<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended June 30, 1998 Commission File No. 1-4368
THE LTV CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-1070950
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
200 Public Square 44114-2308
Cleveland, Ohio (Zip Code)
Registrant's telephone number, including area code: (216) 622-5000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes __|X|__ No _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
99,889,230 shares of common stock
(as of June 30, 1998)
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE LTV CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- -------------------
1998 1997 1998 1997
--------- ---------- -------- --------
<S> <C> <C> <C> <C>
SALES $ 1,093 $ 1,092 $ 2,220 $ 2,164
Costs and expenses:
Cost of products sold 977 939 1,962 1,870
Depreciation and amortization 61 68 126 136
Selling, general and administrative 46 39 91 76
Results of affiliates' operations 9 12 18 11
Net interest and other income (6) (11) (15) (19)
------- ------- ------- -------
Total 1,087 1,047 2,182 2,074
------- ------- ------- -------
INCOME BEFORE INCOME TAXES 6 45 38 90
Income tax provision:
Taxes payable - 2 2 4
Taxes not payable in cash 2 16 13 32
------- ------- ------- -------
Total 2 18 15 36
------- ------- ------- -------
NET INCOME $ 4 $ 27 $ 23 $ 54
======= ======= ======= =======
Earnings per share:
Basic $ 0.03 $ 0.25 $ 0.22 $ 0.50
======= ======= ======= =======
Dilutive $ 0.03 $ 0.25 $ 0.22 $ 0.50
======= ======= ======= =======
Cash dividends per common share $ 0.03 $ 0.03 $ 0.06 $ 0.06
======= ======= ======= =======
</TABLE>
- -----------------
See notes to consolidated financial statements.
I-1
<PAGE> 3
THE LTV CORPORATION
CONSOLIDATED BALANCE SHEET
(in millions, except per share data)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 126 $ 160
Marketable securities 290 360
------- -------
Total cash and marketable securities 416 520
Receivables, less allowance for doubtful accounts 461 470
Inventories:
Products 579 656
Materials, purchased parts and supplies 254 246
------- -------
Total inventories 833 902
Prepaid expenses, deposits and other 18 12
------- -------
Total current assets 1,728 1,904
------- -------
INVESTMENTS IN AFFILIATES 332 312
OTHER NONCURRENT ASSETS 187 169
PROPERTY, PLANT AND EQUIPMENT 4,241 4,096
Allowance for depreciation (995) (935)
------- -------
Total property, plant and equipment 3,246 3,161
------- -------
$ 5,493 $ 5,546
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 348 $ 354
Accrued employee compensation and benefits 346 365
Other accrued liabilities 206 219
------- -------
Total current liabilities 900 938
------- -------
NONCURRENT LIABILITIES
Long-term debt 362 355
Postemployment health care and other insurance benefits 1,550 1,570
Pension benefits 546 548
Other 431 459
------- -------
Total noncurrent liabilities 2,889 2,932
------- -------
SHAREHOLDERS' EQUITY
Convertible preferred stock (aggregate liquidation value $50.0) 1 1
Common stock (par value $0.50 per share) 53 53
Additional paid-in capital 1,044 1,032
Retained earnings 677 661
Treasury stock (5 million shares at cost) (68) (68)
Accumulated other comprehensive loss and other (3) (3)
------- -------
Total shareholders' equity 1,704 1,676
------- -------
$ 5,493 $ 5,546
======= =======
</TABLE>
- -------------
See notes to consolidated financial statements.
I-2
<PAGE> 4
THE LTV CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------
1998 1997
------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 23 $ 54
Adjustments to reconcile net income to net cash
provided by operating activities:
Noncash losses of affiliates 18 11
Depreciation and amortization 126 136
Income tax provision not payable in cash 13 32
Defined benefit pension expense 2 22
Postemployment benefit payments more than related expense (10) (10)
Changes in assets, liabilities and other (15) (60)
------- -------
Net cash provided by operating activities 157 185
------- -------
INVESTING ACTIVITIES
Capital expenditures (211) (131)
Investment in steel-related businesses (45) (38)
Net sales of marketable securities 69 68
Other - 21
------- -------
Net cash used in investing activities (187) (80)
------- -------
FINANCING ACTIVITIES
Borrowings 4 -
Dividends paid and other (8) (8)
Share repurchases - (27)
------- -------
Net cash used in financing activities (4) (35)
------- -------
Net (decrease) increase in cash and cash equivalents (34) 70
Cash and cash equivalents at beginning of period 160 107
------- -------
Cash and cash equivalents at end of period $ 126 $ 177
======= =======
Supplemental cash flow information is presented as follows:
Interest payments $ 1 $ 6
Income tax payments 5 4
Capitalized interest 16 8
Purchases of marketable securities 1,941 3,341
Sales and maturities of marketable securities 2,011 3,409
</TABLE>
- ------------
See notes to consolidated financial statements.
I-3
<PAGE> 5
THE LTV CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
NOTE (1) - The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and disclosures required by generally accepted accounting principles for
complete financial statements. All adjustments that are, in the opinion of
management, necessary for a fair presentation have been made and are of a
recurring nature unless otherwise disclosed herein. Certain prior period amounts
have been reclassified to conform with the current period presentation. The
results of operations for the interim periods are not necessarily indicative of
results of operations for a full year. For further information, refer to the
consolidated financial statements and the notes thereto for the year ended
December 31, 1997 included in the LTV Annual Report to Shareholders incorporated
by reference into the 1997 Annual Report on Form 10-K filed with the Securities
and Exchange Commission.
