<PAGE>
SECOND QUARTER - 1994
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
-------------------------
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the period ended June 30, 1994
or
[_] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from __________ to __________
-------------------------
Commission file number 1-9117
I.R.S. Employer Identification Number 36-3425828
INLAND STEEL INDUSTRIES, INC.
(a Delaware Corporation)
30 West Monroe Street
Chicago, Illinois 60603
Telephone: (312) 346-0300
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 44,332,484 shares of the
Company's Common Stock ($1.00 par value per share) were outstanding as of August
8, 1994.
<PAGE>
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Dollars in Millions (except per share data)
-------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
------------------ -------------------
1994 1993 1994 1993
-------- ------ -------- --------
<S> <C> <C> <C> <C>
NET SALES $1,135.6 $996.4 $2,211.3 $1,937.9
-------- ------ -------- --------
OPERATING COSTS AND EXPENSES
Cost of goods sold 977.0 892.4 1,934.1 1,775.8
Selling, general and
administrative expenses 51.4 49.1 100.1 96.8
Depreciation 35.9 32.3 69.6 64.1
-------- ------ -------- --------
Total 1,064.3 973.8 2,103.8 1,936.7
-------- ------ -------- --------
OPERATING PROFIT 71.3 22.6 107.5 1.2
-------- ------ -------- --------
General corporate expense,
net of income items 2.6 6.3 5.9 13.0
Interest and other expense on debt 18.5 20.1 36.8 39.5
-------- ------ -------- --------
INCOME (LOSS) BEFORE INCOME TAXES 50.2 (3.8) 64.8 (51.3)
PROVISION FOR INCOME TAXES 18.6 1.3Cr. 24.0 17.4Cr.
-------- ------ -------- --------
NET INCOME (LOSS) $ 31.6 $ (2.5) $ 40.8 $ (33.9)
======== ====== ======== ========
EARNINGS (LOSS) PER SHARE OF COMMON STOCK:
PRIMARY $ .57 $ (.30) $ .60 $ (1.41)
======== ====== ======== ========
FULLY DILUTED $ .53 $ (.30) $ .56 $ (1.41)
======== ====== ======== ========
</TABLE>
See notes to consolidated financial statements
-1-
<PAGE>
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Dollars in Millions
------------------------
Six Months Ended
June 30
------------------------
1994 1993
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 40.8 $(33.9)
------- ------
Adjustments to reconcile net income to net
cash provided from operating activities:
Depreciation 69.9 64.4
Deferred employee benefit cost 24.0 25.1
Deferred income taxes 20.2 (18.9)
Change in: Receivables (37.6) (67.7)
Inventories (48.3) 11.9
Accounts payable (17.3) 17.7
Accrued salaries and wages 8.5 (.6)
Other accrued liabilities (5.1) 2.6
Other deferred items 16.9 8.9
------- ------
Net adjustments 31.2 43.4
------- ------
Net cash provided from operating activities 72.0 9.5
------- ------
INVESTING ACTIVITIES
Capital expenditures (108.2) (21.4)
Investments in and advances to joint ventures, net 8.8 (33.1)
Proceeds from sales of assets 2.1 2.1
------- ------
Net cash used for investing activities (97.3) (52.4)
------- ------
FINANCING ACTIVITIES
Long-term debt issued 19.7 39.3
Long-term debt retired (158.3) (57.8)
Dividends paid (17.8) (17.8)
Acquisition of treasury stock (1.5) (3.5)
------- ------
Net cash used for financing activities (157.9) (39.8)
------- ------
Net decrease in cash and cash equivalents (183.2) (82.7)
Cash and cash equivalents - beginning of year 250.5 137.7
------- ------
Cash and cash equivalents - end of period $ 67.3 $ 55.0
======= ======
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
Interest (net of amount capitalized) $ 37.4 $ 38.6
Income taxes, net 3.5 .7
Non-cash investing and financing activities:
Long-term debt acquired in purchase of assets 63.3 -
</TABLE>
See notes to consolidated financial statements
-2-
<PAGE>
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
================================================================================
<TABLE>
<CAPTION>
Dollars in Millions
---------------------------------------
June 30, 1994 December 31, 1993
------------------- ------------------
ASSETS (unaudited)
- - ------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 67.3 $ 250.5
