<PAGE>
Second Quarter - 1998
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, 1998
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: 49,231,047 shares of the
Company's Common Stock ($1.00 par value per share) were outstanding as of August
7, 1998.
<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
------------------ --------------------
1998 1997 1998 1997
------ ------ -------- --------
<S> <C> <C> <C> <C>
NET SALES $724.9 $733.6 $1,465.8 $1,397.9
------ ------ -------- --------
OPERATING COSTS AND EXPENSES
Cost of goods sold 631.0 645.0 1,278.6 1,226.4
Selling, general and
administrative expenses 49.3 47.4 97.7 91.7
Depreciation 7.5 6.4 14.8 12.4
Gain from sale of assets - (6.9) - (8.9)
------ ------ -------- --------
Total 687.8 691.9 1,391.1 1,321.6
------ ------ -------- --------
OPERATING PROFIT 37.1 41.7 74.7 76.3
General corporate income, net of expense items 1.6 3.9 4.0 11.9
Interest and other expense on debt (9.6) (9.9) (19.2) (20.7)
------ ------ -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES 29.1 35.7 59.5 67.5
PROVISION FOR INCOME TAXES 11.4 14.0 23.2 26.1
------ ------ -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE
MINORITY INTEREST 17.7 21.7 36.3 41.4
MINORITY INTEREST IN RYERSON TULL, INC. 2.2 2.6 4.3 4.8
------ ------ -------- --------
INCOME FROM CONTINUING OPERATIONS 15.5 19.1 32.0 36.6
INCOME FROM DISCONTINUED OPERATIONS OF
INLAND STEEL COMPANY (Net of income taxes of
$7.3, $13.8, $10.5 and $23.4) 12.9 21.0 18.2 34.7
------ ------ -------- --------
NET INCOME $ 28.4 $ 40.1 $ 50.2 $ 71.3
====== ====== ======== ========
EARNINGS PER SHARE OF COMMON STOCK:
Basic:
From continuing operations $ .27 $ .34 $ .56 $ .65
Discontinued operations - Inland Steel Company .26 .43 .37 .71
------ ------ -------- --------
Net income $ .53 $ .77 $ .93 $ 1.36
====== ====== ======== ========
Diluted:
From continuing operations $ .26 $ .33 $ .53 $ .62
Discontinued operations - Inland Steel Company .25 .40 .35 .67
------ ------ -------- --------
Net income $ .51 $ .73 $ .88 $ 1.29
====== ====== ======== ========
</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
----------------
1998 1997
------ -------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 50.2 $ 71.3
------ -------
Adjustments to reconcile net income to net
cash provided from operating activities of continuing operations:
Loss (income) from discontinued operations (18.2) (34.7)
Depreciation 15.0 12.7
Deferred employee benefit cost 1.5 2.9
Deferred income taxes 1.5 (.4)
Gain from sale of assets - (8.9)
Change in: Receivables (34.1) (47.5)
Inventories (57.4) (31.7)
Accounts payable 2.4 25.6
Accrued salaries and wages (3.9) (9.8)
Other accrued liabilities (4.6) 3.9
Other deferred items 11.8 10.2
------ -------
Net adjustments (86.0) (77.7)
------ -------
Net cash provided from (used for) operating
activities of continuing operations (35.8) (6.4)
------ -------
INVESTING ACTIVITIES
Acquisitions (Note 2) (7.7) (130.4)
Capital expenditures (15.4) (16.1)
Investments in and advances to joint ventures, net (2.4) (4.2)
Proceeds from sale of assets .2 16.7
------ -------
Net cash used for investing activities of
continuing operations (25.3) (134.0)
------ -------
FINANCING ACTIVITIES
Reduction of debt assumed in acquisitions - (22.6)
Long-term debt retired (5.3) (5.4)
Dividends paid (10.3) (10.4)
Acquisition of treasury stock (6.0) (5.0)
------ -------
Net cash used for financing activities of
continuing operations (21.6) (43.4)
------ -------
Cash provided by discontinued operations 36.5 112.9
------ -------
Net decrease in cash and cash equivalents (46.2) (70.9)
Cash and cash equivalents - beginning of year 97.0 238.0
------ -------
Cash and cash equivalents - end of period $ 50.8 $ 167.1
====== =======
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
Interest (net of amount capitalized) $ 30.1 $ 32.1
