<PAGE>
Second Quarter - 1997
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
-------------------------
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the period ended June 30, 1997
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: 48,798,226 shares of the
Company's Common Stock ($1.00 par value per share) were outstanding as of August
7, 1997.
<PAGE>
PART I. FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
Consolidated Statement of Operations (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dollars in Millions (except per share data)
-----------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
----------------------- ----------------------
1997 1996 1997 1996
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET SALES $1,321.2 $1,163.0 $2,528.5 $2,343.9
-------- -------- -------- --------
OPERATING COSTS AND EXPENSES
Cost of goods sold 1,148.0 1,030.2 2,189.7 2,072.2
Selling, general and
administrative expenses 58.2 53.1 113.9 106.0
Depreciation 40.2 36.5 79.3 73.3
Gain from sale of assets (Note 3) (15.9) - (17.9) -
-------- -------- -------- --------
Total 1,230.5 1,119.8 2,365.0 2,251.5
-------- -------- -------- --------
OPERATING PROFIT 90.7 43.2 163.5 92.4
General corporate expense, net of income items (4.8) (.5) (6.1) (1.8)
Interest and other expense on debt (15.5) (20.1) (31.9) (40.0)
Gain from issuance of subsidiary stock - 31.4 - 31.4
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 70.4 54.0 125.5 82.0
PROVISION FOR INCOME TAXES 27.7 20.3 49.4 31.1
-------- -------- -------- --------
INCOME BEFORE MINORITY INTEREST 42.7 33.7 76.1 50.9
MINORITY INTEREST IN RYERSON TULL, INC. 2.6 - 4.8 -
-------- -------- -------- --------
INCOME BEFORE EXTRAORDINARY LOSS 40.1 33.7 71.3 50.9
EXTRAORDINARY LOSS ON EARLY
RETIREMENT OF DEBT - 14.5 - 14.5
-------- -------- -------- --------
NET INCOME $ 40.1 $ 19.2 $ 71.3 $ 36.4
======== ======== ======== ========
EARNINGS PER SHARE OF COMMON STOCK:
Primary:
Before extraordinary loss $ .77 $ .65 $ 1.36 $ .96
Extraordinary loss on early retirement of debt - (.30) - (.30)
-------- -------- -------- --------
Net income $ .77 $ .35 $ 1.36 $ .66
======== ======== ======== ========
Fully Diluted:
Before extraordinary loss $ .73 $ .61 $ 1.29 $ .90
Extraordinary loss on early retirement of debt - (.28) - (.28)
-------- -------- -------- --------
Net income $ .73 $ .33 $ 1.29 $ .62
======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements
-1-
<PAGE>
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
Consolidated Statement of Cash Flows (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dollars in Millions
----------------------
Six Months Ended
June 30
----------------------
1997 1996
------------ --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 71.3 $ 36.4
-------- -------
Adjustments to reconcile net income to net
cash provided from operating activities:
Depreciation 79.6 73.6
Deferred employee benefit cost 7.2 11.0
Deferred income taxes 21.4 8.9
Gain from sale of assets (17.9) -
Gain from issuance of subsidiary stock - (31.4)
Change in: Receivables (40.3) (15.9)
Inventories (2.8) (4.3)
Accounts payable (11.0) (23.5)
Accrued salaries and wages (5.1) (17.4)
Other accrued liabilities 7.1 18.6
Other deferred items 9.1 1.5
-------- -------
Net adjustments 47.3 21.1
-------- -------
Net cash provided from operating activities 118.6 57.5
-------- -------
INVESTING ACTIVITIES
Acquisitions (Note 2) (130.4) -
Capital expenditures (48.9) (74.4)
Investments in and advances to joint ventures, net 5.9 7.6
Proceeds from sale of assets 31.7 4.9
-------- -------
Net cash used for investing activities (141.7) (61.9)
-------- -------
FINANCING ACTIVITIES
Reduction of debt assumed in acquisitions (22.6) -
Issuance of subsidiary stock - 77.1
Long-term debt retired (9.8) (153.2)
Dividends paid (10.4) (10.5)
Acquisition of treasury stock (5.0) (2.2)
-------- -------
Net cash used for financing activities (47.8) (88.8)
-------- -------
Net decrease in cash and cash equivalents (70.9) (93.2)
Cash and cash equivalents - beginning of year 238.0 267.4
-------- -------
Cash and cash equivalents - end of period $ 167.1 $ 174.2
======== =======
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
Interest (net of amount capitalized) $ 32.1 $ 37.4
Income taxes, net 22.7 5.2
</TABLE>
See notes to consolidated financial statements
-2-
<PAGE>
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
Consolidated Balance Sheet