NOTE (2) - LTV Steel entered into a new $250 million five-year credit facility
("Inventory Facility"), replacing the previous $150 million Letter of Credit
Facility effective as of March 1, 1998. The Inventory Facility, secured by
essentially all of the Company's inventory through a special purpose entity,
permits borrowings of up to $250 million for working capital and general
corporate purposes, $150 million of which may be used to issue letters of
credit. Interest will accrue at the Company's option of either the Chase
Manhattan Bank's base rate or 1% above LIBOR rates. At June 30, 1998, there were
no outstanding borrowings against the Inventory Facility, and letters of credit
totaling $69 million were outstanding under this facility. The borrower under
the Inventory Facility is LTV Steel Products, L.L.C., a consolidated structured
finance special purpose entity wholly owned by LTV Steel, which purchases and
pledges essentially all of the inventory generated by LTV Steel. The creditors
of LTV Steel Products, L.L.C. have a claim on the assets of that Company prior
to those assets becoming available to other creditors of LTV or its affiliates.
NOTE (3) - At June 30, 1998, accumulated other comprehensive loss included in
the balance sheet amounted to $3 million with no material changes since December
31, 1997. The accumulated other comprehensive loss at June 30, 1997 was $9
million, with no material changes since December 31, 1996.
NOTE (4) - VP Buildings has a $4 million, ten-year, 7.25% mortgage on its
headquarters building located in Memphis, Tennessee, effective April 1, 1998,
with principal and interest payments due monthly. Additionally, VP Buildings has
a $20 million demand facility that expires in August 1998 and expects to extend
the facility through the end of 1998.
I-4
<PAGE> 6
NOTE (5) - The following is a summary of the financial information related to VP
Buildings:
Results of operations: Three Months Ended Six Months Ended
June 30, 1998 June 30, 1998
------------------ -----------------
Net sales $ 86 $158
Costs and expenses 80 150
---- ----
Pretax income $ 6 $ 8
==== ====
Total assets $264 $264
Capital expenditures 4 7
NOTE (6) - The Company has a 50% interest, accounted for under the equity
method, in an unconsolidated joint venture, Trico Steel Company, L.L.C. ("Trico
Steel"), which began commercial operations in April 1997. Included in LTV's
consolidated results are pretax losses of $10 million and $19 million for the
three months and six months ended June 30, 1998, respectively, representing the
Company's share of Trico Steel operating results. The following is a summary of
the financial information related to Trico Steel (in millions):
Results of operations: Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
1998 1997 1998 1997
---- ---- ---- ----
Net sales $ 73 $ 10 $ 153 $ 10
Costs and expenses 93 34 191 34
----- ----- ----- ----
Pretax loss $ (20) $ (24) $ (38) $(24)
===== ===== ===== ====
Financial Position June 30, 1998 December 31, 1997
------------- -----------------
Current assets $ 102 $ 76
Noncurrent assets 528 526
Current liabilities (42) (38)
Noncurrent liabilities (272) (273)
----- -----
Net assets $ 316 $ 291
===== =====
I-5
<PAGE> 7
NOTE (7) - LTV's wholly owned subsidiary, LTV Steel Company, Inc., has fully and
unconditionally guaranteed the Company's obligation to pay principal, premium,
if any, and interest with respect to the Senior Notes due September 2007. The
following supplemental consolidating condensed financial statements of The LTV
Corporation present: the balance sheets as of June 30, 1998 and December 31,
1997; statements of operations for the three months ended June 30, 1998 and 1997
and for the six months ended June 30, 1998 and 1997; and statements of cash
flows for the six months ended June 30, 1998 and 1997. The LTV Corporation
(Parent), LTV Steel Company, Inc. (Guarantor) and the combined Non-Guarantor
Subsidiaries' investments in subsidiaries are accounted for using the equity
method. Necessary elimination entries have been made to consolidate the Parent
and all of its subsidiaries.