Receivables 464.9 427.3
Inventories - principally at LIFO
In process and finished products $ 387.5 $ 331.9
Raw materials and supplies 37.7 425.2 45.0 376.9
-------- --------
Deferred income taxes 48.0 44.2
-------- --------
Total current assets 1,005.4 1,098.9
INVESTMENTS AND ADVANCES 205.3 221.0
PROPERTY, PLANT AND EQUIPMENT
Valued on basis of cost 4,251.8 4,083.7
Less: Reserve for depreciation,
amortization and depletion 2,535.2 2,467.6
Allowance for terminated facilities 108.4 1,608.2 108.4 1,507.7
-------- --------
DEFERRED INCOME TAXES 405.8 428.4
INTANGIBLE PENSION ASSET 122.1 122.1
OTHER ASSETS 57.3 57.7
-------- --------
Total Assets $3,404.1 $3,435.8
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------
CURRENT LIABILITIES
Accounts payable $ 281.9 $ 300.9
Accrued liabilities 206.2 202.8
Long-term debt due within one year 73.8 98.8
-------- --------
Total current liabilities 561.9 602.5
LONG-TERM DEBT 727.1 777.1
DEFERRED EMPLOYEE BENEFITS 1,395.1 1,371.1
OTHER CREDITS 59.5 61.7
-------- --------
Total liabilities 2,743.6 2,812.4
REDEEMABLE PREFERRED STOCK 185.0 185.0
COMMON STOCK REPURCHASE COMMITMENT 39.8 40.8
STOCKHOLDERS' EQUITY (Schedule A) 435.7 397.6
-------- --------
Total Liabilities, Temporary Equity,
and Stockholders' Equity $3,404.1 $3,435.8
======== ========
</TABLE>
See notes to consolidated financial statements
-3-
<PAGE>
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
NOTE 1/FINANCIAL STATEMENTS
Results of operations for any interim period are not necessarily indicative of
results of any other periods or for the year. The financial statements as of
June 30, 1994 and for the three-month and six-month periods ended June 30,
1994 and 1993 are unaudited, but in the opinion of management include all
adjustments necessary for a fair presentation of results for such periods.
These financial statements should be read in conjunction with the financial
statements and related notes contained in the Annual Report to Stockholders
for the year ended December 31, 1993.
NOTE 2/CAPITAL STOCK
In the second quarter of 1994, as the result of the Company's call for
redemption, shareholders converted the 1.5 million shares of Series G $4.625
Cumulative Convertible Exchangeable Preferred Stock outstanding into 2.7
million shares of the Company's common stock.
NOTE 3/COMMITMENTS
The total amount of firm commitments of the Company and its subsidiaries to
contractors and suppliers, primarily in connection with additions to property,
plant and equipment, increased to $56 million on June 30, 1994 from $15
million on December 31, 1993.
-4-
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - Comparison of Second Quarter 1994 to Second Quarter 1993
- - --------------------------------------------------------------------------------
The Company reported consolidated net income of $31.6 million, $0.57 per
common share, in the 1994 second quarter, compared with a consolidated net loss
of $2.5 million, $0.30 per common share, in the comparable 1993 quarter. A
substantial improvement in operating profit at the Company's Integrated Steel
segment and increased operating profit at the Steel Service Center segment were
the principal factors in the year-to-year improvement.
As market conditions continued to improve, consolidated net sales rose 14
percent in the current quarter to $1.14 billion, the result of higher volume and
improved average selling price at both of the Company's business segments.
The Integrated Steel segment reported an operating profit of $46.7 million in
the quarter, compared with an operating profit of $7.4 million in the 1993
period. Net sales increased 14 percent to $643 million as steel mill shipments
improved 5 percent to 1,339,000 tons. Average selling price rose 9 percent from
the year-ago period reflecting the overall strength of the market and an
improved mix of products sold. While revenue increased 14 percent from the
previous year's quarter, operating costs were up 7 percent. Contributing to
this increase in operating costs were higher volume, a richer product mix and
higher raw materials costs.
