "Quarter Date": The last date of the calendar quarter.
(r) "Rule 16b-3": Rule 16b-3 promulgated under the Securities
Exchange Act of 1934 (or any successor rule to the same effect), as in
effect from time to time.
(s) "Settlement Date": The date on which a Director terminates
as a Director. Settlement Date shall also include with respect to any
Deferral Period the date prior to the date of termination as a Director
selected by a Director in a Participation Agreement for distribution of
all or a portion of the Share Awards deferred during such Deferral
Period as provided in Section 6.3.
(t) "Share Award": An amount, payable in Shares, constituting
fifty percent of a Director's retainer.
(u) "Shares": Fully paid, non-assessable shares of Common
Stock. Shares may be shares of original issuance or treasury shares or
a combination of the foregoing.
(v) "Voluntary Amount": the meaning set forth in Section
3.1(b).
2
<PAGE> 5
ARTICLE II. PURPOSE
2.1 PURPOSE. The purpose of this Plan is to permit the payment
to the Directors of the Corporation of all or a portion of the annual retainer
and other compensation earned by them for services as Directors in Common Stock
in order to further align the interests of such Directors with the stockholders
of the Corporation and thereby promote the long-term profits and growth of the
Corporation.
ARTICLE III. SHARE AWARDS AND VOLUNTARY AMOUNTS
3.1 SHARE AWARD AND VOLUNTARY AMOUNT.
(a) RETAINER. Fifty percent of the retainer established by the
Board shall be payable in cash and fifty percent of such retainer shall
be payable as a Share Award. Notwithstanding the foregoing, for the
first two calendar quarters of 1996 the retainer shall be paid 100% in
cash as Fees, and for the second two calendar quarters of 1996, the
retainer shall be paid 50% in cash as Fees and 50% in a Share Award.
(b) VOLUNTARY AMOUNT. For any calendar quarter, a Director may
elect by the filing of a Participation Agreement before the end of such
quarter to have up to 100% of his or her Fees for such quarter (the
amount so elected referred to as a "Voluntary Amount"), paid by the
Corporation in the form of Shares and in lieu of cash payment of such
Voluntary Amount. Such election, unless subsequently modified, shall
apply to a Director's Fees for the remainder of the current Plan Year
and each subsequent Plan Year. Any such modification shall be made in a
modified Participation Agreement.
(c) ISSUANCE OF SHARES. Promptly following each Quarter Date,
the Corporation shall issue (i) to each Director a number of whole
Shares equal to the Share Award for the calendar quarter ending on the
Quarter Date divided by the Fair Market Value and (ii) to each Director
who has made an election under Section 3.1(b) a number of whole Shares
equal to such Director's Voluntary Amount for such calendar quarter
divided by the Fair Market Value on the Quarter Date. To the extent
that the application of the foregoing formula would result in the
issuance of fractional shares, no fractional Shares shall be issued,
but instead, the Corporation shall maintain two separate
non-interest-bearing accounts for each Director, which accounts shall
be credited with the amount of any Share Awards or Voluntary Amounts,
as the case may be, not convertible into whole Shares, which amounts
shall be combined with Share Awards and Voluntary Amounts,
respectively, which are paid for the next following calendar quarter.
When whole Shares are issued by the Corporation to the Director for
such calendar quarter, the amounts in such accounts shall be reduced by
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<PAGE> 6
that amount which (when added to the Share Award and Voluntary Amount
for such Director for such quarter) results in the issuance of the
maximum number of whole Shares to such Director. The Director shall
hold the whole Shares issued by the Corporation pursuant to clause (ii)
of the first sentence of this Section for a period of six months from
the date of issuance unless the issuance of such Shares is otherwise
exempt under Rule 16b-3. The Corporation shall pay any and all fees and
commissions incurred in connection with the payment of Share Awards and
Voluntary Amounts to a Director in Shares.
ARTICLE IV. DEFERRAL OF SHARE AWARDS
4.1 DEFERRALS. A Director may elect to defer all or a
specified percentage (or reduce it to zero) of his or her Share Awards, and may
change such percentage by filing a Participation Agreement with the
Administrator, which shall be effective as of the first day of the Plan Year
which commences after the date such Participation Agreement is filed with the
Administrator.
4.2 DEFERRED SHARE ACCOUNT. A Director's Deferred Share
Account shall be credited promptly following each Quarter Date with a number of
Deferred Shares equal to the specified percentage multiplied by the number of
whole Shares which the Director would otherwise receive for such calendar
quarter, rounded up to the next whole Share.
4.3 INITIAL YEAR OF PARTICIPATION. In the event that an
individual first becomes a Director during a Plan Year and wishes to elect to
defer the receipt of any Share Award earned and payable to the individual with
respect to such Plan Year (a "Deferral Election"), a Participation Agreement
must be submitted to the Administrator no later than 30 days following such
individual's becoming a Director. Any Deferral Election made in such
Participation Agreement shall be effective only with regard to Share Awards
earned following the date the Participation Agreement is submitted to the
Administrator. If a Director does not submit a Participation Agreement within
such period of time, such Director will not be eligible to participate in the
Plan with respect to deferral of Share Awards except in accordance with Section
4.1.
4.4 TERMINATION OF PARTICIPATION. Participation in the Plan
shall continue as long as the Director is eligible to receive benefits under the
Plan.
4.5 NO MODIFICATION OF DEFERRAL COMMITMENTS. A Deferral
Commitment shall be irrevocable with respect to the Plan Year for which it is
made, and for future Plan Years unless modified in accordance with Section 4.1.
4.6 WITHHOLDING TAXES. If the Corporation is required to
withhold any taxes from a Director's deferred Share Awards pursuant to any
Federal, state or local law, such amounts
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shall, to the extent possible, be deducted from the Director's Share Awards
before such amounts are credited as described in Section 4.2.
ARTICLE V. DEFERRED SHARE ACCOUNT
5.1 DETERMINATION OF DEFERRED SHARE ACCOUNT. On any particular
date, a Director's Deferred Share Account shall consist of the aggregate number
of Deferred Shares credited thereto pursuant to Section 4.2, plus any dividend
equivalents credited pursuant to Section 5.2, minus the aggregate amount of
distributions, if any, made from such Deferred Share Account.
5.2 CREDITING OF DIVIDEND EQUIVALENTS. Each Deferred Share
Account shall be credited as of the end of each calendar quarter with additional
Deferred Shares equal in value to the amount of cash dividends paid by the
Corporation during such calendar quarter on that number of Shares equivalent to
the number of Deferred Shares in such Deferred Share Account on any dividend
payment date during such calendar quarter. The dividend equivalents shall be
calculated by dividing the dollar value of such dividend equivalents by the Fair
Market Value on the Quarter Date next following the dividend payment date. Until
a Director or his or her Beneficiary receives his or her entire Deferred Share
Account, the unpaid balance thereof credited in Deferred Shares shall be
credited with dividend equivalents as provided in this Section 5.2.
5.3 STATEMENT OF ACCOUNTS. The Administrator shall provide to
each Director, within 120 days after the close of each Plan Year, a statement
setting forth the balance of such Director's Deferred Share Account as of the
last day of the preceding Plan Year and showing all adjustments made thereto
during such Plan Year.
5.4 VESTING OF DEFERRED SHARE ACCOUNT. A Director shall be
100% vested in his or her Deferred Share Account at all times.
ARTICLE VI. DISTRIBUTION OF SHARES
6.1 SETTLEMENT DATE. A Director or, in the event of his or her
death, his or her Beneficiary shall be entitled to distribution of all or part
of the balance of his or her Deferred Share Account, as provided in this Article
VI, following his or her Settlement Date or Dates.
6.2 SHARES TO BE DISTRIBUTED. The number of Shares to be
distributed to a Director or, in the event of his or her death, his or her
Beneficiary shall be equal to all or a portion of the number of Deferred Shares
in the Director's Deferred Share Account determined as of the Quarter Date
coincident with or next following his or her Settlement Date or Dates.
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<PAGE> 8
6.3 IN-SERVICE DISTRIBUTION. A Director may irrevocably elect
to receive a pre-termination distribution of his or her deferred Share Award for
any Plan Year on or commencing not earlier than the beginning of the third Plan
Year following the Plan Year in which such Share Award otherwise would have been
payable. A Director's election of a pre-termination distribution shall be made
in the Participation Agreement filed for the Plan Year as provided in Section
4.1. The Director shall elect irrevocably to receive such Deferred Shares as a
pre-termination distribution under one of the forms as provided in Section 6.5.
6.4 DISTRIBUTION FOLLOWING TERMINATION AS A DIRECTOR. As soon
as practicable after the end of the Quarter Date in which a Director's
Settlement Date occurs, but in no event later than thirty days following the end
of such Quarter Date, the Corporation shall distribute or cause to be
distributed, to the Director a number of Shares equal to the number of Deferred
Shares in the Director's Deferred Share Account as determined under Section 6.2,
under one of the forms provided in Section 6.5. Notwithstanding the foregoing,
if elected by the Director, the distribution of all or a portion of the
Director's Deferred Share Account may be made or may commence at the beginning
of the Plan Year next following his or her Settlement Date. In the event of a
Director's death, the number of Shares equal to the number of Deferred Shares in
his or her Deferred Share Account shall be distributed to his or her Beneficiary
in a single distribution.
6.5 FORM OF DISTRIBUTION. Distribution of a Director's
Deferred Share Account with respect to any Deferral Period shall be made in one
of the following forms as elected by the Director:
(a) by payment in Shares in a single distribution;
(b) by payment in Shares in not greater than ten annual
installments; or
(c) a combination of (a) and (b) above. The Director shall
designate the percentage payable under each option.
The Director's election of the form of distribution shall be made by written
notice filed with the Administrator at least one (1) year prior to the
Director's voluntary retirement as a Director. Any such election may be changed
by the Director at any time and from time to time without the consent of any
other person by filing a later signed written election with the Administrator;
provided that any election made less than one (1) year prior to the Director's
voluntary termination as a Director shall not be valid, and in such case payment
shall be made in accordance with the Director's prior election.
The number of Shares to be distributed in each installment
shall be equal to the quotient obtained by dividing the number of Deferred
Shares in the Director's Deferred Share
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<PAGE> 9
Account as of the date of such installment payment by the number of installment
payments remaining to be made to or in respect of such Director at the time of
calculation. Fractional Shares shall be rounded down to the nearest whole Share,
and such fractional amount shall be re-credited as a fractional Deferred Share
in the Director's Deferred Share Account.
If a Director fails to make an election in a timely manner as
provided in this Section 6.5, distribution of the Director's Deferred Share
Account shall be made in Shares in a single distribution.
6.6 SPECIAL DISTRIBUTIONS. Notwithstanding any other provision
of this Article VI, a Director may elect to receive a distribution of part or
all of his or her Deferred Share Account in one or more distributions if (and
only if) the amount of the Shares in the Director's Deferred Share Account
subject to such distribution is reduced by ten percent (10%). Any distribution
made pursuant to such an election shall be made within sixty days of the date
such election is submitted to the Administrator. The remaining ten percent (10%)
of the portion of the electing Director's Deferred Share Account subject to such
distribution shall be forfeited.
6.7 BENEFICIARY DESIGNATION. As used in the Plan the term
"Beneficiary" means:
(a) The person last designated as Beneficiary by the
Director in writing on a form prescribed by the
Administrator;
(b) If there is no designated Beneficiary or if the
person so designated shall not survive the Director, such
Director's spouse; or
(c) If no such designated Beneficiary and no such spouse is
living upon the death of a Director, or if all such persons die prior
to the distribution of a number of Shares equal to the number of
Deferred Shares in the Director's Deferred Share Account, then the
legal representative of the last survivor of the Director and such
persons, or, if the Administrator shall not receive notice of the
appointment of any such legal representative within one year after such
death, the heirs-at-law of such survivor shall be the Beneficiaries to
whom a number of Shares equal to the number of Deferred Shares
remaining in the Director's Account shall be distributed (in the
proportions in which they would inherit his or her intestate personal
property).
Any Beneficiary designation may be changed from time to time by the filing of a
new form. No notice given under this Section 6.7 shall be effective unless and
until the Administrator actually receives such notice.
6.8 FACILITY OF PAYMENT. Whenever and as often as any Director
or his or her Beneficiary entitled to payments
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<PAGE> 10
hereunder shall be under a legal disability or, in the sole judgment of the
Administrator, shall otherwise be unable to apply such payments to his or her
own best interests and advantage, the Administrator in the exercise of its
discretion may direct all or any portion of such payments to be made in any one
or more of the following ways: (i) directly to him or her; (ii) to his or her
legal guardian or conservator; or (iii) to his or her spouse or to any other
person, to be expended for his or her benefit; and the decision of the
Administrator, shall in each case be final and binding upon all persons in
interest.
ARTICLE VII. ADMINISTRATION, AMENDMENT AND TERMINATION
7.1 ADMINISTRATION. The Plan shall be administered by the
Administrator. The Administrator shall have such powers as may be necessary to
discharge its duties hereunder. The Administrator may, from time to time, employ
agents and delegate to them such administrative duties as it sees fit, and may
from time to time consult with legal counsel who may be counsel to the
Corporation. The Administrator shall have no power to add to, subtract from or
modify any of the terms of the Plan, or to change or add to any benefits
provided under the Plan, or to waive or fail to apply any requirements of
eligibility for a benefit under the Plan. No member of the Administrator shall
act in respect of his or her own Voluntary Amount or his or her own Deferred
Share Account. All decisions and determinations by the Administrator shall be
final and binding on all parties. All decisions of the Administrator shall be
made by the vote of the majority, including actions and writing taken without a
meeting. All elections, notices and directions under the Plan by a Director
shall be made on such forms as the Administrator shall prescribe.
7.2 AMENDMENT AND TERMINATION. The Board may alter or amend
this Plan from time to time or may terminate it in its entirety; provided,
however, that no such action shall, without the consent of a Director, affect
the rights in any Shares issued or to be issued to such Director or in any
Deferred Shares in a Director's Deferred Share Account; and further provided,
that, without further approval by the stockholders of the Corporation no such
action shall (i) increase the total number of shares of Common Stock to be
issued under this Plan specified in Article IX and Article V (except that
adjustments and additions expressly authorized by this Article VII shall not be
limited by this clause. In the event of any change in the outstanding Common
Stock by reason of (a) any stock dividend, stock split, combination of shares,
recapitalization or any other change in the capital structure of the
Corporation, (b) any merger, consolidation, spin-off, split-off, spin-out,
split-up, reorganization, partial or complete liquidation or other distribution
of assets, issuance of rights or warrants to purchase securities, or (c) any
other corporate transaction or event having an effect similar to any of the
foregoing, the number or kind of Shares that may be issued under the Plan and
the number of Deferred Shares in a Director's Deferred Share
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Account shall automatically be adjusted so that the proportionate interest of
the Directors shall be maintained as before the occurrence of such event. Such
adjustment shall be conclusive and binding for all purposes with respect to the
Plan.
ARTICLE VIII. FINANCING OF BENEFITS
8.1 FINANCING OF BENEFITS. The Deferred Shares payable in
Shares under the Plan to a Director or, in the event of his or her death, to his
or her Beneficiary shall be paid by the Corporation from its general assets. The
right to receive payment of the Deferred Shares represents an unfunded,
unsecured obligation of the Corporation. No person entitled to payment under the
Plan shall have any claim, right, security interest or other interest in any
fund, trust, account, insurance contract, or asset of the Corporation which may
be responsible for such payment.
8.2 SECURITY FOR BENEFITS. Notwithstanding the provisions of
Section 8.1, nothing in this Plan shall preclude the Corporation from setting
aside Shares or funds in trust (the "Trust") pursuant to one or more trust
agreements between a trustee and the Corporation. However, no Director or
Beneficiary shall have any secured interest or claim in any assets or property
of the Corporation or the Trust and all Shares or funds contained in the Trust
shall remain subject to the claims of the Corporation's general creditors.
ARTICLE IX. SHARES SUBJECT TO PLAN
9.1 SHARES SUBJECT TO PLAN. Subject to adjustment as provided
in this Plan, the total number of Shares of Common Stock which may be issued
under this Plan shall be 250,000.
ARTICLE X. GENERAL PROVISIONS
10.1 GENERAL PROVISIONS.
(a) NO CONTINUING RIGHT AS DIRECTOR. Neither the adoption or
operation of this Plan, nor any document describing or referring to
this Plan, or any part thereof, shall confer upon any Director any
right to continue as a director of the Corporation or any subsidiary of
the Corporation.
(b) RESTRICTIONS ON SHARES AND RIGHTS TO SHARES. Except for
any restrictions required by law, a Director shall have all rights of a
stockholder with respect to his or her Shares. No rights to Shares
shall be assigned, pledged, hypothecated or otherwise transferred by a
Director or any other person, voluntarily or involuntarily, other than
by will or the laws of descent and distribution. No person shall have
any right to commute, encumber, pledge or
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dispose of any other interest herein or right to receive payments
hereunder, nor shall such interests or payments be subject to seizure,
attachment or garnishment for the payments of any debts, judgments,
alimony or separate maintenance obligations or be transferable by
operation of law in the event of bankruptcy, insolvency or otherwise,
all payments and rights hereunder being expressly declared to be
nonassignable and nontransferable.
(c) GOVERNING LAW. The provisions of this Plan shall be
governed by and construed in accordance with the laws of the State of
Delaware.
(d) WITHHOLDING TAXES. To the extent that the Corporation is
required to withhold Federal, state or local taxes in connection with
any component of a Director's compensation in cash or Shares, and the
amounts available to the Corporation for such withholding are
insufficient, it shall be a condition to the receipt of any Shares that
the Director make arrangements satisfactory to the Corporation for the
payment of the balance of such taxes required to be withheld, which
arrangement may include relinquishment of the Shares. The Corporation
and a Director may also make similar arrangements with respect to
payment of any other taxes derived from or related to the payment of
Shares with the respect to which withholding is not required.
(e) MISCELLANEOUS. Headings are given to the sections of this
Plan solely as a convenience to facilitate reference. Such headings,
numbering and paragraphing shall not in any case be deemed in any way
material or relevant to the construction of this Plan or any provisions
thereof. The use of the singular shall also include within its meaning
the plural, and vice versa.
