1
1993
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993 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
INLAND STEEL INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-3425828
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
30 WEST MONROE STREET, CHICAGO, ILLINOIS 60603
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (312) 346-0300
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
COMMON STOCK ($1.00 PAR VALUE), INCLUDING NEW YORK STOCK EXCHANGE, INC.
PREFERRED STOCK PURCHASE RIGHTS
SERIES A $2.40 CUMULATIVE CONVERTIBLE CHICAGO STOCK EXCHANGE, INCORPORATED
PREFERRED STOCK ($1.00 PAR VALUE)
SERIES G. $4.625 CUMULATIVE CONVERTIBLE NEW YORK STOCK EXCHANGE, INC.
EXCHANGEABLE PREFERRED STOCK
($1.00 PAR VALUE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
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 BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. /X/
AS OF MARCH 15, 1994 THE AGGREGATE MARKET VALUE OF THE VOTING STOCK OF THE
REGISTRANT HELD BY NON-AFFILIATES OF THE REGISTRANT WAS $1,435,453,418.(1)
THE NUMBER OF SHARES OF COMMON STOCK ($1.00 PAR VALUE) OF THE REGISTRANT
OUTSTANDING AS OF MARCH 15, 1994 WAS 41,221,095.
(1)EXCLUDING STOCK HELD BY DIRECTORS AND OFFICERS OF REGISTRANT, WITHOUT
ADMISSION OF AFFILIATE STATUS OF SUCH INDIVIDUALS FOR ANY OTHER PURPOSE; ALSO,
EXCLUDING SERIES E ESOP CONVERTIBLE PREFERRED STOCK AND SERIES F EXCHANGEABLE
PREFERRED STOCK OF THE REGISTRANT, NEITHER OF WHICH SERIES IS PUBLICLY TRADED.
DOCUMENTS INCORPORATED BY REFERENCE
PARTS I AND II OF THIS REPORT ON FORM 10-K INCORPORATE BY REFERENCE CERTAIN
INFORMATION FROM THE ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1993. PART III OF THIS REPORT ON FORM 10-K INCORPORATES BY
REFERENCE CERTAIN INFORMATION FROM THE COMPANY'S DEFINITIVE PROXY STATEMENT
WHICH WILL BE FURNISHED TO STOCKHOLDERS IN CONNECTION WITH THE ANNUAL MEETING OF
STOCKHOLDERS OF THE COMPANY SCHEDULED TO BE HELD ON MAY 25, 1994.
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2
PART I
ITEM 1. BUSINESS.
Inland Steel Industries, Inc. (the "Company"), a Delaware corporation, is
the sole stockholder of Inland Steel Company and Inland Materials Distribution
Group, Inc. ("Distribution"). Inland Steel Company is a fully integrated
domestic steel company that produces and sells a wide range of steels, of which
approximately 99% consists of carbon and high-strength low-alloy steel grades.
It is also a participant in certain steel-finishing joint ventures. Distribution
is the sole stockholder of Joseph T. Ryerson & Son, Inc. ("Ryerson") and J. M.
Tull Metals Company, Inc. ("Tull"). Ryerson and Tull are leading steel service,
distribution and materials processing organizations.
BUSINESS SEGMENTS
The business segments of the Company and its subsidiaries are Integrated
Steel (including iron ore operations) and Steel Service Centers. For the three
years ended December 31, 1993, information relating to net sales, operating
profit, identifiable assets, depreciation and capital expenditures for both
business segments of the Company appears in Note 15 of Notes to Consolidated
Financial Statements in the Company's Annual Report to Stockholders for the
fiscal year ended December 31, 1993. Such information is hereby incorporated by
reference herein.
Integrated Steel Operations
General
Inland Steel Company, a wholly owned subsidiary of the Company, is directly
engaged in the production and sale of steel and related products and the
transportation of iron ore, limestone and certain other commodities (primarily
for its own use) on the Great Lakes. Certain subsidiaries and associated
companies of Inland Steel Company are engaged in the mining and pelletizing of
iron ore and in the operation of a cold-rolling mill and two steel galvanizing
lines. All raw steel made by Inland Steel Company is produced at its Indiana
Harbor Works located in East Chicago, Indiana, which also has facilities for
converting the steel produced into semi-finished and finished steel products.
In August 1988, Inland Steel Company realigned its operations into two
divisions -- the Inland Steel Flat Products Company division and the Inland
Steel Bar Company division. The purpose of the realignment was to allow
management to better focus on the distinctive competitive factors and customer
requirements in the markets for the products manufactured by each division. The
Flat Products division manages Inland Steel Company's iron ore operations,
conducts its ironmaking operations, and produces the major portion of its raw
steel. This division also manufactures and sells steel sheet, strip and plate
and certain related semi-finished products for the automotive, appliance, office
furniture, steel service center and electrical motor markets. The Bar division
manufactures and sells special quality bars and certain related semi-finished
products for forgers, steel service centers, heavy equipment manufacturers, cold
finishers and the transportation industry. The Bar division closed its 28-inch
structural mill in early 1991, completing Inland Steel Company's withdrawal from
the structural steel manufacturing business.
Inland Steel Company and Nippon Steel Corporation ("NSC") are participants,
through subsidiaries, in two joint ventures that operate steel-finishing
facilities near New Carlisle, Indiana. The total cost of these two facilities
was approximately $1.1 billion. I/N Tek, owned 60% by a wholly owned subsidiary
of Inland Steel Company and 40% by an indirect wholly owned subsidiary of NSC,
operates a cold-rolling mill that began shipping commercial product in 1990 and
reached its design capability in 1992. I/N Kote, owned equally by wholly owned
subsidiaries of Inland Steel Company and NSC (indirect in the case of NSC),
operates two galvanizing lines which began start-up production in late 1991,
became fully operational in the third quarter of 1992, and were operating near
design capacity by August 1993. Inland Steel Company is also a participant,
through a subsidiary, in another galvanizing joint venture located near
Walbridge, Ohio.
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Raw Steel Production and Mill Shipments
The following table shows, for the five years indicated, Inland Steel
Company's production of raw steel and, based upon American Iron and Steel
Institute data, its share of total domestic raw steel production:
RAW STEEL PRODUCTION INLAND STEEL
---------------------------------
INLAND STEEL
INLAND STEEL COMPANY AS A % OF
COMPANY U.S. STEEL
(000 TONS*) INDUSTRY
------------ -----------------
1993..................................................... 5,003 5.2%**
1992..................................................... 4,740 5.2
1991..................................................... 4,677 5.3
1990..................................................... 5,339 5.5
1989..................................................... 5,550 5.7
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* Net tons of 2,000 pounds.
** Based on preliminary data from the American Iron and Steel Institute.
The annual raw steelmaking capacity of Inland Steel Company was reduced to
6.0 million net tons from 6.5 million net tons effective September 1, 1991, as
Inland Steel Company ceased making ingots. The basic oxygen process accounted
for 94% of raw steel production of Inland Steel Company in 1993 and 1992. The
remainder of such production was accounted for by electric furnaces.
The total tonnage of steel mill products shipped by Inland Steel Company
for each of the five years 1989 through 1993 was 4.8 million tons in 1993; 4.3
million tons in 1992; 4.2 million tons in 1991; 4.7 million tons in 1990; and
4.9 million tons in 1989. In 1993, sheet, strip, plate and certain related
semi-finished products accounted for 88% of the total tonnage of steel mill
products shipped from the Indiana Harbor Works, and bar and certain related
semi-finished products accounted for 12%.
In 1993 and 1992, approximately 93% of the shipments of the Flat Products
division and 92% of the shipments of the Bar division were to customers in 20
mid-American states. Approximately 75% of the shipments of the Flat Products
division and 83% of the shipments of the Bar division in 1993 were to customers
in a five-state area comprised of Illinois, Indiana, Ohio, Michigan and
Wisconsin, compared to 72% and 83% in 1992. Both divisions compete in these
geographical areas, principally on the basis of price, service and quality, with
the nation's largest producers of raw steel as well as with foreign producers
and with many smaller domestic mills.
According to data from the American Iron and Steel Institute, steel imports
to the United States in 1993 totaled an estimated 19.5 million tons, compared
with 17.1 million tons imported in 1992. Steel imports constituted approximately
18.8% of apparent domestic supply in 1993, compared with approximately 17.9% of
apparent domestic supply in 1992. During 1984, the peak year for steel imports
into the U.S., such imports accounted for 26.4% of apparent domestic supply. In
addition to the importation of steel mill products, the U.S. steel industry has
faced indirect imports of steel. Data from the American Iron and Steel Institute
show that imports of steel contained in manufactured goods exceeded exports by
an estimated 16 million tons in 1993.
Many foreign steel producers are owned, controlled or subsidized by their
governments. In 1992, the Company and certain domestic steel producers filed
unfair trade petitions against foreign producers of certain bar, rod and
flat-rolled products. During 1993, the International Trade Commission ("ITC")
upheld final subsidy and dumping margins on essentially all of the bar and rod
products and about half of the flat-rolled products, in each case based on the
tonnage of the products against which claims were brought. The Company and
certain domestic producers have filed formal appeals of the adverse ITC
decisions in the U.S. Court of International Trade or similar jurisdiction
bodies, and foreign producers have appealed certain of the findings against
them. These appeals are pending and decisions are not expected before September
1994 in the bar and rod product cases, and mid-1995 in the flat-rolled product
cases. It is not certain how the ITC actions and the appeals will impact imports
of steel products into the United States or the price of such steel products.