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dollars in Millions
---------------------------------------
June 30, 1997 December 31, 1996
------------------- ------------------
ASSETS (unaudited)
- ------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 167.1 $ 238.0
Receivables 549.5 464.7
Inventories - principally at LIFO
In process and finished products $ 522.5 $ 418.4
Raw materials and supplies 49.1 571.6 76.2 494.6
-------- --------
Deferred income taxes 31.5 30.5
-------- --------
Total current assets 1,319.7 1,227.8
INVESTMENTS AND ADVANCES 253.1 252.1
PROPERTY, PLANT AND EQUIPMENT
Valued on basis of cost 4,596.2 4,536.1
Less: Reserve for depreciation,
amortization and depletion 2,872.5 2,798.4
Allowance for terminated facilities 100.7 1,623.0 100.7 1,637.0
-------- --------
DEFERRED INCOME TAXES 265.5 287.5
INTANGIBLE PENSION ASSET 76.3 76.3
OTHER ASSETS 95.2 60.9
-------- --------
Total Assets $3,632.8 $3,541.6
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
Accounts payable $ 340.1 $ 321.4
Accrued liabilities 205.1 195.8
Long-term debt due within one year 23.5 19.6
-------- --------
Total current liabilities 568.7 536.8
LONG-TERM DEBT 759.5 773.2
DEFERRED EMPLOYEE BENEFITS 1,308.8 1,301.6
OTHER CREDITS 58.4 59.9
-------- --------
Total liabilities 2,695.4 2,671.5
MINORITY INTEREST IN RYERSON TULL, INC. 53.8 49.0
COMMON STOCK REPURCHASE COMMITMENT 28.2 32.1
STOCKHOLDERS' EQUITY (Schedule A) 855.4 789.0
-------- --------
Total Liabilities, Minority Interest, Temporary Equity,
and Stockholders' Equity $3,632.8 $3,541.6
======== ========
</TABLE>
See notes to consolidated financial statements
-3-
<PAGE>
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
Notes to Consolidated Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE 1/FINANCIAL STATEMENTS
Results of operations for any interim period are not necessarily indicative of
results of any other periods or for the year. The financial statements as of
June 30, 1997 and for the three-month and six-month periods ended June 30,
1997 and 1996 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, 1996.
NOTE 2/ACQUISITIONS
During the first quarter of 1997, the Company, through its majority-owned
subsidiary Ryerson Tull, Inc., acquired Thypin Steel Co., Inc. and Cardinal
Metals, Inc. for an aggregate $130.4 million in cash. The acquisitions were
accounted for as purchases. Results of operations since acquisition for each
company are included in consolidated results. The pro forma effect for 1997
and 1996 had these acquisitions occurred at the beginning of each such year is
not material.
NOTE 3/SALE OF ASSETS
During the second quarter of 1997, the Company realized a pretax gain of $15.9
million associated with the sale of Inland Steel Company's interest in the
Wabush iron ore mine ($9.0 million) and Ryerson Tull's sale of its closed
Boston plant ($6.9 million).
An additional pretax gain of $2.0 million was realized in the first quarter of
1997 due to the sale of Ryerson Tull's Jersey City Plant.
NOTE 4/EARNINGS PER SHARE
The Company is required to adopt Financial Accounting Standards Board
Statement No. 128, "Earnings per Share," at year-end 1997. Basic and diluted
earning per share as defined in that Statement are not materially different
from the primary and fully diluted earning per share amounts presented.
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, decreased to $46 million on June 30, 1997 from $53 million
on December 31, 1996.
-4-
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
RESULTS OF OPERATIONS - Comparison of Second Quarter 1997 to Second Quarter 1996
- --------------------------------------------------------------------------------
The Company reported consolidated net income of $40.1 million, or $.77 per
share, in the 1997 second quarter as compared with $19.2 million, $.35 per
share, in the year-earlier period. Included in the 1997 second quarter's net
income was a pretax gain of $15.9 million ($9.0 million after-tax, or $.18 per
share) associated with the sale of Inland Steel Company's interest in an iron
ore property and Ryerson Tull's sale of its Boston property. The year-earlier
quarter included a $31.4 million pretax gain ($19.5 million after-tax, or $.40
per share) from the issuance of Ryerson Tull Series A common stock and a $14.5
million ($.30 per share) extraordinary after-tax loss from the early retirement
of Inland Steel Industries' 12-3/4% Notes.