THE LTV CORPORATION
By:
-----------------------------
Its:
----------------------------
Attest:
-----------------------------
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<PAGE> 1
EXHIBIT (10)-(59)
THE LTV CORPORATION
NON-EMPLOYEE DIRECTORS'
DEFERRED COMPENSATION PLAN
(AS AMENDED AND RESTATED AS OF
DECEMBER 1, 1996)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I. PURPOSE............................................................................................. 1
Section 1.1. PURPOSE.................................................................................. 1
ARTICLE II. DEFINITIONS AND CONSTRUCTION....................................................................... 1
Section 2.1. DEFINITIONS.............................................................................. 1
ARTICLE III. PARTICIPATION AND DEFERRALS....................................................................... 2
Section 3.1. ELIGIBILITY AND PARTICIPATION............................................................ 2
Section 3.2. AMOUNT OF DEFERRAL....................................................................... 3
Section 3.3. NO MODIFICATION OF DEFERRAL COMMITMENTS.................................................. 3
ARTICLE IV. DIRECTORS' ACCOUNTS................................................................................ 3
Section 4.1. ESTABLISHMENT OF ACCOUNTS................................................................ 3
Section 4.2. CREDITING OF DEFERRED FEES............................................................... 3
Section 4.3. DETERMINATION OF ACCOUNTS................................................................ 3
Section 4.4. ADJUSTMENTS TO ACCOUNTS.................................................................. 4
Section 4.5. STATEMENT OF ACCOUNTS.................................................................... 4
Section 4.6. VESTING OF ACCOUNTS...................................................................... 4
ARTICLE V. FINANCING OF BENEFITS............................................................................... 4
Section 5.1. FINANCING OF BENEFITS.................................................................... 4
Section 5.2. SECURITY FOR BENEFITS.................................................................... 5
Section 5.3. HYPOTHETICAL INVESTMENTS................................................................. 5
ARTICLE VI. DISTRIBUTION OF BENEFITS........................................................................... 6
Section 6.1. SETTLEMENT DATE.......................................................................... 6
Section 6.2. AMOUNT TO BE DISTRIBUTED................................................................. 6
Section 6.3. IN-SERVICE DISTRIBUTION.................................................................. 6
Section 6.4. FORM OF DISTRIBUTION..................................................................... 6
Section 6.5. SPECIAL DISTRIBUTIONS.................................................................... 7
Section 6.6. BENEFICIARY DESIGNATION.................................................................. 7
Section 6.7. FACILITY OF PAYMENT...................................................................... 8
ARTICLE VII. ADMINISTRATION, AMENDMENT AND TERMINATION......................................................... 8
Section 7.1. ADMINISTRATION........................................................................... 8
Section 7.2. AMENDMENT, TERMINATION AND WITHDRAWAL.................................................... 8
Section 7.3. SUCCESSORS............................................................................... 9
Section 7.4. EXPENSES................................................................................. 9
ARTICLE VIII. APPROVAL BY STOCKHOLDERS......................................................................... 9
Section 8.1. APPROVAL OF THE PLAN..................................................................... 9
ARTICLE IX. MISCELLANEOUS............................................................................. 9
Section 9.1. NO CONTINUING RIGHT AS DIRECTOR. ........................................................ 9
Section 9.2. APPLICABLE LAW........................................................................... 9
Section 9.3. INTERESTS NOT TRANSFERABLE............................................................... 10
Section 9.4. SEVERABILITY............................................................................. 10
Section 9.5. WITHHOLDING OF TAXES..................................................................... 10
</TABLE>
i
<PAGE> 3
THE LTV CORPORATION NON-EMPLOYEE
DIRECTORS' DEFERRED COMPENSATION PLAN
(as Amended and Restated as of December 1, 1996)
The LTV Corporation Non-Employee Directors' Deferred
Compensation Plan, originally effective as of January 1, 1995, and amended and
restated effective January 1, 1996, is hereby amended and restated effective
December 1, 1996.
ARTICLE I. PURPOSE
Section 1.1. PURPOSE. The purpose of this Non- Employee
Directors' Deferred Compensation Plan ("Plan") is to provide the non-employee
Directors of the Corporation an opportunity to defer a portion of their
Directors' Fees.
ARTICLE II. DEFINITIONS AND CONSTRUCTION
Section 2.1. DEFINITIONS. Whenever the following
terms are used in this Plan they shall have the meanings specified below unless
the context clearly indicates to the contrary:
(a) "Account": The bookkeeping account maintained for each
Director showing his interest under the Plan.
(b) "Accounting Date": December 31 of each year and the last
day of any calendar quarter.
(c) "Accounting Period": The period beginning on the day
immediately following an Accounting Date and ending on the next
following Accounting Date.
(d) "Administrator": The Board.
(e) "Beneficiary": The person or persons (natural or
otherwise) designated pursuant to Section 6.6.
(f) "Board": The Board of Directors of the Corporation.
(g) "Common Stock": The Corporation's Common Stock, par value
$.50 per share.
(h) "Corporation": The LTV Corporation or any successor or
successors thereto.
(i) "Deferral Commitment": An agreement by a Director to have
a specified percentage or dollar amount of his Fees deferred under the
Plan for a specified period in the future.
<PAGE> 4
(j) "Deferral Period": Means the Plan Year for which a
Director has elected to defer a portion of his Fees.
(k) "Director": An individual duly elected or chosen as a
Director of the Corporation who is not also an employee of the
Corporation or its subsidiaries.
(l) "Fees": The portion of the annual retainer and other
Director compensation payable in cash.
(m) "Investment Fund": The meaning set forth in Section 5.3.
(n) "Participation Agreement": The Agreement submitted by a
Director to the Administrator with respect to a Deferral Commitment.
(o) "Plan": The Plan set forth in this instrument as it may,
from time to time, be amended.
(p) "Plan Year": The 12-month period beginning January 1
through December 31.
(q) "Request": The meaning set forth in Section 5.3.
(r) "Settlement Date": The date on which a Director terminates
as a Director. Settlement Date shall also include with respect to any
Deferral Period the date prior to termination as a Director selected by
a Director in a Participation Agreement for distribution of all or a
portion of the amounts deferred during such Deferral Period as provided
in Section 6.3.
(s) "Trust": The meaning set forth in Section 5.2.
ARTICLE III. PARTICIPATION AND DEFERRALS
Section 3.1. ELIGIBILITY AND PARTICIPATION.
(a) PARTICIPATION. A Director may elect to participate in the
Plan with respect to any Plan Year by submitting a Participation
Agreement to the Administrator prior to the first day of the Plan Year.
(b) INITIAL YEAR OF PARTICIPATION. In the event that an
individual first becomes a Director during a Plan Year and wishes to
elect a Deferral Commitment with respect to Fees earned by and payable
to the individual with respect to such Plan Year, a Participation
Agreement must be submitted to the Administrator no later than 30 days
following such individual's becoming a Director. Any Deferral
Commitment elected in such Participation Agreement shall be effective
2
<PAGE> 5
only with regard to Fees earned following the submission of the
Participation Agreement to the Administrator. If a Director does not
submit a Participation Agreement within such period of time, such
Director will not be eligible to participate in the Plan until the
first day of the next Plan Year.
(c) TERMINATION OF PARTICIPATION. Participation in the Plan
shall continue as long as the Director is eligible to receive benefits
under the Plan.
Section 3.2. AMOUNT OF DEFERRAL. With respect to each Plan
Year, a Director may elect to defer a specified dollar amount or percentage of
any portion of his Fees. A Director may change the dollar amount or percentage
of his Fees to be deferred (or reduce such amount or percentage to zero) by
filing a written notice thereof with the Administrator. Any such change shall be
effective as of the first day of the Plan Year immediately succeeding the Plan
Year in which such notice is filed with the Administrator.
Section 3.3. NO MODIFICATION OF DEFERRAL COMMITMENTS.
A Deferral Commitment shall be irrevocable with respect to the Plan Year for
which it is made.
ARTICLE IV. DIRECTORS' ACCOUNTS
Section 4.1. ESTABLISHMENT OF ACCOUNTS. The Corporation,
through its accounting records, shall establish an Account for each Director. In
addition, the Corporation may establish one or more subaccounts of a Director's
Account, if the Corporation determines that such subaccounts are necessary or
appropriate in administering the Plan.
Section 4.2. CREDITING OF DEFERRED FEES. The portion of a
Director's Fees that are deferred pursuant to a Deferral Commitment shall be
credited to the Director's Account as of the date the corresponding non-deferred
portion of his Fees would have been paid to the Director. Any withholding of
taxes or other amounts with respect to any deferred Fees which is required by
state, federal or local law shall be withheld from the Director's non-deferred
Fees, or if none, then the Director's Deferral Commitment shall be reduced by
the amount of such withholding.
Section 4.3. DETERMINATION OF ACCOUNTS.
(a) DETERMINATION OF ACCOUNTS. The amount credited to each
Director's Account as of a particular date shall equal the deemed
balance of such Account as of such date. The balance in the Account
shall equal the amount credited
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pursuant to Section 4.2, and shall be adjusted in the manner
provided in Section 4.4.
(b) ACCOUNTING. The Corporation, through its accounting
records, shall maintain a separate and distinct record of the amount in
each Account as adjusted to reflect income, gains, losses and
distributions.
Section 4.4. ADJUSTMENTS TO ACCOUNTS.
(a) Each Director's Account shall be immediately debited with
the amount of any distributions under the Plan to or on behalf of the
Director or, in the event of his death, his Beneficiary.
(b) The Director's Account shall next be credited or debited,
as the case may be, with an income (loss) factor equal to an amount
determined by multiplying (i) the balance credited to the Director's
Account as of the immediately preceding Accounting Date (as adjusted
pursuant to Section 4.2 and Section 4.4(a) for the current Accounting
Period) by (ii) the rate of return for the Accounting Period or portion
thereof ending on such Accounting Date on deemed investments provided
for in Section 5.3.
Section 4.5. STATEMENT OF ACCOUNTS. As soon as practicable
after the end of each Accounting Period, a statement shall be furnished to each
Director or, in the event of his death, to his Beneficiary showing the status of
his Account as of the end of the Accounting Period, any changes in his Account
since the end of the immediately preceding Accounting Period, and such other
information as the Administrator shall determine.
Section 4.6. VESTING OF ACCOUNTS. Subject to Section 5.1, each
Director shall at all times have a nonforfeitable interest in his Account
balance.
ARTICLE V. FINANCING OF BENEFITS
Section 5.1. FINANCING OF BENEFITS. Benefits payable under the
Plan to a Director or, in the event of his death, to his Beneficiary shall be
paid by the Corporation from its general assets. The obligation to make payment
of benefits under the Plan represents an unfunded, unsecured obligation of the
Corporation. Notwithstanding the fact that the Directors' Accounts may be
adjusted by an amount that is measured by reference to the performance of any
deemed investments as provided in Section 5.3, no person entitled to payment
under the Plan shall have any claim, right, security interest or other interest
in any fund, trust, account, insurance contract, or asset of the Corporation
which may be responsible for such payment.
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<PAGE> 7
Section 5.2. SECURITY FOR BENEFITS. Notwithstanding the
provisions of Section 5.1, nothing in this Plan shall preclude the Corporation
from setting aside amounts in trust (the "Trust") pursuant to one or more trust
agreements between a trustee and the Corporation. However, no Director or
Beneficiary shall have any secured interest or claim in any assets or property
of the Corporation or the Trust and all funds contained in the Trust shall
remain subject to the claims of the Corporation's general creditors.
Section 5.3. HYPOTHETICAL INVESTMENTS. A Director's Account
will be deemed to be invested in one or more of the following investment funds
("Investment Funds"), which, except for (h) below, shall correspond to the funds
available from time to time under the Corporation's Capital Accumulation Plan:
(a) The Fixed Income Fund
(b) The Balanced Fund
(c) The Equity Fund
(d) The Small Cap Fund
(e) The International Equity Fund
(f) The Blended Equity Fund
(g) The Common Stock Fund
(h) An obligation of the Corporation bearing interest at
prime rate adjusted on the first day of January,
April, July and October.
Each Director shall file an investment preference request
("Request") to be effective as of the beginning of the next Accounting Period
with respect to amounts previously and/or subsequently credited to his Account.
A Request will advise the Administrator as to the Director's preference with
respect to Investment Funds for all or some portion of the amounts credited to a
Director's Account in specified multiples of 1%.
A Request, unless modified as described below, shall apply to
all amounts credited to a Director's Account. A Request may be changed with
respect to the amounts previously credited to a Director's Account as of such
date and amounts subsequently credited to his Account by giving the
Administrator prior written notice. Any such modified Request shall be effective
as of the day the Request is received by the Administrator.
Notwithstanding the foregoing, if a Director modifies his
Request to have the deemed investment of any portion of the amounts previously
credited to such Director's Account changed (x) to the Common Stock Fund from
any of the other Investment Funds, or (y) from the Common Stock Fund to any of
the other Investment Funds, then in either such case such Request will not be
processed by the Administrator if, in the sole judgment of the Administrator,
the processing of such Request would result in the Director being liable to the
Corporation under Section 16(b) of the Securities Exchange Act of 1934, as
amended.
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Earnings on any amounts deemed to have been invested in any
Investment Fund shall be deemed to have been reinvested in such fund.
ARTICLE VI. DISTRIBUTION OF BENEFITS
Section 6.1. SETTLEMENT DATE. A Director or, in the event of
his death, his Beneficiary shall be entitled to distribution of all or a part of
the balance of his Account, as provided in this Article VI, following his
Settlement Date or Dates.
Section 6.2. AMOUNT TO BE DISTRIBUTED. The amount to which a
Director or, in the event of his death, his Beneficiary is entitled in
accordance with the following provisions of this Article shall be based on the
Director's adjusted Account balance determined as of the Accounting Date
coincident with or next following his Settlement Date or Dates.
Section 6.3. IN-SERVICE DISTRIBUTION. A Director may
irrevocably elect to receive an in-service distribution of his deferred Fees for
any Plan Year on or commencing not earlier than the beginning of the third Plan
Year following the Plan Year in which such Fees otherwise would have been
payable. A Director's election of an in-service distribution shall be made in
the Participation Agreement filed for the Plan Year as provided in Section 3.1.
The Director shall elect irrevocably to receive such Fees as an in-service
distribution under one of the forms as provided in Section 6.4. Any benefits
paid to the Director as an in-service distribution shall reduce the Director's
Account.
Section 6.4. FORM OF DISTRIBUTION. As soon as practicable
after the end of the Accounting Period in which a Director's Settlement Date
occurs, but in no event later than thirty days following the end of such
Accounting Period, the Corporation shall distribute or cause to be distributed,
to the Director the balance of the Director's Account as determined under
Section 6.2, under one of the forms provided in this Section. Notwithstanding
the foregoing, if elected by the Director, the distribution of all or a portion
of the Director's Account may be made or commence at the beginning of the Plan
Year next following his Settlement Date. In the event of a Director's death, the
balance of his Account shall be distributed to his Beneficiary in a lump sum.
Distribution of a Director's Account with respect to any
Deferral Period shall be made in one of the following forms as elected by the
Director:
(a) by payment in cash in a single lump sum;
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<PAGE> 9
(b) by payment in cash in not greater than ten annual
installments; or
(c) a combination of (a) and (b) above. The Director shall
designate the percentage payable under each option.
The Director's election of the form of distribution shall be made by written
notice filed with the Administrator at least one (1) year prior to the
Director's voluntary retirement as a Director. Any such election may be changed
by the Director at any time and from time to time without the consent of any
other person by filing a later signed written election with the Administrator;
provided that any election made less than one (1) year prior to the Director's
voluntary termination as a Director shall not be valid, and in such case payment
shall be made in accordance with the Director's prior election.
The amount of each installment shall be equal to the quotient
obtained by dividing the Director's Account balance as of the date of such
installment payment by the number of installment payments remaining to be made
to or in respect of such Director at the time of calculation.
If a Director fails to make an election in a timely manner as
provided in this Section 6.4, distribution shall be made in cash in a lump sum.
Section 6.5. SPECIAL DISTRIBUTIONS. Notwithstanding any other
provision of this Article VI, a Director may elect to receive a distribution or
part or all of his or her Account in one or more distributions if (and only if)
the amount in the Director's Account subject to such distribution is reduced by
ten percent (10%). The remaining ten percent (10%) of the portion of the
electing Director's Account subject to such distribution shall be forfeited.
Section 6.6. BENEFICIARY DESIGNATION. As used in the
Plan the term "Beneficiary" means:
(a) The person last designated as Beneficiary by
the Director in a writing on a form prescribed by the
Administrator;
(b) If there is no designated Beneficiary or if
the person so designated shall not survive the
Director, such Director's spouse; or
(c) If no such designated Beneficiary and no such
spouse is living upon the death of a Director, or if all such
persons die prior to the full distribution of the Director's
Account balance, then the legal representative of the last
survivor of the Director and such persons, or, if the
Administrator shall not
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receive notice of the appointment of any such legal
representative within one year after such death, the
heirs-at-law of such survivor shall be the Beneficiaries to
whom the then remaining balance of the Director's Account
shall be distributed (in the proportions in which they would
inherit his intestate personal property).
Any Beneficiary designation may be changed from time to time by the filing of a
new form. No notice given under this Section shall be effective unless and until
the Administrator actually receives such notice.
Section 6.7. FACILITY OF PAYMENT. Whenever and as often as any
Director or his Beneficiary entitled to payments hereunder shall be under a
legal disability or, in the sole judgment of the Administrator, shall otherwise
be unable to apply such payments to his own best interests and advantage, the
Administrator in the exercise of its discretion may direct all or any portion of
such payments to be made in any one or more of the following ways: (i) directly
to him; (ii) to his legal guardian or conservator; or (iii) to his spouse or to
any other person, to be expended for his benefit; and the decision of the
Administrator, shall in each case be final and binding upon all persons in
interest.
ARTICLE VII. ADMINISTRATION, AMENDMENT AND TERMINATION
Section 7.1. ADMINISTRATION. The Plan shall be administered by
the Administrator. The Administrator shall have such powers as may be necessary
to discharge its duties hereunder. The Administrator may, from time to time,
employ agents and delegate to them such administrative duties as it sees fit,
and may from time to time consult with legal counsel who may be counsel to the
Corporation. The Administrator shall have no power to add to, subtract from or
modify any of the terms of the Plan, or to change or add to any benefits
provided under the Plan, or to waive or fail to apply any requirements of
eligibility for a benefit under the Plan. No member of the Administrator shall
act in respect of his own Account. All decisions and determinations by the
Administrator shall be final and binding on all parties. All decisions of the
Administrator shall be made by the vote of the majority, including actions and
writing taken without a meeting. All elections, notices and directions under the
Plan by a Director shall be made on such forms as the Administrator shall
prescribe.
Section 7.2. AMENDMENT, TERMINATION AND WITHDRAWAL. The Plan
may be amended from time to time or may be terminated at any time by the Board.
No amendment or termination of the Plan, however, may adversely affect the
amount or timing of payment of
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any person's benefits accrued under the Plan to the date of amendment or
termination without such person's written consent.
Section 7.3. SUCCESSORS. The Corporation shall require any
successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business and/or
assets of the Corporation expressly to assume and to agree to perform this Plan
in the same manner and to the same extent the Corporation would be required to
perform if no such succession had taken place. This Plan shall be binding upon
and inure to the benefit of the Corporation and any successor of or to the
Corporation, including without limitation any persons acquiring directly or
indirectly all or substantially all of the business and/or assets of the
Corporation whether by sale, merger, consolidation, reorganization or otherwise
(and such successor shall thereafter be deemed the "Corporation" for the
purposes of this Plan), and the heirs, beneficiaries, executors and
administrators of each Director.
Section 7.4. EXPENSES. All expenses of the Plan shall be paid
by the Corporation from funds other than those deemed investments as provided in
Section 5.3, except that brokerage commissions and other transaction fees and
expenses relating to the investment of deemed assets and investment fees
attributable to commingled investment of such assets shall be paid from or
charged to such assets or earnings thereon.
ARTICLE VIII. APPROVAL BY STOCKHOLDERS
Section 8.1. APPROVAL OF THE PLAN. The Plan shall be submitted
for approval by the stockholders of the Corporation. If such approval has not
been obtained by June 1, 1995, this Plan shall be nullified and all Deferral
Commitments shall be rescinded, and each Director shall receive in cash the full
amount of such Director's Account balance without interest.
ARTICLE IX. MISCELLANEOUS
Section 9.1. NO CONTINUING RIGHT AS DIRECTOR. Neither the
adoption or operation of this Plan, nor any document describing or referring to
this Plan, or any part thereof, shall confer upon any Director any right to
continue as a Director of the Corporation or any subsidiary of the Corporation.
Section 9.2. APPLICABLE LAW. All questions arising in respect
of the Plan, including those pertaining to its validity, interpretation and
administration, shall be governed, controlled and determined in accordance with
the applicable provisions of the laws of the State of Ohio.