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On December 15, 1993, President Clinton notified the U.S. Congress of his
intent to enter into agreements resulting from the Uruguay Round of multilateral
trade negotiations under the General Agreement on Tariffs and Trade. The key
provisions applicable to domestic steel producers include an agreement to
eliminate steel tariffs in major industrial markets, including the United
States, over a period of 10 years commencing July 1995, and agreements regarding
various subsidy and dumping practices as well as dispute settlement procedures.
Legislation must be enacted in order to implement the Uruguay Round agreements.
Until that process is completed, it will not be possible to assess the extent to
which existing U.S. laws against unfair trade practices may be weakened.
Primarily as a result of the influx of foreign steel imports and the
depressed demand for domestic steel products that began in the early 1980s,
certain facilities at the Indiana Harbor Works were permanently closed during
the second half of the 1980s and the early 1990s and others were shut down for
temporary periods. The 28-inch structural mill was closed in early 1991,
reflecting a decision to withdraw from the structural steel markets. In late
1991 the mold foundry, No. 8 Coke Oven Battery, and selected other facilities
were closed either as part of a program to permanently reduce costs through the
closure of uneconomic facilities or for environmental reasons. Provisions with
respect to the shut-down of the structural mill were taken in 1987. Provisions
for estimated costs incurred in connection with the closure of the mold foundry,
No. 8 Coke Oven Battery, and selected other facilities were made in 1991.
Included in such provisions were costs associated with Inland Steel Company's
closure of its No. 11 Coke Oven Battery in June 1992. All remaining coke
batteries were closed by year-end 1993, a year earlier than previously
anticipated. An additional provision was required with respect to those
closures. (See "Environment" below.)
For the five years indicated, shipments by market classification of steel
mill products produced by Inland Steel Company at its Indiana Harbor Works,
including shipments to affiliates of the Company, are set forth below. The table
confirms that a substantial portion of shipments by the Flat Products division
was to steel service centers and transportation-related markets. The Bar
division shipped more than 70% of its products to the steel
converters/processors market over the five-year period shown in the table.
PERCENTAGE OF TOTAL TONNAGE
OF STEEL SHIPMENTS
------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
Steel Service Centers:
Affiliates............................................ 9 % 7 % 8 % 8 % 9 %
Non-Affiliates........................................ 21 22 24 20 20
---- ---- ---- ---- ----
30 29 32 28 29
Automotive.............................................. 37 28 25 26 27
Appliance............................................... 9 9 8 7 7
Industrial, Electrical and Farm Machinery............... 4 8 9 9 10
Construction and Contractors' Products.................. 3 3 4 8 10
Steel Converters/Processors............................. 10 18 12 15 11
Other................................................... 7 5 10 7 6
---- ---- ---- ---- ----
100 % 100 % 100 % 100 % 100 %
---- ---- ---- ---- ----
---- ---- ---- ---- ----
The increase in 1993 of sales to the automotive market and the decline in
sales to the steel converters/processors market are indicative of Inland Steel
Company's efforts to maximize its sales of value-added and higher margin
products.
Some value-added steel processing operations that Inland Steel Company does
not have the capability to perform are performed by outside processors prior to
shipment of certain products to Inland Steel Company's customers. In 1993,
approximately 16% of the products produced by Inland Steel Company were
processed further through value-added services such as electrogalvanizing,
painting and slitting.
Approximately 64% of the total tonnage of shipments by Inland Steel Company
during 1993 from the Indiana Harbor Works was transported by truck, with the
remainder transported primarily by rail. A wholly
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owned truck transport subsidiary of Inland Steel Company was responsible for
shipment of approximately 15% of the total tonnage of products transported by
truck from the Indiana Harbor Works in 1993.
Substantially all of the steel mill products produced by the Flat Products
division are marketed through its own selling organization, with offices located
in Chicago; Southfield, Michigan; St. Louis; and Nashville, Tennessee.
Substantially all of the steel mill products produced by the Bar division are
marketed through its sales office in East Chicago, Indiana.
See "Product Classes" below for information relating to the percentage of
consolidated net sales accounted for by certain classes of similar products of
integrated steel operations.
Raw Materials
Inland Steel Company obtains iron ore pellets primarily from three iron ore
properties, located in the United States and Canada, in which subsidiaries of
Inland Steel Company have varying interests -- the Empire Mine in Michigan, the
Minorca Mine in Minnesota and the Wabush Mine in Labrador and Quebec, Canada. In
recent years Inland Steel Company has closed or terminated certain less
cost-efficient iron ore mining operations. See "Properties Relating to
Integrated Steel Segment -- Raw Materials Properties and Interests" in Item 2
below for further information relating to such iron ore properties.
The following table shows (1) the iron ore pellets available to Inland
Steel Company, as of December 31, 1993, from properties of its subsidiaries and
through interests in raw materials ventures; (2) 1993 and 1992 iron ore pellet
production or purchases from such sources; and (3) the percentage of Inland
Steel Company's iron ore requirements represented by production or purchases
from such sources in 1993 and 1992.
IRON ORE
TONNAGES IN THOUSANDS
(GROSS TONS OF PELLETS)
--------------------------------- % OF
AVAILABLE AS OF PRODUCTION REQUIREMENTS(1)
DECEMBER 31, -------------- -------------
1993(2) 1993 1992 1993 1992
--------------- ----- ----- ---- ----
INLAND STEEL MINING COMPANY PROPERTY
Minorca -- Virginia, MN.............. 68,000 2,577 2,265 41% 38 %
IRON ORE VENTURES AND LONG-TERM
PURCHASE CONTRACTS
Empire (40% owned) -- Palmer, MI;
Wabush (13.75% owned) -- Wabush,
Labrador and Pointe Noire, Quebec,
Canada............................ 116,000 3,513 3,804 55 63
--------------- ----- ----- ---- ----
Total Iron Ore.................... 184,000 6,090 6,069 96% 101%
--------------- ----- ----- ---- ----
--------------- ----- ----- ---- ----
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(1) Production in excess of requirements was sold or added to stockpile.
Production below requirements was purchased or taken from stockpile.
(2) Net interest in proven reserves.
All of Inland Steel Company's coal requirements are satisfied from
independent sources, with a portion of such requirements being met under two
significant purchase contracts. The first such contract, extending through
year-end 1994, requires Inland Steel Company to purchase (subject to force
majeure provisions) a total of 1,270,000 tons of metallurgical and/or steam coal
during the term of the contract at prices (intended to approximate market)
determined with respect to certain cost factors. The contract requires the
parties to enter into good-faith negotiations regarding extension of the
arrangement at mutually agreeable terms and conditions prior to the end of the
term. The term of the contract is likely to be extended covering solely steam
coal, due to the shut-down of Inland Steel Company's coke batteries. During
1993, Inland Steel Company purchased 15% of its coal requirements under such
contract, representing 8% of its metallurgical coal requirements and 33% of its
steam coal requirements.
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A second coal purchase contract extends through year-end 1995. Such
contract covers substantially all of the coal needs of the PCI Associates joint
venture, in which a subsidiary of Inland Steel Company holds a 50% interest. The
PCI facility pulverizes coal for injection into Inland Steel Company's blast
furnaces. The contract requires Inland Steel Company to purchase (subject to
force majeure provisions) 95% of the requirements of PCI Associates (100% in
1993) of injection-quality coal through the term of the contract (currently
estimated to be 1,520,000 tons) at prices determined by annual good-faith
negotiations between the parties. The term of the agreement may be extended by
mutual agreement of the parties. During 1993, Inland Steel Company purchased 5%
of its total coal requirements under such contract, representing 100% of its
injection coal requirements. The balance of Inland Steel Company's coal
requirements was purchased from domestic sources under short-term purchase
contracts and from other sources.
In December 1993, the last of Inland Steel Company's coke-making facilities
was permanently shut down. Inland Steel Company entered into a long-term
purchase contract extending through July 1999 which required Inland Steel
Company to purchase approximately 800,000 tons of coke on an annualized basis
through July 1993, and requires Inland Steel Company to purchase 1,400,000 tons
of coke on an annualized basis thereafter through the term of the contract at
prices negotiated annually based on certain market determinants. The purchase
requirement is subject to force majeure provisions. The term of the contract may
be extended by mutual agreement of the parties. During 1993, Inland Steel
Company satisfied 46% of its total coke needs under such arrangement. The
remainder of its purchased coke requirements was obtained through contracts with
independent domestic sources.
Inland Steel Company's Michigan limestone and dolomite properties were sold
in September 1990. As part of such sale, Inland Steel Company entered into a
requirements contract (subject to force majeure provisions) with the buyer of
the properties to purchase in each of the first five years of the contract term,
beginning in 1992, the greater of its annual limestone needs or one million
gross tons, with certain exceptions, and its annual limestone needs, with
certain exceptions, for the remaining six years of the agreement. Prices
(intended to approximate market) are determined with respect to certain cost
factors.