Income taxes, net 32.2 22.7
</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, 1998 December 31, 1997
----------------- -------------------
ASSETS (unaudited)
- ------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 50.8 $ 97.0
Receivables 348.0 523.3
Inventories - principally at LIFO
In process and finished products $480.0 $ 543.8
Raw materials and supplies 2.3 482.3 80.3 624.1
------ --------
Deferred income taxes 5.6 30.7
-------- --------
Total current assets 886.7 1,275.1
INVESTMENTS AND ADVANCES 40.0 271.6
INVESTMENT IN INLAND STEEL COMPANY 492.3 -
PROPERTY, PLANT AND EQUIPMENT
Valued on basis of cost 595.1 4,649.7
Less: Reserve for depreciation,
amortization and depletion 287.1 2,907.2
Allowance for terminated facilities - 308.0 100.7 1,641.8
------ --------
EXCESS OF COST OVER NET ASSETS ACQUIRED 80.3 82.3
DEFERRED INCOME TAXES 36.2 231.4
PREPAID PENSION COSTS 15.8 77.4
OTHER ASSETS 15.9 66.9
-------- --------
Total Assets $1,875.2 $3,646.5
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
Accounts payable $ 172.2 $ 354.9
Accrued liabilities 47.3 197.3
Long-term debt due within one year 17.1 62.7
-------- --------
Total current liabilities 236.6 614.9
LONG-TERM DEBT 437.4 704.9
DEFERRED EMPLOYEE BENEFITS 160.2 1,275.6
OTHER CREDITS 7.1 65.4
-------- --------
Total liabilities 841.3 2,660.8
MINORITY INTEREST IN RYERSON TULL, INC. 62.4 57.5
COMMON STOCK REPURCHASE COMMITMENT 22.6 28.1
STOCKHOLDERS' EQUITY (Schedule A) 948.9 900.1
-------- --------
Total Liabilities, Minority Interest, Temporary Equity,
and Stockholders' Equity $1,875.2 $3,646.5
======== ========
</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, 1998 and for the three-month and six-month periods ended June 30, 1998
and 1997 are unaudited, but in the opinion of management include all
adjustments, consisting only of normal recurring 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 Current Report on Form 8-K filed July 20, 1998, for the year ended
December 31, 1997.
NOTE 2/ACQUISITIONS
During the 1998 first quarter a subsidiary of the Company acquired Brockway
Pressed Metals, Inc., a powder metallurgy company.
NOTE 3/COMPREHENSIVE INCOME
The Company adopted Financial Accounting Standards Board Statement No. 130,
"Reporting Comprehensive Income," in the first quarter of 1998. Due to the
immateriality of the one item covered by the Statement, the Company has elected,
as allowed by the Statement, to not apply provisions of the Statement.
NOTE 4/ISC/ISPAT TRANSACTION
On July 16, 1998, Ispat International N.V. ("Ispat") acquired Inland Steel
Company ("ISC"), the Company's wholly owned subsidiary that constituted the
steel manufacturing and related operations segment of the Company's consolidated
operations, pursuant to an agreement and plan of merger dated May 27, 1998, as
amended as of July 16, 1998 (the "Merger Agreement"), among the Company, ISC,
Ispat and Inland Merger Sub, Inc. (an Ispat subsidiary). The Merger Agreement
provided for the merger of Merger Sub into ISC with ISC being the surviving
company in the merger (the "ISC/Ispat Transaction"). As a result of the
ISC/Ispat Transaction, ISC became a wholly owned subsidiary of Ispat. Pursuant
to the merger, the Company received $1.1 billion in cash in exchange for the
outstanding common stock and preferred stock of ISC and repayment of
intercompany debt of ISC held by the Company. The Company intends to distribute
a significant portion of the net proceeds from the sale to its stockholders
through the announced Dutch Auction self-tender offer that is currently expected
to be consummated in August 1998, as discussed in Management's Discussion and
Analysis of Financial Condition and Results of Operations Subsequent Events
below. The Company's primary business is currently metals distribution and
processing, conducted through its majority owned subsidiary, Ryerson Tull, Inc.