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Section 9.3. INTERESTS NOT TRANSFERABLE. No person shall have
any right to commute, encumber, pledge or dispose of any interest herein or
right to receive payments hereunder, nor shall such interests or payments be
subject to seizure, attachment or garnishment for the payments of any debts,
judgments, alimony or separate maintenance obligations or be transferable by
operation of law in the event of bankruptcy, insolvency or otherwise, all
payments and rights hereunder being expressly declared to be nonassignable and
nontransferable.
Section 9.4. SEVERABILITY. Each section, subsection and lesser
section of this Plan constitutes a separate and distinct undertaking, covenant
and/or provision hereof. Whenever possible, each provision of this Plan shall be
interpreted in such manner as to be effective and valid under applicable law. In
the event that any provision of this Plan shall finally be determined to be
unlawful, such provision shall be deemed severed from this Plan, but every other
provision of this Plan shall remain in full force and effect, and in
substitution for any such provision held unlawful, there shall be substituted a
provision of similar import reflecting the original intention of the parties
hereto to the extent permissible under law.
Section 9.5. WITHHOLDING OF TAXES. The Corporation may
withhold or cause to be withheld from any amounts payable under this Plan all
federal, state, local and other taxes as shall be legally required.
IN WITNESS WHEREOF, The LTV Corporation has caused this
instrument to be executed in its name as of the date first above written.
THE LTV CORPORATION
By:
----------------------------
Its:
---------------------------
Attest:
- ----------------------------
10
<PAGE> 1
EXHIBIT (10)-(60)
THE LTV CORPORATION EXECUTIVE
DEFERRED COMPENSATION PLAN
(AS AMENDED AND RESTATED AS OF
DECEMBER 1, 1996)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I. PURPOSE............................................................................................. 1
ARTICLE II. DEFINITIONS AND CONSTRUCTION....................................................................... 1
SECTION 2.1. DEFINITIONS.............................................................................. 1
SECTION 2.2. CONSTRUCTION............................................................................. 3
ARTICLE III. PARTICIPATION AND DEFERRALS....................................................................... 4
SECTION 3.1. ELIGIBILITY AND PARTICIPATION............................................................ 4
(a) ELIGIBILITY......................................................................... 4
(b) PARTICIPATION....................................................................... 4
(c) INITIAL YEAR OF PARTICIPATION....................................................... 4
(d) TERMINATION OF PARTICIPATION........................................................ 4
SECTION 3.2. INELIGIBLE PARTICIPANT................................................................... 4
SECTION 3.3. AMOUNT OF DEFERRAL....................................................................... 4
SECTION 3.4. MODIFICATION OF DEFERRAL COMMITMENTS..................................................... 5
SECTION 3.5. AUTOMATIC DEFERRALS...................................................................... 5
ARTICLE IV. PARTICIPANTS' ACCOUNTS............................................................................. 5
SECTION 4.1. ESTABLISHMENT OF ACCOUNTS................................................................ 5
SECTION 4.2. CREDITING OF DEFERRED AWARD OR DEFERRED
COMPENSATION............................................................................. 5
SECTION 4.3. DETERMINATION OF ACCOUNTS................................................................ 5
(a) DETERMINATION OF ACCOUNTS........................................................... 5
(b) ACCOUNTING.......................................................................... 6
SECTION 4.4. ADJUSTMENTS TO ACCOUNTS.................................................................. 6
SECTION 4.5. STATEMENT OF ACCOUNTS.................................................................... 6
SECTION 4.6. VESTING OF ACCOUNTS...................................................................... 6
ARTICLE V. FINANCING OF BENEFITS............................................................................... 6
SECTION 5.1. FINANCING OF BENEFITS.................................................................... 6
SECTION 5.2. SECURITY FOR BENEFITS.................................................................... 7
SECTION 5.3. HYPOTHETICAL INVESTMENTS................................................................. 7
ARTICLE VI. DISTRIBUTION OF BENEFITS........................................................................... 8
SECTION 6.1. SETTLEMENT DATE.......................................................................... 8
SECTION 6.2. AMOUNT TO BE DISTRIBUTED................................................................. 8
SECTION 6.3. IN-SERVICE DISTRIBUTION.................................................................. 8
SECTION 6.4. FORM OF DISTRIBUTION..................................................................... 8
SECTION 6.5. SPECIAL DISTRIBUTIONS.................................................................... 9
SECTION 6.6. BENEFICIARY DESIGNATION.................................................................. 10
SECTION 6.7. FACILITY OF PAYMENT...................................................................... 10
SECTION 6.8. HARDSHIP DISTRIBUTIONS................................................................... 10
ARTICLE VII. ADMINISTRATION, AMENDMENT AND TERMINATION......................................................... 11
SECTION 7.1. ADMINISTRATION........................................................................... 11
SECTION 7.2. PLAN ADMINISTRATOR....................................................................... 11
SECTION 7.3. AMENDMENT, TERMINATION AND WITHDRAWAL.................................................... 11
SECTION 7.4. SUCCESSORS .............................................................................. 11
SECTION 7.5. CLAIMS .............................................................................. 12
SECTION 7.6. EXPENSES .............................................................................. 12
</TABLE>
i
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<TABLE>
<S> <C> <C>
ARTICLE VIII. APPROVAL BY STOCKHOLDERS......................................................................... 12
SECTION 8.1. APPROVAL OF THE PLAN..................................................................... 12
ARTICLE IX. MISCELLANEOUS...................................................................................... 12
SECTION 9.1. NO GUARANTEE OF EMPLOYMENT............................................................... 12
SECTION 9.2. APPLICABLE LAW........................................................................... 13
SECTION 9.3. INTERESTS NOT TRANSFERABLE............................................................... 13
SECTION 9.4. SEVERABILITY............................................................................. 13
SECTION 9.5. WITHHOLDING OF TAXES..................................................................... 13
SECTION 9.6. TOP-HAT PLAN............................................................................. 13
</TABLE>
ii
<PAGE> 4
THE LTV CORPORATION EXECUTIVE
DEFERRED COMPENSATION PLAN
(AS AMENDED AND RESTATED AS OF DECEMBER 1, 1996)
The LTV Corporation Executive Deferred Compensation Plan
("Plan"), originally effective as of January 1, 1995, and amended and restated
effective January 1, 1996, is hereby amended and restated effective December 1,
1996.
ARTICLE I. PURPOSE
THE LTV CORPORATION EXECUTIVE DEFERRED COMPENSATION PLAN (the
"Plan"), is hereby established by The LTV Corporation to allow designated
management and highly compensated employees to defer a portion of their awards
under the Corporation's annual incentive program. It is intended that the Plan
will aid in attracting and retaining employees of exceptional ability by
providing these benefits. The terms and conditions of the Plan are set forth
below.
ARTICLE II. DEFINITIONS AND CONSTRUCTION
Section 2.1. DEFINITIONS. Whenever the following terms are
used in this Plan they shall have the meanings specified below unless the
context clearly indicates to the contrary:
(a) "Account": The bookkeeping account maintained for each
Participant showing his interest under the Plan.
(b) "Accounting Date": December 31 of each year and the last
day of any calendar quarter.
(c) "Accounting Period": The period beginning on the day
immediately following an Accounting Date and ending on the next
following Accounting Date.
(d) "Administrator": With respect to any Participant who is
not an executive officer for purposes of the Corporation's proxy
disclosure, a committee consisting of one or more persons who shall be
appointed by and serve at the pleasure of the Board and, with respect
to such executive officers, the Committee.
(e) "Annual Incentive Program": The short-term performance
award program established under Article V of the Corporation's
Management Incentive Program.
<PAGE> 5
(f) "Award": An Employee's Award for a Plan Year is equal to
the sum of (i) the annual cash award under the Annual Incentive Program
and (ii) any similar annual cash incentive bonus under any other
equivalent Corporation- sponsored bonus program (as determined by the
Administrator), which, in either case, is earned with respect to
services performed by the Employee during such Plan Year, whether or
not such award is actually paid to the Employee during such Plan Year.
(g) "Beneficiary": The person or persons (natural or
otherwise) designated pursuant to Section 6.6.
(h) "Board": The Board of Directors of the Corporation.
(i) "Committee": The Compensation Committee of the Board.
(j) "Common Stock": The Corporation's Common Stock, par value
$.50 per share.
(k) "Compensation": Cash or other property payable with
respect to a Plan Year to an Employee under any agreement, plan,
program or arrangement of the Corporation.
(l) "Corporation": The LTV Corporation or any successor or
successors thereto.
(m) "Deferral Commitment": An agreement by a Participant to
have a specified percentage or dollar amount of his Award deferred
under the Plan for a specified period in the future.
(n) "Disability": The occurrence, while a Participant is an
Employee, of a physical or mental incapacity which entitles the
Participant to benefits under (i) any long-term disability plan
sponsored by the Corporation, or (2) the Social Security Act of the
United States.
(o) "Effective Date": January 1, 1995.
(p) "Employee": Any employee of the Corporation who is, as
determined by the Committee, a member of a "select group of management
or highly compensated employees" of the Corporation, within the meaning
of Sections 201, 301 and 401 of ERISA, and who is designated by the
Committee as an Employee eligible to participate in the Plan.
(q) "ERISA": The Employee Retirement Income Security Act of
1974, as amended from time to time; any reference to a provision of
ERISA shall also include any successor provision thereto.
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<PAGE> 6
(r) "Financial Hardship": An unforeseeable financial emergency
of the Participant, determined by the Administrator as provided in
Section 6.8 on the basis of information supplied by the Participant,
arising from an illness, Disability, casualty loss, sudden financial
reversal or other such unforeseeable occurrence, but not including
foreseeable events such as the purchase of a house or education
expenses for children.
(s) "Insider Participant": Any Participant who is required to
file reports with the Securities and Exchange Commission pursuant to
Section 16(a) of the Securities Exchange Act of 1934, as amended from
time to time, and any rules promulgated thereunder.
(t) "Investment Fund": The meaning set forth in Section 5.3.
(u) "Participant": An Employee participating in the Plan in
accordance with the provisions of Section 3.1, or a former Employee
retaining benefits under the Plan that have not been fully paid.
(v) "Participation Agreement": The Agreement submitted by a
Participant to the Administrator with respect to one or more Deferral
Commitments.
(w) "Plan": The Plan set forth in this instrument as it may,
from time to time, be amended.
(x) "Plan Year": The 12-month period beginning January 1
through December 31.
(y) "Request": The meaning set forth in Section 5.3.
(z) "Retirement": Termination of employment with the
Corporation on or after attainment of age 65.
(aa) "Settlement Date": The date on which a Participant
terminates employment with the Corporation. Leaves of absence granted
by the Corporation will not be considered as termination of employment
during the term of such leave. Settlement Date shall also include with
respect to any Deferral Commitment the date prior or subsequent to
termination of employment selected by a Participant in a Participation
Agreement for distribution of all or a portion of the amounts deferred
during a Plan Year as provided in Section 6.3.
(bb) "Trust": The meaning set forth in Section 5.2.
Section 2.2. CONSTRUCTION. The masculine gender, where
appearing in the Plan, shall be deemed to include the
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<PAGE> 7
feminine gender, and the singular may include the plural, unless the context
clearly indicates to the contrary. The words "hereof," "herein," "hereunder,"
and other similar compounds of the word "here" shall mean and refer to the
entire Plan, and not to any particular provision or Section.
ARTICLE III. PARTICIPATION AND DEFERRALS
Section 3.1. ELIGIBILITY AND PARTICIPATION.
(a) ELIGIBILITY. Eligibility to participate in the Plan for
any Deferral Period is limited to those management and/or highly
compensated Employees of the Corporation who are designated, from time
to time, by the Committee.
(b) PARTICIPATION. An Employee may, prior to the last business
day of May in any Plan Year, elect to participate in the Plan for such
Plan Year and any Plan Year thereafter by filing a Participation
Agreement with the Administrator.
(c) INITIAL YEAR OF PARTICIPATION. Notwithstanding Section
3.1(b), a Participant who first becomes an eligible Employee during a
Plan Year may, within 30 days after he becomes an eligible Employee,
elect to participate in the Plan for such Plan Year and any Plan Year
thereafter by filing a Participation Agreement with the Administrator,
and his Deferral Commitment shall be effective only with regard to an
Award earned following the filing of the Participation Agreement with
the Administrator.
(d) TERMINATION OF PARTICIPATION. Participation in the Plan
shall continue as long as the Participant is eligible to receive
benefits under the Plan.
Section 3.2. INELIGIBLE PARTICIPANT. Notwithstanding any other
provisions of this Plan to the contrary, if the Administrator determines that
any Participant may not qualify as a "management or highly compensated employee"
within the meaning of ERISA or regulations thereunder, the Administrator may
determine, in its sole discretion, that such Participant shall cease to be
eligible to participate in this Plan. Upon such determination, the Corporation
shall make an immediate lump sum payment to the Participant equal to the amount
credited to his Account. Upon such payment no benefit shall thereafter be
payable under this Plan either to the Participant or any Beneficiary of the
Participant, and all of the Participant's elections as to the time and manner of
payment of his Account shall be deemed to be cancelled.
Section 3.3. AMOUNT OF DEFERRAL. With respect to each Plan
Year, a Participant may elect to defer a specified dollar amount or percentage
of his Award. A Participant may change the
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<PAGE> 8
dollar amount or percentage of his Award to be deferred (or reduce such amount
or percentage to zero) by filing a written notice thereof with the
Administrator. Any such change shall be effective as of the first day of the
Plan Year in which such notice is filed with the Administrator if such notice is
filed by the last business day in May of such Plan Year, or if not so timely
filed, then such change shall be effective as of the first day of the next
succeeding Plan Year.
Section 3.4. MODIFICATION OF DEFERRAL COMMITMENTS. A Deferral
Commitment shall be irrevocable with respect to the Plan Year for which it is
made, except that the Administrator may, in its sole discretion, permit a
Participant to terminate, prospectively, any Deferral Commitment for a Plan
Year. If a Participant terminates a Deferral Commitment during a Plan Year, such
Participant will not be permitted to enter into a new Deferral Commitment until
the following Plan Year.
Section 3.5. AUTOMATIC DEFERRALS. A Participant's Compensation
in excess of amounts deductible by the Corporation with respect to a Plan Year
under Section 162(m) of the Code shall be deferred under the Plan under rules
adopted by the Committee.
ARTICLE IV. PARTICIPANTS' ACCOUNTS
Section 4.1. ESTABLISHMENT OF ACCOUNTS. The Corporation,
through its accounting records, shall establish an Account for each Participant.
In addition, the Corporation may establish one or more subaccounts of a
Participant's Account, if the Corporation determines that such subaccounts are
necessary or appropriate in administering the Plan.
Section 4.2. CREDITING OF DEFERRED AWARD OR DEFERRED
COMPENSATION. The portion of a Participant's Award that is deferred pursuant to
a Deferral Commitment shall be credited to the Participant's Account as of the
date the corresponding non-deferred portion of his Award would have been paid to
the Participant. The portion of a Participant's Compensation that is deferred
pursuant to Section 3.5 shall be credited to the Participant's Account as of the
date the Compensation would have been paid to the Participant absent the
application of Section 3.5. Any withholding of taxes or other amounts with
respect to any deferred Award or deferred Compensation which is required by
state, federal or local law shall be withheld from the Participant's
non-deferred compensation.
Section 4.3. DETERMINATION OF ACCOUNTS.
(a) DETERMINATION OF ACCOUNTS. The amount credited to each
Participant's Account as of a particular date shall equal the deemed
balance of such Account as of such date.
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<PAGE> 9
The balance in the Account shall equal the amount credited pursuant to
Section 4.2, and shall be adjusted in the manner provided in Section
4.4.
(b) ACCOUNTING. The Corporation, through its accounting
records, shall maintain a separate and distinct record of the amount in
each Account as adjusted to reflect income, gains, losses and
distributions.
Section 4.4. ADJUSTMENTS TO ACCOUNTS.
(a) Each Participant's Account shall be immediately debited
with the amount of any distributions under the Plan to or on behalf of
the Participant or, in the event of his death, his Beneficiary.
(b) The Participant's Account shall next be credited or
debited, as the case may be, with an income (loss) factor equal to an
amount determined by multiplying (i) the balance credited to the
Participant's Account as of the immediately preceding Accounting Date
(as adjusted pursuant to Section 4.2 and Section 4.4(a) for the current
Accounting Period) by (ii) the rate of return for the Accounting Period
or portion thereof ending on such Accounting Date on deemed investments
provided for in Section 5.3.
Section 4.5. STATEMENT OF ACCOUNTS. As soon as practicable
after the end of each Accounting Period, a statement shall be furnished to each
Participant or, in the event of his death, to his Beneficiary showing the status
of his Account as of the end of the Accounting Period, any changes in his
Account since the end of the immediately preceding Accounting Period, and such
other information as the Administrator shall determine.
Section 4.6. VESTING OF ACCOUNTS. Subject to Section 5.1, each
Participant shall at all times have a nonforfeitable interest in his Account
balance.
ARTICLE V. FINANCING OF BENEFITS
Section 5.1. FINANCING OF BENEFITS. Benefits payable under the
Plan to a Participant or, in the event of his death, to his Beneficiary shall be
paid by the Corporation from its general assets. The obligation to make payment
of benefits under the Plan represents an unfunded, unsecured obligation of the
Corporation. Notwithstanding the fact that the Participants' Accounts may be
adjusted by an amount that is measured by reference to the performance of any
deemed investments as provided in Section 5.3, no person entitled to payment
under the Plan shall have any claim, right, security interest or other interest
in any fund, trust, account, insurance contract, or
6
<PAGE> 10
asset of the Corporation which may be responsible for such payment.
Section 5.2. SECURITY FOR BENEFITS. Notwithstanding the
provisions of Section 5.1, nothing in this Plan shall preclude the Corporation
from setting aside amounts in trust (the "Trust") pursuant to one or more trust
agreements between a trustee and the Corporation. However, no Participant or
Beneficiary shall have any secured interest or claim in any assets or property
of the Corporation or the Trust and all funds contained in the Trust shall
remain subject to the claims of the Corporation's general creditors.
Section 5.3. HYPOTHETICAL INVESTMENTS. A Participant's Account
will be deemed to be invested in one or more of the following investment funds
("Investment Funds"), which, except for (h) below, shall correspond to the funds
available from time to time under the Corporation's Capital Accumulation Plan:
(a) The Fixed Income Fund;
(b) The Balanced Fund;
(c) The Equity Fund;
(d) The Small Cap Fund;
(e) The International Equity Fund;
(f) The Blended Equity Fund;
(g) The Common Stock Fund;
(h) An obligation of the Corporation bearing interest at
prime rate adjusted on the first day of January,
April, July and October.
Each Participant shall file an investment preference request ("Request") to be
effective as of the beginning of the next Accounting Period with respect to
amounts previously and/or subsequently credited to his Account. A Request will
advise the Administrator as to the Participant's preference with respect to
Investment Funds for all or some portion of the amounts credited to a
Participant's Account in specified multiples of 1%.
A Request, unless modified as described below, shall apply to
all amounts credited to a Participant's Account with respect to each subsequent
Plan Year. A Request may be changed with respect to the amounts previously
credited to a Participant's Account as of such date and amounts subsequently
credited to his Account by giving the Administrator prior written notice. Any
such modified Request shall be effective as of the day the Request is received
by the Administrator.
Notwithstanding the foregoing, if an Insider Participant
modifies his Request to have the deemed investment of any portion of the amounts
previously credited to such Insider Participant's Account changed (x) to the
Common Stock Fund from any of the other Investment Funds or (y) from the Common
Stock
7
<PAGE> 11
Fund to any of the other Investment Funds, then in either such case such Request
will not be processed by the Administrator if, in the sole judgment of the
Administrator, the processing of such Request would result in the Insider
Participant being liable to the Corporation under Section 16(b) of the
Securities Exchange Act of 1934, as amended.