Approximately 75% of the iron ore pellets and virtually all of the
limestone received by Inland Steel Company at its Indiana Harbor Works in 1993
were transported by its Great Lakes carriers. Contracts are in effect for the
transportation on the Great Lakes of the remainder of its iron ore pellet
requirements. Approximately 26% of Inland Steel Company's coal requirements were
transported in its hopper cars by unit train in 1993. The remainder of Inland
Steel Company's coal requirements was transported in independent carrier-owned
equipment.
See "Energy" below for further information relating to the use of coal in
the operations of Inland Steel Company.
Steel Service Center Operations
The Company's steel service center operations are conducted by its wholly
owned steel service center management subsidiary, Inland Materials Distribution
Group, Inc., through its operating subsidiaries -- Joseph T. Ryerson & Son, Inc.
and J. M. Tull Metals Company, Inc. In August 1990, Ryerson, Tull and Ryerson
Coil Processing, a specialized processing unit, were organized into five
business units along regional and product lines. Ryerson, on a nationwide basis,
and Tull, in the southeastern and south-central United States, each compete with
a large number of other steel service centers, some of which are affiliated with
foreign steelmakers. Competition is primarily on the basis of service, quality
and price. The ability to meet just-in-time delivery requirements of customers
depends on maintaining adequate inventories and processing capacity and highly
trained personnel.
Depending on location, the Company's steel service center operations are
engaged in the sale of carbon, alloy and stainless steel; aluminum and aluminum
alloys; nickel and nickel alloys; copper; brass; specialty metals; and
industrial plastics. The service centers sell products in various forms,
including, again depending on location, plate, sheet, coil, wire, rod, bar,
tubing, pipe, structural, and expanded metal and grating. During 1993, the Steel
Service Center segment shipped approximately 35% of its product (by sales
revenue) to machinery manufacturers, 25% to metal producers and fabricators, 9%
to transportation equipment producers,
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10% to electrical machinery producers, 4% to wholesale distributors, 5% to
construction-related purchasers, 3% to metal mills and foundries, and 9% to
other customers. Approximately 20% of the tons of product purchased in 1993 by
the Steel Service Center segment were from affiliates.
Joseph T. Ryerson & Son, Inc.
Ryerson, with business unit headquarters in Philadelphia, Pennsylvania,
Chicago, Illinois, and Seattle, Washington, is a leading steel service center
organization. With full-line service centers in 30 major cities, Ryerson is
engaged in the nationwide sale of its products through its own sales
organization. Ryerson maintains heavy-duty shears, slitters, precision
cut-to-length lines, high-speed saws, flame-cutting machines and other
processing equipment for use in furnishing custom cutting and miscellaneous
shapes in accordance with customer orders. The Ryerson Coil Processing Company
division, headquartered in Chicago, performs processing through six facilities
for customers who traditionally buy large quantities of sheet steel products.
Ryerson also markets plant equipment products through a wholesale industrial
catalog.
J. M. Tull Metals Company, Inc.
Tull is one of the largest distributors of metals in the southeastern
United States. Tull and its wholly owned subsidiary, AFCO Metals, Inc., acquired
by Tull in June 1988, operate 19 service centers and two processing facilities
located throughout the southeastern and south-central United States. Tull
produces a variety of metal products with value-added processing, including
welded steel tubing and roll-formed shapes. Tull's products are sold principally
through its own sales staff.
PRODUCT CLASSES
The following table sets forth the percentage of consolidated net sales,
for the five years indicated, contributed by each class of similar products in
the Integrated Steel business segment that accounted for 10% or more of
consolidated net sales in such time period. The Steel Service Center business
segment of the Company did not have any class of similar products that accounted
for 10% or more of such sales in any of such years.
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
Integrated Steel Operations
Sheet, Strip and Plate...................... 45 % 45 % 45 % 43 % 44 %
Bar and Structural.......................... 7 6 6 10 9
---- ---- ---- ---- ----
Total Integrated Steel Operations............. 52 51 51 53 53
Steel Service Center Products................. 48 49 49 47 47
---- ---- ---- ---- ----
100 % 100 % 100 % 100 % 100 %
---- ---- ---- ---- ----
---- ---- ---- ---- ----
CAPITAL EXPENDITURES AND INVESTMENTS IN JOINT VENTURES
In recent years, the Company and its subsidiaries have made substantial
capital expenditures, principally at the Indiana Harbor Works, to improve
quality and reduce costs, and for pollution control. Additions by the Company
and its subsidiaries to property, plant and equipment, together with retirements
and adjustments, for the five years ended December 31, 1993, are set forth
below. Net capital additions during such period aggregated $386.9 million.
DOLLARS IN MILLIONS
--------------------------------------------------------------
RETIREMENTS NET CAPITAL
ADDITIONS* OR SALES* ADJUSTMENTS* ADDITIONS
---------- ----------- ------------ -----------
1993.............................. $105.6 $ 143.4 $ (1.3) $ (39.1)
1992.............................. 64.4 74.9 (7.4) (17.9)
1991.............................. 140.2 95.3 (.6) 44.3
1990.............................. 268.1 49.3 1.4 220.2
1989.............................. 197.2 30.2 12.4 179.4
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* See detail in Schedule V -- Property, Plant and Equipment, of Financial
Statement Schedules attached hereto and incorporated by reference herein.
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In recent years, the Company's largest capital improvement projects at the
Indiana Harbor Works have emphasized reducing costs and improving quality in the
steel-processing sequence of Inland Steel Company. Approximately $10 million was
spent in 1993 to complete upgrade projects begun in 1990 at the 80-inch Hot
Strip Mill and at the 12-inch Bar Mill. The total cost of the 80-inch Hot Strip
Mill and the 12-inch Bar Mill projects was approximately $214 million. The only
major project undertaken and completed in 1993 was a mini-reline of the No. 7
Blast Furnace at a cost of $27 million. No major projects are planned for 1994.
In July 1987, a wholly owned subsidiary of Inland Steel Company formed a
partnership, I/N Tek, with an indirect wholly owned subsidiary of NSC to
construct, own, finance and operate a cold-rolling facility with an annual
capacity of 1,500,000 tons, of which one-third is cold-rolled substrate for I/N
Kote. The I/N Tek facility, located near New Carlisle, Indiana, became
operational in April 1990 and reached its design capability in March 1992.
Inland Steel Company, which owns, through its subsidiary, a 60% interest in the
I/N Tek partnership, is, with certain limited exceptions, the sole supplier of
hot band to be processed by the I/N Tek facility and generally has exclusive
rights to the production capacity of the facility.
In September 1989, a wholly owned subsidiary of Inland Steel Company formed
a second partnership, I/N Kote, with an indirect wholly owned subsidiary of NSC
to construct, own, finance and operate two sheet steel galvanizing lines
adjacent to the I/N Tek facility. The subsidiary of Inland Steel Company owns a
50% interest in I/N Kote. The I/N Kote facility consists of a hot-dip
galvanizing line and an electrogalvanizing line with a combined annual capacity
of 900,000 tons. The electrogalvanizing line began start-up operations in
September 1991 and the hot-dip galvanizing line began start-up operations in
November 1991. Both lines were operating near design capability by August 1993.
Inland Steel Company has guaranteed 50% of I/N Kote's permanent financing. I/N
Kote has contracted to acquire its cold-rolled steel substrate from Inland Steel
Company, which supplies the substrate from the I/N Tek facility and Inland Steel
Company's Indiana Harbor Works.
Further information regarding the I/N Tek and I/N Kote joint venture
projects will be set forth under the caption "Certain Relationships and Related
Transactions -- Joint Ventures" in the Company's definitive Proxy Statement
which will be furnished to stockholders in connection with the Annual Meeting
scheduled to be held on May 25, 1994, and is incorporated by reference into Item
13 of this Report.
Inland Steel Company sold half of its 25% ownership interest in the
Walbridge, Ohio electrogalvanizing joint venture in the second quarter of 1992.
In 1993, the Company and its subsidiaries made capital expenditures of $106
million. Such expenditures principally focused on new machinery and equipment
related to maintaining or improving Integrated Steel operations. Approximately
$86 million was spent for Integrated Steel capital projects in 1993, including
replacements and renewals. Excluding amounts related to the purchase of the
equity interest in Inland Steel Company's No. 2 BOF Shop Caster facility, the
amount budgeted for 1994 capital expenditures by the Company and its
subsidiaries is approximately $110 million. In March 1994 Inland Steel Company
purchased the equity interest of the lessor of the Caster for $83 million. In
addition, in connection with such purchase, Inland Steel Company recorded $63
million of debt. It is anticipated that capital expenditures will be funded from
cash generated by operations and cash on hand at year-end 1993. (See
"Environment" below for a discussion of capital expenditures for pollution
control purposes.)
EMPLOYEES
The monthly average number of active employees of the Company and its
subsidiaries receiving pay during 1993 was approximately 16,200, of whom
approximately 10,900 were employed at Inland Steel Company. The majority of the
remaining employees were employed at the Company's steel service center
operations. At year-end, approximately 8,900 of the Company's employees,
including 8,400 at Inland Steel Company, were represented by the United
Steelworkers of America, of whom approximately 1,430 including 1,400 at Inland
Steel Company, were on furlough or indefinite layoff. Approximately 1,100
employees were represented by other unions during 1993. The decline at Inland
Steel Company in average employment from 12,100 in 1992 is attributable to
improvements in productivity, the shut-down of older facilities, and workforce
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reductions. Excluding the costs attributable to future workforce reductions,
total employment costs decreased from $941 million in 1992 to $925 million in
1993.