Steel Service Center segment net sales of $548 million in the 1994 second
quarter were 14 percent higher than the similar 1993 quarter due to an 11
percent volume improvement and a 3 percent increase in average selling price per
ton. Operating profit increased to $24.2 million from $15.1 million a year
earlier due primarily to the improvement in volume.
Comparison of First Six Months of 1994 to First Six Months of 1993
- - ------------------------------------------------------------------
The strong operating performance in both the first and second quarters of
1994 was the major factor contributing to the Company's reporting a consolidated
net income of $40.8 million for the first six months of 1994, compared with a
net loss of $33.9 million for the 1993 first half. Enhanced operating results
at the Integrated Steel segment combined with continued favorable performance at
the Steel Service Center segment accounted for the improvement.
Consolidated net sales of $2.21 billion in the first six months were 14
percent higher than the comparable 1993 period due to higher volume and improved
average selling price at both business segments.
Integrated Steel segment net sales of $1.23 billion were 14 percent higher in
the 1994 first half as improved average selling price accounted for 10 percent
of the increase, while shipments increased 4 percent to 2,592,000 tons. Higher
average selling price was the principal reason the reported operating profit of
$60.3 million in the first half increased $89.6 million from the operating loss
of $29.3 million in the comparable 1993 period.
-5-
<PAGE>
The Steel Service Center segment continued its advancement posting net sales
of $1.09 billion in the first half of 1994, a 15 percent improvement from the
year earlier period. Volume rose 12 percent from the comparable 1993 period
while average selling price increased 3 percent. Operating profit of $45.6
million in the 1994 first half continued its upward trend improving 51 percent
from the comparable prior year period. The increase in volume was the primary
factor accounting for the improvement.
Liquidity and Financing
- - -----------------------
The Company's cash and cash equivalents at June 30, 1994 were $67 million, as
compared with $251 million at year-end 1993. There was no short-term borrowing
at either date.
During the first half of 1994, Inland Steel Company, a subsidiary, redeemed
all $75 million of its outstanding Series O, P and Q First Mortgage Bonds and
acquired the equity interest in the operating lease of the No. 2 Basic Oxygen
Furnace Shop continuous casters for $83 million. In connection with this
purchase, Inland Steel Company recorded $63 million of debt. Inland Steel
Company also called and subsequently prepaid approximately $48 million of
caster-related debt. In addition, in early May, Inland Steel Company called all
remaining debt related to this continuous caster facility (approximately $48
million) for prepayment in November 1994.
During the second quarter, Inland Steel Company redeemed $20 million
principal amount of 8.125 percent Pollution Control Revenue bonds. The
redemption was funded largely by the proceeds from the issuance of a like amount
of Pollution Control Revenue bonds with a 7.125 percent coupon.
The Company called for redemption all outstanding shares of Series G $4.625
Cumulative Convertible Exchangeable Preferred Stock during the second quarter.
The call resulted in conversion of 1.5 million shares of Series G Preferred
Stock outstanding, increasing the number of shares of common stock outstanding
by 2.7 million shares. This will reduce ongoing preferred dividends by
approximately $7 million on an annual basis.
Cash flow from operating activities during the first six months of 1994 was a
positive $72 million, compared with $10 million in the year-earlier period. Net
income of $41 million, combined with non-cash expenses of $114 million related
to depreciation, deferred employee benefit cost, and deferred income taxes more
than offset cash required for increased inventories and receivables.
-6-
<PAGE>
PART II. OTHER INFORMATION
---------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) A meeting of stockholders was held on May 25, 1994 and was an annual
meeting.
(b) No answer is required.