Consolidating Condensed Balance Sheet
(in millions)
<TABLE>
<CAPTION>
June 30, 1998
------------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash, cash equivalents and marketable
securities $ 375 $ (28) $ 69 $ - $ 416
Receivables 4 - 457 - 461
Notes receivable/(payable) - 1,037 (1,037) - -
Inventories - - 833 - 833
Other current assets 2 11 5 - 18
------ ------- ------ ------- -------
Total current assets 381 1,020 327 - 1,728
Intercompany, net 177 133 (310) - -
Investments and other noncurrent assets 1,489 226 469 (1,665) 519
Property, plant and equipment - 3,023 223 - 3,246
------ ------- ------ ------- -------
Total assets $2,047 $ 4,402 $ 709 $(1,665) $ 5,493
====== ======= ====== ======== =======
Total current liabilities $ 33 $ 767 $ 100 $ - $ 900
Long-term debt 298 60 4 - 362
Postemployment health care and other
insurance benefits - 1,434 116 - 1,550
Pension benefits - 535 11 - 546
Other 12 396 23 - 431
Shareholders' equity 1,704 1,210 455 (1,665) 1,704
------ ------- ------ -------- -------
Total liabilities and shareholders'
equity $2,047 $ 4,402 $ 709 $(1,665) $ 5,493
====== ======= ====== ======== =======
</TABLE>
<TABLE>
<CAPTION>
December 31, 1997
------------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash, cash equivalents and marketable
securities $ 467 $ (15) $ 68 $ - $ 520
Receivables 4 - 466 - 470
Notes receivable/(payable) - 303 (303) - -
Inventories - 859 43 - 902
Other current assets 4 7 1 - 12
------ ------- ------ ------- -------
Total current assets 475 1,154 275 - 1,904
Intercompany, net 83 172 (255) - -
Investments and other noncurrent assets 1,470 186 432 (1,607) 481
Property, plant and equipment - 2,939 222 - 3,161
------ ------- ------ ------- -------
Total assets $2,028 $ 4,451 $ 674 $(1,607) $ 5,546
====== ======= ====== ======= =======
Total current liabilities $ 37 $ 799 $ 102 $ - $ 938
Long-term debt 298 57 - - 355
Postemployment health care and other
insurance benefits - 1,458 112 - 1,570
Pension benefits - 538 10 - 548
Other 17 419 23 - 459
Shareholders' equity 1,676 1,180 427 (1,607) 1,676
------ ------- ------ ------- -------
Total liabilities and shareholders'
equity $2,028 $ 4,451 $ 674 $(1,607) $ 5,546
====== ======= ====== ======= =======
</TABLE>
I-6
<PAGE> 8
Consolidating Condensed Statement of Income
(in millions)
<TABLE>
<CAPTION>
Three Months Ended June 30, 1998
------------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales $ - $ 921 $1,249 $(1,077) $ 1,093
Costs and expenses:
Cost of products sold - 850 1,204 (1,077) 977
Depreciation and amortization - 55 6 - 61
Selling, general and administrative 3 33 10 - 46
Results of affiliates' operations (4) 3 9 1 9
Net interest and other (5) (20) 19 - (6)
------ ------- ------ ------- -------
Total (6) 921 1,248 (1,076) 1,087
------ ------- ------ ------- -------
Income before income taxes 6 - 1 (1) 6
Tax provision (2) - (1) 1 (2)
------ ------- ------ ------- -------
Net income $ 4 $ - $ - $ - $ 4
====== ======= ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended June 30, 1997
------------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales $ - $ 1,005 $ 262 $ (175) $ 1,092
Costs and expenses:
Cost of products sold - 874 240 (175) 939
Depreciation and amortization - 63 5 - 68
Selling, general and administrative 3 32 4 - 39
Results of affiliates' operations (34) (10) 12 44 12
Net interest and other (14) 2 1 - (11)
------ ------- ------ ------- -------
Total (45) 961 262 (131) 1,047
------ ------- ------ ------- -------
Income before income taxes 45 44 - (44) 45
Tax provision (18) (18) - 18 (18)
------ ------- ------ ------- -------
Net income $ 27 $ 26 $ - $ (26) $ 27
====== ======= ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1998
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales $ - $ 1,934 $1,850 $(1,564) $ 2,220
Costs and expenses:
Cost of products sold - 1,754 1,772 (1,564) 1,962
Depreciation and amortization - 113 13 - 126
Selling, general and administrative 7 65 19 - 91
Results of affiliates' operations (33) (1) 18 34 18
Net interest and other (12) (28) 25 - (15)
------- -------- ------ ------- --------
Total (38) 1,903 1,847 (1,530) 2,182
------- ------- ------ -------- -------
Income before income taxes 38 31 3 (34) 38
Tax provision (15) (13) (1) 14 (15)
------- -------- ------- ------- --------
Net income $ 23 $ 18 $ 2 $ (20) $ 23
====== ======= ====== ======== =======
</TABLE>
I-7
<PAGE> 9
<TABLE>
<CAPTION>
Six Months Ended June 30, 1997
------------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales $ - $ 2,015 $ 498 $ (349) $ 2,164
Costs and expenses:
Cost of products sold - 1,760 459 (349) 1,870
Depreciation and amortization - 127 9 - 136
Selling, general and administrative 6 61 9 - 76
Results of affiliates' operations (73) (11) 11 84 11
Net interest and other (23) 4 - - (19)
------ ------- ------ ------- -------
Total (90) 1,941 488 (265) 2,074
------ ------- ------ ------- -------
Income before income taxes 90 74 10 (84) 90
Tax provision (36) (30) (4) 34 (36)
------ ------- ------ ------- -------
Net income $ 54 $ 44 $ 6 $ (50) $ 54
====== ======= ====== ======= =======
</TABLE>
CONSOLIDATING CONDENSED CASH FLOWS STATEMENT
(in millions)
<TABLE>
<CAPTION>
Six Months Ended June 30, 1998
------------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash (used in) provided by operating activities $ (85) $ 174 $ 68 $ - $ 157
------- ------- ------ ------- -------
Investing activities:
Capital expenditures - (185) (26) - (211)
Investment in steel-related businesses - - (45) - (45)
Net sales of marketable securities 69 - - - 69
Proceeds from dispositions of discontinued
operations, businesses and properties - - - - -
Other - - - - -
------ ------- ------ ------- -------
Net cash provided by (used in) investing
activities 69 (185) (71) - (187)
------ ------- ------ ------- -------
Financing activities:
Borrowings - - 4 - 4
Pension funding to restored plans - - - - -
Dividends paid and other (7) (1) - - (8)
------- ------- ------ ------- --------
Net cash (used in) provided by
financing activities (7) (1) 4 - (4)