("RT"). The Company currently intends to merge with RT. Accordingly, the results
of operations of ISC have been segregated from the results of continuing
operations and reported as a separate item on the statement of operations. The
assets and liabilities of ISC at June 30, 1998 have been aggregated and
reflected as a net noncurrent asset.
ISC's revenues, including intercompany sales, were $619.9 million and $643.8
million for the quarters ended June 30, 1998 and 1997, respectively, and
$1,226.0 million and $1,250.4 million for the first six months of each such
year, respectively. The investment in ISC on the consolidated balance sheet at
June 30, 1998 includes the net assets of discontinued operations of $245.0
million, and notes and other receivables of $247.3 million due from ISC.
-4-
<PAGE>
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
Notes to Consolidated Financial Statements (Unaudited)
================================================================================
<TABLE>
<CAPTION>
NOTE 5/EARNINGS PER SHARE
Dollars and Shares in Millions
(except per share data)
---------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
-------------------- -----------------
BASIC EARNINGS PER SHARE 1998 1997 1998 1997
--------- --------- -------- -------
<S> <C> <C> <C> <C>
Income from continuing operations $15.5 $19.1 $32.0 $36.6
Less preferred stock dividends 2.3 2.3 4.6 4.6
----- ----- ----- -----
Income from continuing operations
available to common stockholders 13.2 16.8 27.4 32.0
Discontinued operations 12.9 21.0 18.2 34.7
----- ----- ----- -----
Net income available to common
stockholders $26.1 $37.8 $45.6 $66.7
===== ===== ===== =====
Average shares of common stock
outstanding 48.9 48.9 49.0 48.9
===== ===== ===== =====
Basic earnings per share
From continuing operations $ .27 $ .34 $ .56 $ .65
Discontinued operations .26 .43 .37 .71
----- ----- ----- -----
Net income $ .53 $ .77 $ .93 $1.36
===== ===== ===== =====
DILUTED EARNINGS PER SHARE
Income from continuing operations
available to common stockholders $13.2 $16.8 $27.4 $32.0
Effect of dilutive securities
Series A preferred stock - - - .1
Series E leveraged preferred stock 2.2 2.2 4.4 4.4
Additional ESOP funding required on
conversion of Series E leveraged
preferred stock, net of tax (2.0) (2.1) (4.1) (4.1)
----- ----- ----- -----
Income available to common
stockholders and assumed
conversions before
discontinued operations 13.4 16.9 27.7 32.4
Discontinued operations 12.9 21.0 18.2 34.7
----- ----- ----- -----
Net income available to
common stockholders and
assumed conversions $26.3 $37.9 $45.9 $67.1
===== ===== ===== =====
Average shares of common
stock outstanding 48.9 48.9 49.0 48.9
Assumed conversion of
Series A preferred stock - .1 - .1
Series E leverage preferred stock 3.0 3.0 3.0 3.0
Dilutive effect of stock options .1 - .1 -
----- ----- ----- -----
Shares outstanding for diluted earnings per
share calculation 52.0 52.0 52.1 52.0
===== ===== ===== =====
Diluted earnings per share
From continuing operations $ .26 $ .33 $ .53 $ .62
Discontinued operations .25 .40 .35 .67
----- ----- ----- -----
Net income $ .51 $ .73 $ .88 $1.29
===== ===== ===== =====
</TABLE>
-5-
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
On July 16, 1998, Ispat International N.V. ("Ispat") acquired Inland Steel
Company ("ISC"), the Company's wholly owned subsidiary that constituted the
steel manufacturing and related operations segment of the Company's consolidated
operations, pursuant to an agreement and plan of merger dated May 27, 1998, as
amended as of July 16, 1998 (the "Merger Agreement"), among the Company, ISC,
Ispat and Inland Merger Sub, Inc. (an Ispat subsidiary). The Merger Agreement
provided for the merger of Merger Sub into ISC with ISC being the surviving
company in the merger (the "ISC/Ispat Transaction"). As a result of the
ISC/Ispat Transaction, ISC became a wholly owned subsidiary of Ispat. Pursuant
to the merger, the Company received $1.1 billion in cash in exchange for the
outstanding common stock and preferred stock of ISC and repayment of
intercompany debt of ISC held by the Company. The Company's primary business is
currently metals distribution and processing, conducted through its majority
owned subsidiary, Ryerson Tull, Inc. ("RT"), with which it currently intends to
merge. Accordingly, the results of operations of ISC have been segregated from
the results of continuing operations and reported as a separate item on the
statement of operations. The assets and liabilities of ISC at June 30, 1998 have
been aggregated and reflected as a net noncurrent asset.