(c) The election of eleven nominees for director of the Company was voted
upon at the meeting. The number of affirmative votes and the number
of votes withheld with respect to such approval is as follows:
Nominee Affirmative Votes Votes Withheld
------- ----------------- --------------
[S] [C] [C]
A Robert Abboud 43,175,885 546,192
James W. Cozad 43,355,457 366,619
Robert J. Darnall 43,247,709 474,367
James A. Henderson 43,361,837 360,239
Emerson Kampen 43,343,434 378,643
Robert B. McKersie 43,342,386 379,690
Donald S. Perkins 43,332,698 389,379
Joshua I. Smith 43,348,919 373,157
Nancy H. Teeters 43,338,923 383,154
Raymond C. Tower 43,323,524 398,553
Arnold R. Weber 43,342,675 379,402
The results of the voting for approval of the Inland Steel Industries,
Inc. Annual Incentive Plan (the "AIP Plan") are as follows:
For Against Abstain Broker Non-Votes
--- --------- ------- ----------------
39,747,734 2,473,800 275,156 1,225,386
The results of the voting for the election of Price Waterhouse to
audit the accounts of the Company and its subsidiaries for 1994 are
as follows:
For Against Abstain
--- ------- -------
43,350,736 208,692 162,648
There were no matters voted upon at the meeting, other than approval
of the AIP Plan, to which broker non-votes applied.
(d) Not applicable.
-7-
<PAGE>
ITEM 5. OTHER INFORMATION
Consolidated financial statements for Inland Materials Distribution Group,
Inc. are set forth in Appendix A to this Quarterly Report on Form 10-Q.
Separate consolidated financial statements for Inland Steel Company are set
forth in Inland Steel Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1994.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
3(i) Copy of Certificate of Incorporation, as amended, of the Company. (Filed
as Exhibit 4-A to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1991, and incorporated by reference herein.)
3(ii) Copy of By-laws, as amended, of the Company. (Filed as Exhibit 3-B to
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, and incorporated by reference herein.)
4.A Copy of Certificate of Designations, Preferences and Rights of Series A
$2.40 Cumulative Convertible Preferred Stock of the Company. (Filed as
part of Exhibit B to the definitive Proxy Statement of Inland Steel
Company dated March 21, 1986 that was furnished to stockholders in
connection with the annual meeting held April 23, 1986, and incorporated
by reference herein.)
4.B Copy of Certificate of Designation, Preferences and Rights of Series D
Junior Participating Preferred Stock of the Company. (Filed as Exhibit
4-D to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1987, and incorporated by reference herein.)
4.C Copy of Rights Agreement, dated as of November 25, 1987, as amended and
restated as of May 24, 1989, between the Company and The First National
Bank of Chicago, as Rights Agent (Harris Trust and Savings Bank, as
successor Rights Agent). (Filed as Exhibit 1 to the Company's Current
Report on Form 8-K filed on May 24, 1989, and incorporated by reference
herein.)
4.D Copy of Certificate of Designations, Preferences and Rights of Series E
ESOP Convertible Preferred Stock of the Company. (Filed as Exhibit 4-F
to the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1989, and incorporated by reference herein.)
4.E Copy of Certificate of Designations, Preferences and Rights of Series F
Exchangeable Preferred Stock of the Company. (Filed as Exhibit 4(b) to
the Company's Current Report on Form 8-K filed on December 18, 1989, and
incorporated by reference herein.)
4.F Copy of Certificate of Designations of Series G $4.625 Cumulative
Convertible Exchangeable Preferred Stock of the Company. (Filed as
Exhibit 2.8 to the Company's Registration Statement on Form 8-A filed on
March 25, 1991, and incorporated by reference herein.)
4.G Copy of Indenture dated as of December 15, 1992, between the Company and
Harris Trust and Savings Bank, as Trustee, respecting the Company's
$150,000,000 12-3/4% Notes due December 15, 2002. (Filed as Exhibit 4-G
to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, and incorporated by reference herein.)
