<PAGE> 1
THIRD QUARTER - 1995
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 September 30, 1995
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: 48,772,404 shares of the
Company's Common Stock ($1.00 par value per share) were outstanding as of
November 3, 1995.
<PAGE> 2
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 Nine Months Ended
September 30 September 30
----------------------- ------------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $1,128.6 $1,129.5 $3,659.7 $3,340.8
-------- -------- -------- --------
OPERATING COSTS AND EXPENSES
Cost of goods sold 966.5 975.5 3,117.1 2,909.6
Selling, general and
administrative expenses 60.1 49.2 164.4 149.3
Depreciation 35.4 35.6 107.6 105.2
-------- -------- -------- --------
Total 1,062.0 1,060.3 3,389.1 3,164.1
-------- -------- -------- --------
OPERATING PROFIT 66.6 69.2 270.6 176.7
General corporate expense,
net of income items 14.0 4.1 20.2 10.0
Interest and other expense on debt 19.7 17.6 51.2 54.4
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 32.9 47.5 199.2 112.3
PROVISION FOR INCOME TAXES 12.9 16.8 77.3 40.9
-------- -------- -------- --------
NET INCOME $ 20.0 $ 30.7 $ 121.9 $ 71.4
======== ======== ======== ========
EARNINGS PER SHARE OF COMMON STOCK:
PRIMARY $ .33 $ .54 $ 2.24 $ 1.15
======== ======== ======== ========
FULLY DILUTED $ .32 $ .50 $ 2.11 $ 1.07
======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements
- 1 -
<PAGE> 3
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Dollars in Millions
------------------------------
Nine Months Ended
September 30
------------------------------
1995 1994
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $121.9 $ 71.4
------ -------
Adjustments to reconcile net income to net
cash provided from operating activities:
Depreciation 108.1 105.7
Deferred employee benefit cost (27.4) 35.6
Deferred income taxes 59.0 36.5
Change in: Receivables (10.1) (45.8)
Inventories (74.9) (105.5)
Advances (28.2) -
Accounts payable (35.9) (12.1)
Accrued salaries and wages (9.4) (1.4)
Other accrued liabilities 64.1 12.9
Other deferred items 22.2 19.8
------ -------
Net adjustments 67.5 45.7
------ -------
Net cash provided from operating activities 189.4 117.1
------ -------
INVESTING ACTIVITIES
Capital expenditures (82.8) (135.3)
Investments in and advances to joint ventures, net 11.6 10.7
Proceeds from sales of assets 2.0 5.0
------ -------
Net cash used for investing activities (69.2) (119.6)
------ -------
FINANCING ACTIVITIES
Long-term debt issued 16.8 19.7
Long-term debt retired (35.9) (171.7)
Dividends paid (23.5) (22.3)
Acquisition of treasury stock (2.9) (3.7)
------ -------
Net cash used for financing activities (45.5) (178.0)
------ -------
Net increase (decrease) in cash and cash equivalents 74.7 (180.5)
Cash and cash equivalents - beginning of year 107.1 250.5
------ -------
Cash and cash equivalents - end of period $181.8 $ 70.0
====== =======
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
Interest (net of amount capitalized) $ 35.5 $ 44.6
Income taxes, net 8.4 5.5
Non-cash investing and financing activities:
Long-term debt acquired in purchase of assets - 63.3
Reduction of deferred employee benefits resulting from
contribution of common stock to the Company's Pension Trust 100.0 -
Series F Preferred Stock exchanged for Subordinated
Voting Note 185.0 -
</TABLE>
See notes to consolidated financial statements
- 2 -
<PAGE> 4
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
================================================================================
<TABLE>
<CAPTION>
Dollars in Millions
-------------------------------------------------------
September 30, 1995 December 31, 1994
----------------------- -----------------------
ASSETS (unaudited)
- ------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 181.8 $ 107.1
Receivables 513.7 503.6
Inventories - principally at LIFO
In process and finished products $ 439.2 $ 363.8
Raw materials and supplies 65.2 504.4 65.7 429.5
-------- --------
Advances 28.2 -
Deferred income taxes 43.4 41.3
-------- --------
Total current assets 1,271.5 1,081.5
INVESTMENTS AND ADVANCES 220.8 225.1
PROPERTY, PLANT AND EQUIPMENT
Valued on basis of cost 4,351.6 4,269.2
Less: Reserve for depreciation,
amortization and depletion 2,664.5 2,558.2
Allowance for terminated facilities 100.7 1,586.4 100.7 1,610.3
-------- --------
DEFERRED INCOME TAXES 319.1 379.0
OTHER ASSETS 57.6 57.5
-------- --------
Total Assets $3,455.4 $3,353.4
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
Accounts payable $ 313.4 $ 351.2
Accrued liabilities 248.8 194.1
Long-term debt due within one year 21.4 19.5
-------- --------
Total current liabilities 583.6 564.8
LONG-TERM DEBT 870.2 705.9
DEFERRED EMPLOYEE BENEFITS 1,173.8 1,301.2
OTHER CREDITS 66.5 49.4
-------- --------
Total liabilities 2,694.1 2,621.3
REDEEMABLE PREFERRED STOCK - 185.0
COMMON STOCK REPURCHASE COMMITMENT 35.3 37.9
STOCKHOLDERS' EQUITY (Schedule A) 726.0 509.2
-------- --------
Total Liabilities, Temporary Equity,
and Stockholders' Equity $3,455.4 $3,353.4
======== ========
</TABLE>
See notes to consolidated financial statements
- 3 -
<PAGE> 5
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
September 30, 1995 and for the three-month and nine-month periods ended
September 30, 1995 and 1994 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, 1994.
NOTE 2/CAPITAL STOCK
During the 1995 second quarter, the Company contributed 3.9 million shares of
its common stock with an aggregate value of $100 million to the Company's
Pension Trust, reducing deferred employee benefits and increasing stockholders'
equity.
NOTE 3/REDEEMABLE PREFERRED STOCK
On August 1, 1995, the Company exchanged its Series F Exchangeable Preferred
Stock, held entirely by a wholly owned subsidiary of Nippon Steel Corporation,
for a 10.23% Subordinated Voting Note.
NOTE 4/WORKFORCE REDUCTIONS AND RESERVES
In the 1995 third quarter the Company recorded a charge of $35 million for
provisions related to pensions, health care, and severance costs resulting from
the acceptance by 278 salaried Inland Steel Company employees of a voluntary
retirement package offered during the quarter. In addition, Inland Steel
Company announced the closure of its plate operation. Provisions for pensions
and other employee benefits related to the shutdown of this operation had been
previously accrued.
With the closure of the plate operation, the Company will have completed the
workforce reduction program announced in 1991. A final computation of the
employee benefit costs required for the 1991 program resulted in unused
reserves due to differences between the actual makeup of the population leaving
the Company under this program and the projections used in 1991. Therefore, in
the current quarter, the Company reversed $65 million of unused reserves from
the balance sheet and recorded a corresponding credit to income.
During the quarter, the Company also increased reserves for previously
discontinued or reduced operations related to the Company's restructuring
efforts by $18 million, approximately half of which related to benefit costs,
primarily at closed mining facilities, and half related to impairment of assets
beyond amounts previously recognized. In addition, the Company increased its
environmental reserves by $7 million.
NOTE 5/COMMITMENTS
The total amount of firm commitments of the Company and its subsidiaries to
contractors and suppliers, primarily in connection with additions to property,
plant and equipment, increased to $53 million on September 30, 1995 from $42
million on December 31, 1994.
- 4 -
<PAGE> 6
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - Comparison of Third Quarter 1995 to Third Quarter 1994
The Company reported consolidated net income of $20.0 million, $.33 per
share, in the 1995 third quarter as compared with $30.7 million, $.54 per
share, in the year-earlier period. Lower quarter-to-quarter earnings resulted
from lower operating profit at the Steel Manufacturing segment, reflecting a
softening in key markets and increased maintenance costs as certain projects
planned for later periods were moved into the current quarter.
Consolidated net sales of $1.13 billion were virtually unchanged from the
prior year period. Lower sales levels at the Steel Manufacturing segment were
offset, in large part, by higher sales at the Materials Distribution segment.
The Steel Manufacturing segment reported net sales of $574 million, a 6
percent decrease from the year-ago quarter due to lower volume as average
selling price was virtually unchanged. Operating profit slipped to $39.2
million from $42.2 million in the 1994 third quarter in spite of the current
quarter operating profit being favorably impacted by $15.2 million of reserve
adjustments. A description of reserve adjustments, including those affecting
the Steel Manufacturing segment, is included in "Workforce Reductions and
Reserves" below.
The Materials Distribution segment net sales of $591 million in the third
quarter of 1995 were 5 percent higher than the year-earlier quarter. An 11
percent increase in average selling price was offset, in part, by a 6 percent
decrease in volume. Reflecting the improved net sales, operating profit
increased to $28.6 million from $26.9 million in the 1994 quarter. On a
quarter to comparable year-earlier quarter basis, this is the seventeenth
consecutive quarter of improvement in Materials Distribution operating profit.