ISC's revenues, including intercompany sales, were $619.9 million and
$643.8 million for the quarters ended June 30, 1998 and 1997, respectively, and
$1,226.0 million and $1,250.4 million for the first six months of each such
year, respectively. The investment in ISC on the consolidated balance sheet at
June 30, 1998 includes the net assets of discontinued operations of $245.0
million, and notes and other receivables of $247.3 million due from ISC.
Results of Operations - Comparison of Second Quarter 1998 to Second Quarter 1997
- --------------------------------------------------------------------------------
The Company reported consolidated net income of $28.4 million, $.53 per
share, in the second quarter of 1998 compared with $40.1 million, $.77 per
share, in the year-earlier period. Income from continuing operations in the
current year quarter was $15.5 million, $.27 per share, compared with $19.1
million, $.34 per share, in the comparable year-earlier quarter. Included in the
consolidated 1997 second quarter results was a pretax gain of $15.9 million,
$9.0 million after tax or $.18 per share, associated with the sale of assets, of
which $6.9 million pretax, $3.6 million after tax or $.07 per share, affected
results of continuing operations. Excluding the gain, income from continuing
operations remained unchanged from the previous year.
Consolidated net sales from continuing operations declined 1 percent to
$725 million in the 1998 second quarter from $734 million in the comparable 1997
quarter. Consolidated net sales primarily reflect the net sales of RT which
decreased 2 percent to $715 million in the 1998 quarter. A 4 percent decline in
average selling price at RT was only partially offset by a 2 percent increase in
volume. Operating results at Magnetics International accounted for a majority of
the difference between consolidated results and the results of RT.
At RT, lower average selling prices continued to squeeze gross margins
resulting in them slipping $2 per ton. Offsetting the unfavorable impact of
lower margins was a $4 per ton decline in operating expenses, including
depreciation and amortization. These factors resulted in an increase in
operating profit, excluding the $6.9 million asset sale gain in 1997, of $2.3
million.
The $8.1 million quarter to comparable quarter decline in income from
discontinued operations at ISC was primarily the result of a 3 percent decrease
in volume, a 1 percent decrease in average selling price and less gain from the
sales of assets ($2.7 million in the current quarter compared with $9.0 million
in the 1997 second quarter). Provisions for income taxes were lower due to
reduced pretax income resulting from the above.
-6-
<PAGE>
Comparison of First Six Months of 1998 to First Six Months of 1997
- ------------------------------------------------------------------
For the first six months of 1998, the Company reported consolidated net
income of $50.2 million, $.93 per share, as compared with $71.3 million, $1.36
per share, in the 1997 first half. Income from continuing operations for the
first half of 1998 was $32.0 million, $.56 per share, as compared with $36.6
million, $.65 per share, in the comparable 1997 period. The consolidated 1997
first half benefited from an after-tax gain of $10.0 million, $.20 per share,
from the sale of assets of which $4.6 million after tax, $.09 per share, was
related to results of continuing operations. Excluding the gain, income from
continuing operations, as in the quarter, remained unchanged from the comparable
prior-year period.