Consolidated net sales increased 14 percent to $1.32 billion in the 1997
second quarter from $1.16 billion in the comparable 1996 quarter.
The Steel Manufacturing segment's net sales of $643.8 million for the
quarter represented a 6 percent increase from a year ago. The volume of steel
mill products sold increased 4 percent to 1,375,000, tons which is the highest
second quarter shipping volume since 1984, and average selling prices were up
two percent. As a result, operating profit increased to $49.0 million, including
a $9.0 million gain from the sale of the interest in the Wabush iron ore
property, from $11.3 million a year earlier.
The Materials Distribution segment's net sales of $730.0 million increased
20 percent from the same period a year ago. Volume increased 23 percent from the
year-ago quarter as higher volume from existing facilities was supplemented by
shipments from Thypin Steel and Cardinal Metals, which were acquired in the 1997
first quarter. Lower average selling price, however, put increased pressure on
gross margins, offsetting in part the effects of the increase in volume.
Further, operating expenses, which declined on a per ton basis, were higher in
total from a year ago. Excluding the $6.9 million gain on the sale of the
segment's Boston property, operating profit increased $2.7 million from the 1996
second quarter.
Comparison of First Six Months of 1997 to First Six Months of 1996
- ------------------------------------------------------------------
The Company reported net income of $71.3 million, $1.36 per share, for the
first six months of 1997 compared with net income of $36.4 million, $.66 per
share, in the comparable 1996 period. The first six months of 1997 benefited
from an after-tax gain of $10.0 million, $.20 per share, from the sale of assets
while the 1996 first half included a net gain of $5.0 million, $.10 per share,
associated with the Company's recapitalization.
-5-
<PAGE>
A significant improvement in operating profit at the Steel Manufacturing segment
was the principal contributor to the improved results in 1997.
Consolidated net sales of $2.53 billion for the first six months of 1997
were 8 percent higher than the $2.34 billion realized in the comparable 1996
period.
The Steel Manufacturing segment's net sales improved two percent from the
year-earlier period to $1.25 billion due entirely to higher average selling
price as volume remained virtually unchanged. The increase in net sales
combined with improved operating cost performance were the primary factors
contributing to the $63.4 million year-to-year increase in operating profit.
The 1997 first half included the $9.0 million gain from the sale of the Wabush
property.
Net sales for the Materials Distribution segment of $1.39 billion for the
1997 first half were 13 percent higher than the comparable 1996 period. As in
the 1997 second quarter, higher shipping levels were offset by lower average
selling price and additional operating expense with the result that operating
profit, excluding the gain on the sale of assets, remained virtually unchanged
from the first six months of 1997.
Liquidity and Financing
- -----------------------
The Company's cash and cash equivalents were $167.1 million at
June 30, 1997 compared with $238.0 million at year-end 1996. The decrease was
primarily due to the acquisitions at the Materials Distribution segment and the
repayment of debt assumed in the acquisitions. There was no short-term borrowing
at either date.
-6-
<PAGE>
PART II. OTHER INFORMATION
---------------------------
Item 4. Submission of Matters to a Vote of Security Holders
(a) A meeting of stockholders was held on May 28, 1997 and was an annual
meeting.
(b) No answer is required.
(c) The election of nine nominees for director of the Company was voted
upon at the meeting. The number of affirmative votes and the number of
votes withheld with respect to such approval is as follows:
<TABLE>
<CAPTION>
Nominee Affirmative Votes Votes Withheld
---------------------- ----------------- --------------
<S> <C> <C>
A. Robert Abboud 49,766,716 987,830
Robert J. Darnall 49,704,284 1,050,262
James A. Henderson 49,940,893 813,653
Robert B. McKersie 49,929,200 825,345
Leo F. Mullin 49,939,832 814,714
Jean-Pierre Rosso 49,944,375 810,171
Joshua I. Smith 49,928,619 825,926
Nancy H. Teeters 49,929,270 825,275
Arnold R. Weber 49,932,843 821,702
</TABLE>
The results of the voting for the election of Price Waterhouse to
audit the accounts of the Company and its subsidiaries for 1997 are as
follows:
For Against Abstain
--- ------- -------
50,236,957 318,968 198,620
The results of the voting on the stockholder proposal regarding the
spin-off of Ryerson Tull, Inc. (the "Stockholder Proposal") are as
follows:
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
9,656,310 38,102,331 490,511 2,505,393
There were no matters voted upon at the meeting, other than voting on
the Stockholder Proposal, to which broker non-votes applied.