Comparison of First Nine Months of 1995 to First Nine Months of 1994
The major factor in the Company reporting a consolidated net income of
$122 million for the first nine months of 1995 compared with $71 million of net
income in the comparable 1994 period was the strong operating performance in
the first half of 1995 at both of the Company's business segments.
Consolidated net sales of $3.66 billion were 10 percent higher for the
first nine months of 1995 than in 1994 due almost entirely to improved average
selling price at both business segments.
Steel Manufacturing segment net sales of $1.91 billion for the first nine
months of 1995 increased 3 percent from the comparable 1994 period due to an
improvement in average selling price as shipments decreased 1 percent. Higher
average selling price was also the primary factor leading to operating profit
increasing to $160 million as compared with $102 million a year earlier.
The Materials Distribution segment continued to advance, posting net
sales of $1.87 billion and operating profit of $112 million, increases of 14
percent and 54 percent, respectively, from year-ago periods. Average selling
price in the first nine months of 1995 increased 13 percent while volume
increased slightly compared with the first nine months of 1994.
- 5 -
<PAGE> 7
Workforce Reductions and Reserves
During the quarter, Inland Steel Company offered a voluntary retirement
package to approximately 1,000 salaried employees. A total of 278 salaried
employees accepted the package, resulting in Inland Steel Company recording a
charge of $35 million in the quarter for provisions related to pensions, health
care, and severance costs.
At quarter's end, Inland Steel Company announced the closure of its plate
operation. Provisions for pensions and other employee benefits related to the
shutdown of this operation had been previously accrued. With the closure of
the plate operation, the Company will have completed the workforce reduction
program announced in 1991 that will reduce employment at corporate headquarters
and Inland Steel Company by 25 percent from year-end 1991. A final computation
of the employee benefit costs required for the 1991 program resulted in unused
reserves due to differences between the actual makeup of the population leaving
the Company under this program and the projections used in 1991. As a result,
in the current quarter, the Company reversed $65 million of unused reserves
from the balance sheet and recorded a corresponding credit to income.
In the 1995 third quarter, the Company also recorded the following
adjustments to reserves. The Company increased reserves for previously
discontinued or reduced operations related to the Company's restructuring
efforts by $18 million, approximately half of which related to benefit costs,
primarily at closed mining facilities, and half related to impairment of assets
beyond amounts previously recognized. The Company also increased its
environmental reserves by $7 million.
Liquidity and Financing
At September 30, 1995, the Company had cash and cash equivalents of $182
million, compared with $107 million at year-end 1994. There was no short-term
borrowing at either date.
In the 1995 first quarter, the Ryerson unsecured revolving credit
facility was increased to $200 million and the maturity was extended for five
years. This increased Company subsidiaries' total committed credit facilities
to $325 million.
During the second quarter, the credit facility at I/N Kote, Inland Steel
Company's joint venture galvanizing facility, was renegotiated resulting in
reduced borrowing rates, an increase in the term from three to five years, and
a reduction in the credit line from $55 million to $45 million.
In May, the Company contributed 3.9 million shares of its common stock
with an aggregate value of $100 million to the Company's Pension Trust. The
contribution strengthens the plan's funded status and reduces the need for
future contributions.
In July, Inland Steel Company refinanced $17 million of Pollution Control
Bonds, lowering the interest rate from 10.75 percent to 6.85 percent on such
debt.
In August, the Company exchanged its Series F Exchangeable Preferred
Stock, held entirely by a wholly owned subsidiary of Nippon Steel Corporation,
for a 10.23% Subordinated Voting Note.
- 6 -
<PAGE> 8
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
(a) Inland Steel Company, a subsidiary of the Company, has entered into
a Thirty-Fourth Supplemental Indenture dated as of August 1, 1995 to
its First Mortgage Indenture dated April 1, 1928 filed as Exhibit
4.G to the Company's 1994 Annual Report on Form 10-K, under which
Inland Steel Company's outstanding first mortgage bonds have been
issued, to modify certain provisions of the First Mortgage Indenture
by (a) deleting the restriction on dividends set forth in Article
Six, Section 19, (b) deleting all restrictions on the issuance of
additional first mortgage bonds, including those relating to
interest coverage and capital expenditures, and on the purposes for
which additional first mortgage bonds may be issued, and (c)
providing that all first mortgage bonds of any future series may be
signed with the facsimile signature or signatures of an officer or
officers of Inland Steel Company and may be sealed with the
facsimile seal of Inland Steel Company.
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 September 30, 1995.
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 3.(i) to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1994, and incorporated by
reference herein.)
3.(ii) Copy of By-laws, as amended, of the Company.
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 Subordinated Voting Note Due 1999 in the amount of
$185,000,000 from the Company to NS Finance III, Inc. (Filed as
Exhibit 4.8 to Form S-3 Registration Statement No. 33-62897 and
incorporated by reference herein.)
4.F 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
- 7 -
<PAGE> 9
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.)
4.G 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-Third
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); (xxvii) Exhibit
4 filed with Steel Company's Current Report on Form 8-K dated June
23, 1993; and (xxviii) Exhibit 4.C filed with the Steel Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995.
4.H 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.)
10.A* Copy of Inland Steel Industries, Inc. Annual Incentive Plan, as
amended.
11 Statement of Earnings per Share of Common Stock.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
The Company did not any file Current Reports on Form 8-K during the
quarter ended September 30, 1995.
________________________
* Management contract or compensatory plan or arrangement required to
be filed as an exhibit to the Company's Quarterly Report on Form
10-Q.
- 8 -
<PAGE> 10
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 JAMES M. HEMPHILL
----------------------------
James M. Hemphill
Controller and
Principal Accounting Officer
Date: November 10, 1995
- 9 -
<PAGE> 11
Part I -- Schedule A
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
SUMMARY OF STOCKHOLDERS' EQUITY
================================================================================
<TABLE>
<CAPTION>
Dollars in Millions
--------------------------------------------------------
September 30, 1995 December 31, 1994
------------------------ ----------------------
(unaudited)
<S> <C> <C> <C> <C>
STOCKHOLDERS' EQUITY
Series A preferred stock ($1 par value)
- 94,201 shares and 94,701 shares issued and
outstanding as of September 30, 1995
and December 31, 1994, respectively $ .1 $ .1
Series E preferred stock ($1 par value)
- 3,105,426 shares and 3,102,553 shares
issued and outstanding as of September 30,
1995 and December 31, 1994, respectively 3.1 3.1
Common stock ($1 par value)
- 50,556,350 shares issued as of September 30, 1995
and December 31, 1994 50.6 50.6
Capital in excess of par value 1,052.4 1,095.5
Accumulated deficit
Balance beginning of year $(292.4) $(371.9)
Net income 121.9 107.4
Dividends
Series A preferred stock -
$1.80 per share in 1995 and
$2.40 per share in 1994 (.1) (.2)
Series E preferred stock -
$1.7615 per share in 1995 and
$3.523 per share in 1994 (5.5) (11.0)
Income tax benefit - Series E dividend 1.2 2.5
Series F preferred stock -
$47.40 per share in 1995 and
$94.80 per share in 1994 (8.8) (17.5)
Series G preferred stock -
$1.54165 per share in 1994 - (1.7)
Common stock -
$.15 per share in 1995 (7.1) (190.8) - (292.4)
------- -------
Unearned compensation related to ESOP (92.8) (100.5)
Common stock repurchase commitment (35.3) (37.9)
Investment valuation allowance (4.0) (3.5)
Unearned restricted stock award compensation (2.8) (4.0)
Treasury stock, at cost
- 1,861,828 shares and 6,006,122
shares as of September 30, 1995 and
December 31, 1994, respectively (53.0) (200.9)
Cumulative translation adjustment (1.5) (.9)
-------- --------
Total Stockholders' Equity $ 726.0 $ 509.2
======== ========
</TABLE>
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<PAGE> 12
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 Nine Months Ended
September 30 September 30
------------------------ -----------------------
1995 1994 1995 1994
-------- ------- -------- -------
<S> <C> <C> <C> <C>
NET SALES
- ---------
Steel Manufacturing Operations $ 574.3 $ 613.5 $1,911.4 $1,847.6
Materials Distribution Operations 590.7 560.7 1,874.7 1,647.3
Eliminations and adjustments (36.4) (44.7) (126.4) (154.1)
-------- -------- -------- --------
Total Net Sales $1,128.6 $1,129.5 $3,659.7 $3,340.8
======== ======== ======== ========
OPERATING PROFIT
- ----------------
Steel Manufacturing Operations $ 39.2 $ 42.2 $ 160.1 $ 102.4
Materials Distribution Operations 28.6 26.9 111.6 72.5
Eliminations and adjustments (1.2) .1 (1.1) 1.8
-------- -------- -------- --------
Total Operating Profit $ 66.6 $ 69.2 $ 270.6 $ 176.7
======== ======== ======== ========
</TABLE>
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<PAGE> 13
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 Nine Months Ended
September 30 September 30
--------------------- ------------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $590.7 $560.7 $1,874.7 $1,647.3
------ ------ -------- --------
OPERATING COSTS AND EXPENSES
Cost of goods sold 518.0 490.8 1,629.0 1,444.9
Selling, general and administrative expenses 38.6 37.6 117.6 113.8
Depreciation and amortization 5.5 5.4 16.5 16.1
------ ------ -------- --------
Total 562.1 533.8 1,763.1 1,574.8
------ ------ -------- --------
OPERATING PROFIT 28.6 26.9 111.6 72.5
General corporate expense (1.8) (1.8) (5.4) (5.3)
Interest income (expense), net .7 (.9) 1.7 (2.7)
------ ------ -------- --------
INCOME BEFORE INCOME TAXES 27.5 24.2 107.9 64.5
PROVISION FOR INCOME TAXES 10.6 8.5 42.5 25.0
------ ------ -------- --------
NET INCOME $ 16.9 $ 15.7 $ 65.4 $ 39.5
====== ====== ======== ========
</TABLE>
See notes to consolidated financial statements
A-1
<PAGE> 14
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
---------------------
Nine Months Ended
September 30
---------------------
1995 1994
------ ------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 65.4 $ 39.5
------ ------
Adjustments to reconcile net income to net cash
provided from (used for) operating activities:
Depreciation and amortization 16.5 16.1
Deferred employee benefit cost (13.6) (.1)
Deferred income taxes 3.7 1.2
Change in: Receivables (47.3) (52.9)
Inventories (14.6) (35.4)
Other assets (1.0) -
Accounts payable 10.2 12.5
Payables to related companies 2.3 10.2
Accrued liabilities (1.3) (3.4)
------ ------
Net adjustments (45.1) (51.8)
------ ------
Net cash provided from (used for) operating activities 20.3 (12.3)
------ ------
INVESTING ACTIVITIES
Capital expenditures (10.8) (11.5)
Proceeds from sales of assets 1.1 2.8
Net cash used for investing activities (9.7) (8.7)
------ ------
FINANCING ACTIVITIES
Long-term debt retired (4.5) (4.7)
Change in notes receivable from related companies 19.0 (1.8)
------ ------
Net cash provided from (used for) financing activities 14.5 (6.5)
------ ------
Net increase (decrease) in cash and cash equivalents 25.1 (27.5)
Cash and cash equivalents - beginning of year 2.5 29.5
------ ------
Cash and cash equivalents - end of period $ 27.6 $ 2.0
====== ======
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
Interest (net of amount capitalized) $ 2.4 $ 3.5
Income taxes, net 35.7 17.3
</TABLE>
See notes to consolidated financial statements
A-2
<PAGE> 15
INLAND MATERIALS DISTRIBUTION GROUP, INC.