------- ------- ------ ------- -------
Net increase (decrease) in cash and cash
equivalents (23) (12) 1 - (34)
Cash and cash equivalents at beginning of year 108 (16) 68 - 160
------ -------- ------ ------- -------
Cash and cash equivalents at end of year $ 85 $ (28) $ 69 $ - $ 126
====== ======== ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1997
------------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash provided by operating activities $ 26 $ 110 $ 49 $ - $ 185
------ ------- ------ ------- -------
Investing activities:
Capital expenditures - (131) - - (131)
Investment in steel-related businesses - - (38) - (38)
Net sales of marketable securities 68 - - - 68
Other 5 - 16 - 21
------ ------- ------ ------- -------
Net cash provided by (used in)
investing activities 73 (131) (22) - (80)
------ ------- ------ ------- -------
Financing activities:
Pension funding to restored plans - - - - -
Dividends paid and other (7) (1) - - (8)
Shares repurchased (27) - - - (27)
------ ------- ------ ------- -------
Net cash provided by (used in)
financing activities (34) (1) - - (35)
------ ------- ------ ------- -------
Net increase (decrease) in cash and cash
equivalents 65 (22) 27 - 70
Cash and cash equivalents at beginning of period 62 (15) 60 - 107
------ ------- ------ ------- -------
Cash and cash equivalents at end of period $ 127 $ (37) $ 87 $ - $ 177
====== ======= ====== ======= =======
</TABLE>
I-8
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS - COMPARISON OF SECOND QUARTER AND FIRST SIX MONTHS 1998
AND 1997
Sales
- -----
Sales of $1,093 million in the second quarter of 1998 were equal to the
second quarter of 1997. Second quarter 1998 steel shipments of 1.9 million tons
decreased by 120,000 tons (6%) from the second quarter 1997. Sales in the second
quarter of 1998 include $86 million of VP Buildings sales which was acquired on
July 2, 1997, partially offset by lower average steel selling prices of 2% and
lower shipments.
Sales of $2,220 million in the first six months of 1998 increased by
$56 million (3%) from the first six months of 1997. Steel shipments in the first
six months of 1998 of 4.0 million tons decreased by 105,000 tons (3%) from the
first six months of 1997. The overall sales increase in the first six months of
1998 resulted from the VP Buildings sales of $158 million, partially offset by
lower average steel selling prices of 2% and lower shipments.
Production and Costs
- --------------------
Raw steel production was lower by 482,000 tons in both the second
quarter and first half of 1998 from the comparable prior year periods in 1997.
Raw steel production was 1.8 million tons and 4.0 million tons in the three
months and six months ended June 30, 1998, respectively. The average operating
rate (of AISI defined capacity) at the Company's steelmaking facilities during
the second quarter of 1998 was 83% compared with 108% in 1997 due to the
scheduled reline of the H-4 blast furnace at the Company's Indiana Harbor Works
and an increase in the AISI defined rated capacity of LTV steelmaking facilities
in 1998. The same factors reduced the average operating rate in the first six
months of 1998 to 94% compared with 108% in 1997. LTV also rerated its AISI
capacity in 1998 which resulted in a 2.3% increase in its capacity rating.
Cost of products sold as a percentage of sales increased 3% in the
second quarter of 1998 and 2% in the first six months of 1998 compared to the
comparable 1997 periods. The increase in the percentage is primarily due to the
recently completed blast furnace reline, partially offset by lower steel
production costs and lower average selling prices in the 1998 periods.
Results of Affiliates' Operations
- ---------------------------------
Results of affiliates' operations consist principally of LTV's share of
operating losses from its 50% interest in Trico Steel Company, L.L.C. ("Trico"),
which commenced commercial operations in the second quarter of 1997. Trico
continues to incur expenses in excess of revenues.
I-9
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
The Company's sources of liquidity include cash and cash equivalents,
marketable securities, cash from operations, amounts available under credit
facilities and other external sources of funds. Management believes that these
sources are sufficient to fund the current requirements of working capital,
capital expenditures, investments in steel-related businesses, pensions and
postemployment health care.
During the first six months of 1998, cash provided by operating
activities amounted to $157 million. Major uses of cash during the first six
months of 1998 included capital expenditures of $211 million and $45 million
invested in steel-related businesses. Since December 31, 1997, total cash, cash
equivalents and marketable securities have decreased by $104 million to $416
million at June 30, 1998.
LTV's wholly owned subsidiary, LTV Steel Company, Inc. entered into a
new $250 million five-year credit facility ("Inventory Facility") replacing the
previous $150 million Letter of Credit Facility effective as of March 1, 1998.
The new Inventory Facility, secured by essentially all of the LTV Steel's
inventory through a special purpose entity, permits borrowings of up to $250
million for working capital and general corporate purposes, $150 million of
which may be used to issue letters of credit. Interest will accrue at the
Company's option of either the Chase Manhattan Bank's base rate or 1% above
LIBOR rates. At June 30, 1998, there were no outstanding borrowings against the
Inventory Facility, and letters of credit totaling $69 million were outstanding
under this facility.
The Company's receivables credit facility permits borrowings of up to
$320 million for working capital requirements and general corporate purposes,
$100 million of which may be used to issue letters of credit. At June 30, 1998,
$282 million was permitted to be borrowed; however, no borrowings were
outstanding and letters of credit outstanding amounted to $36 million under this
facility.