Beginning in 1991, the Company embarked upon a major turnaround strategy,
with the assistance of an outside consulting firm, to significantly reduce
costs, increase revenues and improve asset utilization at both the Company and
Inland Steel Company. As a result, employment was reduced by 2,300 positions by
year-end 1993. Another 1,200 positions are expected to be eliminated by the end
of 1994.
The current labor agreement between Inland Steel Company and the United
Steelworkers of America, effective August 1, 1993, covers wages and benefits
through July 31, 1999. Among other things, the agreement provides a wage
increase of $.50 per hour in 1995, a $500 bonus in each of 1993 and 1994
(totalling in each case approximately $4 million) and a potential bonus of up to
$1,000 per employee (approximately $8 million in total) based on Inland Steel
Company's achieving $150 million of pre-tax income in 1995 adjusted to exclude
the incremental FASB Statement No. 106 costs and such bonus. In addition, all
active employees receive an additional week of vacation in 1994 and in 1996. The
agreement provides for a reopener on wages and certain benefits in 1996 with an
arbitration provision to resolve unsettled issues, thereby precluding a work
stoppage over the six-year term of the contract. The agreement also provides for
election of a Union designee acceptable to the Company to the Company's Board of
Directors, restrictions on the ability of Inland Steel Company to reduce the
Union workforce (generally limited to attrition and major facilities shutdowns)
while allowing greater flexibility to institute work rule changes, quarterly
rather than annual payment of profit sharing amounts, significant improvements
in pension benefits for active employees, and the securing of retiree health
care obligations through certain trust and second mortgage arrangements. "First
dollar" health care coverage is eliminated under the agreement through the
institution of co-payments and increased deductibles on medical benefits.
As of December 31, 1993, the number of active employees at Ryerson was
approximately 4,045 of whom approximately 1,125 were covered by collective
bargaining agreements. Of those employees covered by collective bargaining
agreements, approximately 475 production, maintenance, and transportation
employees were represented by the United Steelworkers of America and
approximately 370 such employees were represented by the International
Brotherhood of Teamsters. The current agreement with the United Steelworkers
will expire on July 31, 1996. During 1993, Ryerson reached agreement at seven
separate plants (San Francisco, Buffalo, Indianapolis, Chattanooga, St. Louis,
Jersey City, and Los Angeles) represented by various unions covering 190
employees. These agreements expire on various dates from April 31, 1995 through
October 31, 1997. The agreements, as well as the current agreement with the
United Steelworkers of America, provide for modest wage increases, lump sum
bonuses, pension improvements, and increased employee sharing of health care
costs. Ryerson maintains agreements with the Teamsters covering 13 facilities.
Teamster agreements expire on various dates during the period beginning March
31, 1994, and ending October 31, 1997. In addition, Ryerson contracts with
independent third parties to provide approximately 175 drivers on a leased basis
to nine Ryerson facilities. These leased drivers are covered by agreements
between the Teamsters and such independent third parties, which agreements
expire on March 31, 1994.
ENVIRONMENT
The Company is subject to environmental laws and regulations concerning
emissions into the air, discharges into ground water and waterways, and the
generation, handling, labeling, storage, transportation, treatment and disposal
of waste material. These include various Federal statutes regulating the
discharge or release of pollutants to the environment, including the Clean Air
Act, Clean Water Act, Resource Conservation and Recovery Act, Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA," also
known as "Superfund"), Safe Drinking Water Act, and Toxic Substances Control
Act, as well as state and local requirements. Violations of these laws and
regulations can give rise to a variety of civil, administrative, and, in some
cases, criminal actions and could also result in substantial liabilities or
require substantial capital expenditures. In addition, under CERCLA the United
States Environmental Protection Agency (the "EPA") has authority to impose
liability for site redemination on waste generators, past and present site
owners and operators, and transporters, regardless of fault or the legality of
the original disposal activity. Liability under CERCLA is strict, joint and
several.
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By year-end 1993, the last of Inland Steel Company's coke-making facilities
was permanently shut down. All coke battery closures were necessitated by the
inability of the facilities to meet environmental regulations and their
deteriorating condition and performance. The Company had anticipated the closure
of such remaining coke-making facilities at year-end 1994. The October 1993
decision to close these facilities early necessitated a fourth-quarter 1993
pre-tax charge of $22.3 million that included the write-off of property, plant
and equipment costs which were to be depreciated in 1994 and additional costs
related to the earlier-than-anticipated displacement of personnel. Inland Steel
Company has entered into a long-term contract to satisfy the majority of its
coke needs. (See "Raw Materials" above). In addition, Inland Steel Company
participates in a joint venture that has constructed and is operating a
pulverized coal injection facility for blast furnace application, which process
is anticipated to replace up to 30% of Inland Steel Company's coke needs. The
facility is anticipated to substantially achieve operation at its design
capacity by year-end 1994.
On June 10, 1993, the U.S. District Court for the Northern District of
Indiana entered a consent decree that resolved all matters raised by the lawsuit
filed by the EPA in 1990. The consent decree includes a $3.5 million cash fine,
environmentally beneficial projects at the Indiana Harbor Works through 1997
costing approximately $7 million, and sediment remediation of portions of the
Indiana Harbor Ship Canal and Indiana Harbor Turning Basin estimated to cost
approximately $19 million over the next several years. The fine and estimated
remediation costs were provided for in 1991 and 1992. After payment of the fine,
the Company's reserve for environmental liabilities totalled $19 million. The
consent decree also defines procedures for corrective action at Inland Steel
Company's Indiana Harbor Works. The procedures defined establish essentially a
three-step process, each step of which requires agreement of the EPA before
progressing to the next step in the process, consisting of: assessment of the
site, evaluation of corrective measures for remediating the site, and
implementation of the remediation plan according to the agreed-upon procedures.
The Company is presently assessing the extent of environmental contamination.
The Company anticipates that this assessment will cost approximately $1 million
to $2 million per year and take another three to five years to complete. Because
neither the nature and extent of the contamination nor the corrective actions
can be determined until the assessment of environmental contamination and
evaluation of corrective measures is completed, the Company cannot presently
reasonably estimate the costs of or the time required to complete such
corrective actions. Such corrective actions may, however, require significant
expenditures over the next several years that may be material to the results of
operations or financial position of the Company. Insurance coverage with respect
to such corrective actions is not significant.
Capital spending for pollution control projects totaled $7 million in 1993,
down from $11 million in 1992. Another $44 million was spent in 1993 to operate
and maintain such equipment, versus $46 million a year earlier. During the five
years ended December 31, 1993, the Company has spent $302 million to construct,
operate and maintain environmental control equipment at its various locations.
Environmental projects previously authorized and presently under
consideration, including those designed to comply with the 1990 Clean Air Act
Amendments, but excluding any amounts that would be required under the consent
decree settling the 1990 EPA lawsuit, will require capital expenditures of
approximately $20 million in 1994 and $13 million in 1995. It is anticipated
that the Company will make annual capital expenditures of $5 million to $10
million in each of the three years thereafter. In addition, Inland Steel Company
will have ongoing annual expenditures of $40 million to $50 million for the
operation of air and water pollution control facilities to comply with current
Federal, state and local laws and regulations. Due to the inability to predict
the costs of corrective action that may be required under the Resource
Conservation and Recovery Act and the consent decree in the 1990 EPA lawsuit,
the Company cannot predict the amount of additional environmental expenditures
that will be required. Such additional environmental expenditures, excluding
amounts that may be required in connection with the consent decree in the 1990
EPA lawsuit, however, are not expected to be material to the results of
operations or financial position of Inland Steel Company.
See Item 3 below for information concerning certain proceedings pertaining
to environmental matters in which Inland Steel Company is involved.
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ENERGY
Coal, all of which is purchased from independent sources, together with
coke, accounted for approximately 67.8% of the energy consumed by Inland Steel
Company at the Indiana Harbor Works in 1993. In recent years Inland Steel
Company has purchased varying portions of its coke requirements from outside
sources, purchasing approximately 59% in 1993 and approximately 46% in 1992. See
"Environment" above for a discussion of coke-making by Inland Steel Company and
alternatives for obtaining coke.
Natural gas and fuel oil supplied approximately 30% of the energy
requirements of the Indiana Harbor Works in 1993 and are used extensively by the
Company at other facilities that it owns or in which it has an interest. The
Company anticipates that utilization of the pulverized coal injection facility
(see "Environment" above) will substantially reduce natural gas and fuel oil
consumption at the Indiana Harbor Works.
The Company both purchases and, through Inland Steel Company, generates
electricity to satisfy electrical energy requirements at the Indiana Harbor
Works. In 1993, Inland Steel Company produced approximately 61% of its
requirements at the Indiana Harbor Works. The purchase of electricity at the
Indiana Harbor Works is subject to curtailment under rules of the local utility
when necessary to maintain appropriate service for various classes of its
customers.
ITEM 2. PROPERTIES.