AND SUBSIDIARY COMPANIES
(A wholly owned subsidiary of Inland Steel Industries, Inc.)
CONSOLIDATED BALANCE SHEET
================================================================================
<TABLE>
<CAPTION>
Dollars in Millions
------------------------------------------------------
ASSETS September 30, 1995 December 31, 1994
- ------ -------------------- -----------------------
(unaudited)
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 27.6 $ 2.5
Receivables 274.4 227.1
Inventories - principally at LIFO 287.8 273.2
Notes receivable from related companies 38.6 57.6
Deferred income taxes 13.4 13.0
------- -------
Total current assets 641.8 573.4
PROPERTY, PLANT AND EQUIPMENT
Valued on basis of cost $469.3 $461.6
Less accumulated depreciation 222.6 246.7 209.1 252.5
------ ------
DEFERRED INCOME TAXES 22.5 26.6
EXCESS OF COST OVER NET ASSETS ACQUIRED 24.0 25.0
OTHER ASSETS 2.6 1.6
------- -------
Total Assets $ 937.6 $ 879.1
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
- ------------------------------------
CURRENT LIABILITIES
Accounts payable $ 110.0 $ 99.8
Payables to related companies - trade and other 17.1 14.8
Accrued liabilities 27.0 28.3
Long-term debt due within one year 4.7 4.7
------- -------
Total current liabilities 158.8 147.6
LONG-TERM DEBT 19.1 23.6
DEFERRED EMPLOYEE BENEFITS AND OTHER 114.3 127.9
------- -------
Total liabilities 292.2 299.1
STOCKHOLDER'S EQUITY 645.4 580.0
------- -------
Total Liabilities and Stockholder's Equity $ 937.6 $ 879.1
======= =======
</TABLE>
See notes to consolidated financial statements
A-3
<PAGE> 16
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
September 30, 1995 and for the three-month and nine-month periods ended
September 30, 1995 and 1994 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,
1994.
NOTE 2/RELATED PARTY TRANSACTIONS
Inland Materials Distribution Group, Inc. ("Distribution") 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, Distribution was charged $5.4 million by
Industries for each of the first nine months of 1995 and 1994, for management,
financial and legal services provided to Distribution.
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. Distribution's net intercompany interest income
for the first nine months of 1995 totaled $2.6 million as compared to $.5
million of interest expense for the first nine months of 1994.
Distribution 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:
<TABLE>
<CAPTION>
Dollars in Millions
-------------------------------------------------------
Three Months Nine Months
Ended September 30 Ended September 30
---------------------- -----------------------
1995 1994 1995 1994
----- ----- ------ ------
<S> <C> <C> <C> <C>
Net Product Sales $ 2.4 $ 2.7 $ 9.6 $ 8.2
Net Product Purchases 35.9 43.7 122.0 151.0
</TABLE>
A-4
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page No.
------- ----------- --------
<S> <C> <C>
3.(i) Copy of Certificate of Incorporation, as amended, of the Company. (Filed as Exhibit
3.(i) to the Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1994, and incorporated by reference herein.) --
3.(ii) Copy of By-laws, as amended, of the Company . . . . . . . . . . . . . . . . . . . . . .
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 Subordinated Voting Note Due 1999 in the amount of $185,000,000 from the
Company to NS Finance III, Inc. (Filed as Exhibit 4.8 to Form S-3 Registration
Statement No. 33-62897 and incorporated by reference herein.) --
4.F 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.)
--
</TABLE>
- i -
<PAGE> 18
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page No.
------- ----------- --------
<S> <C> <C>
4.G 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-Third
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); (xxvii) Exhibit 4 filed with Steel Company's Current Report on Form 8-
K dated June 23, 1993; and (xxviii) Exhibit 4.C filed with the Steel Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995. --
4.H 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.) --
10.A* Copy of Inland Steel Industries, Inc. Annual Incentive Plan, as amended . . . . . . . .
11 Statement of Earnings per Share of Common Stock . . . . . . . . . . . . . . . . . . . .
27 Financial Data Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to the Company's Quarterly Report on Form 10-Q.
- ii -
<PAGE> 1
EXHIBIT 3.(ii)
BY-LAWS
OF
INLAND STEEL INDUSTRIES, INC.
(AS AMENDED TO AND INCLUDING JULY 26, 1995)
ARTICLE I
OFFICES
Section 1. The registered office of the Corporation shall be in the
City of Wilmington, County of New Castle, State of Delaware. The Corporation
may also have offices at such other places both within and without the State of
Delaware as the Board of Directors may from time to time determine or the
business of the Corporation may require.
ARTICLE II
STOCKHOLDERS
Section 1. Time and Place of Meetings. All meetings of the
stockholders for the election of directors or for any other purpose shall be
held at such time and place, within or without the State of Delaware, as shall
be designated by the Board of Directors.
Section 2. Annual Meetings; Nomination of Directors. An annual meeting
of stockholders shall be held for the purpose of electing Directors and for the
transaction of only such other business as is properly brought before the
meeting in accordance with these By-Laws. The date of the annual meeting shall
be the fourth Wednesday of May each year or such other date as may be
determined by the Board of Directors.
To be properly brought before the meeting, business must be either (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board, (b) otherwise properly brought before the meeting
by or at the direction of the Board or (c) otherwise properly brought before
the meeting by a stockholder. In addition to any other applicable
requirements, for business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing
to the Secretary of the Corporation. To be timely, a stockholder's notice must
be delivered to or mailed and received at the principal executive offices of
the Corporation, not less than ninety days nor more than one hundred fifteen
days prior to the meeting; provided, however, that in the event that less than
one-hundred five days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the
fifteenth day following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure was made, whichever first occurs.
A stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting
<PAGE> 2
- 2 -
(i) a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting,
(ii) the name and record address of the stockholder proposing such business,
(iii) the class and number of shares of the Corporation which are beneficially
owned by the stockholder and (iv) any material interest of the stockholder in
such business.
Notwithstanding anything in the By-Laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Article II, Section 2, provided, however, that
nothing in this Article II, Section 2 shall be deemed to preclude discussion by
any stockholder of any business properly brought before the annual meeting.
The Chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Article II,
Section 2, and if he should so determine, he shall so declare to the meeting
and any such business not properly brought before the meeting shall not be
transacted.