The Company's wholly owned subsidiary, VP Buildings, has a Secured
Demand Facility that expires August 1998 and is secured by the accounts
receivable of VP Buildings. The facility permits borrowings of up to $20 million
for working capital and general corporate purposes and for letters of credit. At
June 30, 1998, $20 million was permitted to be borrowed, with no borrowings
outstanding under this facility.
The Company's Senior Notes, long-term debt and credit facilities'
agreements contain various covenants that require the Company to maintain
certain financial ratios and amounts. These agreements, as well as the Company's
agreement with the Pension Benefit Guaranty Corporation (the "PBGC Agreement"),
place certain restrictions on payment of dividends, share repurchases, capital
expenditures, investments in subsidiaries and borrowings. Under the terms of the
most restrictive debt covenant, approximately $107 million of retained earnings
are available for common stock dividend payments at June 30, 1998. Substantially
all of the Company's receivables and inventories are pledged as collateral under
these credit agreements. The Company does not believe that the restrictions
contained in these financial and operating covenants will cause significant
limitations on its financial flexibility.
I-10
<PAGE> 12
Domestic steel producers face significant competition from foreign
producers. Foreign competition is intense and has adversely affected product
prices in the United States and tonnage sold by domestic producers. The
intensity of foreign competition is substantially affected by the relative
strength of foreign economies and fluctuations in the value of the United States
dollar against foreign currencies.
LTV also competes with other domestic integrated producers, some of
which have greater resources than the Company, and with minimills, which are
relatively efficient, low-cost producers that generally produce steel from scrap
in electric furnaces, have lower employment and environmental costs and
generally target regional markets. Recently developed thin slab casting
technologies have allowed some minimill producers to enter certain sectors of
the flat rolled market that have traditionally been supplied by integrated
producers. Industry experts estimate that current domestic raw steel production
capacity will increase as new minimills complete their start-up operations and
add steelmaking capacity to fully utilize rolling capacity.
Many steel products face substantial competition from manufacturers of
other products, including plastics, aluminum, ceramics, glass, wood and
concrete.
Joint ventures have in the past been one of the Company's primary means
for expanding its operations, and the Company expects to continue to make
investments in joint ventures. Many of the joint venture opportunities that the
Company is pursuing are start-up operations and require significant investments
before becoming operational. The development, construction and start-up of such
operations are themselves subject to numerous risks. After start-up, further
investments may be required and significant losses could be incurred before any
profits are realized.
On February 28, 1998, the Company ceased operations at the Pittsburgh
coke plant and began the closure process. LTV established reserves for the cost
of the closure and clean-up in the third quarter of 1997. Year to date spending
charged against the reserve totaled $11 million.
ENVIRONMENTAL LIABILITIES AND OTHER
LTV is subject to changing and increasingly stringent environmental
laws and regulations concerning air emissions, water discharges and waste
disposal, as well as remediation activities that involve the clean-up of
environmental media such as soils and groundwater ("remediation liabilities").
As a consequence, the Company has incurred, and will continue to incur,
substantial capital expenditures and operating and maintenance expenses in order
to comply with such requirements. Additionally, if any of the Company's
facilities are unable to meet required environmental standards or laws, those
operations could be temporarily or permanently closed.
The Company spent $7 million during the first six months of 1998 for
environmental clean-up and related matters at operating and idled facilities,
and at June 30, 1998, has a recorded liability of $150 million for known and
identifiable environmental and related matters, including costs related to the
closure and demolition of the Pittsburgh coke plant. 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 $9 million in the first six months of 1998 for environmental
compliance-related capital expenditures and expects it will be required to spend
an
I-11
<PAGE> 13
average of approximately $30 million annually in capital expenditures during the
next five years to meet environmental standards.
As is the case with most other companies using computers in their
operations, the Company is faced with the task of addressing the Year 2000. The
Company is currently engaged in a comprehensive project to replace some of its
business systems in its information technology, manufacturing and facilities
systems to programs that will be Year 2000 compliant. Replacement systems are
scheduled for implementation throughout 1998 with the final implementation
during the second quarter of 1999. In addition, the Company is changing its
remaining systems to be Year 2000 compliant. The Company believes it has
identified the changes required in its remaining systems and is in the process
of making the conversion; the Company anticipates completion and conversion by
year end 1998 and final testing during early 1999. LTV is also reviewing with
its major suppliers and customers their efforts to become Year 2000 compliant.
Failure by the Company and/or vendors working on the Company's project, and/or
LTV's major suppliers and customers to complete Year 2000 compliance work in a
timely manner, could have a material adverse effect on the Company's operations.
LTV expects to spend $55 million to be compliant in early 1999 with $8 million
previously expended in 1997 and $44 million expected in 1998.
OUTLOOK
The Company believes that demand for its products will remain strong in
the second half of the year. LTV completed its planned reline on a blast furnace
at the Indiana Harbor Works that will permit the Company's steelmaking capacity
and production costs to return to normal levels in the third quarter. Flat
rolled imports reached their highest level ever in May 1998. The increased
levels of imports of steel products into the U.S are expected to cause
reductions in steel prices which will negatively affect the domestic steel
industry including LTV. In addition, lack of a prompt settlement of the GM
strike will negatively impact the results of the Company.