PROPERTIES RELATING TO INTEGRATED STEEL SEGMENT
Steel Production
All raw steel made by Inland Steel Company is produced at its Indiana
Harbor Works located in East Chicago, Indiana. The property on which this plant
is located, consisting of approximately 1,900 acres, is held by Inland Steel
Company in fee. The basic production facilities of Inland Steel Company at its
Indiana Harbor Works consist of furnaces for making iron; basic oxygen and
electric furnaces for making steel; a continuous billet caster, a continuous
combination slab/bloom caster and two continuous slab casters; and a variety of
rolling mills and processing lines which turn out finished steel mill products.
Certain of these production facilities, including a continuous anneal line and
the No. 2 BOF Shop Caster Facility ("Caster"), are held by Inland Steel Company
under leasing arrangements. Inland Steel Company purchased the equity interest
of the lessor of the Caster in March 1994 and currently intends to terminate the
lease and prepay or formally assume the applicable debt in the first half of
1994. Substantially all of the remaining property, plant and equipment at the
Indiana Harbor Works is subject to the lien of the First Mortgage of Inland
Steel Company dated April 1, 1928, as amended and supplemented. See "Business
Segments -- Integrated Steel Operations -- Raw Steel Production and Mill
Shipments" in Item 1 above for further information relating to capacity and
utilization of Inland Steel Company's properties. Inland Steel Company's
properties are adequate to serve its present and anticipated needs, taking into
account those issues discussed in "Capital Expenditures and Investments in Joint
Ventures" in Item 1 above.
I/N Tek, a partnership in which a subsidiary of Inland Steel Company owns a
60% interest, has constructed a 1,500,000-ton annual capacity cold-rolling mill
on approximately 200 acres of land, which it owns in fee, located near New
Carlisle, Indiana. Substantially all the property, plant and equipment owned by
I/N Tek at this location is subject to a lien securing related indebtedness. The
I/N Tek facility is adequate to serve the present and anticipated needs of
Inland Steel Company planned for such facility.
I/N Kote, a partnership in which a subsidiary of Inland Steel Company owns
a 50% interest, has constructed a 900,000-ton annual capacity steel galvanizing
facility on approximately 25 acres of land, which it owns in fee, located
adjacent to the I/N Tek site. Substantially all the property, plant and
equipment owned by I/N Kote is subject to a lien securing related indebtedness.
The I/N Kote facility is adequate to serve the present and anticipated needs of
Inland Steel Company planned for such facility.
PCI Associates, a partnership in which a subsidiary of Inland Steel Company
owns a 50% interest, has constructed a pulvarized coal injection facility on
land located within the Inland Harbor Works. Inland Steel Company leases PCI
Associates the land upon which the facility is located. Substantially all the
property,
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plant and equipment owned by PCI Associates is subject to a lien securing
related indebtedness. Upon achieving operation at design capacity, the PCI
Associates facility will be adequate to serve the anticipated needs of Inland
Steel Company planned for such facility.
Inland Steel Company owns three vessels for the transportation of iron ore
and limestone on the Great Lakes, and a subsidiary of Inland Steel Company owns
a fleet of 404 coal hopper cars (100-ton capacity each) used in unit trains to
move coal to the Indiana Harbor Works. See "Business Segments -- Integrated
Steel Operations -- Raw Materials" in Item 1 above for further information
relating to utilization of Inland Steel Company's transportation equipment. Such
equipment is adequate, when combined with purchases of transportation services
from independent sources, to meet Inland Steel Company's present and anticipated
transportation needs.
Inland Steel Company also owns and maintains research and development
laboratories in East Chicago, Indiana, which facilities are adequate to serve
its present and anticipated needs.
Raw Materials Properties and Interests
Certain information relating to raw materials properties and interests of
Inland Steel Company and its subsidiaries is set forth below. See "Business
Segments -- Integrated Steel Operations -- Raw Materials" in Item 1 above for
further information relating to capacity and utilization of such properties and
interests.
Iron Ore
The operating iron ore properties of Inland Steel Company's subsidiaries
and of the iron ore ventures in which Inland Steel Company has an interest are
as follows:
ANNUAL
PRODUCTION CAPACITY
(IN THOUSANDS OF
GROSS TONS OF
PROPERTY LOCATION PELLETS)
- ------------------------------------------ ------------------------ -------------------
Empire Mine............................... Palmer, Michigan 8,100
Minorca Mine.............................. Virginia, Minnesota 2,500
Wabush Mine............................... Wabush, Labrador and 4,500
Pointe Noire, Quebec,
Canada
The Empire Mine is operated by the Empire Iron Mining Partnership, in which
Inland Steel Company has a 40% interest. Inland Steel Company, through a
subsidiary, is the sole owner and operator of the Minorca Mine. The Wabush Mine
is a taconite project in which Inland Steel Company owns a 13.75% interest.
Inland Steel Company also owns a 38% interest in the Butler Taconite project
(permanently closed in 1985) in Nashwauk, Minnesota.
The reserves at the Empire Mine, the Minorca Mine and the Wabush Mine are
held under leases expiring, or expected at current production rates to expire,
between 2012 and 2040. Substantially all of the reserves at Butler Taconite are
held under leases. Inland Steel Company's share of the production capacity of
its interests in such iron ore properties is sufficient to provide the majority
of its present and anticipated iron ore pellet requirements. Any remaining
requirements have been and are expected to continue to be readily available from
independent sources. During 1992, the Minorca Mine's original ore body was
depleted and production shifted to a new major iron ore body, the Laurentian
Reserve, acquired by lease in 1990.
Limestone and Dolomite
The limestone and dolomite properties of Inland Steel Company located near
the town of Gulliver in the Upper Peninsula of Michigan were permanently closed
on December 29, 1989 and sold in 1990.
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Coal
Inland Steel Company's sole remaining coal property, the Lancashire No. 25
Property, located near Barnesboro, Pennsylvania, is permanently closed. All
Inland Steel Company coal requirements for the past several years have been and
are expected to continue to be met through contract purchases and other
purchases from independent sources.
PROPERTIES OF STEEL SERVICE CENTER SEGMENT
Joseph T. Ryerson & Son, Inc.
Ryerson owns its regional business unit headquarters offices in Chicago and
leases regional headquarters offices in West Chester (PA) and Renton (WA).
Ryerson/East division maintains steel service centers at Allston (MA), Buffalo,
Carnegie (PA), Charlotte, Chattanooga, Cleveland, Jersey City, Philadelphia, and
Wallingford (CT). Ryerson/Central's service centers are in Chicago, Cincinnati,
Dallas, Detroit, Houston, Indianapolis, Kansas City, Milwaukee, Plymouth (MN),
St. Louis, and Tulsa. Ryerson/West's service centers are in Commerce City (CO),
Emeryville (CA), Los Angeles, Phoenix, Portland (OR), Renton (WA), Spokane, and
Salt Lake City. Ryerson Coil Processing division's processing facilities are
located in Chicago, Marshalltown (IA), Plymouth (MN) and New Hope (MN).
All of Ryerson's operating facilities are held in fee with the exception of
a portion of the property at St. Louis (held under long-term lease), a portion
of the property in Portland (held under short-term lease), a satellite facility
at Omaha (held under short-term lease), two facilities in Chicago (held under
short-term lease), two facilities in New Hope (MN) (one partly held in fee and
partly under short-term lease, the other held under short-term lease), one
facility in Marshalltown (IA) (held under an installment purchase contract) and
one facility in Salt Lake City (held under short-term lease). In addition,
Ryerson holds in fee approximately 44 acres of unimproved property in Powder
Springs (GA) and approximately eight acres of property in Elk Grove Village
(IL), formerly the site of an operating facility. Ryerson's properties are
adequate to serve its present and anticipated needs.
J. M. Tull Metals Company, Inc.
Tull maintains service centers in Birmingham, Columbia (SC), Jacksonville,
Miami, Tampa, Baton Rouge, New Orleans, Charlotte, Greensboro (NC), Greenville
(SC), Richmond, and Norcross (GA), where its headquarters is located. All of
these facilities are owned by Tull in fee, except for the Columbia facility,
which is held under short-term lease. Tull's AFCO Metals, Inc. subsidiary
operates service centers in Fort Smith (AR), Oklahoma City, Shreveport, West
Memphis (AR), Wichita, Jackson (MS) and Little Rock. AFCO's headquarters are
located in Norcross (GA), where it leases space owned in fee by Tull. Each of
AFCO's facilities is held in fee except the Wichita facility, which is held
under a short-term lease. Tull holds in fee land improved with a parking garage
in Atlanta. Tull's properties are adequate to serve its present and anticipated
needs.
OTHER PROPERTIES
The Company and certain of its subsidiaries lease, under a long-term
arrangement, approximately 63% of the space in the Inland Steel Building located
at 30 West Monroe Street, Chicago, Illinois (where the Company's principal
executive offices are located), which property interest is adequate to serve the
Company's present and anticipated needs. Approximately 12% of such space is
under sublease to other parties.
Magnetics International, Inc., a subsidiary of the Company, owns
approximately 63 acres in northern Indiana, on which site it has constructed an
iron oxide plant that began operation in April 1991. Such facility is adequate
to serve the present and anticipated needs of Magnetics International, Inc.
Certain subsidiaries of the Company hold in fee at various locations an
aggregate of approximately 355 acres of land, all of which is for sale. Inland
Steel Company also holds in fee approximately 300 acres of land adjacent to the
I/N Tek and I/N Kote sites, which land is available for future development.