Only persons who are nominated in accordance with the following
procedures shall be eligible for election as Directors. Nominations of persons
for election to the Board of the Corporation at the annual meeting may be made
at a meeting of stockholders by or at the direction of the Board of Directors
by any nominating committee or person appointed by the Board or by any
stockholder of the Corporation entitled to vote for the election of Directors
at the meeting who complies with the notice procedures set forth in this
Article II, Section 2. Such nominations, other than those made by or at the
direction of the Board, shall be made pursuant to timely notice in writing to
the Secretary of the Corporation. To be timely, a stockholder's notice shall
be delivered to or mailed and received at the principal executive offices of
the Corporation not less than ninety days nor more than one hundred fifteen
days prior to the meeting; provided, however, that in the event that less than
one-hundred five days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the
fifteenth day following the day on which such notice of the date of the meeting
was mailed or such public disclosure was made, whichever first occurs. Such
stockholder's notice to the Secretary shall set forth: (a) as to each person
whom the stockholder proposes to nominate for election or re-election as a
Director, (i) the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the person, (iii) the
class and number of shares of capital stock of the Corporation which are
beneficially owned by the person and (iv) any other information relating to the
person that is required to be disclosed in solicitations for proxies for
election of Directors pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended; and (b) as to the
<PAGE> 3
- 3 -
stockholder giving the notice, (i) the name and record address of such
stockholder and (ii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by such stockholder. The Corporation
may require any proposed nominee to furnish such other information as may
reasonably be required by the Corporation to determine the eligibility of such
proposed nominee to serve as Director of the Corporation. No person shall be
eligible for election as a Director of the Corporation unless nominated in
accordance with the procedures set forth herein.
The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
Section 3. Special Meetings. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed by law,
may be called by the Chairman of the Board, Vice Chairman of the Board, the
President or the Board of Directors and shall be called by the Secretary at the
direction of the Chairman of the Board, Vice Chairman of the Board, the
President or the Board of Directors.
Section 4. Notice of Meetings. Written notice of each meeting
of the stockholders stating the place, date and time of the meeting shall,
unless otherwise required by law, be given not less than ten nor more than
sixty days before the date of the meeting to each stockholder entitled to vote
at such meeting. The notice of any special meeting of stockholders shall state
the purpose or purposes for which the meeting is called. If mailed, such
notice shall be deemed to be delivered to a stockholder when deposited in the
United States mail in a sealed envelope addressed to the stockholder at his or
her address as it appears on the records of the Corporation with postage
thereon paid.
Section 5. Quorum. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum for the transaction of business
at any meeting of the stockholders, except as otherwise provided by law, by the
Certificate of Incorporation or by these By-Laws. If a quorum is not present
or represented, the holders of the stock present in person or represented by
proxy at the meeting and entitled to vote thereat shall have power, by the
affirmative vote of the holders of a majority of such stock, to adjourn the
meeting to another time and/or place, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting, at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the original meeting. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned
<PAGE> 4
- 4 -
meeting, a notice of the adjourned meeting shall be given to each stockholder
of record entitled to vote at the meeting.
Section 6. Voting. At all meetings of the stockholders, each
holder of record on the record date for the meeting shall be entitled to vote
as set forth in the Corporation's Certificate of Incorporation (including any
Certificates of Designations) or as otherwise required by law, in person or by
proxy, the shares of voting stock owned of record by such stockholder on the
record date. When a quorum is present or represented at any meeting, the vote
of the holders of a majority of the stock entitled to be voted present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of law or
of the Certificate of Incorporation, a different vote is required, in which
case such express provision shall govern and control the decision of such
question. If the Certificate of Incorporation provides for more or less than
one vote for any share of stock, on any matter, every reference in the
Certificate of Incorporation or these By-laws to a majority or other proportion
of stock shall refer to such majority or other proportion of the votes of such
stock.
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the
Corporation shall be managed and controlled by or under the direction of a
Board of Directors, which may exercise all such powers of the Corporation and
do all such lawful acts and things as are not by law or by the Certificate of
Incorporation or by these By-Laws directed or required to be exercised or done
by the stockholders.
Section 2. Number, Qualification and Tenure. Prior to the first
annual meeting of stockholders, the Board of Directors shall consist of not
fewer than three (3) Directors nor more than eighteen (18) Directors.
Thereafter, the Board of Directors shall consist of not fewer than ten (10)
Directors nor more than eighteen (18) Directors. Within the limits above
specified, the number of Directors shall be determined from time to time by
resolution of the Board of Directors. The Directors shall be elected at the
annual meeting of the stockholders, except as provided in Section 3 of this
Article, and each Director elected shall hold office until his or her successor
is elected and qualified or until his or her earlier resignation or removal.
Directors need not be stockholders. Except as provided in Article III, Section
3 of these By-laws, the Directors shall designate from among their number a
Chairman of the Board, who shall preside at all meetings of the stockholders
and of the Board of Directors of the Corporation and who, if he or she is an
employee of the Corporation, shall exercise all of the powers and duties
conferred on the Chairman of the Board by the provisions of these By-Laws.
<PAGE> 5
- 5 -
If the person selected by the Directors as the Chairman of the Board is not, or
ceases to be, an employee of the Corporation, then, notwithstanding any other
provision of these By-Laws to the contrary, he or she shall exercise only such
powers and duties conferred on the Chairman of the Board by these By-Laws as
the Directors shall determine by resolution duly adopted and any other powers
and duties, including those of chief executive officer of the Corporation,
shall be exercised by the President of the Corporation.
Section 3. Vacancies. Vacancies and newly created directorships
resulting from any increase in the number of directors may be filled by a
majority of the Directors then in office (even if less than a quorum), and each
Director so chosen shall hold office until his or her successor is elected and
qualified or until his or her earlier resignation or removal. If there are no
Directors in office, then an election of Directors may be held in the manner
provided by law.
Immediately upon the Chairman of the Board's death, physical or mental
incapacity, or other inability to act (other than due to absence for a brief
and identifiable period), the Chairman of the committee responsible for
recommending candidates to fill vacancies on the Board of Directors of the
Corporation (the "Nominating Committee Chairman") shall assume the position of
Chairman of the Board and responsibility for performing all functions,
authorities and duties thereof, and shall serve in such capacity until his or
her successor is duly elected and qualified pursuant to Article III, Section 2
and any other applicable provision of these By-laws or until his or her earlier
resignation or removal. The Nominating Committee Chairman shall have sole
discretion to determine, at any time and from time to time, whether the
Chairman of the Board is physically or mentally incapacitated, otherwise unable
to act, or absent for other than a brief and identifiable period and shall,
immediately upon making such a determination or learning of the death of the
Chairman of the Board, notify each member of the Board of Directors and each
officer of the Corporation of the relevant facts and circumstances.
Section 4. Place of Meetings. The Board of Directors may hold
meetings, whether regular or special, within or without the State of Delaware.
Section 5. Regular Meetings. The Board of Directors shall hold
a regular meeting, to be known as the annual meeting, immediately following
each annual meeting of the stockholders. Other regular meetings of the Board
of Directors shall be held at such time and place as shall from time to time be
determined by the Board. No notice of regular meetings need be given.
Section 6. Special Meetings. Special meetings of the Board may
be called by the Chairman of the Board, the Vice Chairman of the Board, any
five Directors or the President. Special meetings
<PAGE> 6
- 6 -
shall be called by the Secretary on the written request of any Director.
Notice of special meetings shall be given at least one day before any such
meeting.
Section 7. Quorum. At all meetings of the Board of Directors a
majority of the total number of Directors shall constitute a quorum for the
transaction of business and the act of a majority of the Directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by law. If a
quorum shall not be present at any meeting of the Board of Directors, the
Directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 8. Organization. The Chairman of the Board, if elected,
shall act as chairman at all meetings of the Board of Directors. If a Chairman
of the Board is not elected or, if elected, is not present, the Vice Chairman
of the Board, if any, or if the Vice Chairman of the Board is not present, the
President or, in the absence of the President, a Director chosen by a majority
of the Directors present, shall act as chairman at meetings of the Board of
Directors.
Section 9. Executive Committee. The Board of Directors, by
resolution adopted by a majority of the whole Board, may designate not fewer
than five (5) and not more than nine (9) Directors to constitute an Executive
Committee, to serve as such, unless the resolution designating the Executive
Committee is sooner amended or rescinded by the Board of Directors, until the
next annual meeting of the Board or until their respective successors are
designated. The Board of Directors, by resolution adopted by a majority of the
whole Board, may also designate additional Directors as alternate members of
the Executive Committee (so long as the aggregate number of members of the
Executive Committee does not exceed nine (9)) to serve as members of the
Executive Committee in the place and stead of any regular member or members
thereof who may be unable to attend a meeting or otherwise unavailable to act
as a member of the Executive Committee. In the absence or disqualification of
a member and all alternate members who may serve in the place and stead of such
member, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another Director to act at the meeting in the
place of any such absent or disqualified member.
Except as expressly limited by the General Corporation Law of the
State of Delaware or the Certificate of Incorporation, the Executive Committee
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation
between the meetings of the Board of Directors, but subject always to the final
control of the Board of Directors except where rights of third parties have
<PAGE> 7
- 7 -
intervened. The Executive Committee shall keep a record of its acts and
proceedings, which shall form a part of the records of the Corporation in the
custody of the Secretary, and all actions of the Executive Committee shall be
reported to the Board of Directors at the next meeting of the Board.