Consolidated net sales from continuing operations increased 5 percent to
$1.47 billion for the first six months of 1998 from $1.40 billion in the prior-
year period. Net sales at RT improved 4 percent in large part due to the
inclusion of a full six months of net sales from acquisitions made by RT during
1997. The higher sales level combined with a decline in operating expenses were
the major factors in the increase in operating profit of $7.1 million at RT,
excluding the $8.9 million pretax gain from asset sales in 1997.
Income from discontinued operations at ISC for the first six months of 1998
were approximately half the income recognized in the comparable 1997 period due
primarily to a 2 percent decline in average selling price and the lower gain
from the sale of assets discussed above. The reduced pretax income resulting
from the above resulted in lower provisions for income taxes in the 1998 first
half compared with the year-earlier period.
Liquidity and Financing
- -----------------------
The Company's cash and cash equivalents were $50.8 million at June 30, 1998
compared with $97.0 million at December 31, 1997. Not included in the June 30
amount was $14.1 million of cash and cash equivalents at Inland Steel Company.
There was no short-term borrowing at either date.
Subsequent Events
- -----------------
On July 20, 1998, the Company commenced an offer to purchase up to 25.5
million shares of its common stock pursuant to a "Dutch Auction" self-tender
offer. The tender price will be between $30 and $34 per share. The offer, which
will expire August 14, 1998, unless extended, is not contingent upon any minimum
number of shares being tendered. The Company will finance the tender with cash
received from the sale of Inland Steel Company.
On August 3, 1998, the Company retired the remaining outstanding $100
million principal amount of its Subordinated Voting Note for $114 million, which
included $14 million of breakage and other related costs.
-7-
<PAGE>
PART II. OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
By letter dated June 17, 1998, Inland Steel Company ("Inland") was
offered an opportunity to show cause why enforcement action should not
be taken against Inland in connection with alleged violations of the
Resource Conservation and Recovery Act ("RCRA") arising out of an
October 1997 Inspection. Inland is in the process of attempting to
resolve this matter with EPA. It is not possible at this time to
predict the amount of Inland's potential liability or whether such
liability could affect Inland's financial position.
Item 4. Submision of Matters to a Vote of Security Holders
(a) A meeting of stockholders was held on May 27, 1998 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 43,521,900 7,369,190
Robert J. Darnall 43,525,567 7,365,522
James A. Henderson 43,550,007 7,341,082
Robert B. McKersie 43,548,155 7,342,934
Leo F. Mullin 43,550,330 7,340,759
Jean-Pierre Rosso 43,551,929 7,339,161
Joshua I. Smith 43,541,087 7,350,003
Nancy H. Teeters 43,545,787 7,345,303
Arnold R. Weber 43,546,290 7,344,800
</TABLE>
The results of the voting for the election of PricewaterhouseCoopers
L.L.P. to audit the accounts of the Company and its subsidiaries for
1998 are as follows:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
50,584,623 216,849 89,616
</TABLE>
There were no matters voted upon at the meeting to which broker non-
votes applied.
(d) Not applicable.
Item 5. Other Information.
To be considered for inclusion in the Company's proxy statement and
form of proxy relating to the 1999 Annual Meeting, proposals of holders
of voting securities must be received in writing by the Secretary of
the Company no later than December 22, 1998 and must comply with the
requirements of the Securities and Exchange Commission. In order for a
candidate recommended by a stockholder to be considered by the
Committee as a nominee for election at the 1999 Annual Meeting, the
name of the candidate and a written description of his or her
qualifications must be received by the Secretary of the Company by
December 31, 1998. Holders of voting securities who intend to nominate
persons for election as directors at annual meetings, and proposals not
included in a proxy statement for an annual meeting, must comply with
the advance notice procedure set forth in the By-laws of the Company in
order to be properly brought before that annual meeting of
stockholders. The advance notice procedure requires that, if the
Company provides less than 105 days' notice or prior public disclosure
of the date of the meeting, such stockholder's notice must be received
no later than the close of business on the 15th day following the first
to occur of the date on which notice of the annual meeting date was
mailed or the date on which public disclosure of the meeting date was
made. Otherwise, the stockholder's notice must be delivered to or
mailed and received at the Company's principal executive offices not
less than 90 or more than 115 days prior to the meeting.