-8-
<PAGE>
4.H Copy of First Mortgage Indenture, dated April 1, 1928, between Inland
Steel Company (the "Steel Company") and First Trust and Savings Bank and
Melvin A. Traylor, as Trustees, and of supplemental indentures thereto,
to and including the Thirty-Second Supplemental Indenture, incorporated
by reference from the following Exhibits: (i) Exhibits B-1(a), B-1(b),
B-1(c), B-1(d) and B-1(e), filed with Steel Company's Registration
Statement on Form A-2 (No. 2-1855); (ii) Exhibits D-1(f) and D-1(g),
filed with Steel Company's Registration Statement on Form E-1 (No.
2-2182); (iii) Exhibit B-1(h), filed with Steel Company's Current Report
on Form 8-K dated January 18, 1937; (iv) Exhibit B-1(i), filed with
Steel Company's Current Report on Form 8-K, dated February 8, 1937; (v)
Exhibits B-1(j) and B-1(k), filed with Steel Company's Current Report on
Form 8-K for the month of April, 1940; (vi) Exhibit B-2, filed with
Steel Company's Registration Statement on Form A-2 (No. 2-4357); (vii)
Exhibit B-1(l), filed with Steel Company's Current Report on Form 8-K
for the month of January, 1945; (viii) Exhibit 1, filed with Steel
Company's Current Report on Form 8-K for the month of November, 1946;
(ix) Exhibit 1, filed with Steel Company's Current Report on Form 8-K
for the months of July and August, 1948; (x) Exhibits B and C, filed
with Steel Company's Current Report on Form 8-K for the month of March,
1952; (xi) Exhibit A, filed with Steel Company's Current Report on Form
8-K for the month of July, 1956; (xii) Exhibit A, filed with Steel
Company's Current Report on Form 8-K for the month of July, 1957; (xiii)
Exhibit B, filed with Steel Company's Current Report on Form 8-K for the
month of January, 1959; (xiv) the Exhibit filed with Steel Company's
Current Report on Form 8-K for the month of December, 1967; (xv) the
Exhibit filed with Steel Company's Current Report on Form 8-K for the
month of April, 1969; (xvi) the Exhibit filed with Steel Company's
Current Report on Form 8-K for the month of July, 1970; (xvii) the
Exhibit filed with the amendment on Form 8 to Steel Company's Current
Report on Form 8-K for the month of April, 1974; (xviii) Exhibit B,
filed with Steel Company's Current Report on Form 8-K for the month of
September, 1975; (xix) Exhibit B, filed with Steel Company's Current
Report on Form 8-K for the month of January, 1977; (xx) Exhibit C, filed
with Steel Company's Current Report on Form 8-K for the month of
February, 1977; (xxi) Exhibit B, filed with Steel Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1978; (xxii) Exhibit
B, filed with Steel Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1980; (xxiii) Exhibit 4-D, filed with Steel
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1980; (xxiv) Exhibit 4-D, filed with Steel Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1982; (xxv) Exhibit
4-E, filed with Steel Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1983; (xxvi) Exhibit 4(i) filed with the
Steel Company's Registration Statement on Form S-2 (No. 33-43393); and
(xxvii) Exhibit 4 filed with Steel Company's Current Report on Form 8-K
dated June 23, 1993.
4.I Copy of consolidated reprint of First Mortgage Indenture, dated April 1,
1928, between Inland Steel Company and First Trust and Savings Bank and
Melvin A. Traylor, as Trustees, as amended and supplemented by all
supplemental indentures thereto, to and including the Thirteenth
Supplemental Indenture. (Filed as Exhibit 4-E to Form S-1 Registration
Statement No. 2-9443, and incorporated by reference herein.)
11 Statement of Earnings per Share of Common Stock.
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the quarter
ended June 30, 1994.
-9-
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INLAND STEEL INDUSTRIES, INC.