Meetings of the Executive Committee may be called at any time by the
Chairman of the Board, the Chairman of the Executive Committee or any two (2)
members of the Executive Committee. A majority of the members of the Executive
Committee shall constitute a quorum for the transaction of business and, except
as expressly limited by this Section, the act of a majority of the members
present at any meeting at which there is a quorum shall be the act of the
Executive Committee. Except as expressly provided in this Section, the
Executive Committee shall fix its own rules of procedure. Notice of Executive
Committee meetings shall be given at least one day before such meetings.
Section 10. Finance and Retirement Committee. The Board of
Directors may, annually, by resolution passed by a majority of the whole Board
of Directors, designate not fewer than four (4) and not more than eleven (11)
Directors to constitute a Finance and Retirement Committee. Such designation
may be made either at the first meeting of the Board of Directors held after
each annual meeting of the stockholders of the Corporation, or at any
subsequent regular or special meeting of the Board of Directors. Vacancies in
the Finance and Retirement Committee may be filled, or additional members of
the Finance and Retirement Committee (so long as the aggregate number of the
Finance and Retirement Committee does not exceed eleven (11)) may be
designated, at any meeting of the Board of Directors. Each member of the
Finance and Retirement Committee shall hold office until his or her successor
shall have been duly elected, or until his or her death, or until he or she
shall resign or shall have been removed. Any member of the Finance and
Retirement Committee may be removed by the Board of Directors whenever in its
judgment the best interests of the Corporation would be served thereby.
The Finance and Retirement Committee, from time to time, shall
consider the fiscal affairs of the Corporation and make recommendations with
respect thereto to the Board of Directors and the Executive Committee. The
Finance and Retirement Committee shall also administer and act with respect to
pension or retirement plans and trusts of the Corporation and such other
matters as shall from time to time be specified in resolutions passed by a
majority of the whole Board of Directors, subject, however, to any conditions
and provisions set forth in such resolutions. The Pension and Retirement
Committee is designated as the Pension Plan Retirement Committee.
The Finance and Retirement Committee shall meet at the call of the
Chairman of the Board, the Vice Chairman of the Board, the Chairman of the
Finance and Retirement Committee, or any two (2)
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members of the Finance and Retirement Committee. Three (3) members of the
Finance Committee shall constitute a quorum. The Finance and Retirement
Committee shall keep a record of its acts and pro-ceedings and all actions of
the Finance Committee shall be reported to the Board of Directors at its next
regular meeting, and the minute books of the Finance and Retirement Committee
shall be open to the inspection of any Directors.
Section 11. Other Committees. The Board of Directors, by
resolution adopted by a majority of the whole Board, may designate one or more
other committees, each such committee to consist of one or more Directors.
Except as expressly limited by the General Corporation Law of the State of
Delaware or the Certificate of Incorporation, any such committee shall have and
may exercise such powers as the Board of Directors may determine and specify in
the resolution designating such committee. The Board of Directors, by
resolution adopted by a majority of the whole Board, also may designate one or
more additional Directors as alternate members of any such committee to replace
any absent or disqualified member at any meeting of the committee, and at any
time may change the membership of any committee or amend or rescind the
resolution designating the committee. In the absence or disqualification of a
member or alternate member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another Director
to act at the meeting in the place of any such absent or disqualified member,
provided that the Director so appointed meets any qualifications stated in the
resolution designating the committee. Each committee shall keep a record of
proceedings and report the same to the Board of Directors to such extent and in
such form as the Board of Directors may require. Unless otherwise provided in
the resolution designating a committee, a majority of all of the members of any
such committee may select its Chairman, fix its rules or procedure, fix the
time and place of its meetings and specify what notice of meetings, if any,
shall be given.
Section 12. Action without Meeting. Unless otherwise restricted
by the Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board
or committee, as the case may be, consent thereto in writing, and the writing
or writings are filed with the minutes of proceedings of the Board or
committee.
Section 13. Attendance by Telephone. Members of the Board of
Directors, or of any committee, may participate in a meeting of the Board of
Directors, or of such committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
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Section 14. Compensation. The Board of Directors shall have the
authority to fix the compensation of Directors, which may include reimbursement
of their expenses, if any, of attendance of each meeting of the Board of
Directors or of a committee.
Section 15. Honorary Directors. Any person who has at any time
been chief executive officer of the Corporation (or of Inland Steel Company
prior to May 1, 1986), may, after retirement or resignation from the Board of
Directors (or having retired or resigned from the Board of Directors of Inland
Steel Company), be appointed by the Board of Directors as an Honorary Director
for one or more year terms. Honorary Directors shall serve in an advisory
capacity to the Board of Directors, shall have no vote and shall not be
considered as Directors for the purposes of determining a quorum. Honorary
Directors shall be reimbursed for their expenses in attending meetings of the
Board of Directors. Any Honorary Director who is not at the time otherwise
regularly employed by the Corporation or any subsidiary shall receive such fees
(which may include reimbursement of expenses, if any) for attendance at each
meeting of the Board of Directors as may be fixed from time to time by the
Board of Directors, but shall not receive any other director's fees or any
other compensation for his or her services.
ARTICLE IV
OFFICERS
Section 1. Enumeration. The officers of the Corporation shall
be chosen by the Board of Directors and shall be a President, a Secretary, a
Treasurer, a General Counsel and a Controller. The Board of Directors may also
elect a Chairman of the Board, a Vice Chairman, one or more Assistants to the
Chairman, one or more Vice Presidents, one or more Assistant Secretaries and
Assistant Treasurers and such other officers and agents as it shall deem
appropriate. Any number of offices may be held by the same person.
Section 2. Term of Office. The officers of the Corporation
shall be elected at the annual meeting of the Board of Directors and shall hold
office until their successors are elected and qualified. Any officer elected
or appointed by the Board of Directors may be removed at any time by the Board
of Directors. Any vacancy occurring in any office of the Corporation required
by this Article shall be filled by the Board of Directors, and any vacancy in
any other office may be filled by the Board of Directors.
Section 3. Chairman of the Board. Subject to the provisions of
Article III, Section 2 of these By-Laws, the Chairman of the Board, when
elected, shall be the Chief Executive Officer of the Corporation and, as such,
shall have general supervision, direction and control of the business and
affairs of the Corporation, subject to the control of the Board of Directors,
shall preside at meetings of stockholders and shall have such other functions,
authority and
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duties as customarily appertain to the office of the chief executive of a
business corporation or as may be prescribed by the Board of Directors.
Section 4. Vice Chairman of the Board. The Vice Chairman of the
Board shall, in the case of absence of the Chairman of the Board for any brief
and identifiable period, have and exercise the powers and duties of the
Chairman of the Board. He or she shall have such other duties and powers as
may be assigned to him by the Board of Directors, the Executive Committee or
the Chairman of the Board.
Section 5. President. During any period when there shall be a
Chairman of the Board, the President shall be the Chief Operating Officer of
the Corporation and shall have such functions, authority and duties as may be
prescribed by the Board of Directors or the Chairman of the Board. During any
period when there shall not be a Chairman of the Board or Vice Chairman of the
Board, the President shall be the Chief Executive Officer of the Corporation
and, as such, shall have the functions, authority and duties provided for the
office of Chairman of the Board.
Section 6. Executive and Senior Vice Presidents. Each Executive
Vice President shall have such duties and powers as may be assigned to him or
her by the Board of Directors, the Executive Committee, the Chairman of the
Board, the Vice Chairman of the Board, or the President. An Executive Vice
President, designated by the Board of Directors, shall (in the event of
absence, death or other inability to act of the President) have and exercise
the powers and duties of the President.
Each Senior Vice President shall have such duties and powers as may be
assigned to him or her by the Board of Directors, the Executive Committee, the
Chairman of the Board, the Vice Chairman of the Board or the President.
Section 7. Vice Presidents. Each Vice President shall perform
such duties and have such other powers as may from time to time be prescribed
by the Board of Directors, the Chairman of the Board or the President or the
Executive Committee.
Section 8. Secretary. The Secretary shall keep a record of all
proceedings of the stockholders of the Corporation and of the Board of
Directors, Finance Committee and Executive Committee, and shall perform like
duties for any other standing committees when required. The Secretary shall
give, or cause to be given, notice, if any, of all meetings of the stockholders
and shall perform such other duties as may be prescribed by the Board of
Directors, the Chairman of the Board, the President, or the Executive
Committee. The Secretary shall have custody of the corporate seal of the
Corporation and the Secretary, or in the absence of the Secretary any Assistant
Secretary, shall have authority to affix the same to any instrument requiring
it, and when so affixed it may be attested
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by the signature of the Secretary or an Assistant Secretary. The Board of
Directors may give general authority to any other officer to affix the seal of
the corporation and to attest such affixing of the seal.