(d) Not applicable.
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 Annual Report on Form 10-K
for the year ended December 31, 1995, and incorporated by reference
herein.)
3.(ii) Copy of By-laws, as amended, of the Company. (Filed as Exhibit
3.(ii) to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995, and incorporated by reference
herein.)
-7-
<PAGE>
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.)
4.G Copy of Supplemental Indenture dated as of June 19, 1996 between
the Company and Harris Trust & Savings Bank, as Trustee, respecting
the Company's $150,000,000 12-3/4% Notes. (Filed as Exhibit 4.G to
the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996 and incorporated by reference herein.)
4.H Copy of First Mortgage Indenture, dated April 1, 1928, between
Inland Steel Company (the "Steel Company") and First Trust and
Savings Bank and Melvin A. Traylor, as Trustees, and of
supplemental indentures thereto, to and including the Thirty-Fifth
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
-8-
<PAGE>
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; (xxix)
Exhibit 4.C filed with the Steel Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1995; and (xxx) Exhibit
4.C filed with Steel Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996.
4.I Copy of consolidated reprint of First Mortgage Indenture, dated
April 1, 1928, between Inland Steel Company and First Trust and
Savings Bank and Melvin A. Traylor, as Trustees, as amended and
supplemented by all supplemental indentures thereto, to and
including the Thirteenth Supplemental Indenture. (Filed as Exhibit
4-E to Form S-1 Registration Statement No. 2-9443, and incorporated
by reference herein.)
11 Statement of Earnings per Share of Common Stock.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
The Company did not file any Current Reports on Form 8-K during the quarter
ended June 30, 1997.
-9-
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INLAND STEEL INDUSTRIES, INC.
By James M. Hemphill
-------------------------------------
James M. Hemphill
Controller and
Principal Accounting Officer
Date: August 12, 1997
-10-
<PAGE>
Part I -- Schedule A
--------------------
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
SUMMARY OF STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dollars in Millions
------------------------------------------------------------------------
June 30, 1997 December 31, 1996
------------------------------------- ---------------------------------
(unaudited)
<S> <C> <C> <C> <C>
STOCKHOLDERS' EQUITY
- ------------------------------------------------
Series A preferred stock ($1 par value)
- 94,201 shares issued and outstanding as of
June 30, 1997 and December 31, 1996 $ .1 $ .1
Series E preferred stock ($1 par value)
- 3,039,748 shares and 3,080,790 shares
issued and outstanding as of June 30,
1997 and December 31, 1996, respectively 3.0 3.1
Common stock ($1 par value)
- 50,556,350 shares issued as of June 30, 1997
and December 31, 1996 50.6 50.6
Capital in excess of par value 1,042.7 1,045.8
Accumulated deficit
Balance beginning of year $(146.0) $(172.8)
Net income 71.3 45.7
Dividends
Series A preferred stock -
$1.20 per share in 1997 and
$2.40 per share in 1996 (.1) (.2)
Series E preferred stock -
$1.7615 per share in 1997 and
$3.523 per share in 1996 (5.5) (11.0)
Income tax benefit - Series E dividend 1.0 2.1
Common stock -
$.10 per share in 1997 and
$.20 per share in 1996 (4.9) (84.2) (9.8) (146.0)
------- --------
Unearned compensation related to ESOP (74.1) (79.4)
Common stock repurchase commitment (28.2) (32.1)
Investment valuation allowance (4.4) (4.8)
Unearned restricted stock award compensation (.4) (.8)
Treasury stock, at cost
- 1,776,984 shares and 1,647,954
shares as of June 30, 1997 and
December 31, 1996, respectively (46.4) (44.2)
Cumulative translation adjustment (3.3) (3.3)
-------- --------
Total Stockholders' Equity $ 855.4 $ 789.0
======== ========
</TABLE>
-11-
<PAGE>
Part I -- Schedule B
--------------------