By Olivia M. Thompson
--------------------------------------
Olivia M. Thompson
Controller and
Chief Accounting Officer
Date: August 10, 1994
-10-
<PAGE>
Part I -- Schedule A
--------------------
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
SUMMARY OF STOCKHOLDERS' EQUITY
================================================================================
<TABLE>
<CAPTION>
Dollars in Millions
-------------------------------------------------------------
June 30, 1994 December 31, 1993
------------------------- -----------------------
(unaudited)
<S> <C> <C> <C> <C>
STOCKHOLDERS' EQUITY
- - --------------------
Series A preferred stock ($1 par value)
- 96,354 shares and 96,589 shares issued and
outstanding as of June 30, 1994 and
December 31, 1993, respectively $ .1 $ .1
Series E preferred stock ($1 par value)
- 3,103,373 shares and 3,114,568 shares
issued and outstanding as of June 30,
1994 and December 31, 1993, respectively 3.1 3.1
Series G preferred stock ($1 par value)
- 1,500,000 shares issued and outstanding as of
December 31, 1993 - 1.5
Common stock ($1 par value)
- 50,556,350 shares and 47,854,208 shares issued
as of June 30, 1994 and December 31, 1993 50.6 47.9
Capital in excess of par value 1,106.4 1,113.7
Accumulated deficit
Balance beginning of year $(371.9) $(302.3)
Net income (loss) 40.8 (37.6)
Dividends
Series A preferred stock -
$1.20 per share in 1994 and
$2.40 per share in 1993 (.1) (.2)
Series E preferred stock -
$1.7615 per share in 1994 and
$3.523 per share in 1993 (5.5) (11.0)
Income tax benefit - Series E dividend 1.4 3.6
Series F preferred stock -
$47.40 per share in 1994 and
$94.80 per share in 1993 (8.8) (17.5)
Series G preferred stock -
$1.54165 per share in 1994 and
$4.625 per share in 1993 (1.7) (345.8) (6.9) (371.9)
------- ------
Unearned compensation related to ESOP (107.2) (112.2)
Common stock repurchase commitment (39.8) (40.8)
Investment valuation allowance (4.0) (5.2)
Unearned restricted stock award compensation (3.1) (2.1)
Treasury stock, at cost
- 6,515,967 shares and 6,767,139
shares as of June 30, 1994 and
December 31, 1993, respectively (224.6) (236.5)
-------- --------
Total Stockholders' Equity $ 435.7 $ 397.6
======== ========
</TABLE>
-11-
<PAGE>
Part I -- Schedule B
--------------------
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
SUMMARY FINANCIAL INFORMATION FOR BUSINESS SEGMENTS (UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Dollars in Millions
------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
------------------ -------------------
1994 1993 1994 1993
-------- ------ -------- --------
NET SALES
- - ---------
<S> <C> <C> <C> <C>
Integrated Steel Operations $ 643.2 $566.2 $1,234.0 $1,086.9
Steel Service Center Operations 548.1 481.2 1,086.6 948.1
Eliminations and adjustments (55.7) (51.0) (109.3) (97.1)
-------- ------ -------- --------
Total Net Sales $1,135.6 $996.4 $2,211.3 $1,937.9
======== ====== ======== ========
OPERATING PROFIT (LOSS)
- - -----------------------
Integrated Steel Operations $46.7 $ 7.4 $ 60.3 $(29.3)
Steel Service Center Operations 24.2 15.1 45.6 30.1
Eliminations and adjustments .4 .1 1.6 .4
----- ----- ------ ------
Total Operating Profit $71.3 $22.6 $107.5 $ 1.2
===== ===== ====== ======
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11
----------
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK (UNAUDITED)
===========================================================================================================
Dollars and Shares in Millions
(except per share data)
-----------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
------------------ -----------------
1994 1993 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE OF COMMON STOCK
Shares of common stock
Average shares outstanding 42.4 35.3 41.8 35.3
Dilutive effect of stock options .4 - .4 -
----- ------ ----- ------
42.8 35.3 42.2 35.3
===== ====== ===== ======
Net income (loss) $31.6 $ (2.5) $40.8 $(33.9)
Dividends on preferred stock, net of tax benefit on dividends
applicable to leveraged Series E Preferred Stock held by
the ESOP 7.3 8.0 15.3 16.0
----- ------ ----- ------
Net income (loss) applicable $24.3 $(10.5) $25.5 $(49.9)
===== ====== ===== ======