Section 9. Assistant Secretary. The Assistant Secretary, or if
there be more than one, the Assistant Secretaries in the order determined by
the Board of Directors (or if there be no such determination, then in the order
of their election), shall, in the absence of the Secretary or in the event of
the Secretary's inability or failure to act, perform the duties and exercise
the powers of the Secretary and shall perform such other duties as may from
time to time be prescribed by the Board of Directors, the Chairman of the
Board, the President or the Secretary.
Section 10. Treasurer. The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors or the Executive Committee. The Treasurer shall disburse the funds
of the Corporation as may be ordered by the Board of Directors, keeping proper
records of such disbursements, and shall render to the Chairman of the Board,
Vice Chairman of the Board, the Chairman of the Executive Committee, the
Chairman of the Finance Committee, the President, the officer designated by the
Board of Directors as Chief Financial Officer, if any, and the Board of
Directors, the Executive Committee and the Finance Committee at their regular
meetings or when the Board of Directors so requires, an account of all
transactions as Treasurer and of the financial condition of the Corporation.
The Treasurer shall perform such other duties as may from time to time be
prescribed by the Board of Directors, the Chairman of the Board, the President
or the Chief Financial Officer.
Section 11. Assistant Treasurer. The Assistant Treasurer, or if
there shall be more than one, the Assistant Treasurers in the order determined
by the Board of Directors (or if there be no such determination, then in the
order of their election), shall, in the absence of the Treasurer or in the
event of the Treasurer's inability or refusal to act, perform the duties and
exercise the powers of the Treasurer and shall perform such other duties and
have such other powers as may from time to time be prescribed by the Board of
Directors, the Chairman of the Board, the President or the Treasurer.
Section 12. Assistant to the Chairman. The Assistant to the
Chairman of the Board shall have and exercise such powers and duties as may be
assigned to him or her by the Chairman of the Board.
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Section 13. General Counsel. The General Counsel shall be
responsible for the legal affairs of the Corporation and shall have such other
duties as from time to time may be assigned to him or her by the Chairman of
the Board, the Vice Chairman of the Board, the President, the Board of
Directors or the Executive Committee.
Section 14. Controller. The Controller shall be the chief
accounting officer of the Corporation. He or she shall, when proper, approve
all bills for purchases, payrolls, and similar instruments providing for
disbursement of money by the Corporation, for payment by the Treasurer. He or
she shall be in charge of and maintain books of account and accounting records
of the Corporation. He or she shall perform such other acts as are usually
performed by a Controller of a corporation. He or she shall render to the
Chairman of the Board, the Vice Chairman of the Board, the Chairman of the
Executive Committee, the Chairman of the Finance Committee, the President, the
Chief Financial Officer, the Board of Directors, the Executive Committee and
the Finance Committee, such reports as any thereof may require.
Section 15. Other Officers. Any officer who is elected or
appointed from time to time by the Board of Directors and whose duties are not
specified in these By-Laws shall perform such duties and have such powers as
may be prescribed from time to time by the Board of Directors, the Chairman of
the Board, the Vice Chairman of the Board, the President or the Executive
Committee.
Section 16. Surety Bonds. The Board of Directors or Executive
Committee may by resolution, require any officers of the Corporation to give
bonds for the faithful discharge of their duties in such sums and with such
sureties as the Board of Directors or Executive Committee shall determine, the
expense of which shall be paid by the Corporation.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Form. The shares of the Corporation shall be
represented by certificates; provided, however, that the Board of Directors may
provide by resolution or resolutions that some or all of any or all classes or
series of the Corporation's stock shall be uncertificated shares. Certificates
of stock in the Corporation, if any, shall be signed by or in the name of the
Corporation by the Chairman of the Board or the President or a Vice President
and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation. The signatures of the Chairman of the Board, the
President or a Vice President and the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary may be facsimiles. In case any
officer, transfer agent or registrar who has signed or whose facsimile
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signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, the
certificate may be issued by the Corporation with the same effect as if such
officer, transfer agent or registrar were such officer, transfer agent or
registrar at the date of its issue.
Section 2. Transfer. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction on its books.
Section 3. Replacement. In case of the loss, destruction or
theft of a certificate for any stock of the Corporation, a new certificate of
stock or uncertificated shares in place of any certificate therefor issued by
the Corporation may be issued upon satisfactory proof of such loss, destruction
or theft and upon such terms as the Board of Directors may prescribe. The
Board of Directors may in its discretion require the owner of the lost,
destroyed or stolen certificate, or his or her legal representative, to give
the Corporation a bond, in such sum and in such form and with such surety or
sureties as it may direct, to indemnify the Corporation against any claim that
may be made against it with respect to a certificate alleged to have been lost,
destroyed or stolen.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Each person who was or is made a party or is threatened to
be made a party to or is involved in or called as a witness in any action, suit
or proceeding, whether civil, criminal, administrative or investigative, and
any appeal therefrom (hereinafter, collectively a "proceeding"), by reason of
the fact that he or she, or a person of whom he or she is the legal
representative, is, was or had agreed to become a director of the Corporation
or is, was or had agreed to become an officer of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, shall be
indemnified and held harmless by the Corporation to the fullest extent
permitted under the General Corporation Law of the State of Delaware (the
"DGCL"), as the same now exists or may hereafter be amended (but, in the case
of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than the DGCL permitted
the Corporation to
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provide prior to such amendment), against all expenses, liabilities and losses
(including attorneys' fees, judgments, fines, excise taxes or penalties
pursuant to the Employee Retirement Income Security Act of 1974, as amended,
and amounts paid or to be paid in settlement) reasonably incurred or suffered
by such person in connection therewith; provided, that except as explicitly
provided herein, prior to a Change in Control, as defined herein, a person
seeking indemnity in connection with a proceeding (or part thereof) initiated
by such person against the Corporation or any director, officer, employee or
agent of the Corporation shall not be entitled thereto unless the Corporation
has joined in or consented to such proceeding (or part thereof). For purposes
of this Article, a "Change in Control of the Corporation" shall be deemed to
have occurred if (i) any "Person" (as is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) is or becomes (except in a
transaction approved in advance by the Board of Directors of the Corporation)
the beneficial owner (as defined in Rule 13d-3 under such Act), directly or
indirectly, of securities of the Corporation representing 20% or more of the
combined voting power of the Corporation's then outstanding securities or (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Corporation cease for any
reason to constitute at least a majority thereof unless the election of each
director who was not a director at the beginning of the period was approved by
a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
Any indemnification under this Section 1 (unless ordered by a court)
shall be paid by the Corporation unless within 60 days of such request for
indemnification a determination is made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
proceeding, (ii) if such quorum is not obtainable, or even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel (who
may be the regular counsel of the Corporation) in a written opinion or (iii) by
the stockholders, that indemnification of such person is not proper under the
circumstances because such person has not met the necessary standard of conduct
under Delaware law; provided, however, that following a Change in Control of
the Corporation, with respect to all matters thereafter arising out of acts,
omissions or events prior to the Change in Control of the Corporation
concerning the rights of any person seeking indemnification under this Section
1, such determination shall be made by special independent counsel selected by
such person and approved by the Corporation (which approval shall not be
unreasonably withheld), which counsel has not otherwise performed services
(other than in connection with similar matters) within the five years preceding
its engagement to render such opinion for such person or for the Corporation or
any affiliates (as such term is defined in Rule 405 under the Securities Act of
1933, as amended)
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of the Corporation (whether or not they were affiliates when services were so
performed) ("Independent Counsel"). Unless such person has theretofore
selected Independent Counsel pursuant to this Section 1 and such Independent
Counsel has been approved by the Corporation, legal counsel approved by a
resolution or resolutions of the Board of Directors prior to a Change in
Control of the Corporation shall be deemed to have been approved by the
Corporation as required. Such Independent Counsel shall determine as promptly
as practicable whether and to what extent such person would be permitted to be
indemnified under applicable law and shall render its written opinion to the
Corporation and such person to such effect. The Corporation agrees to pay the
reasonable fees of the Independent Counsel referred to above and to fully
indemnify such Independent Counsel against any and all expenses, claims,
liabilities and damages arising out of or relating to this Article or its
engagement pursuant hereto.
Section 2. Expenses. Expenses, including attorneys' fees,
incurred by a person referred to in Section 1 of this Article in defending or
otherwise being involved in a proceeding shall be paid by the Corporation in
advance of the final disposition of such proceeding, including any appeal
therefrom, upon receipt of an undertaking (the "Undertaking") by or on behalf
of such person to repay such amount if it shall ultimately be determined that
he or she is not entitled to be indemnified by the Corporation.
Section 3. Right of Claimant to Bring Suit. If a claim under
Section 1 hereof is not paid in full by the Corporation within 60 days after a
written claim has been received by the Corporation or if expenses pursuant to
Section 2 hereof have not been advanced within 10 days after a written request
for such advancement accompanied by the Undertaking has been received by the
Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim or the advancement of
expenses. (If the claimant is successful, in whole or in part, in such suit or
any other suit to enforce a right for expenses or indemnification against the
Corporation or any other party under any other agreement, such claimant shall
also be entitled to be paid the reasonable expense of prosecuting such claim.)