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
Summary Financial Information for Business Segments (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dollars in Millions
------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
-------------------- --------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
------ ------ -------- --------
NET SALES
- ---------
Steel Manufacturing Operations $643.8 $604.9 $1,250.4 $1,220.6
Materials Distribution Operations 730.0 607.5 1,390.7 1,232.8
Eliminations and adjustments (52.6) (49.4) (112.6) (109.5)
------ ------ -------- --------
Total Net Sales $1,321.2 $1,163.0 $2,528.5 $2,343.9
======== ======== ======== ========
OPERATING PROFIT
- ----------------
Steel Manufacturing Operations $49.0 $11.3 $ 87.3 $23.9
Materials Distribution Operations 42.3 32.7 77.3 69.3
Eliminations and adjustments (.6) (.8) (1.1) (.8)
----- ----- ------ -----
Total Operating Profit $ 90.7 $ 43.2 $ 163.5 $ 92.4
====== ======= ======= =======
</TABLE>
-12-
<PAGE>
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 Six Months Ended
June 30 June 30
------------------ ------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE OF COMMON STOCK
Shares of common stock
Average shares outstanding 48.9 48.7 48.9 48.7
Dilutive effect of stock options - - - -
----- ----- ----- -----
48.9 48.7 48.9 48.7
===== ===== ===== =====
Income before extraordinary loss $40.1 $33.7 $71.3 $50.9
Extraordinary loss - 14.5 - 14.5
----- ----- ----- -----
Net income 40.1 19.2 71.3 36.4
Dividends on preferred stock, net of tax benefit on dividends
applicable to leveraged Series E Preferred Stock held by
the ESOP 2.3 2.3 4.6 4.4
----- ----- ----- -----
Net income applicable $37.8 $16.9 $66.7 $32.0
===== ===== ===== =====
Primary earnings per share of common stock
Before extraordinary loss $ .77 $ .65 $1.36 $ .96
Extraordinary loss on early retirement of debt - (.30) - (.30)
----- ----- ----- -----
Net income $ .77 $ .35 $1.36 $ .66
===== ===== ===== =====
FULLY DILUTED EARNINGS PER SHARE OF COMMON STOCK
Shares of common stock
Average shares outstanding 48.9 48.7 48.9 48.7
Assumed conversion of Series A and leveraged
Series E Preferred Stock 3.1 3.0 3.1 3.0
Dilutive effect of stock options .1 .1 .1 .1
----- ----- ----- -----
52.1 51.8 52.1 51.8
==== ===== ===== =====
Income before extraordinary loss $40.1 $33.7 $71.3 $50.9
Extraordinary loss - 14.5 - 14.5
----- ----- ----- -----
Net income 40.1 19.2 71.3 36.4
Dividends on antidilutive preferred stock .1 .1 .1 .2
Additional ESOP funding required on conversion of leveraged
Series E Preferred Stock, net of tax benefit 2.0 2.0 4.0 3.9
----- ----- ----- -----
Net income applicable $38.0 $17.1 $67.2 $32.3
===== ===== ===== =====
Fully diluted earnings per share of common stock
Before extraordinary loss $ .73 $ .61 $1.29 $ .90
Extraordinary loss on early retirement of debt - (.28) - (.28)
----- ----- ----- -----
Net income $ .73 $ .33 $1.29 $ .62
===== ===== ===== =====
</TABLE>
NOTE: In the three-month and six-month periods ended June 30, 1997, the assumed
conversion of non-leveraged Series E Preferred Stock was antidilutive. In
the three-month and six-month periods ended June 30, 1996, the assumed
conversions of Series A Preferred Stock and non-leveraged Series E
Preferred Stock were antidilutive.
-13-
<TABLE> <S> <C>
<PAGE>
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 167,100
<SECURITIES> 0
<RECEIVABLES> 575,400
<ALLOWANCES> 25,900
<INVENTORY> 571,600
<CURRENT-ASSETS> 1,319,700
<PP&E> 4,596,200
<DEPRECIATION> 2,973,200
<TOTAL-ASSETS> 3,632,800
<CURRENT-LIABILITIES> 568,700
<BONDS> 759,500
0
3,100
<COMMON> 50,600
<OTHER-SE> 801,700
<TOTAL-LIABILITY-AND-EQUITY> 3,632,800
<SALES> 2,527,700
<TOTAL-REVENUES> 2,528,500
<CGS> 2,268,400
<TOTAL-COSTS> 2,269,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,900
<INCOME-PRETAX> 125,500
<INCOME-TAX> 49,400
<INCOME-CONTINUING> 76,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71,300
<EPS-PRIMARY> 1.36
<EPS-DILUTED> 1.29
</TABLE>