Approximately 1,060 acres of rural land, which are held in fee at various
locations in the north-central United States by various raw materials ventures,
are
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also for sale. I R Construction Products Company, Inc. (formerly Inryco, Inc.),
a subsidiary of Inland Steel Company and the Company's former Construction
Products business segment, owns, in fee, a combination office building and
warehouse in Hoffman Estates (IL), which is for sale.
ITEM 3. LEGAL PROCEEDINGS.
On August 12, 1992, Inland Steel Administrative Service Company ("ISAS"), a
wholly owned subsidiary of Inland Steel Company, filed a lawsuit in the Court of
Common Pleas in Lorain County, Ohio against Western Steel Group, Inc.
("Western") to collect the unpaid balance of its account for steel products sold
to Western by Inland Steel Company in the amount of $5.7 million. On October 15,
1992, Western filed a counterclaim against ISAS and a third-party complaint
against Inland Steel Company for $40 million actual damages and $100 million
punitive damages, alleging, among other things, breach of contract and wrongful
interference with contractual relations in connection with a refusal by Inland
Steel Company to continue selling steel products to Western and defamation of
Western and a patent held by Western in connection with discussions with third
parties. All claims were settled between the parties in February 1994 and the
settlement was approved by the court. Under the terms of the settlement, ISAS
has received $3.4 million and all counterclaims against Inland Steel Company and
ISAS have been released.
On June 10, 1993, the U.S. District Court for the Northern District of
Indiana entered a consent decree that resolved all matters raised by the lawsuit
filed by the EPA in 1990. The consent decree includes a $3.5 million cash fine,
environmentally beneficial projects at the Indiana Harbor Works through 1997
costing approximately $7 million, and sediment remediation of portions of the
Indiana Harbor Ship Canal and Indiana Harbor Turning Basin estimated to cost
approximately $19 million over the next several years. The fine and estimated
remediation costs were provided for in 1991 and 1992. After payment of the fine,
the Company's reserve for environmental liabilities totalled $19 million. The
consent decree also defines procedures for corrective action at Inland Steel
Company's Indiana Harbor Works. The procedures defined establish essentially a
three-step process, each step of which requires agreement of the EPA before
progressing to the next step in the process, consisting of: assessment of the
site, evaluation of corrective measures for remediating the site, and
implementation of the remediation plan according to the agreed-upon procedures.
The Company is presently assessing the extent of environmental contamination.
The Company anticipates that this assessment will cost approximately $1 million
to $2 million per year and take another three to five years to complete. Because
neither the nature and extent of the contamination nor the corrective actions
can be determined until the assessment of environmental contamination and
evaluation of corrective measures is completed, the Company cannot presently
reasonably estimate the costs of or the time required to complete such
corrective actions. Such corrective actions may, however, require significant
expenditures over the next several years that may be material to the results of
operations or financial position of the Company. Insurance coverage with respect
to such corrective actions is not significant.
On March 22, 1985, the EPA issued an administrative order to Inland Steel
Company's former Inland Steel Container Company Division ("Division") naming the
former Division and various other unrelated companies as responsible parties
under the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") in connection with the cleanup of a waste disposal facility operated
by Duane Marine Salvage Corporation at Perth Amboy, New Jersey. The
administrative order alleged that certain of the former Division's wastes were
transported to, and disposed of at, that facility and required Inland Steel
Company to join with other named parties in taking certain actions relating to
the facility. Inland Steel Company and the other administrative order recipients
have completed the work required by the order. In unrelated matters, the EPA
also advised the former Division and various other unrelated parties of other
sites located in New Jersey at which the EPA expects to spend public funds on
any investigative and corrective measures that may be necessary to control any
releases or threatened releases of hazardous substances, pollutants and
contaminants pursuant to the applicable provisions of CERCLA. The notice also
indicated that the EPA believes Inland Steel Company may be a responsible party
under CERCLA. The extent of Inland Steel Company's involvement and participation
in these matters has not yet been determined. While it is not possible at this
time to predict the amount of Inland Steel Company's potential liability, none
of these matters is expected to materially affect Inland Steel Company's
financial position.
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The EPA has adopted a national policy of seeking substantial civil
penalties against owners and operators of sources for noncompliance with air and
water pollution control statutes and regulations under certain circumstances. It
is not possible to predict whether further proceedings will be instituted
against the Company or any of its subsidiaries pursuant to such policy, nor is
it possible to predict the amount of any such penalties that might be assessed
in any such proceeding.
The Indiana Department of Environmental Management ("IDEM") from time to
time advises various parties of alleged violations of air pollution regulations
by issuing Notices of Violation so as to initiate discussions concerning
corrective measures. Inland Steel Company has three currently outstanding
unresolved Notices of Violation at its Indiana Harbor Works. Inland Steel
Company is presently in discussions with the staff of IDEM with respect to these
matters and cannot currently estimate the time period within which these matters
will be resolved. While it is not possible at this time to predict the amount of
Inland Steel Company's potential liability, none of these matters is expected to
materially affect Inland Steel Company's financial position.
Inland Steel Company received a Notice of Violation from IDEM dated March
3, 1989 alleging violations of Inland Steel Company's National Pollution
Discharge Elimination System permit regarding water discharges. Inland Steel
Company is presently in discussions with the staff of IDEM with respect to these
matters and cannot currently estimate the time period within which these matters
will be resolved. While it is not possible at this time to predict the amount of
Inland Steel Company's potential liability, this matter is not expected to
materially affect Inland Steel Company's financial position.
Inland Steel Company received a Special Notice of Potential Liability
("Special Notice") from IDEM on February 18, 1992 relating to the Four County
Landfill Site, Fulton County, Indiana (the "Facility"). The Special Notice
stated that IDEM has documented the release of hazardous substances, pollutants
and contaminants at the Facility and was planning to spend public funds to
undertake an investigation and control the release or threatened release at the
Facility unless IDEM determined that a potentially responsible party ("PRP")
will properly and promptly perform such action. The Special Notice further
stated that Inland Steel Company may be a PRP and that Inland Steel Company, as
a PRP, may have potential liability with respect to the Facility. In August
1993, Inland Steel Company, along with other PRPs, entered into an Agreed Order
with IDEM, pursuant to which the PRPs agreed to perform a Remedial
Investigation/Feasibility Study ("RI/FS") for the Facility and pay certain past
and future IDEM costs. In addition, the PRPs agreed to provide funds for
operation and maintenance necessary for stabilization of the Facility. Those
costs which Inland Steel Company has agreed to assume under the Agreed Order are
not currently anticipated to exceed $154,000. The cost of the final remedies
which will be determined to be required with respect to the Facility cannot be
reasonably estimated until, at a minimum, the RI/FS is completed. Inland Steel
Company is therefore unable to determine the extent of its potential liability,
if any, relating to the Facility or whether this matter could materially affect
Inland Steel Company's financial position.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.
Not applicable.
EXECUTIVE OFFICERS OF REGISTRANT.
Officers are elected by the Board of Directors of the Company to serve for
a period ending with the next succeeding annual meeting of the Board of
Directors held immediately after the annual meeting of stockholders. All
executive officers of the Company, with the exception of Earl L. Mason, H.
William Howard, Olivia M. Thompson, and Maurice S. Nelson, Jr., have been
employed by the Company or a subsidiary of the Company throughout the past five
years.
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Set forth below are the executive officers of the Company as of March 1,
1994 and the age of each as of such date. Their principal occupations held
presently and during the past five years, including positions and offices held
with the Company or a significant subsidiary of the Company are shown below.
NAME, AGE AND POSITIONS AND OFFICES HELD
PRESENT POSITION WITH REGISTRANT DURING THE PAST FIVE YEARS
- ----------------------------------- --------------------------------------------------------
Robert J. Darnall, 56.............. Mr. Darnall has been Chairman, President and Chief
Chairman, President, Chief Executive Officer of the Company since September 1,
Executive Officer and Director 1992. A Director of the Company and a member of the
Executive and Finance and Retirement Committees of the
Board of Directors since April 23, 1986, he became
Chairman of the Finance and Retirement Committee on
April 24, 1991 and Chairman of the Executive Committee
on January 1, 1993. He was President and Chief Operating
Officer of the Company from April 16, 1986 to September
1, 1992. He has been Chairman and Chief Executive
Officer of Inland Steel Company since September 1, 1992
and was also its President from November 1987 to
September 1, 1992. Mr. Darnall has also been a Director
of Inland Steel Company since April 1983. He also has
been Chairman of the Board of Directors of Inland
Materials Distribution Group, Inc. (and its predecessor
company) since November 1990. Prior to November 1990, he
had been Chairman of the Board of its subsidiaries
Joseph T. Ryerson & Son, Inc. since May 1986 and J. M.
Tull Metals Company, Inc. since July 1986.
W. Gordon Kay, 57.................. Mr. Kay has been Senior Vice President of the Company
Senior Vice President since July 1990 and President and Chief Operating
Officer of Inland Materials Distribution Group, Inc.
(and its predecessor company) and Chairman of its
subsidiaries, Joseph T. Ryerson & Son, Inc. and J. M.
Tull Metals Company, Inc., since November 1990. He also
has been President of Joseph T. Ryerson & Son, Inc.
since January 1990 and was President and Chief Executive
Officer of J. M. Tull Metals Company, Inc. (acquired by
the Company in July 1986) from July 1984 until November
1990.