It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required Undertaking has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the DGCL for the Corporation to indemnify the claimant for
the amount claimed. After a Change in Control, the burden of proving such
defense shall be on the Corporation, and any determination by the Corporation
(including its Board of Directors, independent legal counsel or its
stockholders) that the claimant had not met the applicable standard of conduct
required under the
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DGCL shall not be a defense to the action nor create a presumption that
claimant had not met such applicable standard of conduct.
Section 4. Non-Exclusivity of Rights. The rights conferred on
any person by this Article shall not be exclusive of any other right which such
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, By-Law, agreement, vote of stockholders or
disinterested directors or otherwise. The Board of Directors shall have the
authority, by resolution, to provide for such other indemnification of
directors, officers, employees or agents as it shall deem appropriate.
Section 5. Insurance. The Corporation may purchase and maintain
insurance to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expenses, liabilities or losses, whether or not the
Corporation would have the power to indemnify such person against such
expenses, liabilities or losses under the DGCL.
Section 6. Enforceability. The provisions of this Article shall
be applicable to all proceedings commenced after its adoption, whether such
arise out of events, acts, omissions or circumstances which occurred or existed
prior or subsequent to such adoption, and shall continue as to a person who has
ceased to be a director or officer and shall inure to the benefit of the heirs,
executors and administrators of such person. This Article shall be deemed to
grant each person who, at any time that this Article is in effect, serves or
agrees to serve in any capacity which entitles him to indemnification hereunder
rights against the Corporation to enforce the provisions of this Article, and
any repeal or other modification of this Article or any repeal or modification
of the DGCL or any other applicable law shall not limit any rights of
indemnification then existing or arising out of events, acts, omissions,
circumstances occurring or existing prior to such repeal or modification,
including, without limitation, the right to indemnification for proceedings
commenced after such repeal or modification to enforce this Article with regard
to acts, omissions, events or circumstances occurring or existing prior to such
repeal or modification.
Section 7. Severability. If this Article or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify each director and officer of the
Corporation as to costs, charges and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement with respect to any proceeding,
whether civil, criminal, administrative or investigative, including an action
by or in the right of the Corporation, to the full extent permitted by any
applicable portion of this Article that shall not
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have been invalidated and to the full extent permitted by applicable law.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Fiscal Year. The fiscal year of the Corporation
shall be the calendar year.
Section 2. Corporate Seal. The corporate seal shall be in such
form as may be approved from time to time by the Board of Directors. The seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
in any other manner reproduced.
Section 3. Waiver of Notice. Whenever any notice is required to
be given under law or the provisions of the Certificate of Incorporation or
these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent to notice.
ARTICLE VIII
AMENDMENTS
These By-Laws may be altered, amended or repealed or new By-Laws may
be adopted by the Board of Directors. The fact that the power to amend, alter,
repeal or adopt the By-Laws has been conferred upon the Board of Directors
shall not divest the stockholders of the same powers.
<PAGE> 1
EXHIBIT 10.A
INLAND STEEL INDUSTRIES, INC.
ANNUAL INCENTIVE PLAN
(AS AMENDED EFFECTIVE JULY 1, 1995)
1. PURPOSE.
The purpose of the Annual Incentive Plan (the "Plan") of Inland Steel
Industries, Inc. (the "Company") is to promote the interests of the Company and
its stockholders by (i) attracting and retaining salaried employees of
outstanding ability; (ii) strengthening the Company's capability to develop,
maintain and direct a competent employee population; (iii) motivating salaried
employees, by means of performance- related incentives, to achieve financial
rewards commensurate with their individual performances; (iv) providing annual
incentive compensation opportunities which are competitive with those of other
major corporations; and (v) enabling salaried employees to participate in the
growth and financial success of the Company.
2. DEFINITIONS
"Affiliate" -- means any corporation or other entity which is not a
Subsidiary but as to which the Company possesses a direct or indirect ownership
interest and has power to exercise management control.
"Award" -- means an amount for an Award Period determined to be payable to
a Participant under the Plan.
"Award Period" -- means a calendar quarter or a calendar year, as the
Committee may establish from time to time with respect to any Hay point class or
resulting salary grade designations, to any Corporate Unit, or to a combination
of these factors.
"Award Schedule" -- means the schedule to be used for determining Awards
as established by the Committee and set forth in the Addendum to the Plan
applicable to the Corporate Unit covered thereby.
"Committee" -- means the Compensation Committee of the Board of Directors
of the Company.
"Consolidated Earnings" -- means the net income for the relevant Award
Period, on a consolidated basis, of the Company and all Subsidiaries, adjusted
as follows: (i) by adding back any amounts credited to the Fund or Funds under
the Plan for the Award Period in question; (ii) by adding back any provisions
of federal, state or municipal taxes which are based on or determined by
earnings or net income and imposed on the Company or any Subsidiary; (iii) by
eliminating gains or losses from sales or other dispositions of assets arising
other than in the ordinary course of business or arising from discontinued
operations (after adjusting for taxes in
<PAGE> 2
the manner provided in (ii) above); and (iv) by deducting or adding back any
other earnings or charges (after adjusting for taxes in the manner provided in
(ii) above) that have been designated by the Committee for exclusion or
inclusion under the Plan.
"Corporate Unit" -- means the Company, Inland Steel Company, Inland
Materials Distribution Group, Inc., Joseph T. Ryerson & Son/East, Joseph
T. Ryerson & Son/Central, Joseph T. Ryerson & Son/West, Ryerson Coil
Processing, J. M. Tull Metals Company, Inc., and any Affiliate, other
Subsidiary or any division or group of the Company or any Subsidiary designated
as a Corporate Unit from time to time by the Board of Directors of the Company.
"Employee" -- means an employee eligible to be designated a Participant in
the Plan.
"Operating Assets" -- means the average for an Award Period of the sum
(computed on a month-end basis) of (i) working capital (with inventory adjusted
to current value and excluding cash, marketable securities, interest-bearing
receivables, notes payable and long-term debt due in one year); (ii) property,
plant and equipment, net of accumulated depreciation; and (iii) any other
operating assets.
"Operating Profit" -- means the operating profit set forth in the
Company's Quarterly Report on Form 10-Q or Annual Report to Stockholders for a
Corporate Unit for the applicable Award Period, or if not separately stated, as
determined in accordance with generally accepted accounting principles based on
the financial results presented in such Quarterly Report on Form 10-Q or Annual
Report, in each case as adjusted by the Committee to reflect such items as the
Committee determines appropriate.
"Participant" -- means an Employee who is selected by the Committee to receive
an Award under the Plan.
"Return on Equity" -- means Consolidated Earnings divided by Stockholders'
Equity.
"Return on Operating Assets" -- means Operating Profit divided by
Operating Assets (expressed as a percentage), provided that Operating Profit
shall be computed for this purpose without giving effect to any payments to
Participants for the Award Period in question.
"Stockholders' Equity" -- means the average of the amounts so designated
on a consolidated basis in the Company's Quarterly Report on Form 10-Q or
Annual Report to Stockholders as of the close of the applicable Award Period
for which Awards under the Plan are being made and as of the close of the
comparable year-earlier Award Period, less the aggregate amount of any equity
financings from external sources during the applicable Award Period
- 2 -
<PAGE> 3
for which Awards are being made.
"Subsidiary" -- means any corporation in which the Company possesses
directly or indirectly more than fifty percent (50%) of the total combined
voting power of all classes of its stock.
"Target Award" -- means the percentage of a Participant's salary earnings
for an Award Period as established by the Committee pursuant to paragraph 6 of
the Plan and set forth in the Addendum to the Plan applicable to the Corporate
Unit in which such Participant is employed.
"Threshold" -- means the minimum financial performance (established by the
Committee and set forth in the Addendum to the Plan applicable to such
Corporate Unit) required by a Corporate Unit before an Award may be paid to a
Participant employed in such Corporate Unit.
3. ADMINISTRATION
The Plan shall be administered by the Committee. No member of the
Committee shall be eligible to receive an Award while serving on the Committee.
The Committee shall have authority to interpret the Plan and to establish,
amend and rescind rules and regulations for the administration of the Plan, and
all such interpretations, rules and regulations shall be conclusive and binding
on all persons. In addition, the Committee may delegate to one or more senior
executive officers of the Company the right to administer the Plan as it
pertains to employees who are not officers of the Company or any other
Corporate Unit. Notwithstanding any other provision of the Plan to the
contrary, the Committee may impose such conditions on participation in and
Awards under the Plan as it deems appropriate. Such conditions may include
conditions applicable to one or more Participants which are intended to cause
Awards payable to such Participants to be disregarded for purposes of Section
162(m) of the Internal Revenue Code of 1986, as amended, including but not
limited to conditions which subject payment of Awards to stockholder approval
of the Plan and conditions which preclude the Committee from exercising any
discretion otherwise provided by the Plan to adjust Consolidated Earnings or
Operating Profits or to adjust individual Awards in accordance with paragraph
7, if the effect of any such adjustment would be to increase the amount of any
Award otherwise payable to such Participants.