This earnings release includes forward-looking statements. Our use of
the words "outlook," "anticipates," "believes," "estimate," "expect" and similar
words are intended to identify these statements as forward looking. These
statements represent our current judgment on what the future holds. While we
believe them to be reasonable, a number of important factors could cause actual
results to differ materially from those projected. These factors include
relatively small changes in market price or market demand; changes in domestic
capacity or the level of importing resulting from currency fluctuations or
devaluation; changes in raw material costs; increased operating costs,
continuation of loss of business from GM or other major customers, especially
for high value-added product; unanticipated expenses; substantial changes in
financial markets; labor unrest; unfair foreign competition; major equipment
failure; unanticipated results in pending legal proceedings; or difficulties in
implementing information technology, including Year 2000 compliant systems.
I-12
<PAGE> 14
PART II
ITEM 1. LEGAL PROCEEDINGS.
In May 1998, LTV Steel received a Notice of Violation from the Indiana
Department of Environmental Management ("IDEM") alleging that LTV Steel exceeded
applicable opacity standards at the H-3 blast furnace at its Indiana Harbor
Works on certain days in May, June and November 1997. IDEM has indicated it is
seeking civil penalties of $25,000 for each day of violation of the applicable
standards and the installation of additional pollution control equipment at the
H-3 casthouse. LTV Steel and IDEM are engaged in discussions in an effort to
settle the Notice of Violation.
In June 1998, a purported class action was filed against LTV Steel in the
Illinois Circuit Court (Tenth Judicial Circuit) by two retirees and a dependent
of one of the retirees on behalf of all other similarly situated LTV Steel
retirees and qualified dependents. In July 1998, this action was removed to the
U.S. District Court for the Central District of Illinois. The complaint charges
that LTV Steel was required but failed to give notice to plaintiffs of their
rights to continue coverage under LTV Steel's existing group medical insurance
plan as required by the Employee Retirement Income Security Act of 1974 and
Internal Revenue Code and failed to provide such benefit coverage. Plaintiffs
seek to recover the medical plan benefits, retroactive correction of the failure
to give notice and civil penalties of up to $100 a day per person from the date
that LTV Steel failed to provide notice to plaintiffs. The purported class, as
defined by the plaintiffs, is estimated to total approximately 2,200 retirees.
In July 1998, LTV Steel received a copy of a draft complaint from the U.S.
Department of Justice representing the U.S. EPA. The draft complaint, which has
not been filed in court, charges that LTV Steel allegedly (i) violated
applicable opacity and SO2 emission standards at the blast furnace and basic
oxygen furnace operations at the Cleveland Works and (ii) discharged pollutants
into the Cuyahoga River at its Cleveland Works and otherwise violated the terms
of its NPDES permit at the Cleveland Works during various periods over a
several year period. The draft complaint also charges that LTV Steel discharged
pollutants into the Mahoning River in violation of the terms of its NPDES
permit at its Warren coke plant. The draft complaint also charges violations of
applicable regulations relating to hazardous waste materials at both the
Cleveland Works and Chicago coke plant. The draft complaint seeks to enjoin LTV
Steel from further violations of the Clean Air Act and Clean Water Act and
civil penalties of up to $25,000 or $27,500 per violation, depending on the
date of the violation, for each day of violation of the applicable standards
and permits. LTV Steel, the U.S. EPA and the Justice Department are discussing
the possibilities of settling the claims.
ITEM 5. OTHER INFORMATION
BY-LAW AMENDMENTS:
ADVANCE STOCKHOLDER NOTICE REQUIREMENTS AND OTHER PROVISIONS
LTV has provisions in its By-Laws intended to promote the efficient
functioning of its annual meetings. The provisions describe LTV's right to
determine the time, place and conduct of stockholder meetings, require advance
notice by mail or delivery to LTV of stockholder proposals or director
nominations for annual meetings and require persons wishing to conduct a
solicitation of written consents of stockholders or to call a special meeting of
stockholders to apply to the Board of
II-1
<PAGE> 15
Directors to set a record date for the consent solicitation or to determine
whether the requisite number of stockholders desire to call a special meeting.
Under the By-Laws, stockholders must provide LTV with at least 60 days, but
no more than 90 days, notice prior to the announced Tentative Meeting Date of
(i) business the stockholder is proposing for consideration at that meeting and
(ii) persons the stockholder intends to nominate for election as directors at
that meeting.
The LTV Board of Directors has selected April 23, 1999 as the Tentative
Meeting Date for the next Annual Meeting of Stockholders. Accordingly,
stockholders who intend to propose business for consideration, or to nominate
persons for election as directors at the 1999 Annual Meeting, must provide
notice and the required information to the Company no earlier than January 23,
1999 and no later than February 22, 1999.
REQUIRED APPROVAL FOR CERTAIN PURCHASES OF
COMMON STOCK
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 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 and aggregation of
shares purchased by persons acting in concert. PURCHASES OF COMMON STOCK 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
WHO BELIEVES THAT IT MAY BE SUBJECT TO THE LIMITATIONS IMPOSED BY ARTICLE NINTH
SHOULD CONSULT WITH THEIR ADVISORS OR LTV IN ADVANCE OF ACQUIRING SUCH
SECURITIES TO DETERMINE IF ADVANCE APPROVAL MUST BE OBTAINED FROM LTV'S BOARD OF
DIRECTORS.
LTV's Board of Directors was required by Article Ninth of LTV's Restated
Certificate of Incorporation to consider during 1996 whether to waive the
transfer restrictions in Article Ninth with respect to all future transfers of
securities. At its October 1996 meeting, the Board of Directors, after
considering all relevant factors, determined not to waive Article Ninth at that
time.