Earnings on any amounts deemed to have been invested in any
Investment Fund shall be deemed to have been reinvested in such fund.
The provisions of this Section with respect to Insider
Participants shall apply to any Participant immediately upon the time such
Participant becomes an Insider Participant and shall continue until such time as
such Participant is no longer an Insider Participant.
ARTICLE VI. DISTRIBUTION OF BENEFITS
Section 6.1. SETTLEMENT DATE. A Participant or, in the event
of his death, his Beneficiary shall be entitled to distribution of all or a part
of the balance of his Account, as provided in this Article VI, following his
Settlement Date or Dates.
Section 6.2. AMOUNT TO BE DISTRIBUTED. The amount to which a
Participant or, in the event of his death, his Beneficiary is entitled in
accordance with the following provisions of this Article shall be based on the
Participant's adjusted account balance determined as of the Accounting Date
coincident with or next following his Settlement Date or Dates.
Section 6.3. IN-SERVICE DISTRIBUTION. A Participant may
irrevocably elect to receive an in-service distribution of his deferred Award
for any Plan Year on or commencing not earlier than the beginning of the third
Plan Year following the Plan Year in which such Award otherwise would have been
first payable. A Participant's election of an in-service distribution shall be
made in the Participation Agreement filed for the Plan Year as provided in
Section 3.1. The Participant shall elect irrevocably to receive such Award as an
in-service distribution under one of the forms provided in Section 6.4. Any
benefits paid to the Participant as an in-service distribution shall reduce the
Participant's Account.
Section 6.4. FORM OF DISTRIBUTION. As soon as practicable
after the end of the Accounting Period in which a Participant's Settlement Date
occurs, but in no event later than thirty days following the end of such
Accounting Period, the Corporation shall distribute or cause to be distributed
to the Participant the balance of the Participant's Account as determined under
Section 6.2, under one of the forms provided in
8
<PAGE> 12
this Section. Notwithstanding the foregoing, if elected by the Participant, the
distribution of all or a portion of the Participant's Account may be made or
commence on a date between the Settlement Date and the date the Participant
attains age sixty-five. In the event of a Participant's death, the balance of
his Account shall be distributed to his Beneficiary in a lump sum.
Distribution of a Participant's Account with respect to any
Plan Year shall be made in one of the following forms as elected by the
Participant:
(a) by payment in cash in a single lump sum;
(b) by payment in cash in not greater than ten annual
installments; or
(c) a combination of (a) and (b) above. The Participant shall
designate the percentage payable under each option.
The Participant's election of the form of distribution shall be made by written
notice filed with the Administrator at least one (1) year prior to the
Participant's voluntary termination of employment with, or retirement from, the
Corporation. Any such election may be changed by the Participant at any time and
from time to time without the consent of any other person by filing a later
signed written election with the Administrator; provided that any election made
less than one (1) year prior to the Participant's voluntary termination of
employment or retirement shall not be valid, and in such case payment shall be
made in accordance with the Participant's prior election.
The amount of each installment shall be equal to the quotient obtained by
dividing the Participant's Account balance as of the date of such installment
payment by the number of installment payments remaining to be made to or in
respect of such Participant at the time of calculation.
If a Participant fails to make an election in a timely manner
as provided in this Section 6.4, distribution shall be made in cash in a lump
sum.
Section 6.5. SPECIAL DISTRIBUTIONS. Notwithstanding any other
provision of this Article VI, a Participant may elect to receive a distribution
of part or all of his or her Account in one or more distributions if (and only
if) the amount in the Participant's Account subject to such distribution is
reduced by ten percent (10%). Any distribution made pursuant to such an election
shall be made as soon as practicable following the date such election is
submitted to the Administrator. The remaining ten percent (10%) of the portion
of the electing Participant's Account subject to such distribution shall be
forfeited.
9
<PAGE> 13
Section 6.6. BENEFICIARY DESIGNATION. As used in the
Plan the term "Beneficiary" means:
(a) The person last designated as Beneficiary by
the Participant in a writing on a form prescribed by
the Administrator;
(b) If there is no designated Beneficiary or if
the person so designated shall not survive the
Participant, such Participant's spouse; or
(c) If no such designated Beneficiary and no such
spouse is living upon the death of a Participant, or if all
such persons die prior to the full distribution of the
Participant's Account balance, then the legal representative
of the last survivor of the Participant and such persons, or,
if the Administrator shall not receive notice of the
appointment of any such legal representative within one year
after such death, the heirs-at-law of such survivor shall be
the Beneficiaries to whom the then remaining balance of the
Participant's Account shall be distributed (in the proportions
in which they would inherit his intestate personal property).
Any Beneficiary designation may be changed from time to time by the filing of a
new form. No notice given under this Section shall be effective unless and until
the Administrator actually receives such notice.
Section 6.7. FACILITY OF PAYMENT. Whenever and as often as any
Participant or his Beneficiary entitled to payments hereunder shall be under a
legal disability or, in the sole judgment of the Administrator, shall otherwise
be unable to apply such payments to his own best interests and advantage, the
Administrator in the exercise of its discretion may direct all or any portion of
such payments to be made in any one or more of the following ways: (i) directly
to him; (ii) to his legal guardian or conservator; or (iii) to his spouse or to
any other person, to be expended for his benefit; and the decision of the
Administrator, shall in each case be final and binding upon all persons in
interest.
Section 6.8. HARDSHIP DISTRIBUTIONS. Upon a finding by the
Administrator that a Participant has suffered a Financial Hardship, the
Administrator may, in its sole discretion, distribute, or direct the Trustee to
distribute, to the Participant an amount which does not exceed the amount
required to meet the immediate financial needs created by the Financial Hardship
and not reasonably available from other sources of the Participant; provided,
however, that in no event shall any amount attributable to a Deferral Commitment
be distributed less than
10
<PAGE> 14
six months after the date of the applicable Participation Agreement. No
distributions pursuant to this Section 6.7 may be made in excess of the value of
the Participant's Account at the time of such distribution. Notwithstanding the
foregoing provisions of this Section 6.8, no distributions pursuant to this
Section 6.8 may be made to a Participant who is an Insider Participant.
ARTICLE VII. ADMINISTRATION, AMENDMENT AND TERMINATION
Section 7.1. ADMINISTRATION. The Plan shall be administered by
the Administrator. The Administrator shall have such powers as may be necessary
to discharge its duties hereunder, including, but not by way of limitation, to
construe and interpret, resolve any ambiguities in, and determine the amount and
time of payment of any benefits under, the Plan. The Administrator may, from
time to time, employ agents and delegate to them such administrative duties as
it sees fit, and may from time to time consult with legal counsel who may be
counsel to the Corporation. The Administrator shall have no power to add to,
subtract from or modify any of the terms of the Plan, or to change or add to any
benefits provided under the Plan, or to waive or fail to apply any requirements
of eligibility for a benefit under the Plan. No member of the Administrator
shall act in respect of his own Account. All decisions and determinations by the
Administrator shall be final and binding on all parties. All decisions of the
Administrator shall be made by the vote of the majority, including actions in
writing taken without a meeting. All elections, notices and directions under the
Plan by a Participant shall be made on such forms as the Administrator shall
prescribe.
Section 7.2. PLAN ADMINISTRATOR. The Corporation shall be the
"administrator" under the Plan for purposes of ERISA.
Section 7.3. AMENDMENT, TERMINATION AND WITHDRAWAL. The Plan
may be amended from time to time or may be terminated at any time by the Board.
No amendment or termination of the Plan, however, may adversely affect the
amount or timing of payment of any person's benefits accrued under the Plan to
the date of amendment or termination without such person's written consent.
Section 7.4. SUCCESSORS. The Corporation shall require any
successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business and/or
assets of the Corporation expressly to assume and to agree to perform this Plan
in the same manner and to the same extent the Corporation would be required to
perform if no such succession had taken place. This Plan shall be binding upon
and inure to the benefit of the Corporation and any successor of or to the
Corporation, including
11
<PAGE> 15
without limitation any persons acquiring directly or indirectly all or
substantially all of the business and/or assets of the Corporation whether by
sale, merger, consolidation, reorganization or otherwise (and such successor
shall thereafter be deemed the "Corporation" for the purposes of this Plan), and
the heirs, beneficiaries, executors and administrators of each Participant.
Section 7.5. CLAIMS. The Administrator will provide to any
Participant or Beneficiary whose claim for benefits under the Plan has been
fully or partially denied a written notice setting forth (i) the specific
reasons for such denial, (ii) a designation of any additional material or
information required and (iii) an explanation of the Plan's claim review
procedure. Such notice shall state that the Participant or Beneficiary is
entitled to request a review in writing, by the Administrator, of the decision
denying the claim. The claim will be reviewed by the Administrator who may, but
need not, grant the claimant a hearing. On review, the claimant may have legal
representation, examine pertinent documents and submit issues and comments in
writing. The decision on review will be made within 120 days following the
request, will be provided in writing to the claimant and will be final and
binding on all parties concerned.
Section 7.6. EXPENSES. All expenses of the Plan shall be paid
by the Corporation from funds other than those deemed invested in Investment
Funds as provided in Section 5.3, except that the Investment Funds shall bear
and be charged with actual or hypothetical expenses to the same extent that the
corresponding investment fund in which assets are deemed to be invested bear and
are charged with such expenses, as determined by the Administrator.
ARTICLE VIII. APPROVAL BY STOCKHOLDERS
Section 8.1. APPROVAL OF THE PLAN. The Plan shall be submitted
for approval by the stockholders of the Corporation. If such approval has not
been obtained by June 1, 1995, this Plan shall be nullified and all Deferral
Commitments shall be rescinded and each Participant shall receive in cash the
full amount of such Participant's Account balance without interest.
ARTICLE IX. MISCELLANEOUS
Section 9.1. NO GUARANTEE OF EMPLOYMENT. Nothing contained in
the Plan shall be construed as a contract of employment between the Corporation
and any Employee, or as a right of any Employee, to be continued in the
employment of the Corporation, or as a limitation of the right of the
Corporation to discharge any of its Employees, with or without cause.
12
<PAGE> 16
Section 9.2. APPLICABLE LAW. All questions arising in respect
of the Plan, including those pertaining to its validity, interpretation and
administration, shall be governed, controlled and determined in accordance with
the applicable provisions of federal law and, to the extent not preempted by
federal law, the laws of the State of Ohio.
Section 9.3. INTERESTS NOT TRANSFERABLE. No person shall have
any right to commute, encumber, pledge or dispose of any interest herein or
right to receive payments hereunder, nor shall such interests or payments be
subject to seizure, attachment or garnishment for the payments of any debts,
judgments, alimony or separate maintenance obligations or be transferable by
operation of law in the event of bankruptcy, insolvency or otherwise, all
payments and rights hereunder being expressly declared to be nonassignable and
nontransferable.
Section 9.4. SEVERABILITY. Each section, subsection and lesser
section of this Plan constitutes a separate and distinct undertaking, covenant
and/or provision hereof. Whenever possible, each provision of this Plan shall be
interpreted in such manner as to be effective and valid under applicable law. In
the event that any provision of this Plan shall finally be determined to be
unlawful, such provision shall be deemed severed from this Plan, but every other
provision of this Plan shall remain in full force and effect, and in
substitution for any such provision held unlawful, there shall be substituted a
provision of similar import reflecting the original intention of the parties
hereto to the extent permissible under law.
Section 9.5. WITHHOLDING OF TAXES. The Corporation may
withhold or cause to be withheld from any amounts payable under this Plan all
federal, state, local and other taxes as shall be legally required.
Section 9.6. TOP-HAT PLAN. The Plan is intended to be a plan
which is unfunded and maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
within the meaning of Sections 201, 301 and 401 of ERISA, and therefore to be
exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA. Accordingly,
notwithstanding any other provision of the Plan, the Plan will terminate and no
further benefits will accrue hereunder in the event it is determined by a court
of competent jurisdiction or by an opinion of counsel based upon a change in law
that the Plan constitutes an employee pension benefit plan within the meaning of
Section 3(2) of ERISA, which is not so exempt. In addition and notwithstanding
any other provision of the Plan, in the absolute discretion of the Committee,
the amount credited to each Participant's Account under the Plan as of the date
of termination, which shall be an Accounting Date for purposes of the Plan, will
be paid immediately to such Participant in a single lump sum cash payment.
13
<PAGE> 17
IN WITNESS WHEREOF, The LTV Corporation has caused this
instrument to be executed in its name as of the date first above written.
THE LTV CORPORATION
By:
-------------------------------
Its:
-------------------------------
Attest:
- ------------------------------
14
<PAGE> 1
Exhibit (10)-(61)
NINTH AMENDMENT TO
PBGC-LTV SETTLEMENT AGREEMENT
This Ninth Amendment to the PBGC-LTV Settlement Agreement (this
"Amendment") is made as of December 20 1996, by and among PBGC, LTV and each
other member of the LTV Controlled Group (as defined in the Settlement
Agreement), including, without limitation, LTV Steel Company, Inc., a
corporation organized under the laws of New Jersey ("LTV Steel"). Capitalized
terms used without definition herein shall have the same meanings as set forth
in the Settlement Agreement.
RECITALS
WHEREAS, on June 28, 1993, the PBGC, LTV, and each other member of the
Initial LTV Group entered into the Settlement Agreement as amended to the date
hereof (the "Settlement Agreement");
WHEREAS, Section 3.3 of the Settlement Agreement provides that all
costs or expenses of the Restored Plans shall be borne by LTV Steel and shall
not be paid from the assets of the Restored Plans;
WHEREAS, LTV has determined and communicated to PBGC that it wishes to
amend the Settlement Agreement to pay certain fees from the assets of the
Restored Plans under certain defined circumstances;
WHEREAS, the Settlement Agreement authorizes the amendment of that
Agreement pursuant to an agreement entered into by the PBGC and LTV evidenced by
a written instrument signed by their authorized representatives; and
WHEREAS, subject to the terms and conditions contained herein, the PBGC
consents and is willing to agree to such amendments to the Settlement Agreement
as provided below;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
<PAGE> 2
SECTION 1. AMENDMENT OF SETTLEMENT AGREEMENT
Section 3.3 is amended in its entirety to read as follows:
"Section 3.3. ADMINISTRATIVE DUTIES. (a) Unless the Pension
Committee established pursuant to Section 8.3(a) directs otherwise and
subject to supervision by the Pension Committee, LTV Steel shall
perform all day-to-day administrative duties with respect to the
Restored Plans. Except as set forth in paragraph (b) of this Section
3.3, no disbursements shall be made from the Restored Plans except
benefit payments to participants and beneficiaries of the Restored
Plans; all other costs or expenses of the Restored Plans shall be borne
by LTV Steel.
(b) Fees charged by investment managers and trustees for
investment and custodial services rendered to the Restored Plans may be
paid from the assets of the Restored Plans, provided that after payment
of such fees the cumulative rate of return on Restored Plan assets
shall not be less than eight and one-half percent (8.5%). For purposes
of this paragraph, the cumulative rate of return shall be calculated
from the Effective Date to the end of the calendar month in which any
such fee payment is made, by using the actual aggregate investment
return of the assets of the Restored Plans as of each calendar month
end, expressed as an annual rate.
(c) In any case in which the assets of the Restored Plans are
pooled for investment or custodial purposes with the assets of any
other pension plan, the Restored Plans shall be charged with no more
than their pro-rata share of such fees."
SECTION 2. EFFECTIVENESS AND MISCELLANEOUS PROVISIONS
A. EFFECTIVENESS. This amendment shall become effective as of January
1, 1997 (the "Ninth Amendment Effective Date") when it, or a counterpart
thereof, is executed by a duly authorized officer of each of the PBGC and LTV
and LTV Steel.
B. REFERENCE TO AND EFFECT ON THE SETTLEMENT AGREEMENT.
(i) On and after the Ninth Amendment Effective Date, each reference in
the Settlement Agreement to "this Agreement," "hereunder," "hereof," or words of
like import referring to the Settlement Agreement shall mean and be a reference
to the Settlement Agreement as amended by this Amendment.
(ii) Except as specifically amended by this Amendment, the Settlement
Agreement shall remain in full force and effect.
-2-
<PAGE> 3
C. APPLICABLE LAW. This Amendment shall be interpreted in accordance
with and governed by the law of the State of New York, except to the extent
preempted by federal law.
D. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties to this Amendment have caused this
Ninth Amendment to be duly executed and delivered by their respective duly
authorized officers or representatives as of the day and year first written
above.
PENSION BENEFIT GUARANTY
CORPORATION
By:
-----------------------------------------
Title:
--------------------------------------
Date:
---------------------------------------
THE LTV CORPORATION, on behalf of itself
and the other members of the LTV Controlled
Group
By:
----------------------------------------
Title: Sr. Vice President and
Chief Financial Officer
Date: 12/19/96
LTV STEEL COMPANY, INC.