-8-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The exhibits required to be filed by Item 601 of
Regulation S-K are listed in the "Exhibit Index," which is
attached hereto and incorporated by reference herein.
(b) Reports on Form 8-K.
The Company did not file any Current Reports on Form 8-K during
the quarter ended June 30, 1998.
-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, 1998
-10-
<PAGE>
Part I -- Schedule A
--------------------
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
SUMMARY OF STOCKHOLDERS' EQUITY
================================================================================
<TABLE>
<CAPTION>
Dollars in Millions
-----------------------------------------
June 30, 1998 December 31, 1997
------------------ -------------------
(unaudited)
<S> <C> <C> <C> <C>
STOCKHOLDERS' EQUITY
- -------------------------------------------
Series A preferred stock ($1 par value)
- 94,101 shares issued and outstanding as of
June 30, 1998 and December 31, 1997 $ .1 $ .1
Series E preferred stock ($1 par value)
- 2,967,022 shares and 3,014,548 shares
issued and outstanding as of June 30,
1998 and December 31, 1997, respectively 3.0 3.0
Common stock ($1 par value)
- 50,556,350 shares issued as of June 30, 1998
and December 31, 1997 50.6 50.6
Capital in excess of par value 1,037.8 1,039.8
Accumulated deficit
Balance beginning of year $(45.6) $(146.0)
Net income 50.2 119.3
Dividends
Series A preferred stock -
$1.20 per share in 1998 and
$2.40 per share in 1997 (.1) (.2)
Series E preferred stock -
$1.7615 per share in 1998 and
$3.523 per share in 1997 (5.3) (10.8)
Income tax benefit - Series E dividend .8 1.9
Common stock -
$.10 per share in 1998 and
$.20 per share in 1997 (4.9) (4.9) (9.8) (45.6)
------ -------
Unearned compensation related to ESOP (63.6) (68.6)
Common stock repurchase commitment (22.6) (28.1)
Investment valuation allowance (6.7) (7.1)
Unearned restricted stock award compensation (.6) (.2)
Treasury stock, at cost
- 1,556,870 shares and 1,557,635
shares as of June 30, 1998 and
December 31, 1997, respectively (40.9) (40.5)
Cumulative translation adjustment (3.3) (3.3)
-------- --------
Total Stockholders' Equity $ 948.9 $ 900.1
======== ========
</TABLE>
-11-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page No.
- ------ ----------- ----------
<S> <C> <C>
2. Agreement and Plan of Merger, dated as of May 27, 1998 between
Ispat International, N.V., Inland Steel Industries, Inc., Inland
Merger Sub, Inc. and Inland Steel Company. (Filed as Exhibit 2.1
to Inland Steel Company's Current Report on Form 8-K filed on
June 9, 1998, and incorporated by reference herein.) --
2.1 Amendment to Agreement and Plan of Merger dated as of July 16,
1998 between Ispat International, N.V., Inland Steel Industries,
Inc., Inland Merger Sub, Inc. and Inland Steel Company. (Filed
as Exhibit 2.2 to the Company's Current Report on Form 8-K
filed on July 20, 1998, and incorporated by reference herein.) --
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 fiscal 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 Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, and incorporated by
reference herein.) --
10.A* Copy of Inland 1992 Stock Plan for Non-Employee Directors, as
amended.......................................................
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
-i-
<PAGE>
Exhibit 10.A
INLAND 1992 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
(as Amended through July 15, 1998)
1. Purpose.
--------
The purpose of the Inland 1992 Stock Plan for Non-Employee Directors
(the "Plan") is to attract and retain outstanding individuals as directors of
Inland Steel Industries, Inc. (the "Company") and to provide such directors with
an opportunity to increase their ownership interest in the Company through the
payment of a portion of their directors' fees in shares of common stock of the
Company.
2. Participants.
-------------
Participants in the Plan shall consist of directors of the Company who
are not employees of the Company or any of its subsidiaries.