ITEM 6. EXHIBITS AND REPORTS ON 8-K
(a) Exhibits
Certain of the exhibits to this Report are hereby incorporated by
reference, as specified below, to other documents filed with the Commission by
LTV. Exhibit designations below correspond to the numbers assigned to exhibit
classifications in Regulation S-K.
II-2
<PAGE> 16
(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)
II-3
<PAGE> 17
(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) - 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)-(11) - 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)-(12) - 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)
II-4
<PAGE> 18
(10)-(13) - Receivables Purchase and Sale Agreement dated as of October 12,
1994 among LTV, LTV Steel Company, Inc., Continental Emsco
Company, LTV Steel Tubular Products Company, Georgia Tubing
Corporation and LTV Sales Finance Company (incorporated herein by
reference to Exhibit (10)-(23) to LTV's Report on Form 10-Q for
the quarter ended September 30, 1994)
(10)-(14) - 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)-(15) - 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)-(16) - 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)-(17) - 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)-(18) - Open-End 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)-(19) - 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)
II-5
<PAGE> 19
(10)-(20) - 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)-(21) - Second Settlement Agreement and Stipulated Order supplementing
10.36 above and approved by the Court on May 19, 1993
(incorporated by reference to Exhibit 10.39 to LTV's Registration
Statement on Form S-1 [Registration No. 33-50217])
(10)-(22) - 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)-(23) - 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)-(24) - 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)-(25) - 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)-(26) - 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)-(27) - 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)-(28) - 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)
II-6
<PAGE> 20
(10)-(29) - 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)-(30) - 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)-(31) - Amendment to LTV Executive Benefit Plan adopted October 22, 1993
(incorporated herein by reference to Exhibit 10.50 to Amendment
No. 2 to LTV's Registration Statement on Form S-1 [Registration
No. 33-50217])
(10)-(32) - 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)-(33) - 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)-(34) - 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)-(35) - 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)-(36) - 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)-(37) - 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)
II-7
<PAGE> 21
(10)-(38) - 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)-(39) - 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)-(40) - 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)-(41) - The Hourly Employee Stock Payment Alternative Plan (incorporated
herein by reference to Exhibit 4.3 to LTV's Registration
Statement on Form S-8 [Registration No. 33-56861])
(10)-(42) - 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)-(43) - 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)-(44) - 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)-(45) - The LTV Corporation Amended and Restated Non-Employee Directors'
Equity Compensation Plan adopted on November 22, 1996
(incorporated herein by reference to Exhibit (10)-(58) to LTV's
Report on Form 10-K for the year ended December 31, 1996)
II-8
<PAGE> 22
(10)-(46) - The LTV Corporation Amended and Restated Non-Employee Directors'
Deferred Compensation Plan adopted on November 22, 1996
(incorporated herein by reference to Exhibit (10)-(59) to LTV's
Report on Form 10-K for the year ended December 31, 1996)
(10)-(47) - The LTV Corporation Amended and Restated Executive Deferred
Compensation Plan adopted on October 25, 1996 (incorporated
herein by reference to Exhibit (10)-(60) to LTV's Report on Form
10-K for the year ended December 31, 1996)
(10)-(48) - Amendment No. 9 to the Settlement Agreement dated as of June 28,
1993 by and among the PBGC, LTV, the Initial LTV Group (as
defined in the Settlement Agreement) and LTV as Administrator of
the Restated Plans (incorporated herein by reference to Exhibit
(10)-(61) to LTV's Report on Form 10-K for the year ended
December 31, 1996)
(10)-(49) - Indenture between LTV and The Chase Manhattan Bank, as Trustee,
(incorporated by reference to Exhibit 4.1 to LTV's Registration
Statement on Form S-4 [Registration No. 333-40425])
(10)-(50) - Amendment No. 10 to the Settlement Agreement dated as of June 28,
1993 by and among the PBGC, LTV, the Initial LTV Group (as
defined in the Settlement Agreement) and LTV as Administrator of
the Restated Plans (incorporated herein by reference to Exhibit
(10)-(62) to LTV's Report on Form 10-Q for the quarter ended
March 31, 1997)
(10)-(51) - The LTV Change in Control and Severance Pay Plan I (filed as
Exhibit 10.1 to Amendment No. 1 to LTV's Registration Statement
on Form S-4 [Registration No. 333-40425])
(10)-(52) - Note Purchase and Letter of Credit Agreement dated as of February
26, 1998 among LTV Steel Company, Inc., various financial
institutions (as defined therein), Chase Securities, Inc., as
placement agent, The Chase Manhattan Bank, as administrative
agent and The Chase Manhattan Bank, as collateral agent