By
-----------------------------------------
Title: Sr. Vice President and
Chief Financial Officer
Date: 12/19/96
<PAGE> 1
Page 1 of 2
Exhibit (11)
<TABLE>
<CAPTION>
THE LTV CORPORATION
Calculation of Primary Earnings Per Share (EPS)
(Dollar amounts in millions except for EPS)
(Share data in thousands)
Year Ended Year Ended
December 31, 1996 December 31, 1995
-------------------------- -------------------------------
Shares Amount EPS Shares Amount EPS
-------- ------- ----- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Income from continuing operations $ 109.2 $ 184.8
Preferred stock dividend requirements (2.2) (2.2)
------- --------
107.0 182.6
Share base:
Shares deemed issued pursuant to Joint Plan 60,413 60,409
Shares issued through public offerings 36,610 36,610
Shares issued upon exercise of Series A Warrants
and stock options 123 121
Common Stock issued (or obligated to issue)
on June 28, 1994:
Common Stock held for issuance 3,328 3,328
Series A Preferred Stock 3,328 3,328
LTV Steel ESOP 1,494 1,498
IRS Settlement Agreement 65 65
--------- -------
8,215 8,219
--------- -------
Common Stock equivalent shares resulting from
outstanding Series A Warrants, Stock Options
and Restricted Stock 65 13
Common Stock issuable upon conversion of
Series B Preferred Stock 2,926 2.2 2,926 2.2
--------- ------- -------- -----------
108,352 $ 109.2 108,298 $ 184.8
========= ======= ======== ===========
PRIMARY EARNINGS PER SHARE $ 1.01 $ 1.71
====== ========
<CAPTION>
Year Ended
December 31, 1994
-------------------------------
Shares Amount EPS
--------- --------- --------
<S> <C> <C> <C>
Income from continuing operations $ 127.1
Preferred stock dividend requirements (2.3)
---------
124.8
Share base:
Shares deemed issued pursuant to Joint Plan 60,838
Shares issued through public offerings 26,542
Shares issued upon exercise of Series A Warrants
and stock options 54
Common Stock issued (or obligated to issue)
on June 28, 1994:
Common Stock held for issuance 3,328
Series A Preferred Stock 3,328
LTV Steel ESOP 1,308
IRS Settlement Agreement 33
---------
7,997
---------
Common Stock equivalent shares resulting from
outstanding Series A Warrants, Stock Options
and Restricted Stock 349
Common Stock issuable upon conversion of
Series B Preferred Stock 2,926 2.3
--------- ---------
98,706 $ 127.1
========= =========
PRIMARY EARNINGS PER SHARE $ 1.29
========
</TABLE>
<PAGE> 2
Page 2 of 2
Exhibit (11)
<TABLE>
<CAPTION>
THE LTV CORPORATION
Calculation of Fully Diluted Earnings Per Share (EPS)
(Dollar amounts in millions except for EPS)
(Share data in thousands)
Year Ended Year Ended
December 31, 1996 December 31, 1995
-------------------------------- --------------------------------
Shares Amount EPS Shares Amount EPS
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Income from continuing operations $ 109.2 $ 184.8
Preferred stock dividend requirements (2.2) (2.2)
---------- ----------
107.0 182.6
Share base:
Shares deemed issued pursuant to Joint Plan 60,413 60,409
Shares issued through public offerings 36,610 36,610
Shares issued upon exercise of Series A Warrants
and stock options 123 121
Common Stock issued (or obligated to issue)
on June 28, 1994:
Common Stock held for issuance 3,328 3,328
Series A Preferred Stock 3,328 3,328
LTV Steel ESOP 1,494 1,498
IRS Settlement Agreement 65 65
--------- ---------
8,215 8,219
--------- ---------
Common Stock equivalent shares resulting
from outstanding Series A Warrants,
Stock Options and Restricted Stock 90 18
Common Stock issuable upon conversion of
Series B Preferred Stock 2,926 2.2 2,926 2.2
Common Stock issuable upon conversion of
Senior Secured Convertible Notes 0 0.0 5,128 5.3
--------- ---------- --------- ---------
108,377 $ 109.2 113,431 $ 190.1
========= ========== ========= =========
FULLY DILUTED EARNINGS PER SHARE $ 1.01 $ 1.68
========= =========
</TABLE>
<TABLE>
THE LTV CORPORATION
Calculation of Fully Diluted Earnings Per Share (EPS)
(Dollar amounts in millions except for EPS)
(Share data in thousands)
<CAPTION>
Year Ended
December 31, 1994
--------------------------------
Shares Amount EPS
--------- --------- ---------
<S> <C> <C> <C>
Income from continuing operations $ 127.1
Preferred stock dividend requirements (2.3)
---------
124.8
Share base:
Shares deemed issued pursuant to Joint Plan 60,838
Shares issued through public offerings 26,542
Shares issued upon exercise of Series A Warrants
and stock options 54
Common Stock issued (or obligated to issue)
on June 28, 1994:
Common Stock held for issuance 3,328
Series A Preferred Stock 3,328
LTV Steel ESOP 1,308
IRS Settlement Agreement 33
--------
7,997
--------
Common Stock equivalent shares resulting
from outstanding Series A Warrants,
Stock Options and Restricted Stock 352
Common Stock issuable upon conversion of
Series B Preferred Stock 2,926 2.3
Common Stock issuable upon conversion of
Senior Secured Convertible Notes 5,128 5.2
-------- ---------
103,837 $ 132.3
======== =========
FULLY DILUTED EARNINGS PER SHARE $ 1.27
=========
</TABLE>
<PAGE> 1
Exhibit 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
The LTV Corporation ("LTV" or the "Company") is a fully integrated steel
producer that manufactures a diversified line of carbon steel products
consisting of hot rolled and cold rolled sheet, galvanized, tin mill and tubular
products. The Company operates two integrated steel mills (Cleveland Works and
Indiana Harbor Works) and various finishing, galvanizing and processing
facilities as well as tin mill and tubular operations. The Company is a major
supplier of flat rolled steel for the domestic transportation, appliance and
electrical equipment markets.
<TABLE>
<CAPTION>
Year Ended December 31,
RESULTS OF OPERATIONS -------------------------------------------------
(in millions, except per share data) 1996 1995 1994
------------- -------------- --------------
<S> <C> <C> <C>
Sales $ 4,134.5 $ 4,283.2 $ 4,233.3
Costs and expenses:
Cost of products sold 3,587.7 3,620.9 3,668.6
Depreciation and amortization 265.7 251.9 241.8
Selling, general and administrative 150.8 142.2 133.2
Net interest and other income (42.4) (42.6) (13.0)
----------- ---------- -----------
Total 3,961.8 3,972.4 4,030.6
----------- ---------- -----------
Income from continuing operations
before income taxes 172.7 310.8 202.7
Income tax provision:
Taxes payable (refundable) 0.3 2.0 (1.5)
Taxes not payable in cash 63.2 115.3 74.7
----------- ---------- -----------
63.5 117.3 73.2
----------- ---------- -----------
Income from continuing operations 109.2 193.5 129.5
Discontinued operations - (8.7) (2.4)
----------- ---------- -----------
Net income $ 109.2 $ 184.8 $ 127.1
=========== ========== ===========
Earnings per share $ 1.01 $ 1.71 $ 1.29
=========== ========== ===========
Dividends paid per common share $ 0.09 $ - $ -
=========== =========== ===========
OPERATING DATA
Raw steel production (thousands of tons) 8,784 8,462 8,253
Steel shipments (thousands of tons) 8,080 7,961 7,969
Active employees (thousands) 14.0 14.4 15.3
</TABLE>
-1-
<PAGE> 2
[Graph]
QUARTERLY INCOME FROM
CONTINUING OPERATIONS BEFORE INCOME TAXES
(IN MILLIONS)
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
First $21.2 $ 82.1 $18.4
Second $50.6 $105.2 $62.9
Third $44.7 $ 70.2 $55.3
Fourth $56.2 $ 53.3 $66.1
</TABLE>
-2-
<PAGE> 3
RESULTS OF OPERATIONS
1996 COMPARED WITH 1995
Sales
- -----
Sales of $4.135 billion in 1996 decreased by $149 million (3%) from 1995,
primarily due to lower average selling prices. Steel shipments of 8.08 million
tons increased by 119,000 tons (1%) over the previous year's total.
[Graph]
SALES BY PRODUCT
<TABLE>
<CAPTION>
1996 1995 1994
Total (in millions) $4,135 $4,283 $4,233
<S> <C> <C> <C>
All Other 3% 3% 3%
Tubular 8% 7% 7%
Tin 11% 11% 11%
Galvanized 29% 29% 29%
Hot and Cold Flat Rolled 49% 50% 50%
</TABLE>
Hot and cold flat rolled product sales of $2.017 billion were 6% lower in 1996
versus 1995, reflecting lower average selling prices and lower shipments.
Galvanized product sales of $1.203 billion were 1% lower in 1996, reflecting
lower average selling prices, partially offset by a 5% increase in shipments.
Tin mill product sales of $453 million were 1% higher in 1996 as a result of a
6% increase in shipments, partially offset by a decrease in average selling
prices. Tubular product sales of $319 million were 1% higher in 1996 than in
1995, reflecting a 5% increase in shipments, partially offset by a decrease in
average selling prices. Nonsteel and other sales in 1996 of $143 million were
$10 million lower than 1995 due to lower sales of iron ore.
-3-
<PAGE> 4
Production and Costs
- --------------------
Raw steel production increased by 322,000 tons to 8.78 million tons in 1996
compared with 1995. The average operating rate at the Company's steelmaking
facilities during 1996 was 105%, compared with 102% in 1995. The Company follows
industry standards in calculating its maximum operating rate that is based on
95% of blast furnace capacity. The 5% adjustment recognizes the average effect
of blast furnace relines. Steel production may be supplemented with purchases of
semifinished steel when demand for the Company's products exceeds production
capability.
Cost of products sold as a percentage of sales increased to 86.8% in 1996 from
84.5% in 1995, primarily due to lower average selling prices. The 1996 results
were favorably impacted by productivity and operating performance improvements,
partially offset by additional costs arising from extremely cold weather
conditions experienced in the first quarter of 1996 at the Company's iron ore
and coke plant operations, and higher purchased material prices. Selling,
general and administrative costs increased in 1996, which included higher legal
and professional fees related to labor contract negotiations and the redesign of
business processes.
1995 COMPARED WITH 1994
Sales
- -----
Sales of $4.283 billion in 1995 increased by $50 million (1%) from 1994, while
steel shipments of 7.96 million tons approximated the previous year's total. The
increase in sales during 1995 was primarily due to higher average selling
prices.
Hot and cold flat rolled product sales of $2.146 billion were 2% higher in 1995
versus 1994, reflecting an increase in shipments and selling prices, partially
offset by a change in the mix of products sold that reflected higher shipments
of lower-priced hot rolled steel to the export markets. Galvanized product sales
of $1.221 billion were 1% higher in 1995, reflecting a 5% decrease in shipments
that was more than offset by an increase in average selling prices. Tin mill
product sales of $449 million were 5% lower in 1995, reflecting a 7% decrease in
shipments, partially offset by an increase in average selling prices. Tubular
product sales of $314 million were 7% higher in 1995 than in 1994, reflecting a
2% increase in shipments and an increase in average selling prices. Nonsteel and
other sales in 1995 of $153 million were relatively unchanged from 1994.
Production and Costs
- --------------------
Raw steel production increased by 209,000 tons to 8.46 million tons in 1995
compared with 1994. The average operating rate at the Company's steelmaking
facilities during 1995 was 102%, compared with 99% in 1994. The 1994 production
was impacted by the extremely cold weather conditions experienced at the
operating units in the first quarter of 1994 and the start-up of the Direct Hot
Charge Complex ("DHCC") at the Cleveland Works, which became fully operational
in the second quarter of 1994.
Cost of products sold as a percentage of sales improved to 84.5% in 1995 from
86.7% in 1994, primarily due to higher average selling prices. The 1995 results
were also favorably impacted by productivity and operating performance
improvements, including those achieved through the Cleveland Works' DHCC,
-4-
<PAGE> 5
partially offset by additional costs incurred in 1995 arising from the June 1994
labor agreement with the United Steelworkers of America ("USWA") and higher
purchased material prices.
In 1995, LTV reached a long-term agreement with a large technology service
organization to manage LTV's information systems and data processing functions.
Also, during 1995, LTV began a reorganization and centralization of certain
sales and marketing functions. One-time transitional and personnel costs related
to these actions totaled $9.5 million in 1995, of which $1.7 million was paid in
1995 and $4.9 million was paid in 1996. A portion of these costs was included in
selling, general and administrative expenses and was the primary reason for the
increase in these expenses in 1995 versus 1994.
OTHER INCOME AND EXPENSE ITEMS
1996, 1995 AND 1994
Net Interest and Other Income
- -----------------------------
Net interest and other income of $42.4 million in 1996 was approximately the
same as 1995. Decreased interest income on lower levels of investments and lower
earnings rates was offset by increased capitalized interest expense in 1996.
Net interest and other income of $42.6 million in 1995 increased by $29.6
million from 1994, primarily due to increased interest income on higher levels
of investments coupled with a higher earnings rate, as well as lower fees on
credit facilities. Additionally, in 1995, the Company recorded a recovery of
$5.8 million unclaimed disbursements as other income.
Income Taxes
- ------------
Of the Company's total federal and state income tax expense from continuing
operations, $63.2 million, $115.3 million and $74.7 million of such expense
amounts in 1996, 1995 and 1994, respectively, did not result in cash payments
because of net deductible temporary differences. The Company's cash payments for
income taxes will continue to be significantly less than the income tax expense
amounts in the financial statements until the deferred tax assets are fully
utilized or expire. Under fresh-start financial statement reporting rules, tax
benefits associated with pre-reorganization net deductible temporary differences
and net operating loss carryforwards cannot be recognized as a reduction to the
tax provision and do not increase net income. Consequently, income before income
taxes represents an important indicator of the Company's true earnings.
The Company's effective tax rate for financial statement reporting purposes was
36.8% in 1996, 37.7% in 1995 and 36.1% for 1994. The 1994 effective tax rate
reflects the Company reaching a settlement on certain state income tax issues
and recording a benefit of $5.0 million. Taxes payable in cash during the past
three years consist primarily of state and federal (for a less than 80% owned
subsidiary) taxes. The Company's ability to reduce its future income tax
payments through the use of net operating loss carryforwards could be
significantly limited on an annual basis if the Company were to undergo an
"ownership change" within the meaning of Section 382 of the Internal Revenue
Code of 1986. For the purpose of preserving LTV's ability to utilize its net
operating loss carryforwards, Article Ninth of LTV's Restated Certificate of
Incorporation prohibits, with certain limited exceptions, any unapproved
-5-
<PAGE> 6
acquisition of common stock or Series A Warrants that would cause the ownership
interest percentage of the acquirer or any other person to increase to 4.5% or
above.
Discontinued Operations
- -----------------------
On August 1, 1995, LTV sold its energy products segment, Continental Emsco
Company ("Continental Emsco"), for $74.6 million, with $38.6 million of the
proceeds used to reduce LTV's long-term debt. The loss of $8.7 million on the
sale of the segment was recorded in the second quarter of 1995, and Continental
Emsco is reflected as a discontinued operation in LTV's financial statements.
LIQUIDITY AND FINANCIAL 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.
In 1996, total cash, cash equivalents and marketable securities decreased by $49
million to $674 million as of December 31, 1996. During 1996, cash provided by
operating activities amounted to $495 million. Major uses of cash during 1996
included $205 million in funding to the restored pension plans, the conversion
of $109 million of cash equivalents to highly liquid marketable securities to
improve the return on those funds, $243 million in capital expenditures, $79
million investment in steel-related businesses and $12 million of dividend
payments.
In 1995, total cash, cash equivalents and marketable securities increased by $30
million to $723 million at December 31, 1995. During 1995, cash provided by
operating activities amounted to $756 million, with the other major source of
cash consisting of $94 million in proceeds from the dispositions of discontinued
operations, businesses and properties. Major uses of cash during 1995 included
$473 million in funding to the restored pension plans, the conversion of $100
million of cash equivalents to highly liquid marketable securities, $205 million
in capital expenditures, $89 million investment in steel-related businesses and
$41 million of long-term debt payments.
In 1994, total cash, cash equivalents and marketable securities increased by
$287 million to $693 million at December 31, 1994. During 1994, cash provided by
operating activities, which included the remaining $171 million from the
settlement of an antitrust lawsuit, amounted to $716 million. Other major 1994
sources of cash consisted of $257 million from the Company's equity offering and
$184 million relating to dispositions of businesses and properties. Major uses
of cash during 1994 included $642 million in funding to the restored pension
plans, the conversion of $358 million of cash equivalents to highly liquid
marketable securities and $234 million in capital expenditures.
The Company has two credit facilities with banks, a "Receivables Facility" and a
"Letter of Credit Facility," which provide the Company with up to $470 million
of financing resources at prevailing market rates. Management believes that cash
provided by operations, along with its credit facilities, is sufficient to fund
the current requirements of working capital, capital expenditures, investment in
joint ventures, pensions and other postemployment benefits.
The Company's long-term debt and Letter of Credit Facility 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 ("PBGC Agreement"), place
-6-
<PAGE> 7
certain restrictions on payments of dividends, share repurchases, capital
expenditures, investments in subsidiaries and borrowings. Under the terms of the
most restrictive covenant, $155 million of retained earnings are available for
common stock dividend payments at December 31, 1996. Substantially all of the
Company's receivables and inventories are pledged as collateral under certain of
these agreements. The Company does not believe that the restrictions contained
in these covenants will cause significant limitations on its financial
flexibility.
In April 1996, the Company declared a common stock dividend of $0.03 per share,
the first quarterly cash dividend since 1984. Additionally, LTV declared
dividends in July and October of 1996 and in January 1997. Also, in January
1997, LTV announced a stock repurchase program authorizing the acquisition, from
time to time, of up to $75 million of the Company's common shares in the open
market.
CAPITAL EXPENDITURES AND REQUIREMENTS
The Company invested $243 million in capital expenditures during 1996. LTV's
capital expenditures are directed toward market-driven requirements, customer
service, productivity improvements, cost-reduction programs, new technology,
replacement projects and environmental requirements. The Company anticipates
capital expenditures will approximate $320 million during 1997.
INVESTMENT IN JOINT VENTURES
Investments in steel-related businesses totaled $79 million in 1996 and $89
million in 1995. In 1995, LTV entered into a joint venture to build and operate
a new flat rolled steel minimill company, Trico Steel Company, L.L.C. ("Trico
Steel Company"). LTV has a 50% interest in the joint venture. Operations are
scheduled to begin in early 1997.
In 1996, LTV entered into a joint venture to produce high purity direct reduced
iron ("DRI") briquettes as a scrap steel substitute for use in electric furnace
steelmaking operations. The total construction costs are estimated to be $150
million, and LTV's investment will be 46.5% of the total. Construction planning
began in late 1996 with production scheduled to begin in the second half of
1998. Once fully operational, the joint venture will produce about 500,000
metric tons of DRI briquettes per year.
-7-
<PAGE> 8
PENSION AND OTHER POSTEMPLOYMENT BENEFITS
[Graph]
PENSION PLAN ASSETS AND UNFUNDED PROJECTED BENEFIT OBLIGATION
(in millions)
<TABLE>
<CAPTION>
1996 1995 1994
AT DECEMBER 31,
<S> <C> <C> <C>
PENSION PLAN ASSETS $2,836 $2,566 $2,003
UNFUNDED PROJECTED BENEFIT OBLIGATION $ 560 $1,042 $1,174
</TABLE>
PENSION PLAN ASSETS PRINCIPALLY CONSIST OF EQUITY SECURITIES LISTED ON NATIONAL
EXCHANGES, FIXED INCOME SECURITIES AND CASH EQUIVALENTS. THE ACTUAL RETURN ON
PLAN ASSETS IN 1996 WAS $405.1 MILLION, OR 16.8%.
Pension plan expense of $112 million in 1996 decreased significantly from $172
million in 1995, primarily due to increased pension plan assets and earnings.
Pension expense in 1995 was $9 million higher than the 1994 pension expense of
$163 million, primarily due to using a higher discount rate of 9%, and the
pension benefit enhancements under the Company's 1994 USWA labor agreement,
partially offset by the funding of the Company's plans. Pension expense for all
plans is expected to approximate $93 million in 1997.
The Company's cash funding of its major defined benefit pension plans is based
on a flexible payment schedule as determined under the PBGC Agreement requiring
minimum annual fixed payments of $30 million in 1994 through 1997, and $50
million in subsequent years. Also, if cash flow exceeds certain levels, the
Company is obligated each year to make additional payments to these plans. Under
the PBGC Agreement, the pension contributions due in 1997 total $169 million,
$160 million of which was prepaid in 1996. Contributions to major defined
benefit pension plans have totaled nearly $2.7 billion since June 28, 1993. As
of December 31, 1996, "advance payments" to the pension plans total $451
million, which, together with future cumulative earnings, can be used at the
Company's option as credits against future required payments.
Other postemployment benefit expense consists primarily of health care and life
insurance benefits with the expense of $136 million in 1996 remaining
approximately the same as 1995. Other postemployment
-8-
<PAGE> 9
benefit expense is expected to remain approximately the same in 1997. Cash
payments amounted to $131 million in 1996, $144 million in 1995 and $130 million
in 1994.
As part of the 1994 USWA labor agreement, the Company began making contributions
to a Voluntary Employee Beneficiary Association ("VEBA") Trust to prefund other
postemployment benefits for employees and retirees covered under the agreement.
The Company is required to contribute to the VEBA Trust a minimum of $5 million
annually ($10 million in years when common stock dividends are declared) and
additional amounts based on defined cash flow as set forth in the labor
agreement. Additional discretionary contributions are also permitted. The
required contributions were $11 million and $19 million in 1996 and 1995,
respectively, and the 1997 contribution is expected to be $10 million.