3. Shares Reserved under the Plan.
-------------------------------
The maximum number of shares of common stock, $1.00 par value per
share, of the Company that may be issued under the Plan shall not exceed 50,000.
Such number, however, may be appropriately adjusted by the Committee
(hereinafter referred to) in the event of stock dividends, stock splits,
spinoffs or other distributions of assets (other than normal cash dividends),
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in corporate structure or capitalization.
Shares of common stock of the company to be issued under the Plan may be
authorized and unissued shares of common stock, treasury common stock, or any
combination thereof.
4. Administration of the Plan.
---------------------------
The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company. The Committee shall have
authority to interpret the Plan, 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.
5. Effective Date of the Plan.
---------------------------
The Plan shall be submitted to the stockholders of the Company for
approval at the annual meeting of stockholders to be held on April 22, 1992, or
any adjournment thereof, and, if approved by the stockholders, shall be deemed
to have become effective on the date of such approval.
6. Payment of Shares.
------------------
For each calendar year beginning with the calendar year commencing
January 1, 1992, with respect to each participant who is elected a director at
the annual meeting of stockholders for such year and continues to be a director
as of July 1 of such year, twenty
<PAGE>
-2-
percent (20%) of the first $30,000 of his or her annual retainer for services as
a member of the Board of Directors of the Company plus any amount of annual
retainer in excess of $30,000 shall be paid in shares of common stock of the
Company. The number of such shares shall be determined on the basis of (a) the
average of the highest and lowest selling prices of such stock on the New York
Stock Exchange Composite Transactions on July 1 of such year, or if such stock
is not traded on that day, then on the next preceding day on which such stock
was traded, and (b) the annual retainer in effect as of such date, with any
fraction of a share to be rounded up to the next whole share. A certificate for
such shares shall be delivered to each such director as soon as practicable
after each July 1, unless such director has elected to defer the issuance of
such shares in accordance with such rules and procedures as the Board of
Directors of the Company may from time to time have established for such
deferrals.
7. Transfer of Shares.
-------------------
Shares of stock issued under the Plan may be sold, assigned,
transferred or otherwise disposed of immediately after a director receives such
shares.
8. Amendment and Termination of the Plan.
--------------------------------------
The Plan may be amended by the Board of Directors of the Company in
any respect, provided that, without stockholder approval, no amendment shall
increase the maximum number of shares available for issuance under the Plan, and
provided, further, that the Plan may not be amended more than once every six
months except to comply with the Internal Revenue Code, the Employee Retirement
Income Security Act, or the rules and regulations thereunder. The Plan may also
be terminated at any time by the Board of Directors.
9. Miscellaneous.
--------------
(a) No right to Continue as Director. Nothing contained in this Plan
shall be deemed to confer upon any person any right to continue as a director of
or to be associated in any other way with the Company.
(b) Rights as Stockholder. No person shall have any rights as a
stockholder of the Company with respect to any payment of shares covered by the
Plan until the date of the issuance of a stock certificate to such person.
(c) Governing Law. The Plan shall be governed by and construed under
the law of the State of Illinois.
<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-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 50,800
<SECURITIES> 0
<RECEIVABLES> 356,200
<ALLOWANCES> 8,200
<INVENTORY> 482,300
<CURRENT-ASSETS> 886,700
<PP&E> 595,100
<DEPRECIATION> 287,100
<TOTAL-ASSETS> 1,875,200
<CURRENT-LIABILITIES> 236,600
<BONDS> 437,400
0
3,100
<COMMON> 50,600
<OTHER-SE> 895,200
<TOTAL-LIABILITY-AND-EQUITY> 1,875,200
<SALES> 1,465,800
<TOTAL-REVENUES> 1,465,800
<CGS> 1,293,400
<TOTAL-COSTS> 1,293,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,200
<INCOME-PRETAX> 59,500
<INCOME-TAX> 23,200
<INCOME-CONTINUING> 32,000
<DISCONTINUED> 18,200
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,200
<EPS-PRIMARY> .93
<EPS-DILUTED> .88
</TABLE>