Primary earnings (loss) per share of common stock $ .57 $ (.30) $ .60 $(1.41)
===== ====== ===== ======
FULLY DILUTED EARNINGS PER SHARE OF COMMON STOCK
Shares of common stock
Average shares outstanding 42.4 35.3 41.8 35.3
Assumed conversion of Series E Preferred Stock 3.0 - 3.0 -
Dilutive effect of stock options .4 - .4 -
----- ------ ----- ------
45.8 35.3 45.2 35.3
===== ====== ===== ======
Net income (loss) $31.6 $(2.5) $40.8 $(33.9)
Dividends on antidilutive preferred stock, net of tax benefit
on dividends applicable to leveraged Series E
Preferred Stock held by the ESOP 5.1 8.0 11.4 16.0
Additional ESOP funding required on conversion of leveraged
Series E Preferred Stock, net of tax benefit 2.2 - 3.9 -
----- ------ ----- ------
Net income (loss) applicable $24.3 $(10.5) $25.5 $(49.9)
===== ====== ===== ======
Fully diluted earnings (loss) per share of common stock $ .53 $ (.30) $ .56 $(1.41)
===== ====== ===== ======
</TABLE>
NOTE: Series G Preferred Stock was converted to common stock as the result of a
redemption call in May 1994.
In the three-month and six-month periods ended June 30, 1994, the assumed
conversion of Series A, non-leveraged Series E, and Series G Preferred
Stock were antidilutive. In the three-month and six-month periods ended
June 30, 1993, the assumed conversions of Series A, Series E, and Series G
Preferred Stock were antidilutive.
-13-
<PAGE>
APPENDIX A
INLAND MATERIALS DISTRIBUTION GROUP, INC.
AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Dollars in Millions
------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
------------------ ------------------
1994 1993 1994 1993
------ ------ -------- ------
<S> <C> <C> <C> <C>
NET SALES $548.1 $481.2 $1,086.6 $948.1
------ ------ -------- ------
OPERATING COSTS AND
EXPENSES
Cost of goods sold 480.1 424.0 954.0 833.8
Selling, general and
administrative expenses 38.5 37.0 76.3 73.9
Depreciation and amortization 5.3 5.1 10.7 10.3
------ ------ -------- ------
Total 523.9 466.1 1,041.0 918.0
------ ------ -------- ------
OPERATING PROFIT 24.2 15.1 45.6 30.1
General corporate expense 1.8 1.9 3.6 3.7
Interest expense, net of
interest income .9 2.8 1.7 5.4
------ ------ -------- ------
INCOME BEFORE INCOME TAXES 21.5 10.4 40.3 21.0
PROVISION FOR INCOME TAXES 10.5 2.9 16.5 5.8
------ ------ -------- ------
NET INCOME $ 11.0 $ 7.5 $ 23.8 $ 15.2
====== ====== ======== ======
</TABLE>
See notes to consolidated financial statements
A-1
<PAGE>
INLAND MATERIALS DISTRIBUTION GROUP, INC.
AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
==========================================================================================================
Dollars in Millions
-------------------
Six Months Ended
June 30
------------------
1994 1993
------ ------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 23.8 $ 15.2
------ ------
Adjustments to reconcile net income to net cash
provided from (used for) operating activities:
Depreciation and amortization 10.7 10.3
Deferred employee benefit cost (.4) 1.5
Deferred income taxes 4.9 (4.7)
Change in: Receivables (46.4) (39.6)
Inventories (28.6) (24.1)
Accounts payable 42.6 (11.1)
Payables to related companies 7.4 8.2
Accrued liabilities (1.1) (.3)
------ ------
Net adjustments (10.9) (59.8)
------ ------
Net cash provided from (used for) operating activities 12.9 (44.6)
------ ------
INVESTING ACTIVITIES
Capital expenditures (6.2) (3.0)
Proceeds from sales of assets .3 .8
------ ------
Net cash used for investing activities (5.9) (2.2)
------ ------
FINANCING ACTIVITIES
Long-term debt retired (.6) (1.0)
Change in notes receivable from/payable to related companies (35.9) 50.2
------ ------
Net cash provided from (used for) financing activities (36.5) 49.2
------ ------
Net increase (decrease) in cash and cash equivalents (29.5) 2.4
Cash and cash equivalents - beginning of year 29.5 -
------ ------
Cash and cash equivalents - end of period $ - $ 2.4
====== ======
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
Interest (net of amount capitalized) $ 1.7 $ 5.4
Income taxes, net 9.9 7.7
</TABLE>
See notes to consolidated financial statements
A-2
<PAGE>
<TABLE>
<CAPTION>
INLAND MATERIALS DISTRIBUTION GROUP, INC.
AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
CONSOLIDATED BALANCE SHEET
==================================================================================================
Dollars in Millions
----------------------------------------
ASSETS June 30, 1994 December 31, 1993
- - ------ ------------------- -----------------
(unaudited)
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ - $ 29.5
Receivables 242.4 196.0
Inventories - principally at LIFO 307.5 278.9
Notes receivable from related companies 6.3 -
Deferred income taxes 13.8 11.8
------ ------
Total current assets 570.0 516.2
PROPERTY, PLANT AND EQUIPMENT
Valued on basis of cost $458.7 $455.2
Less accumulated depreciation 205.6 253.1 198.0 257.2
------ ------
DEFERRED INCOME TAXES 21.6 28.5
EXCESS OF COST OVER NET ASSETS ACQUIRED 25.7 26.4
------ ------
Total Assets $870.4 $828.3
====== ======
LIABILITIES AND STOCKHOLDER'S EQUITY
- - ------------------------------------
CURRENT LIABILITIES
Accounts payable $119.8 $ 77.2
Payables to related companies
Notes - 29.6
Other 16.4 9.0
Accrued liabilities 27.5 28.6
Long-term debt due within one year 5.0 5.0
------ ------
Total current liabilities 168.7 149.4
LONG-TERM DEBT 27.6 28.2
DEFERRED EMPLOYEE BENEFITS AND OTHER 123.6 124.0
------ ------
Total liabilities 319.9 301.6
STOCKHOLDER'S EQUITY 550.5 526.7
------ ------
Total Liabilities and Stockholder's Equity $870.4 $828.3
====== ======
</TABLE>
See notes to consolidated financial statements
A-3
<PAGE>
INLAND MATERIALS DISTRIBUTION GROUP, INC.
AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
NOTE 1/FINANCIAL STATEMENTS
Results of operations for any interim period are not necessarily indicative of
results of any other periods or for the year. The financial statements as of
June 30, 1994 and for the three-month and six-month periods ended June 30, 1994
and 1993 are unaudited, but in the opinion of management include all adjustments
necessary for a fair presentation of results for such periods. These financial
statements should be read in conjunction with the financial statements and
related notes contained in Appendix A of Inland Steel Industries, Inc. Annual
Report on Form 10-K for the year ended December 31, 1993.
NOTE 2/RELATED PARTY TRANSACTIONS
The Company has agreed to procedures established by Inland Steel Industries,
Inc. ("Industries") for charging Industries' administrative expenses to the
operating companies owned by it. Pursuant to these procedures, the Company was
charged $3.6 million and $3.7 million by Industries for the first six months of
1994 and 1993, respectively, for management, financial and legal services
provided to the Company.
Procedures also have been established to charge interest on all intercompany
loans within the Industries group of companies. Such loans currently bear
interest at the prime rate. The Company's net intercompany interest expense for
the first six months of 1994 totaled $.3 million as compared to $3.9 million for
the first six months of 1993.
The Company sells to and purchases products from other companies within the
Industries group of companies. Such transactions are made at prevailing market
prices. These transactions are summarized as follows:
Dollars in Millions
----------------------------
Three Months Six Months
Ended June 30 Ended June 30
------------- -------------
1994 1993 1994 1993
------ ----- ------ -----
Net Product Sales $ 2.9 $ 2.9 $ 5.5 $ 5.6
Net Product Purchases 54.5 49.4 107.3 93.9
A-4