The accounting requirement to reset annually the discount rate used to calculate
the actuarial present value of the pension and other postemployment benefit
obligations, consistent with changes in market interest rates, results in
volatility of the recorded amount of the Company's obligations. This volatility
is highlighted in the adjacent graph, which displays LTV's unfunded projected
pension benefit obligation at each annual required discount rate and at a
constant 8.5% discount rate. In determining the assumed long-term rate of return
on pension plan assets, LTV has used a rate of 9% in 1996 and 8.5% in 1995 and
1994.
[Graph]
UNFUNDED PROJECTED PENSION BENEFIT OBLIGATION
At December 31
(in millions)
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
ACTUAL DISCOUNT RATE USED
(7.5% IN 1996, 7.25% IN 1995 AND 9.0% IN 1994) $560 $1,042 $1,174
CONSTANT DISCOUNT RATE OF 8.5% $297 $ 711 $1,299
</TABLE>
A 1993 agreement with the USWA provided that a portion of the requirements with
respect to certain postemployment benefits would be secured by a junior lien of
$250 million on collateral with an unencumbered fair market value of at least
$500 million. The initial security was provided by the grant of a mortgage on
facilities having a carrying value of approximately $500 million.
-9-
<PAGE> 10
COMPETITION AND STEEL PRICES
LTV competes directly with domestic and foreign integrated flat rolled carbon
steel producers and minimills and indirectly with producers of plastics,
aluminum and other materials such as ceramics and wood, which sometimes can be
substituted for flat rolled carbon steel in manufacturing and construction.
Certain companies have announced plans or begun construction of additional
minimills to produce flat rolled products. Minimills 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. Thin slab casting technologies have allowed some minimills to enter
certain flat rolled markets that have traditionally been supplied by integrated
producers. The primary factors that affect competition include price, quality,
delivery and customer service. LTV targets quality-critical, value-added
applications and believes it is able to differentiate some of its products from
those of competitors on the basis of product quality, on-time delivery
performance, and product and technical support to customers.
Significant competition from foreign producers has adversely affected product
prices in the United States and tonnage sold by domestic producers. The
intensity of foreign competition is affected partially by fluctuations in the
value of the U.S. dollar against foreign currencies and demand within the
domestic steel market. Many foreign steel producers are owned, controlled or
subsidized by their governments, and decisions 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 American Iron and
Steel Institute reports, steel imports of flat rolled products (including tin
mill products) during the first 11 months of 1996 totaled 11.8 million tons, an
increase of 1.2 million tons, or 11%, from the year-ago period.
The Company's results of operations are substantially affected by small
variations in the realized prices of its products, which are significantly
influenced by prevailing prices for steel and demand for particular products.
The Company shipped 8.08 million tons of steel products and recorded sales of
$4.135 billion during 1996. A 1% increase or decrease in the average realized
price during 1996 would, on a pro forma basis, result in an increase or decrease
in pretax income of approximately $36 million. The Company and the steel
industry in general realized lower steel selling prices in the latter half of
1995. In 1996, the Company implemented several price increases that partially
offset the price decreases experienced in the second half of 1995, but average
steel selling prices in 1996 were below 1995 levels. Competitive pressures,
including increased domestic steelmaking capacity, could limit the Company's
ability to maintain or increase current prices.
LABOR MATTERS
The Company has a labor agreement with the USWA on terms consistent with those
negotiated with other major integrated steel producers that expires August 1,
1999. The agreement provided for a reopening of wage provisions in 1996, subject
to binding arbitration with changes becoming effective August 1, 1996. The 1996
arbitration settlement resulted in wages and benefits comparable to those at
other U. S. integrated steel competitors.
-10-
<PAGE> 11
ENVIRONMENTAL LIABILITIES AND RELATED COSTS
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.
Important examples of laws referred to above are the 1990 Clean Air Act
Amendments ("CAA Amendments"), the Resource Conservation and Recovery Act of
1976, as amended ("RCRA"), and related state and local laws. The CAA Amendments
and its state and local counterparts require progressively more stringent air
emission quality standards in the future. RCRA and related state laws include
so-called "corrective action" provisions that grant environmental agencies
authority to require the Company to clean up environmental media, such as soils
and groundwater, under certain prescribed conditions. These corrective action
provisions, in most instances, are not self-implementing and, in the Company's
view, create no current legal obligation. If, in the future, the Company were
required to implement corrective actions, the Company could be required to
record additional liabilities that cannot be estimated at this time, but would
be substantial.
In 1993, as part of the Company's reorganization, LTV entered into agreements
with the U.S. Environmental Protection Agency ("EPA") and several state
environmental agencies, which settled a significant portion of the Company's
pending remediation liabilities and certain other environmental-related
liabilities. The agreement also established a mechanism to resolve specified
environmental claims subsequently identified (if any).
During 1996, the Company spent approximately $18 million for environmental
clean-up and related matters at operating and idled facilities, and at December
31, 1996, has a recorded liability of $84 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 approximately
$27 million in 1996 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.
NEW ACCOUNTING PRONOUNCEMENT
In October 1996, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 96-1
("SOP 96-1"), "Environmental Remediation Liabilities," which clarifies the
existing authoritative guidance on loss contingencies that apply in determining
environmental liabilities. The Company will adopt SOP 96-1 in the first quarter
of 1997 and, based on current circumstances, does not believe the effect of
adoption will be material to results of operations.
-11-
<PAGE> 12
OUTLOOK
To date, 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 rising import levels and a strengthening dollar. These factors,
along with industry capacity additions, could affect future market prices.
This report includes forward-looking statements. The use of the words "outlook,"
"believes," "estimate," "expect" and similar words are intended to identify
these statements as forward-looking. These statements represent the Company's
current judgment on what the future holds. While the Company believes 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 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; or
unanticipated results in pending legal proceedings.
-12-
<PAGE> 13
CONSOLIDATED STATEMENT OF INCOME
The LTV Corporation
(in millions, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
1996 1995 1994
----------- ---------- -----------
<S> <C> <C> <C>
SALES $ 4,134.5 $ 4,283.2 $ 4,233.3
COSTS AND EXPENSES:
Cost of products sold 3,587.7 3,620.9 3,668.6
Depreciation and amortization 265.7 251.9 241.8
Selling, general and administrative 150.8 142.2 133.2
Net interest and other income (42.4) (42.6) (13.0)
----------- ---------- -----------
Total 3,961.8 3,972.4 4,030.6
----------- ---------- -----------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES 172.7 310.8 202.7
INCOME TAX PROVISION:
Taxes payable (refundable) 0.3 2.0 (1.5)
Taxes not payable in cash 63.2 115.3 74.7
----------- ---------- -----------
Total 63.5 117.3 73.2
----------- ---------- -----------
INCOME FROM CONTINUING OPERATIONS 109.2 193.5 129.5
Discontinued operations - (8.7) (2.4)
----------- ---------- -----------
NET INCOME $ 109.2 $ 184.8 $ 127.1
=========== ========== ===========
EARNINGS PER SHARE
Primary:
Continuing operations $ 1.01 $ 1.79 $ 1.31
Discontinued operations - (0.08) (0.02)
----------- ---------- -----------
Net income $ 1.01 $ 1.71 $ 1.29
=========== ========== ===========
Fully diluted:
Continuing operations $ 1.01 $ 1.76 $ 1.29
Discontinued operations - (0.08) (0.02)
----------- ---------- -----------
Net income $ 1.01 $ 1.68 $ 1.27
=========== ========== ===========
DIVIDENDS PAID PER COMMON SHARE $ 0.09 $ - $ -
=========== ========== ===========
</TABLE>
See notes to consolidated financial statements.
-13-
<PAGE> 14
CONSOLIDATED STATEMENT OF CASH FLOWS
The LTV Corporation
<TABLE>
<CAPTION>
(in millions) Year Ended December 31,
--------------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Income from continuing operations $ 109.2 $ 193.5 $ 129.5
Adjustments to reconcile income to net cash
provided by operating activities:
Special credits - - 171.0
Depreciation and amortization 265.7 251.9 241.8
Income tax provision not payable in cash 63.2 115.3 74.7
Defined benefit pension expense 64.3 124.0 119.8
Postemployment benefit payments
less (more) than related expense 5.8 (7.6) 18.5
VEBA Trust contributions (11.3) (19.1) -
Changes in assets and liabilities 10.8 104.0 (31.0)
Other (13.2) (5.8) (8.2)
----------- ---------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 494.5 756.2 716.1
----------- ---------- -----------
INVESTING ACTIVITIES
Capital expenditures (242.9) (204.8) (234.0)
Investment in steel-related businesses (78.5) (89.2) (0.9)
Net purchases of marketable securities (109.2) (99.7) (357.5)
Proceeds from dispositions of discontinued
operations, businesses and properties 11.2 94.4 184.2
Other (17.2) (9.5) (13.6)
----------- ---------- -----------
NET CASH USED IN INVESTING ACTIVITIES (436.6) (308.8) (421.8)
----------- ---------- -----------
FINANCING ACTIVITIES
Issuance of common stock - - 257.2
Pension funding to restored plans (204.7) (472.6) (642.2)
Receipt of escrowed funds - - 25.8
Payments on long-term debt - (41.1) (2.5)
Dividends paid - common (9.5) - -
- preferred (2.2) (2.2) (2.3)
Other - (1.0) (1.2)
----------- ---------- -----------
NET CASH USED IN FINANCING ACTIVITIES (216.4) (516.9) (365.2)
----------- ---------- -----------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (158.5) (69.5) (70.9)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 265.9 335.4 406.3
----------- ---------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 107.4 $ 265.9 $ 335.4
=========== ========== ===========
</TABLE>
- ----------
See notes to consolidated financial statements.
-14-
<PAGE> 15
CONSOLIDATED BALANCE SHEET
The LTV Corporation
(in millions, except per share data)
<TABLE>
<CAPTION>
December 31,
-------------------------------
1996 1995
------------ -------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 107.4 $ 265.9
Marketable securities 566.4 457.2
------------- -------------
673.8 723.1
Receivables, less allowance for doubtful accounts of
$17.7 in 1996 and $17.1 in 1995 400.3 396.1
Inventories:
Products 570.6 512.6
Materials, purchased parts and supplies 231.7 229.9
------------- -------------
Total inventories 802.3 742.5
Prepaid expenses, deposits and other 11.9 8.7
------------- -------------
Total current assets 1,888.3 1,870.4
------------- -------------
INVESTMENTS IN AFFILIATES 256.3 167.8
OTHER NONCURRENT ASSETS 149.1 201.7
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements 68.7 69.5
Buildings 147.7 144.9
Machinery and equipment 3,443.5 3,322.2
Construction in progress 211.4 121.6
------------- -------------
3,871.3 3,658.2
Less allowance for depreciation (754.5) (518.0)
------------- -------------
Total property, plant and equipment 3,116.8 3,140.2
------------- -------------
$ 5,410.5 $ 5,380.1
============= =============
</TABLE>
- ----------
See notes to consolidated financial statements.
-15-
<PAGE> 16
<TABLE>
<CAPTION>
December 31,
-------------------------------
1996 1995
------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 351.1 $ 255.0
Accrued employee compensation and benefits 372.9 408.4
Other accrued liabilities 175.0 183.3
------------- -------------
Total current liabilities 899.0 846.7
------------- -------------
NONCURRENT LIABILITIES
Long-term debt 152.6 150.4
Postemployment health care and other insurance benefits 1,596.0 1,598.4
Pension benefits 647.9 988.7
Other 404.3 420.7
------------- -------------
Total noncurrent liabilities 2,800.8 3,158.2
------------- -------------
SHAREHOLDERS' EQUITY
Convertible preferred stock - par value $1.00 per share 0.5 0.5
Common stock - par value $0.50 per share;
authorized 150.0 shares; issued and outstanding
105.5 shares in 1996 and 1995 52.8 52.8
Additional paid-in capital 1,021.1 958.0
Retained earnings 646.7 549.3
Minimum pension liability adjustment (8.9) (184.8)
Other (1.5) (0.6)
------------- -------------
Total shareholders' equity 1,710.7 1,375.2
------------- -------------
$ 5,410.5 $ 5,380.1
============= =============
</TABLE>
-16-
<PAGE> 17
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
The LTV Corporation
(in millions)
<TABLE>
<CAPTION>
Common Minimum Restricted
Convertible Stock Additional Pension Stock and Total
Preferred Held for Common Paid-In Retained Liability Marketable Shareholders'
Stock Issuance Stock Capital Earnings Adjustment Securities Equity
---------- -------- -------- -------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
January 1, 1994 $ 1.0 $ 54.3 $ 41.9 $ 561.3 $ 246.1 $ (364.8) $ 539.8
Net income 127.1 127.1
Shares issued:
Public offering 6.8 250.4 257.2
Stock plans 1.0 5.4 $ (3.2) 3.2
Conversion of stock (0.5) (54.3) 3.2 51.6 -
Unrealized losses (1.2) (1.2)
Pension liability 359.0 359.0
Dividends paid:
Preferred 0.1 4.1 (6.5) (2.3)
----------- -------- -------- --------- --------- ----------- ---------- ---------
December 31, 1994 0.5 - 53.0 872.8 366.7 (5.8) (4.4) 1,282.8
Net income 184.8 184.8
Taxes not payable
in cash 84.9 84.9
Shares issued:
Stock plans 0.1 0.8 0.9
Unrealized gains 3.0 3.0
Pension liability (179.0) (179.0)
Dividends paid:
Preferred (2.2) (2.2)
Other (0.2) 0.2 -
----------- -------- -------- --------- --------- ----------- ---------- ---------
December 31, 1995 0.5 - 52.8 958.0 549.3 (184.8) (0.6) 1,375.2
Net income 109.2 109.2
Taxes not payable
in cash 63.2 63.2
Unrealized losses (0.9) (0.9)
Pension liability 175.9 175.9
Dividends paid:
Common (9.5) (9.5)
Preferred (2.2) (2.2)
Other (0.1) (0.1) (0.2)
----------- -------- -------- --------- --------- ----------- ---------- ---------
December 31, 1996 $ 0.5 $ - $ 52.8 $ 1,021.1 $ 646.7 $ (8.9) $ (1.5) $ 1,710.7
=========== ======== ======== ========= ========= =========== ========== =========
</TABLE>
See notes to consolidated financial statements.
-17-
<PAGE> 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The LTV Corporation
December 31, 1996
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
- -----------------------
The LTV Corporation ("LTV" or the "Company") is a fully integrated steel
producer that manufactures a diversified line of carbon steel products
consisting of hot rolled and cold rolled sheet, galvanized, tin mill and tubular
products. The Company operates two integrated steel mills (Cleveland Works and
Indiana Harbor Works) and various finishing, galvanizing and processing
facilities as well as tin mill and tubular operations. The Company is a major
supplier of flat rolled steel for the domestic transportation, appliance and
electrical equipment markets.
Principles of Consolidation
- ---------------------------
The consolidated financial statements include LTV and its majority-owned
subsidiaries. Investments in joint ventures and companies owned 20% to 50% are
accounted for by the equity method. The Company's interest in the cumulative
undistributed earnings of its unconsolidated affiliates was $19.8 million at
December 31, 1996, all of which was available for dividend or other distribution
to the Company.
Cost of products sold has been reduced by the equity in earnings of raw material
and other affiliates of $16.2 million, $17.2 million and $14.7 million for the
years ended December 31, 1996, 1995 and 1994, respectively.
Marketable Securities
- ---------------------
The Company determines the appropriate classification of marketable securities
at the time of purchase and reevaluates such designation at each balance sheet
date. Marketable securities have been classified as available-for-sale and are
carried at fair value, with unrealized holding gains and losses reported as a
separate component of shareholders' equity.
The cost of debt securities is adjusted for amortization of premiums and
accretion of discounts to maturity. Such amortization, interest income, realized
gains and losses and declines in value judged to be other than temporary are
included in net interest and other income. The cost of securities sold is based
on specific identification.
-18-
<PAGE> 19
Inventories
- -----------
Inventories are valued at the lower of cost or market, with cost determined
primarily by the "last-in, first-out" ("LIFO") method. The amount by which
inventory is reduced to state inventory at LIFO value is $26.3 million at
December 31, 1996 and $26.2 million at December 31, 1995. Liquidation of LIFO
inventory quantities, carried at costs which prevailed in earlier years, reduced
cost of products sold by $1.6 million, $4.2 million and $1.8 million during the
years ended December 31, 1996, 1995 and 1994, respectively. The current
replacement value of inventories is $801.9 million and $742.0 million at
December 31, 1996 and 1995, respectively.
Property Costs and Depreciation
- -------------------------------
Fixed assets are recorded on the cost basis and include land, buildings,
machinery and equipment, and software and associated costs. Depreciation is
computed principally using a modified straight-line method based upon estimated
economic lives of assets and the levels of production providing depreciation
within a range of 80% to 120% of the straight-line amount on individual major
production facilities with decreased depreciation at lower and increased
depreciation at higher operating levels. During each of the last three years,
depreciation expense under this method has approximated the computed
straight-line amounts. In addition, a units-of-production method is used for
blast furnaces. The cost of buildings is depreciated over 45 years, and
machinery and equipment is depreciated over an average life of approximately 17
years.
When properties are retired or sold, their carrying value and the related
allowance for depreciation are eliminated from the property and allowance for
depreciation accounts, respectively. Generally, for normal retirements, gains or
losses are credited or charged to allowance for depreciation accounts; for
abnormal retirements, gains or losses are included in income in the year of
disposal.
The Company adopted Financial Accounting Standards Board Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," which requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present, and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount. The adoption did not impact the results of
operations.
Environmental Remediation Liabilities
- -------------------------------------
The Company's policy is to accrue environmental remediation liabilities when it
is probable a liability exists and the costs can be reasonably estimated. The
Company's estimates of these undiscounted costs are based on existing
technology, current enacted laws and regulations, its current legal obligations
regarding remediation and site-specific costs. The liabilities are adjusted when
the effect of new facts or changes in law or technology is determinable. The
Company's liability for environmental remediation totaled $84 million and $98
million at December 31, 1996 and 1995, respectively.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
-19-
<PAGE> 20
New Accounting Pronouncement
- ----------------------------
In October 1996, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 96-1
("SOP 96-1"), "Environmental Remediation Liabilities," which clarifies the
existing authoritative guidance on loss contingencies that apply in determining
environmental liabilities. The Company will adopt SOP 96-1 in the first quarter
of 1997 and, based on current circumstances, does not believe the effect of
adoption will be material to results of operations.
MARKETABLE SECURITIES
The following is a summary of marketable securities at December 31 (in
millions):
<TABLE>
<CAPTION>
Unrealized Unrealized
Holding Holding
Cost Gains Losses Fair Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
1996
U. S. Government obligations $ 193.7 $ 0.2 $ (0.3) $ 193.6
Corporate obligations 267.8 0.3 (0.1) 268.0
Other 104.8 - - 104.8
----------- ----------- ----------- -----------
$ 566.3 $ 0.5 $ (0.4) $ 566.4
=========== =========== ========== ===========
1995
U. S. Government obligations $ 291.3 $ 1.6 $ - $ 292.9
Corporate obligations 144.1 0.2 - 144.3
Other 20.0 - - 20.0
----------- ----------- ----------- -----------
$ 455.4 $ 1.8 $ - $ 457.2
=========== =========== =========== ===========
</TABLE>
The cost and estimated fair value of marketable securities by contractual
maturity at December 31, 1996 are as follows (in millions):
<TABLE>
<CAPTION>
Cost Fair Value
---------- -----------
<S> <C> <C>
Due in one year or less $ 292.5 $ 292.4
Due after one year through two years 63.2 63.2
Due after two years 210.6 210.8
---------- -----------
$ 566.3 $ 566.4
========== ===========
</TABLE>
-20-
<PAGE> 21
OTHER LIABILITIES
Current accrued employee compensation and benefits included the following at
December 31 (in millions):
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Pension benefits $ 24.1 $ 59.3
Postemployment health care and other insurance benefits 134.5 137.6
Compensated absences 49.9 49.6
Other 164.4 161.9
--------- ----------
$ 372.9 $ 408.4
========= ==========
Current other accrued liabilities included the following at December 31 (in
millions):
1996 1995
----------- -----------
Accrued taxes other than income $ 91.2 $ 83.7
Accrued income taxes 11.9 13.1
Other 71.9 86.5
--------- ----------
$ 175.0 $ 183.3
========= ==========
Noncurrent other liabilities included the following at December 31 (in
millions):
1996 1995
----------- -----------
Benefits under the Coal Industry Retiree Health Benefit Act of 1992* $ 133.5 $ 135.6
Other employee benefits 126.3 126.3
Environmental and plant rationalization 87.0 105.6
Other 57.5 53.2
--------- ----------
$ 404.3 $ 420.7
========= ==========
<FN>
* The Company accrued this obligation by recording an extraordinary charge of
$140 million in 1992.