4. ELIGIBILITY
All full-time salaried employees of a Corporate Unit as of (a) the first
day and the last day of a quarterly Award Period, or (b) June 30 of an annual
Award Period, as applicable, are eligible to be designated Participants in the
Plan for such Award Period, provided, however, that the Committee may adopt
criteria restricting the number of full-time salaried employees of a
- 3 -
<PAGE> 4
Corporate Unit eligible to be so designated, which criteria shall be set forth
in the Addendum to the Plan applicable to such Corporate Unit.
5. DESIGNATION OF PARTICIPANTS
The Committee shall determine and designate from time to time those
Employees who shall be Participants. The designation of an Employee as a
Participant in the Plan for any Award Period shall not bestow upon such
Employee any right to receive an Award for such Award Period or the right to be
designated a Participant for any subsequent Award Period.
6. INDIVIDUAL AWARD OPPORTUNITY
For each Award Period, the Committee shall establish for each Participant
a Target Award, expressed as a percentage of his or her base salary earnings
for such Award Period, on the basis of his or her Hay point classification or
resulting salary grade designation.
7. DETERMINATION OF AWARDS
Awards for each Award Period for Participants in each Corporate Unit shall
be determined in accordance with the Award Schedule established by the
Committee for such Corporate Unit, provided, however, that no Award shall be
paid to any Participant in a Corporate Unit for any Award Period in which the
performance of such Corporate Unit did not equal or exceed the Threshold
applicable to such Corporate Unit. The Award for each Participant in a
Corporate Unit shall be the percentage of his or her Target Award determined in
accordance with the applicable Award Schedule, provided, however, that (except
in the case of the Chief Executive Officer of the Company) the Committee may
adjust such Award for individual performance on the basis of such quantitative
and qualitative performance measures and evaluations as it deems appropriate,
and provided, further, that the Committee may also make such adjustments as it
deems appropriate in the case of Participants whose Hay point classifications
or resulting salary grade designations have changed during the applicable Award
Period or who have been employed in more than one Corporate Unit during an
Award Period. In no event may a participant be paid an Award in any calendar
year in excess of $2,000,000. No segregation of any moneys or the creation of
any trusts or the making of any special deposits shall be required in
connection with any Awards made or to be made under the Plan.
8. PAYMENT OF AWARDS
Awards shall be paid in cash as soon as practicable after the end of the
Award Period for which the Award is made. If a Participant to whom an Award
has been made dies prior to the payment of the Award, such Award shall be
delivered to his or her
- 4 -
<PAGE> 5
legal representative or to such other person or persons as shall be determined
by the Chief Executive Officer of the Company. The Company or other applicable
Corporate Unit shall have the right to deduct from all Awards payable under the
Plan any taxes required by law to be withheld by the Company or other Corporate
Unit with respect thereto.
9. TERMINATION OF EMPLOYMENT
Except in the case of death, disability or retirement or except as
provided in paragraph 10, a Participant must be an Employee as of the end of
the Award Period in order to be eligible for an Award. Notwithstanding the
foregoing, in the case of a Participant who retires under the provisions of a
special retirement incentive program offered by the Company, the Committee may,
in its sole discretion, make an advance payment of an Award on or prior to the
end of the Award Period based upon the financial performance of the Company as
determined by the Committee. A Participant who receives advance payment of an
Award pursuant to this paragraph 9 shall not be entitled to any additional
payment for the Award Period.
10. CHANGE OF CONTROL
In the event of a Change of Control of the Company (as hereinafter
defined), the Plan shall remain in full force and effect for the remainder of
the calendar year in which such Change of Control occurs, and each Participant
shall receive an Award for all Award Periods occurring in such calendar year,
at least equal to his or her Target Award, regardless of whether or not Awards
would otherwise have been payable under the Plan for such Award Periods and
regardless of whether or not such Participant was an Employee at the end of any
Award Period occurring in such calendar year. A "Change of Control of the
Company" shall be deemed to have occurred if there shall have been a change in
the composition of the Board of Directors of the Company such that a majority
of the Board of Directors shall have been members of the Board of Directors for
less than twenty-four months, unless the election of each new director who was
not a director at the beginning of the twenty-four month period was approved by
a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of such period.
11. TRANSFERABILITY
Any payment to which a Participant may be entitled under the Plan shall be
free from the control or interference of any creditor of such Participant and
shall not be subject to attachment or susceptible of anticipation or
alienation. The interests of a Participant shall not be transferable except by
will or the laws of descent and distribution.
- 5 -
<PAGE> 6
12. NO RIGHT TO PARTICIPATION; EMPLOYMENT
Neither the adoption of the Plan nor any action of the Committee shall be
deemed to give any Employee any right to be designated as a Participant under
the Plan. Further, nothing contained in the Plan, nor any action by the
Committee or any other person hereunder, shall be deemed to confer upon any
Employee any right of continued employment with any Corporate Unit or to limit
or diminish in any way the right of any Corporate Unit to terminate his or her
employment any time with or without cause.
13. NONEXCLUSIVITY OF THE PLAN
This Plan is not intended to and shall not preclude the Board of Directors
of the Company from adopting or continuing such additional compensation
arrangements as it deems desirable for Participants under this Plan, including
any thrift, savings, investment, stock purchase, stock option, profit sharing,
pension, retirement, insurance or other incentive plan.
14. AMENDMENT
Except as provided in paragraph 10 hereof, the Board of Directors of the
Company may amend, suspend or terminate the Plan at any time.
- 6 -
<PAGE> 1
EXHIBIT 11
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK (UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Dollars and Shares in Millions
(except per share data)
-----------------------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
-------------------------- ------------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE OF COMMON STOCK
Shares of common stock
Average shares outstanding 48.7 44.3 46.9 42.6
Dilutive effect of stock options .1 .6 .1 .5
----- ----- ------- -------
48.8 44.9 47.0 43.1
===== ===== ======= =======
Net income $20.0 $30.7 $ 121.9 $ 71.4
Dividends on preferred stock, net of tax benefit on dividends
applicable to leveraged Series E Preferred Stock held by
the ESOP 3.7 6.6 16.8 21.8
----- ----- ------- -------
Net income applicable $16.3 $24.1 $ 105.1 $ 49.6
===== ===== ======= =======
Primary earnings per share of common stock $ .33 $ .54 $ 2.24 $ 1.15
===== ===== ======= =======
FULLY DILUTED EARNINGS PER SHARE OF COMMON STOCK
Shares of common stock
Average shares outstanding 48.7 44.3 46.9 42.6
Assumed conversion of Series A and leveraged
Series E Preferred Stock 3.0 3.0 3.1 3.0
Dilutive effect of stock options .1 .6 .1 .7
----- ----- ------- -------
51.8 47.9 50.1 46.3
===== ===== ======= =======
Net income $20.0 $30.7 $ 121.9 $ 71.4
Dividends on antidilutive preferred stock, net of tax benefit
on dividends applicable to leveraged Series E
Preferred Stock held by the ESOP 1.6 4.5 10.6 15.9
Additional ESOP funding required on conversion of leveraged
Series E Preferred Stock, net of tax benefit 1.9 2.1 5.6 5.9
----- ----- ------- -------
Net income applicable $16.5 $24.1 $ 105.7 $ 49.6
===== ===== ======= =======
Fully diluted earnings per share of common stock $ .32 $ .50 $ 2.11 $ 1.07
===== ===== ======= =======
</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 nine-month periods ended September 30, 1995, the
assumed conversion of non-leveraged Series E Preferred Stock was
antidilutive. In the three-month period ended September 30, 1995, the
assumed conversion of Series A Preferred Stock was antidilutive. In
the three-month and nine-month periods ended September 30, 1994, the
assumed conversions of Series A, non-leveraged Series E, and Series G
Preferred Stock were antidilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF OPERATIONS, THE CONSOLIDATED BALANCE SHEET, AND THE
SUMMARY OF STOCKHOLDERS' EQUITY CONTAINED IN THE QUARTERLY REPORT ON FORM 10-Q
TO WHICH THIS EXHIBIT IS ATTACHED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL SCHEDULES.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 181,800
<SECURITIES> 0
<RECEIVABLES> 542,100
<ALLOWANCES> 28,400
<INVENTORY> 504,400
<CURRENT-ASSETS> 1,271,500
<PP&E> 4,351,600
<DEPRECIATION> 2,765,200
<TOTAL-ASSETS> 3,455,400
<CURRENT-LIABILITIES> 583,600
<BONDS> 870,200
<COMMON> 50,600
0
3,200
<OTHER-SE> 672,200
<TOTAL-LIABILITY-AND-EQUITY> 3,455,400
<SALES> 3,657,900
<TOTAL-REVENUES> 3,659,700
<CGS> 3,223,200
<TOTAL-COSTS> 3,224,700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 51,200
<INCOME-PRETAX> 199,200
<INCOME-TAX> 77,300
<INCOME-CONTINUING> 121,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 121,900
<EPS-PRIMARY> 2.24
<EPS-DILUTED> 2.11
</TABLE>