(incorporated by reference to Exhibit (10)-(52) to LTV's Report
on Form 10-Q for the quarter ended June 30, 1998)
(10)-(53) - Guaranty made as of February 26, 1998 by LTV Steel Products, LLC
given in connection with the Note Purchase and Letter of Credit
Agreement dated as of February 26, 1998 among LTV Steel Company,
Inc., various financial institutions (as defined therein), Chase
Securities, Inc., as placement agent, The Chase Manhattan Bank,
as administrative agent and The Chase Manhattan Bank, as
collateral agent (incorporated by reference to Exhibit (10)-(53)
to LTV's Report on Form 10-Q for the quarter ended June 30, 1998)
II-9
<PAGE> 23
(10)-(54) - Contribution and Sale Agreement dated as of February 26, 1998
among LTV Steel Products, LLC, as purchaser, LTV Steel Company,
Inc., as servicer, and LTV Steel Company, Inc. and Georgia Tubing
Corporation, as initial sellers (incorporated by reference to
Exhibit (10)-(54) to LTV's Report on Form 10-Q for the quarter
ended June 30, 1998)
(10)-(55) - Inventory Processing and Servicing Agreement dated as of February
26, 1998 by and among LTV Steel Products, LLC, LTV Steel Company,
Inc., as processor and servicer, and The Chase Manhattan Bank, as
collateral agent (incorporated by reference to Exhibit (10)-(55)
to LTV's Report on Form 10-Q for the quarter ended June 30, 1998)
(10)-(56) - Trust Agreement dated as of February 26, 1998 among LTV Steel
Products, LLC, as issuer, and The Chase Manhattan Bank as
collateral agent (incorporated by reference to Exhibit (10)-(56)
to LTV's Report on Form 10-Q for the quarter ended June 30, 1998)
(10)-(57) - Amendment No. 2 dated as of March 1, 1998 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 and Amendment No. 1, dated as of March
1, 1998 to 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 by reference to Exhibit
(10)-(57) to LTV's Report on Form 10-Q for the quarter ended June
30, 1998)
(10)-(58) - Amendment No. 11 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 by reference to Exhibit
(10)-(58) to LTV's Report on Form 10-Q for the quarter ended June
30, 1998)
(11) - Statement re Computation of Per Share Earnings (filed herewith)
(27) - Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
No report on Form 8-K was filed by the registrant for the
relevant period.
II-10
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE LTV CORPORATION
------------------------------------
(Registrant)
By /s/ ARTHUR W. HUGE
---------------------------------
Arthur W. Huge
Executive Vice President
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: July 29, 1998
------------------
II-11
<PAGE> 1
Exhibit (11)
THE LTV CORPORATION
Calculation of Basic Earnings Per Share (EPS)
(Dollar amounts in millions except for EPS)
(Share data in thousands)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
----------------------------------------------------- ------------------------------------------------
1998 1997 1998 1997
--------------------------- ----------------------- --------------------- ------------------------
Shares Amount EPS Shares Amount EPS Shares Amount EPS Shares Amount EPS
------ ------ --- ------ ------ --- ------ ------ --- ------ ------ ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net income (loss) $ 4 $ 27 $ 23 $ 54
Preferred stock dividend
requirements - - (1) (1)
-- ---- ---- ----
$ 4 $ 27 $ 22 $ 53
==== ==== ==== ====
Share base:
Average common
stock outstanding 99,846 104,173 99,827 104,599
BASIC EARNINGS PER SHARE $ 0.03 $ 0.25 $ 0.22 $0.50
====== ====== ====== ======
</TABLE>
<PAGE> 2
THE LTV CORPORATION
Calculation of Dilutive Earnings Per Share (EPS)
(Dollar amounts in millions except for EPS)
(Share data in thousands)
<TABLE>
<CAPTION>
Three Months Ended June 30, Three Months Ended June 30,
------------------------------------------------- ---------------------------------------------
1998 1997 1998 1997
------------------------- ---------------------- --------------------- ----------------------
Shares Amount EPS Shares Amount EPS Shares Amount EPS Shares Amount EPS
------ ------ --- ------ ------ --- ------ ------ --- ------ ------ ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net income $ 4 $ 27 $ 23 $ 54
Preferred stock dividend
requirements - - (1) (1)
-- ---- ----- ---
4 27 22 53
Share base:
Average common
stock outstanding 99,846 104,173 99,827 104,599
Common Stock equivalent shares
resulting from outstanding
Series A Warrants, Stock
Options and Restricted Stock 167 177 160 147
Common Stock issuable upon
conversion of Series B
Preferred Stock (A) - 2,926 - (A) - 2,926 1
Common Stock issuable upon
conversion of Senior
Secured Convertible Notes (B) - 5,128 1 (B) - 5,128 3
------- --- ------- ---- ------ ---- ------- ----
100,013 $ 4 112,404 $ 28 99,987 $ 22 112,800 $ 57
======= === ======= ==== ====== ==== ======= ====
DILUTIVE EARNINGS PER SHARE $ 0.03 $ 0.25 $ 0.22 $ 0.50
======= ====== ====== ======
</TABLE>
(A) Addition of these shares would result in antidilution in 1997.
(B) Senior Secured Convertible Notes were redeemed in September 1997.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 126
<SECURITIES> 290
<RECEIVABLES> 480
<ALLOWANCES> 19
<INVENTORY> 833
<CURRENT-ASSETS> 1,728
<PP&E> 4,241
<DEPRECIATION> 995
<TOTAL-ASSETS> 5,493
<CURRENT-LIABILITIES> 900
<BONDS> 362
0
1
<COMMON> 53
<OTHER-SE> 1,650
<TOTAL-LIABILITY-AND-EQUITY> 5,493
<SALES> 2,220
<TOTAL-REVENUES> 2,220
<CGS> 1,962
<TOTAL-COSTS> 2,179
<OTHER-EXPENSES> 1
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> 38
<INCOME-TAX> 15
<INCOME-CONTINUING> 23
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
</TABLE>