</TABLE>
DEBT AND CREDIT FACILITIES
Long-term debt consisted of the following at December 31 (in millions):
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Senior secured convertible notes due June 2003 $ 100.0 $ 100.0
Notes due December 2020 52.6 50.4
--------- ----------
$ 152.6 $ 150.4
========= ==========
</TABLE>
The Company has no required long-term debt maturities occurring within the next
five years.
-21-
<PAGE> 22
The senior secured convertible notes bear interest at the rate of 8.5% if paid
in cash or 10.5% if paid with additional convertible notes. The holders of the
convertible notes have the right to convert such notes, in whole or in part,
into shares of LTV common stock at a conversion price of $19.50 per share
(potentially 5,128,205 shares).
The notes due December 2020 are required to be prepaid within 120 days after the
restored pension plans become fully funded. LTV also has the option to partially
or fully prepay the notes. The notes bear interest at 8.5%, which can be paid in
cash or in additional notes.
The Company has two credit facilities with banks (the "Receivables Facility"
expiring in 2000 and the "Letter of Credit Facility" expiring in 1999) that
provide the Company with up to $470 million of financing resources at prevailing
market rates.
The Receivables 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 December 31, 1996, $285.5 million was
permitted to be borrowed; however, no borrowings were outstanding and letters of
credit outstanding amounted to $22.7 million under this facility. The borrower
under the Receivables Facility is LTV Sales Finance Company, a structured
finance special purpose entity wholly owned by LTV, which on a daily basis
purchases and pledges essentially all of the receivables generated by LTV. The
creditors of LTV Sales Finance Company have a claim on the assets of that
company prior to those assets becoming available to other creditors of LTV or
its affiliates.
The Letter of Credit Facility is a separate credit facility that provides for
the issuance of up to $150 million in letters of credit. At December 31, 1996,
letters of credit totaling $82.9 million were outstanding under this facility.
The long-term debt and Letter of Credit Facility agreements contain various
covenants that require the Company to maintain certain financial ratios and
amounts. These agreements, as well as an agreement with the Pension Benefit
Guaranty Corporation regarding the restored pension plans ("PBGC Agreement"),
place certain restrictions on payments of dividends, stock repurchases, capital
expenditures, investments in subsidiaries and borrowings. Under the terms of the
most restrictive covenant, $155 million of retained earnings are available for
common stock dividend payments at December 31, 1996. Substantially all of the
Company's receivables and inventories are pledged as collateral under the
convertible notes and credit facilities agreements.
-22-
<PAGE> 23
OPERATING LEASES
The Company leases certain manufacturing facilities and equipment, office space
and computer equipment under cancelable and noncancelable leases that expire at
various dates. Minimum future operating lease obligations in effect at
December 31, 1996 are as follows (in millions):
<TABLE>
<S> <C>
1997 $ 41.5
1998 40.5
1999 26.7
2000 13.3
2001 11.7
Later years 62.7
-------------
Total obligations $ 196.4
=============
</TABLE>
Rental expense on operating leases was $61.8 million, $58.4 million and $59.0
million for the years ended December 31, 1996, 1995 and 1994, respectively.
POSTEMPLOYMENT HEALTH CARE AND OTHER INSURANCE BENEFITS
The Company provides health care and other insurance benefits, primarily life,
for substantially all active, inactive and retired employees. The health care
plans are contributory and contain other cost-sharing features such as
deductibles, lifetime maximums and copayment requirements. The components of
periodic expense and cash payments for postemployment benefits are as follows
(in millions):
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Service cost - benefits earned during the period $ 18.0 $ 14.7 $ 18.7
Interest cost on accumulated benefit obligation 120.0 131.9 130.2
Actual return on plan assets (5.9) (0.1) -
Net amortization and deferral 4.3 (10.0) -
---------- --------- ----------
Total expense $ 136.4 $ 136.5 $ 148.9
========== ========= ==========
Total cash payments $ 130.6 $ 144.1 $ 130.4
========== ========= ==========
</TABLE>
-23-
<PAGE> 24
The actuarial and recorded liabilities for postemployment benefits are as
follows at December 31 (in millions):
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
Accumulated benefit obligation:
Retirees $ 1,253.7 $ 1,275.6
Fully eligible active plan participants 121.3 123.9
Other active plan participants 312.3 323.4
---------- -----------
Total 1,687.3 1,722.9
Unrecognized net actuarial gains 79.6 32.3
Plan assets at fair value (36.4) (19.2)
---------- -----------
Total liability included in the consolidated balance sheet 1,730.5 1,736.0
Less current portion (134.5) (137.6)
---------- -----------
Noncurrent liability $ 1,596.0 $ 1,598.4
========== ===========
</TABLE>
The actuarial assumptions used in the calculation of the liability for
postemployment benefits are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Discount rate 7.5% 7.25% 9.0%
Long-term rate of return on plan assets 9.0% 8.5% 8.5%
Projected health care cost trend rate 7.5% 8.0% 8.9%
Ultimate trend rate 4.5% 4.5% 5.5%
Year ultimate trend rate is achieved 2003 2002 2001
</TABLE>
As part of the 1994 United Steelworkers of America ("USWA") labor agreement, the
Company is required to contribute to a Voluntary Employee Beneficiary
Association ("VEBA") Trust to prefund postemployment health care and other
insurance benefits for covered employees and retirees in addition to making cash
payments for such benefits on a current basis. The Company is required to
contribute to the VEBA Trust a minimum of $5 million annually ($10 million in
years when common stock dividends are declared) and additional amounts based on
defined cash flow as set forth in the labor agreement. The required contribution
made in 1996 was $11.3 million. Plan assets are invested in a mutual fund, which
primarily consists of equity securities listed on national exchanges.
The effect on the present value of the accumulated benefit obligation at
December 31, 1996 of a 1% increase each year in the health care cost trend rate
used would result in an increase of $146 million in the accumulated benefit
obligation, and a $13 million increase in the total 1996 service and interest
components of expense. The assumed discount rate increase in 1996 resulted in a
net decrease in the accumulated benefit obligation of $38 million.
-24-
<PAGE> 25
PENSION BENEFITS
The Company has various pension plans covering substantially all of its
employees. Current benefits for most employees are provided through defined
contribution plans with benefits based on age and compensation levels. Pension
costs for the defined contribution plans are accrued and funded on a current
basis.
The Company also has defined benefit plans, the benefits of which are primarily
for past service only, based on years of service and on average compensation for
certain years. The majority of these plans' obligations are required to be
funded by the year 2020 in accordance with the PBGC Agreement.
The components of pension expense are as follows (in millions):
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
1996 1995 1994
---------- --------- ----------
<S> <C> <C> <C>
Defined benefit plans:
Service cost - benefits earned during the period $ 6.4 $ 6.6 $ 3.5
Interest cost on projected benefit obligation 247.0 274.3 250.2
Actual return on plan assets (405.1) (461.0) (14.8)
Net amortization and deferral 215.9 304.1 (119.1)
---------- --------- ----------
Net pension cost of defined benefit plans 64.2 124.0 119.8
Defined contribution plans 47.9 48.4 42.8
---------- --------- ----------
Total expense $ 112.1 $ 172.4 $ 162.6
========== ========= ==========
</TABLE>
-25-
<PAGE> 26
The following table sets forth the funded status of the Company's defined
benefit pension plans (in millions):
<TABLE>
<CAPTION>
At December 31, 1996 At December 31, 1995
------------------------------ -----------------------------
Plans With Plans With Plans With Plans With
Assets in Obligations Assets in Obligations
Excess of in Excess Excess of in Excess
Obligations of Assets Obligations of Assets
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Actuarial present value:
Vested benefit obligation $ 215.0 $ 2,918.7 $ 16.5 $ 3,300.8
Nonvested benefit obligation 26.8 221.0 0.5 275.9
------------ ------------ ----------- ------------
Accumulated benefit obligation $ 241.8 $ 3,139.7 $ 17.0 $ 3,576.7
============ ============ =========== ============
Projected benefit obligation $ 255.5 $ 3,139.7 $ 19.2 $ 3,588.3
Plan assets at fair value 266.1 2,569.4 26.9 2,538.7
------------ ------------ ----------- ------------
Plan assets in excess of (less than)
projected benefit obligation 10.6 (570.3) 7.7 (1,049.6)
Unrecognized initial net asset existing
at transition (0.6) - (1.0) -
Unrecognized prior service cost 12.4 126.9 0.4 156.3
Unrecognized net actuarial (gains) losses (2.7) (124.2) (1.7) 190.6
Adjustment required to recognize
minimum liability - shareholders' equity - (8.9) - (184.8)
- intangible asset - (86.4) - (154.4)
------------ ------------ ----------- ------------
Prepaid (accrued) pension expense included
in the consolidated balance sheet $ 19.7 $ (662.9) $ 5.4 $ (1,041.9)
============ ============ =========== ============
</TABLE>
The actuarial assumptions used to determine the pension asset (liability) are as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- -------
<S> <C> <C> <C>
Discount rate 7.5% 7.25% 9.0%
Long-term rate of return on plan assets 9.0% 8.5% 8.5%
</TABLE>
Plan assets consist substantially of equity securities listed on national
exchanges, fixed income securities and cash equivalents. The increase in the
1996 assumed discount rate decreased the accumulated benefit obligation by $68
million, and such adjustment, together with favorable asset return, was also the
primary reason for the decreases in the shareholders' equity minimum pension
liability adjustment account of $176 million and the intangible asset minimum
pension liability account of $68 million.
-26-
<PAGE> 27
TAXES
The provision for income taxes from continuing operations is as follows (in
millions):
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
1996 1995 1994
--------- -------- ---------
<S> <C> <C> <C>
Current:
Federal $ 0.4 $ 0.4 $ 0.8
State 0.4 2.0 (2.0)
Deferred (0.5) (0.4) (0.3)
Amount not payable in cash 63.2 115.3 74.7
--------- -------- ---------
Tax provision $ 63.5 $ 117.3 $ 73.2
========= ======== =========
</TABLE>
The Company reports federal income tax expense before consideration of
pre-reorganization net deferred tax assets ($1.35 billion at December 31, 1996).
The Company's actual income tax cash payments are, and will continue to be,
significantly less than the total financial statement expense amounts as the tax
provision required by fresh-start financial statement reporting is in excess of
the Company's actual tax payments. As LTV realized the benefits (through reduced
cash tax payments) from pre-reorganization net deferred tax assets, such benefit
amounts first reduced the intangible asset resulting from reorganization until
it was fully amortized in 1995. Subsequently realized tax benefits increase
additional paid-in capital. Tax benefits of $63.2 million, $115.3 million and
$74.7 million were realized in 1996, 1995 and 1994, respectively. Amounts
totaling $63.2 million and $84.9 million in 1996 and 1995 were used to increase
the additional paid-in capital account of shareholders' equity.
The income tax effects of the factors accounting for the differences between
federal income tax computed at the statutory rate and the recorded provision are
as follows (in millions):
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
1996 1995 1994
--------- -------- ---------
<S> <C> <C> <C>
Tax provision at statutory rates $ 60.5 $ 108.8 $ 70.9
Increases (decreases) resulting from:
Percentage depletion deduction (5.0) (7.0) (6.4)
State taxes 8.3 16.7 7.3
Other (0.3) (1.2) 1.4
--------- -------- ---------
Tax provision $ 63.5 $ 117.3 $ 73.2
========= ======== =========
</TABLE>
-27-
<PAGE> 28
Significant components of the Company's deferred tax assets and liabilities are
as follows at December 31 (in millions):
<TABLE>
<CAPTION>
1996 1995
------------- ------------
<S> <C> <C>
Deferred tax assets:
Postemployment health care liability $ 690.1 $ 692.2
Net operating loss carryforwards 937.1 935.0
Pension liability 227.9 356.6
Other employee benefits 165.7 175.0
Plant rationalization and environmental 62.9 70.2
Safe harbor tax leases 117.6 126.1
Other 98.7 94.9
---------- -----------
Subtotal 2,300.0 2,450.0
Deferred tax liabilities:
Tax over book depreciation (847.4) (846.7)
Inventory and other (102.6) (103.3)
---------- -----------
Subtotal (950.0) (950.0)
Valuation allowance (1,350.0) (1,500.0)
---------- -----------
Total deferred taxes - net $ - $ -
========== ===========
</TABLE>
The evaluation of the realizability of the Company's net deferred tax assets in
future periods is made based upon historical and projected operating performance
and other factors for generating future taxable income, such as intent and
ability to sell assets. At this time, the Company has established a valuation
reserve for all of its net deferred tax assets.
For income tax reporting purposes, LTV has a net operating loss carryforward of
$2.6 billion for regular income taxes, $2.5 billion of which is not restricted
as to use and will expire in the years 2000 through 2010. The balance of the
regular income tax net operating loss carryforward expires in 1997 and 1998 and
is restricted to offsetting future taxable income of the respective companies
that generated the losses. LTV has a federal alternative minimum tax net
operating loss carryforward of $1.5 billion that is unrestricted as to its use
and will expire in the years 2000 through 2010. The Company's ability to reduce
future income tax payments through the use of net operating loss carryforwards
could be significantly limited on an annual basis if the Company were to undergo
an "ownership change" within the meaning of Section 382 of the Internal Revenue
Code of 1986.
Alternative minimum taxes paid through 1996 of approximately $42 million are
available as a credit carryforward, and the period is not limited. Investment
tax credit carryforwards of approximately $12 million at December 31, 1996 are
recognized using the "flow through" method and expire in 1997 through 2003.
-28-
<PAGE> 29
SHAREHOLDERS' EQUITY
LTV has authorized for issuance 20 million shares of preferred stock with a
$1.00 par value. At December 31, 1996, the Company has 500,000 outstanding
shares of Series B Convertible Preferred Stock ("Series B"). This issue has a
stated liquidation preference value of $50 million, is senior to all common
stock and has weighted voting rights equal to that number of shares of common
stock into which it can be converted. Dividends on the Series B are payable
quarterly in either cash or common stock, at the election of LTV, at the rate of
4.5% per annum on the stated value. Holders of the Series B have the right to
convert the stated value of their shares, in whole or in part, into common stock
at a conversion price of $17.09 per share (potentially 2,925,688 shares). LTV
has the right to redeem the Series B on and after June 28, 1996 at $52.3
million, declining to $50.0 million at June 28, 2000.
On June 28, 1994, the Series A Convertible Preferred Stock, and accrued
dividends thereon, were mandatorily converted into 3.3 million shares of common
stock. The common stock held for issuance represented a $50.0 million cash
investment in LTV on June 28, 1993, which resulted in 3.3 million shares of
common stock being issued on June 28, 1994.
During 1994, LTV issued 13.6 million shares of common stock pursuant to a public
offering. The Company's net proceeds of $257.2 million from the offering were
contributed to the Company's pension plans. Also in 1994, LTV issued 1.9 million
shares of common stock pursuant to various stock distribution plans.
The Company has a nonleveraged Employee Stock Ownership Plan ("ESOP"), for
employees covered by the USWA labor agreement, that effectively holds 3.9
million shares of common stock at December 31, 1996.
In June 1993, the Company was reorganized and common stock reserved for
potential future issuance includes the following:
a. Conversion of the Series B and the convertible notes as previously
discussed.
b. In accordance with a settlement agreement with the Internal Revenue Service
("IRS"), payments in six equal annual installments of cash or shares of
common stock with an aggregate value of $6.5 million are required to be
made to the IRS commencing on June 28, 1994. The first of these payments
was satisfied with the issuance of 65,183 shares of common stock, and the
1996 and 1995 payments were satisfied in cash.
c. In accordance with an agreement with the U.S. Environmental Protection
Agency ("EPA"), certain (if any) future environmental claims can be settled
in cash or common stock. Also, through June 28, 1997, if and when shares
are actually issued under this agreement, the ESOP is to receive additional
shares approximating 7.5% of such issued shares.
d. In June 1993, 8.5 million Series A Warrants were issued. Each Series A
Warrant is exercisable for 0.5582 of a share of common stock at $16.28 per
each full share purchased. The Series A Warrants are exercisable through
June 28, 1998. There have been 32,149 warrants exercised through
December 31, 1996.
-29-
<PAGE> 30
The Company has also reserved for future issuance 3.5 million shares of LTV
common stock under incentive programs authorizing the granting of stock options
and restricted stock awards to directors, officers and other key employees. The
stock incentive programs are designed to encourage a personal investment in LTV
common stock from participating individuals. The options to purchase common
stock are primarily outstanding for terms of ten years from date of grant and
are granted at prices not lower than market price at date of grant. The market
value of restricted stock awarded has been recorded as unearned compensation and
is shown as a separate component of shareholders' equity. Unearned compensation
is primarily being amortized to expense over the five-year vesting period.
Transactions under these programs are summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------------------
1996 1995 1994
------------------------------ ------------------------------ ------------------------------
Shares Price Shares Price Shares Price
--------- ------------------ -------- ------------------ --------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stock options:
Options outstanding at
beginning of period 1,419,950 $ 14.17 - $ 19.33 1,147,639 $ 15.38 - $ 19.33 934,000 - $ 15.38
Granted 321,680 12.21 - 14.31 398,700 14.17 - 16.13 272,705 $ 16.53 - 19.33
Exercised - (5,000) 15.38 (22,066) 15.38
Canceled (50,871) 14.78 - 19.33 (121,389) 15.38 - 19.33 (37,000) 15.38
--------- ------------------ --------- ------------------ --------- -------------------
Options outstanding at
end of period 1,690,759 $ 12.21 - $ 19.33 1,419,950 $ 14.17 - $ 19.33 1,147,639 $ 15.38 - $ 19.33
========= ================== ========= ================== ========= ===================
Options exercisable at
end of period 1,093,347 $ 14.74 - $ 19.33 684,614 $ 14.74 - $ 19.33 297,896 $ 15.38 - $ 16.53
========= ================== ========= ================== ========= ===================
Restricted Stock:
Shares outstanding at
beginning of period 186,186 $ 14.00 - $ 18.88 191,430 $ 15.75 - $ 18.88 - - -
Granted 2,348 14.13 10,856 14.00 - 15.25 191,430 $ 15.75 - $ 18.88
Unrestricted (3,685) 18.88 (16,100) 18.88 - -
Canceled (815) 18.88 - - - -
-------- ----------------- --------- ------------------ -------- -------------------
Shares outstanding at
end of period 184,034 $ 14.00 - $ 18.88 186,186 $ 14.00 - $ 18.88 191,430 $ 15.75 - $ 18.88
======== ================= ======== ================== ======== ===================
</TABLE>
In 1995, the Financial Accounting Standards Board issued Statement No. 123,
"Accounting for Stock-Based Compensation," which permits companies to recognize
expense for stock-based awards in 1996 and 1995 based on their fair value on the
date of grant or to continue to follow Accounting Principles Board ("APB")
Opinion No. 25 with pro-forma disclosures. The Company continues expense
recognition of stock option programs in accordance with APB Opinion No. 25.
Application of the disclosure requirements of the new statement resulted in
amounts that are immaterial and requires no additional disclosure.
EARNINGS PER SHARE
Primary earnings per share calculations for the years ended December 31, 1996,
1995 and 1994 are based on average common and common equivalent shares
outstanding of 108.4 million, 108.3 million and 98.7 million, respectively.
Common equivalent shares principally included common stock that is issuable in
exchange for the Series B and for outstanding Series A Warrants.
Fully diluted earnings per share calculations for the years ended December 31,
1996, 1995 and 1994 are based on fully diluted shares outstanding of 108.4
million, 113.4 million and 103.8 million, respectively. Fully diluted shares
were determined by increasing the primary shares outstanding to reflect the
common stock issuable upon conversion of the convertible notes.
-30-
<PAGE> 31
COMMITMENTS AND CONTINGENCIES
The Company is the subject of various threatened or pending legal actions,
contingencies and commitments in the normal course of conducting its business.
The Company provides for costs relating to these matters when a loss is probable
and the amount is reasonably estimable. The effect of the outcome of these
matters on the Company's future results of operations and liquidity cannot be
predicted because any such effect depends on future results of operations and
the amount and timing of the resolution of such matters. While it is not
possible to predict with certainty, management believes that the ultimate
resolution of such matters will not have a material adverse effect on the
consolidated financial position of the Company.
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.
Important examples of laws referred to above are the 1990 Clean Air Act
Amendments ("CAA Amendments"), the Resource Conservation and Recovery Act of
1976, as amended ("RCRA"), and related state and local laws. The CAA Amendments
and its state and local counterparts require progressively more stringent air
emission quality standards in the future. RCRA and related state laws include
so-called "corrective action" provisions that grant the environmental agencies
authority to require the Company to clean up environmental media, such as soils
and groundwater, under certain prescribed conditions. These corrective action
provisions, in most instances, are not self-implementing and, in the Company's
view, create no current legal obligation. If, in the future, the Company were
required to implement corrective actions, the Company could be required to
record additional liabilities which cannot be estimated at this time, but could
be substantial.
As part of LTV's reorganization in 1993, an agreement ("Environmental Settlement
Agreement" or "ESA") with the EPA was reached. The ESA resolved or provided the
means to resolve a significant portion of the Company's environmental-related
liabilities and also provided a basis for settlement agreements concerning the
environmental claims of several states. The ESA settled certain Superfund Site
liabilities identified at the time of reorganization for $33 million as general
unsecured claims. Management believes that future prepetition environmental
claims, if any, that are not covered by the ESA will be subject to the
dischargeability provisions of the Federal Bankruptcy Code or to the provisions
of the Joint Plan, subject to judicially imposed due process requirements.
General liabilities from postpetition acts were not discharged or in any manner
affected by the reorganization. In addition, the Company retains responsibility
for environmental obligations for properties owned at confirmation of the Joint
Plan regardless of when the conduct that gives rise to the liability occurred.
A 1993 agreement with the USWA provided that a portion of the requirements with
respect to certain postemployment benefits would be secured by a junior lien of
$250 million on collateral with an unencumbered fair market value of at least
$500 million. The initial security was provided by the grant of a mortgage on
facilities having a carrying value of approximately $500 million.
-31-
<PAGE> 32
FINANCIAL INSTRUMENTS
Cash equivalents are investments in highly liquid, low-risk money market mutual
funds and commercial paper with maturities of three months or less and are
classified as held-to-maturity. The carrying amount of these assets approximates
fair value. The Company carries marketable securities at fair value. The
carrying amount of the Company's long-term debt approximates fair value at
December 31, 1996 and 1995, based on current market interest rates.
The Company has entered into futures contracts to reduce its exposure to
fluctuations in costs caused by the price volatility of certain metal
commodities and natural gas supplies. The Company does not engage in speculation
and the results of these hedging transactions become part of the cost of the
commodity or supply being hedged. At December 31, 1996 and 1995, the purchase
value of these contracts totaled $10 million in each year. The contracts extend
for periods of up to two years. At December 31, 1996 and 1995, the fair value of
the contracts, which is based on quoted market prices, approximated the carrying
value of zero.
LTV owns a preferred stock asset related to the sale of its energy products
segment with an aggregate redemption price and liquidation preference of $14.3
million, plus accrued and unpaid dividends. The preferred stock is subject to
redemption at the option of LTV or the issuer beginning August 2000. The
estimated discounted cash flow value of the preferred stock asset approximates
its stated and carrying value at December 31, 1996.
Outstanding letters of credit totaled $107.6 million and $118.6 million at
December 31, 1996 and 1995, respectively. The letters of credit guarantee
performance to third parties of various trade activities and tax benefit
transfer agreements. LTV has guaranteed approximately $13 million per year
through January 1999 for a joint venture's operating lease rental obligation.
The Company does not believe it is practicable to estimate the fair value of the
guarantees and does not believe exposure to loss is likely.
DISCONTINUED OPERATIONS
On August 1, 1995, LTV sold its energy products segment, Continental Emsco
Company ("Continental Emsco"), for $74.6 million, with $38.6 million of the
proceeds used to reduce LTV's long-term debt. The loss of $8.7 million on the
sale of the segment was recorded in the second quarter of 1995, and Continental
Emsco is reflected as a discontinued operation in LTV's financial statements for
all periods presented. Sales by the energy products segment were $179.2 million
through August 1, 1995 and $299.2 million in 1994.
-32-
<PAGE> 33
OTHER FINANCIAL DATA
Net interest and other income included the following (in millions):
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
1996 1995 1994
-------- ------- --------
<S> <C> <C> <C>
Interest and other income $ 44.1 $ 53.8 $ 27.4
Interest expense (1.7) (11.2) (14.4)
--------- -------- ---------
Total $ 42.4 $ 42.6 $ 13.0
========= ======== =========
</TABLE>
The Company's sales to the transportation market have approximated 30% of sales
over each of the last three years. The Company also sells to the steel service
center and converter markets that, in turn, sell to the transportation and other
industries. Management does not believe significant credit risk exists at
December 31, 1996. Sales for the years ended December 31, 1996, 1995 and 1994 to
the Company's largest customer, General Motors Corporation, represented
approximately 11%, 12% and 11%, respectively, of total sales.
The Company has incurred research and development expense of $15.1 million,
$14.8 million and $15.1 million for the years ended December 31, 1996, 1995 and
1994, respectively.
Supplemental cash flow information is presented as follows (in millions):
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
1996 1995 1994
----------- ---------- -----------
<S> <C> <C> <C>
Changes in assets and liabilities which
provided (used) net cash:
Receivables $ (7.2) $ 68.5 $ (38.8)
Inventories (59.8) 9.1 13.0
Other assets 12.9 39.4 0.5
Accounts payable 96.1 (12.2) 27.3
Other liabilities (31.2) (0.8) (33.0)
----------- ---------- -----------
Total $ 10.8 $ 104.0 $ (31.0)
=========== ========== ===========
Interest payments $ 13.4 $ 11.4 $ 17.1
Income tax payments 2.1 2.2 0.6
Capitalized interest 15.0 7.6 7.7
Purchases of marketable securities 4,681.9 8,734.8 1,719.0
Sales of marketable securities 4,574.6 8,636.9 1,360.3
</TABLE>
-33-
<PAGE> 34
REPORT OF MANAGEMENT
The management of The LTV Corporation is responsible for the preparation of the
accompanying consolidated financial statements in conformity with generally
accepted accounting principles appropriate in the circumstances. Management is
also responsible for the determination of estimates and judgments used in the
financial statements, and the preparation of other financial information
included in this annual report to shareholders. The financial statements have
been audited by Ernst & Young LLP, independent auditors.
The management of the Company is responsible for and maintains an accounting
system and related internal controls that it believes are sufficient to provide
reasonable assurance that assets are safeguarded against unauthorized
acquisition, use or disposition, that transactions are executed and recorded in
accordance with management's authorization and that the financial records are
reliable for preparing financial statements. The concept of reasonable assurance
is based on the recognition that the cost of a system of internal control must
be related to the benefits derived and that the balancing of those factors
requires estimates and judgments. The system is tested and evaluated regularly
by the Company's internal auditors as well as by the independent auditors in
connection with their annual audit. Management responds to all significant
recommendations of the internal and independent auditors and makes changes to
the systems when appropriate.
The Board of Directors has an Audit Committee of Directors who are not members
of management. The Committee meets with management, the internal auditors and
the independent auditors in connection with its review of matters relating to
the Company's annual financial statements; the Company's internal audit program;
the Company's system of internal accounting controls; and the services of the
independent auditors. The Committee also periodically meets with internal
auditors as well as the independent auditors, without management present, to
discuss appropriate matters. In addition, the internal auditors and the
independent auditors have full and free access to meet with the Committee, with
or without management representatives present, to discuss the results of their
audits, the adequacy of internal accounting controls and the quality of
financial reporting.
David H. Hoag
Chairman of the Board,
President and Chief Executive Officer
Arthur W. Huge
Senior Vice President and
Chief Financial Officer
January 23, 1997
-34-
<PAGE> 35
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders and Board of Directors
The LTV Corporation
We have audited the accompanying consolidated balance sheet of The LTV
Corporation ("the Company") as of December 31, 1996 and 1995, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of The LTV
Corporation at December 31, 1996 and 1995, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
Cleveland, Ohio Ernst & Young LLP
January 23, 1997
-35-
<PAGE> 36
FIVE YEAR FINANCIAL SUMMARY
(dollars in millions, except per share data)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
------------ ------------ ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS FOR THE YEAR
Steel sales $ 4,134.5 $ 4,283.2 $ 4,233.3 $ 3,868.2 $ 3,564.9
Income (loss) from continuing
operations before income taxes 172.7 310.8 202.7 517.1 (97.7)
Income tax provision:
Taxes payable (refundable) 0.3 2.0 (1.5) 3.2 4.9
Taxes not payable in cash 63.2 115.3 74.7 158.2 -
----------- ----------- ----------- ---------- -----------
Total 63.5 117.3 73.2 161.4 4.9
----------- ----------- ----------- ---------- -----------
Income (loss) from continuing
operations 109.2 193.5 129.5 355.7 (102.6)
Reorganization items - - - 30.7 14.4
Discontinued operations - (8.7) (2.4) 0.5 826.9
Extraordinary items - - - 3,928.0 (140.0)
----------- ----------- ----------- ---------- -----------
Net income $ 109.2 $ 184.8 $ 127.1 $ 4,314.9 $ 598.7
=========== =========== =========== ========== ===========
Earnings per share (primary):
Continuing operations $ 1.01 $ 1.79 $ 1.31 NM NM
Net income 1.01 1.71 1.29 NM NM
Dividends paid per common share $ 0.09 - - - -
FINANCIAL POSITION AT YEAR END
Working capital $ 989.3 $ 1,023.7 $ 1,190.4 $ 882.7 $ 2,048.4
Total assets 5,410.5 5,380.1 5,525.1 5,795.1 6,223.1
Property, net 3,116.8 3,140.2 3,189.0 3,216.8 2,953.2
Long-term debt 152.6 150.4 183.1 186.3 7.7
Other noncurrent obligations 2,648.2 3,007.8 3,222.1 3,668.6 9,487.0
Shareholders' equity (deficit) 1,710.7 1,375.2 1,282.8 539.8 (4,129.3)
OTHER FINANCIAL INFORMATION
Property additions $ 242.9 $ 204.8 $ 234.0 $ 323.1 $ 311.0
Depreciation 265.7 251.9 241.8 236.8 208.6
OTHER OPERATING DATA
Raw steel production
(millions of tons) 8.8 8.5 8.3 7.9 8.3
Continuous cast 100% 100% 100% 86% 77%
Shipments (millions of tons) 8.1 8.0 8.0 7.6 7.2
Operating rate 105% 102% 99% 95% 85%
Employees 14,000 14,400 15,300 15,700 16,400
<FN>
NM Not meaningful. Earnings per share data prior to the Company's mid-1993
emergence from Chapter 11 proceedings are not presented due to the
general lack of comparability and because the revised capital structure
of the Company consists of entirely new issues of common and preferred
stock. No reorganization items have occurred after June 1993. The primary
earnings per share totaled $3.19 on continuing operations and $3.21 on
net income for the six months ended December 31, 1993.
</TABLE>
-36-
<PAGE> 37
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following table presents quarterly financial information (in millions,
except per share data):
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
--------- --------- -------- ----------
<S> <C> <C>
Net sales
1996 $ 993.1 $ 1,075.1 $ 1,048.9 $ 1,017.4
1995 1,084.9 1,113.2 1,040.2 1,044.9
Gross margin
1996 114.4 146.7 139.0 146.7
1995 172.1 193.7 150.4 146.1
Income from continuing operations
1996 21.2 50.6 44.7 56.2
1995 82.1 105.2 70.2 53.3
Net income
1996 13.3 32.0 29.4 34.5
1995 51.2 55.6 43.2 34.8
Market price per share
1996 - High $ 15.88 $ 14.50 $ 13.50 $ 12.13
Low 12.25 11.38 10.63 10.00
1995 - High 17.88 15.25 17.25 15.25
Low 12.63 13.25 13.63 13.25
Market price per Series A Warrant
1996 - High $ 3.13 $ 2.25 $ 1.63 $ 1.13
Low 2.00 1.50 0.94 0.56
1995 - High 4.13 3.50 3.88 3.13
Low 2.75 2.63 2.88 2.25
Earnings per share (1)
1996 - Primary:
Continuing operations $ 0.12 $ 0.30 $ 0.27 $ 0.32
Discontinued operations - - - -
--------- --------- -------- --------
Net income $ 0.12 $ 0.30 $ 0.27 $ 0.32
========= ========= ======== ========
1996 - Fully diluted:
Continuing operations $ 0.12 $ 0.29 $ 0.27 $ 0.32
Discontinued operations - - - -
--------- --------- --------- --------
Net income $ 0.12 $ 0.29 $ 0.27 $ 0.32
========= ========= ======== ========
1995 - Primary:
Continuing operations $ 0.47 $ 0.59 $ 0.40 $ 0.32
Discontinued operations - (0.08) - -
--------- --------- --------- --------
Net income $ 0.47 $ 0.51 $ 0.40 $ 0.32
========= ========= ======== ========
1995 - Fully diluted:
Continuing operations $ 0.46 $ 0.58 $ 0.39 $ 0.32
Discontinued operations - (0.08) - -
--------- --------- --------- --------
Net income $ 0.46 $ 0.50 $ 0.39 $ 0.32
========= ========= ======== ========
1996 - Dividends paid per common share $ - $ 0.03 $ 0.03 $ 0.03
========= ========= ======== ========
<FN>
(1) Earnings per share are computed independently for each of the quarters
based on the weighted average number of shares outstanding for each
period, and the sum of the quarters may not necessarily be equal to the
full year earnings per share amount.
</TABLE>
-37-
<PAGE> 1
Exhibit (21)
LIST OF SUBSIDIARIES
--------------------
NAME OF COMPANY PERCENTAGE OWNED
- --------------- ----------------
THE LTV CORPORATION Parent
Georgia Tubing Corporation 100%
Vought Arabia 49%
Investment Bankers, Inc. 100%
Inmobiliaria Nueva Icacos, S.A. de C.V. 100%
Jalcite I, Inc. 100%
Black River Lime Company 25%
Cliffs and Associates Limited 46.5%
Jones & Laughlin Steel Incorporated 100%
Kingsley International Insurance Ltd. 100%
LTV Corporation, The (Wyoming) 100%
LTV/EGL Holding Company 100%
L-S Electro-Galvanizing Company 60%
LTV Electro-Galvanizing, Inc. 100%
LTV Holdings, Inc. 100%
Reomar, Inc. 100%
Chateaugay Corporation 100%
Republic Buildings Corporation 100%
LTV International N.V. 100%
LTV Properties, Inc. 100%
LTV Sales Finance Company 100%
LTV Steel Company, Inc. 100%
Aliquippa and Southern Railroad Company 100%
Chicago Short Line Railway Company 100%
Crystalane, Inc. 100%
Cuyahoga Valley Railway Company, The 100%
Mahoning Valley Railway Company, The 100%
<PAGE> 2
NAME OF COMPANY PERCENTAGE OWNED
- --------------- ----------------
THE LTV CORPORATION (Continued) Parent
LTV Steel Company, Inc. (Continued) 100%
Dearborn Leasing Company 100%
LS-II Electro-Galvanizing Company 50%
Erie B Corporation 100%
LTV Steel Mining Company 45%
Erie I Corporation 100%
LTV Steel Mining Company 10%
Fox Trail, Inc. 100%
J&L Empire, Inc. 100%
Empire Iron Mining Partnership 25%
Jalcite II, Inc. 100%
Black River Lime Company 12.5%
Jalore Mining Company, Ltd. 100%
L.A.S. Resources, Inc. 53%
LTV Pickle, Inc. 100%
Monongahela Connecting Railroad Company, The 100%
Nemacolin Mines Corporation 100%
Northern Land Company 50%
Olga Coal Company 53%
Presque Isle Corporation 53.5%
Processing Technology, Inc. 33.3%
Prospect Corporation, The 100%
Republic Technology Corporation 100%
Reserve Mining Company 50%
River Terminal Railway Company, The 100%
Youngstown Erie Corporation 100%
LTV Steel Mining Company 45%
YST Erie Corporation 100%
LTV Steel Tubular Products Company 100%
LTV-Trico, Inc. 100%
Trico Steel Company, L.L.C. 50%
RepSteel Overseas Finance N.V. 100%
Trico Steel Company, Inc. 100%
<PAGE> 1
Exhibit (23)
We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-52543, Form S-8 No. 33-52545, Form S-8 No. 33-54229, Form S-8
No. 33-56857, Form S-8 No. 33-56861, Form S-8 No. 33-61399 and Form S-8 No.
33-20431) pertaining to the Non-Employee Director Stock Option Plan, Management
Incentive Program, LTV Steel Group Employee Stock Ownership Plan, Non-Employee
Directors' Equity Compensation Plan, The Hourly Employee Stock Payment
Alternative Plan, Non-Qualified Stock Option Plan for Certain Key Executives of
Continental Emsco Company and Salaried Employee Stock Option Plan, respectively,
of The LTV Corporation of our report dated January 23, 1997, with respect to the
consolidated financial statements of The LTV Corporation incorporated by
reference in the Annual Report (Form 10-K) for the year ended December 31, 1996.
/s/ ERNST & YOUNG LLP
Cleveland, Ohio
February 28, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> DEC-31-1996
<CASH> 107
<SECURITIES> 567
<RECEIVABLES> 418
<ALLOWANCES> 18
<INVENTORY> 802
<CURRENT-ASSETS> 1,888
<PP&E> 3,872
<DEPRECIATION> 755
<TOTAL-ASSETS> 5,411
<CURRENT-LIABILITIES> 899
<BONDS> 153
<COMMON> 53
0
1
<OTHER-SE> 1,657
<TOTAL-LIABILITY-AND-EQUITY> 5,411
<SALES> 4,135
<TOTAL-REVENUES> 4,135
<CGS> 3,588
<TOTAL-COSTS> 4,004
<OTHER-EXPENSES> (44)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> 173
<INCOME-TAX> 64
<INCOME-CONTINUING> 109
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 109
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 1.01
</TABLE>