Maurice S. Nelson, Jr., 56......... Mr. Nelson has been Senior Vice President of the Company
Senior Vice President and President and Chief Operating Officer of Inland
Steel Company since September 1, 1992. He also holds the
position of President of the Inland Steel Flat Products
Company division of Inland Steel Company, which he
assumed on joining the Company on November 1, 1991.
Prior to joining Inland Steel Company, he was President,
Sheet and Plate Division, Aluminum Company of America
("ALCOA"), from August 1991 to October 1991 and Vice
President, Sheet and Plate Division, ALCOA, from October
1986 to July 1991.
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NAME, AGE AND POSITIONS AND OFFICES HELD
PRESENT POSITION WITH REGISTRANT DURING THE PAST FIVE YEARS
- ----------------------------------- --------------------------------------------------------
Earl L. Mason, 46.................. Mr. Mason has been Vice President and Chief Financial
Vice President and Officer of the Company since January 24, 1994. Prior to
Chief Financial Officer such appointment, he was Vice President -- Finance and
Principal Financial Officer of the Company from June 17,
1991. Prior to joining the Company, he was Group
Executive -- Logistics and Asset Management of Digital
Equipment Corporation (a manufacturer of data processing
equipment) ("Digital") from July 1990 until joining the
Company in June 1991, and Chief Financial Officer for
the European operations of Digital from September 1987
to June 1990.
David B. Anderson, 51.............. Mr. Anderson has been Secretary of the Company and of
Vice President -- Corporate Inland Steel Company since January 1, 1994. He also has
Planning, General Counsel and been Vice President -- Corporate Planning and General
Secretary Counsel of the Company since April 23, 1986.
Jay E. Dittus, 61.................. Mr. Dittus has been Vice President -- Finance since
Vice President -- Finance January 24, 1994. Prior to such appointment, he was
Treasurer of the Company from April 23, 1986, Treasurer
of Inland Steel Company from May 1981, Treasurer of
Joseph T. Ryerson & Son, Inc. from October 1990,
Assistant Treasurer of Joseph T. Ryerson & Son, Inc.
from April 1986 to October 1990, and Treasurer of J. M.
Tull Metals Company, Inc. from September 1988. He also
has been Vice President of Inland Steel Company since
November 1988.
Judd R. Cool, 58................... Mr. Cool has been Vice President -- Human Resources of
Vice-President -- Human Resources the Company since September 21, 1987 and Vice President
-- Human Resources of Inland Steel Flat Products Company
division since January 11, 1993.
H. William Howard, 59.............. Mr. Howard has been Vice President -- Information
Vice President -- Information Technology of the Company since September 1, 1990 and
Technology Vice President -- Automation and Information Technology
of Inland Steel Flat Products Company division since
January 11, 1993. Prior to joining the Company, he was
the Vice President of Information Technology of the
Bechtel Group, Inc. (involved in engineering and
construction) from May 1987 to September 1990.
Vicki L. Avril, 39................. Ms. Avril has been Treasurer of the Company and of
Treasurer and Director of Pension Inland Steel Company since January 24, 1994, and
Investments and Administration Treasurer of Joseph T. Ryerson & Son, Inc. and J. M.
Tull Metals Company, Inc. since February 10, 1994. In
addition, she has been Director of Pension Investments
and Administration since June 1991. She was Assistant
Treasurer of the Company from May 1993 until January
1994, Manager -- Planning -- Distribution Business from
February 1990 until June 1991, and Manager -- Pension
Investments from March 1988 until February 1990.
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NAME, AGE AND POSITIONS AND OFFICES HELD
PRESENT POSITION WITH REGISTRANT DURING THE PAST FIVE YEARS
- ----------------------------------- --------------------------------------------------------
Olivia M. Thompson, 44............. Ms. Thompson has been Controller of the Company since
Controller and Principal August 17, 1992 and Controller of Inland Steel Company
Accounting Officer since February 1, 1993. Prior to joining the Company,
she was employed by Allied-Signal, Inc. (involved in
aerospace, automotive and engineered materials) as
Director of Business Planning and Development for the
Automotive Sector from September 1991 to July 1992,
Assistant Corporate Controller -- Operations Analysis
and Accounting from June 1990 to August 1991, and Group
Controller -- Bendix Safety Restraints Group from
January 1987 to June 1990.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.
The common stock of the Company is listed and traded on the New York Stock
Exchange. As of March 15, 1994, the number of holders of record of common stock
of the Company was 15,388.
The remaining information called for by this Item 5 is set forth under the
caption "Summary by Quarter" in the Company's Annual Report to Stockholders for
the fiscal year ended December 31, 1993, and is hereby incorporated by reference
herein.
ITEM 6. SELECTED FINANCIAL DATA.
The information called for by this Item 6 with respect to each of the last
five years of the Company and its predecessor is set forth under the caption
"Eleven-Year Summary of Selected Financial Data and Operating Results" in the
Company's Annual Report to Stockholders for the fiscal year ended December 31,
1993, and is hereby incorporated by reference herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information called for by this Item 7 is set forth in the Financial
Review section of the Company's Annual Report to Stockholders for the fiscal
year ended December 31, 1993, and, excluding the tables entitled "Inland Steel
Company -- Steel Shipments by Market" and "Inland Materials Distribution Group
- -- Shipments by Market" and the bar charts entitled "Inland Steel Industries --
Debt to Total Capitalization," "Inland Steel Industries -- Capital Expenditures
versus Depreciation," "Inland Steel Industries -- Total Employment Costs" and
"Inland Steel Industries -- Average Employment Cost Per Employee" contained
therein, is hereby incorporated by reference herein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of the Company called for by this
Item 8, together with the report thereon of the independent accountants dated
February 23, 1994, are set forth under the captions "Report of Independent
Accountants" and "Statement of Accounting and Financial Policies" as well as in
all consolidated financial statements and schedules of the Company and the
"Notes to Consolidated Financial Statements" in the Company's Annual Report to
Stockholders for the fiscal year ended December 31, 1993, and are hereby
incorporated by reference herein. The financial statement schedules listed under
Item 14(a)2 of this Report on Form 10-K, together with the report thereon of the
independent accountants dated February 23, 1994, should be read in conjunction
with the consolidated financial statements. Financial statement schedules not
included in this Report on Form 10-K have been omitted because they are not
applicable or because the information called for is shown in the consolidated
financial statements or notes
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thereto. Separate consolidated financial statements for Inland Steel Company are
set forth in Inland Steel Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993. Separate consolidated financial statements for
Inland Materials Distribution Group, Inc. are set forth in Appendix A to this
Report.
Consolidated quarterly sales, earnings and per share common stock
information for 1992 and 1993 are set under the caption "Summary by Quarter" in
the Company's Annual Report to Stockholders for the fiscal year ended December
31, 1993, and are hereby incorporated by reference herein.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information called for by this Item 10 with respect to directors of the
Company will be set forth under the caption "Election of Directors" in the
Company's definitive Proxy Statement which will be furnished to stockholders in
connection with the Annual Meeting of Stockholders to be held on May 25, 1994,
and is hereby incorporated by reference herein. The information called for with
respect to executive officers of the Company is included in Part I of this
Report on Form 10-K under the caption "Executive Officers of Registrant."
ITEM 11. EXECUTIVE COMPENSATION.
The information called for by this Item 11 will be set forth under the
caption "Executive Compensation" in the Company's definitive Proxy Statement
which will be furnished to stockholders in connection with the Annual Meeting of
Stockholders to be held on May 25, 1994, and is hereby incorporated by reference
herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) The information called for by this Item 12 with respect to security
ownership of more than five percent of the Company's common stock, Series E ESOP
Convertible Preferred Stock and Series F Exchangeable Preferred Stock will be
set forth under the caption "Additional Information Relating to Voting
Securities" in the Company's definitive Proxy Statement which will be furnished
to stockholders in connection with the Annual Meeting of Stockholders scheduled
to be held on May 25, 1994, and is hereby incorporated by reference herein.
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The following beneficial owners of Series A $2.40 Cumulative Convertible
Preferred Stock are the only persons known to the Company to be the beneficial
owners (as defined by the Securities and Exchange Commission), as of March 15,
1994, of more than five percent of that class of the Company's voting
securities:
NUMBER PERCENT
NAME AND ADDRESS OF SHARES OF CLASS
------------------------------------------------------------------- --------- --------
Joseph H. Campbell................................................. 7,500 7.78
2003 Country Club Drive
Midland, TX 79701
Harry Kifferstein.................................................. 10,025 10.40
c/o Warren Kifferstein
6735 Telegraph Road, Suite 330
Bloomfield Hills, MI 48301
Janice F. McCollough............................................... 7,200 7.47
5778 Lake Breeze Court
Sarasota, FL 34233
Donald F. Reinhardt................................................ 5,181 5.38
24638 Elmhurst Drive
Elkhart, IN 46517
(b) The information called for by this Item 12 with respect to the security
ownership of directors and of management will be set forth under the caption
"Security Ownership of Directors and Management" in the Company's definitive
Proxy Statement which will be furnished to stockholders in connection with the
Annual Meeting of Stockholders to be held on May 25, 1994, and is hereby
incorporated by reference herein.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information called for by this Item 13 will be set forth under the caption
"Additional Information Relating to Voting Securities -- Certain Relationships
and Related Transactions" in the Company's definitive Proxy Statement which will
be furnished to stockholders in connection with the Annual Meeting of
Stockholders to be held on May 25, 1994, and is hereby incorporated by reference
herein.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) DOCUMENTS FILED AS A PART OF THIS REPORT.
1. CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY. The consolidated
financial statements listed below are set forth in the Company's Annual
Report to Stockholders for the fiscal year ended December 31, 1993, and
are incorporated by reference in Item 8 of this Annual Report on Form
10-K.
Report of Independent Accountants dated February 23, 1994.
Statement of Accounting and Financial Policies.
Consolidated Statements of Operations and Reinvested Earnings for the
three years ended December 31, 1993.
Consolidated Statement of Cash Flows for the three years ended
December 31, 1993.
Consolidated Balance Sheet at December 31, 1993 and 1992.
Schedules to Consolidated Financial Statements at December 31, 1993
and 1992, relating to:
Investments and Advances.
19
21
Property, Plant and Equipment.
Long-Term Debt.
Notes to Consolidated Financial Statements.
2. FINANCIAL STATEMENT SCHEDULES OF THE COMPANY.
Report of Independent Accountants on Financial Statement Schedules
dated February 23, 1994. (Included on page 27 of this Report)
Consent of Independent Accountants. (Included on page 27 of this
Report)
For the years ended December 31, 1993, 1992 and 1991:
Schedule III -- Condensed Financial Information (Parent Company
Only). (Included on pages 28 to 30, inclusive, of this Report)
Schedule V -- Property, Plant and Equipment. (Included on page 31
of this Report)
Schedule VI -- Reserve for Depreciation, Amortization and
Depletion of Property, Plant and Equipment. (Included on page 32
of this Report)
Schedule VIII -- Reserves. (Included on page 33 of this Report)
Schedule IX -- Short-Term Borrowings. (Included on page 34 of
this Report)
Schedule X -- Supplementary Profit and Loss Information.
(Included on page 35 of this Report)
3. CONSOLIDATED FINANCIAL STATEMENTS OF INLAND MATERIALS DISTRIBUTION
GROUP, INC.
The consolidated financial statements listed below are set forth in
Appendix A on pages A-1 to A-13 inclusive, of this Report.
Report of Independent Accountants dated February 23, 1994. (Page A-2)
Consolidated Statements of Operations and Reinvested Earnings for the
three years ended December 31, 1993. (Page A-3)
Consolidated Statement of Cash Flows for the three years ended
December 31, 1993. (Page A-4)
Consolidated Balance Sheet at December 31, 1993 and 1992. (Page A-5)
Statement of Accounting and Financial Policies. (Page A-6)
Notes to Consolidated Financial Statements. (Pages A-7 to A-13,
inclusive)
4. EXHIBITS. The exhibits required to be filed by Item 601 of Regulation
S-K are listed under the caption "Exhibits" below.
(B) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed by the Company during the quarter
ended December 31, 1993.
(C) EXHIBITS.
3.(i) Copy of Certificate of Incorporation, as amended, of the Company. (Filed
as Exhibit 4-A to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1991, and incorporated by reference herein.)
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22
3.(ii) Copy of By-laws, as amended, of the Company. (Filed as Exhibit 3-B to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1992, and incorporated by reference herein.)
4.A Copy of Certificate of Designations, Preferences and Rights of Series A
$2.40 Cumulative Convertible Preferred Stock of the Company. (Filed as
part of Exhibit B to the definitive Proxy Statement of Inland Steel
Company dated March 21, 1986 that was furnished to stockholders in
connection with the annual meeting held April 23, 1986, and incorporated
by reference herein.)
4.B Copy of Certificate of Designation, Preferences and Rights of Series D
Junior Participating Preferred Stock of the Company. (Filed as Exhibit
4-D to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1987, and incorporated by reference herein.)
4.C Copy of Rights Agreement, dated as of November 25, 1987, as amended and
restated as of May 24, 1989, between the Company and The First National
Bank of Chicago, as Rights Agent (Harris Trust and Savings Bank, as
successor Rights Agent). (Filed as Exhibit 1 to the Company's Current
Report on Form 8-K filed on May 24, 1989, and incorporated by reference
herein.)
4.D Copy of Certificate of Designations, Preferences and Rights of Series E
ESOP Convertible Preferred Stock of the Company. (Filed as Exhibit 4-F to
the Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1989, and incorporated by reference herein.)
4.E Copy of Certificate of Designations, Preferences and Rights of Series F
Exchangeable Preferred Stock of the Company. (Filed as Exhibit 4(b) to
the Company's Current Report on Form 8-K filed on December 18, 1989, and
incorporated by reference herein.)
4.F Copy of Certificate of Designations of Series G $4.625 Cumulative
Convertible Exchangeable Preferred Stock of the Company. (Filed as
Exhibit 2.8 to the Company's Registration Statement on Form 8-A filed on
March 25, 1991, and incorporated by reference herein.)
4.G Copy of Indenture dated as of December 15, 1992, between the Company and
Harris Trust and Savings Bank, as Trustee, respecting the Company's
$150,000,000 12-3/4% Notes due December 15, 2002. (Filed as Exhibit 4-G
to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, and incorporated by reference herein.)
4.H Copy of First Mortgage Indenture, dated April 1, 1928, between Inland
Steel Company (the "Steel Company") and First Trust and Savings Bank and
Melvin A. Traylor, as Trustees, and of supplemental indentures thereto,
to and including the Thirty-Second Supplemental Indenture, incorporated
by reference from the following Exhibits: (i) Exhibits B-1(a), B-1(b),
B-1(c), B-1(d) and B-1(e), filed with Steel Company's Registration
Statement on Form A-2 (No. 2-1855); (ii) Exhibits D-1(f) and D-1(g),
filed with Steel Company's Registration Statement on Form E-1 (No.
2-2182); (iii) Exhibit B-1(h), filed with Steel Company's Current Report
on Form 8-K dated January 18, 1937; (iv) Exhibit B-1(i), filed with Steel
Company's Current Report on Form 8-K, dated February 8, 1937; (v)
Exhibits B-1(j) and B-1(k), filed with Steel Company's Current Report on
Form 8-K for the month of April, 1940; (vi) Exhibit B-2, filed with Steel
Company's Registration Statement on Form A-2 (No. 2-4357); (vii) Exhibit
B-1(l), filed with Steel Company's Current Report on Form 8-K for the
month of January, 1945; (viii) Exhibit 1, filed with Steel Company's
Current Report on Form 8-K for the month of November, 1946; (ix) Exhibit
1, filed with Steel Company's Current Report on Form 8-K for the months
of July and August, 1948; (x) Exhibits B and C, filed with Steel
Company's Current Report on Form 8-K for the month of March, 1952; (xi)
Exhibit A, filed with Steel Company's Current Report on Form 8-K for the
month of July, 1956; (xii) Exhibit A, filed with Steel Company's Current
Report on Form 8-K for the month of July, 1957;
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23
(xiii) Exhibit B, filed with Steel Company's Current Report on Form 8-K
for the month of January, 1959; (xiv) the Exhibit filed with Steel
Company's Current Report on Form 8-K for the month of December, 1967;
(xv) the Exhibit filed with Steel Company's Current Report on Form 8-K
for the month of April, 1969; (xvi) the Exhibit filed with Steel
Company's Current Report on Form 8-K for the month of July, 1970; (xvii)
the Exhibit filed with the amendment on Form 8 to Steel Company's Current
Report on Form 8-K for the month of April, 1974; (xviii) Exhibit B, filed
with Steel Company's Current Report on Form 8-K for the month of
September, 1975; (xix) Exhibit B, filed with Steel Company's Current
Report on Form 8-K for the month of January, 1977; (xx) Exhibit C, filed
with Steel Company's Current Report on Form 8-K for the month of
February, 1977; (xxi) Exhibit B, filed with Steel Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1978; (xxii) Exhibit
B, filed with Steel Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1980; (xxiii) Exhibit 4-D, filed with Steel
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1980; (xxiv) Exhibit 4-D, filed with Steel Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1982; (xxv) Exhibit 4-E,
filed with Steel Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1983; (xxvi) Exhibit 4(i) filed with the Steel
Company's Registration Statement on Form S-2 (No. 33-43393); and (xxvii)
Exhibit 4 filed with Steel Company's Current Report on form 8-K dated
June 23, 1993.
4.I Copy of consolidated reprint of First Mortgage Indenture, dated April 1,
1928, between Inland Steel Company and First Trust and Savings Bank and
Melvin A. Traylor, as Trustees, as amended and supplemented by all
supplemental indentures thereto, to and including the Thirteenth
Supplemental Indenture. (Filed as Exhibit 4-E to Form S-1 Registration
Statement No. 2-9443, and incorporated by reference herein.)
[The registrant hereby agrees to provide a copy of any other agreement
relating to long-term debt at the request of the Commission.]
10.A* Copy of Inland Steel Industries, Inc. Annual Incentive Plan, as amended.
10.B* Copy of Inland Steel Industries, Inc. Special Achievement Award Plan.
(Filed as Exhibit 10-I to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1987, and incorporated by reference
herein.)
10.C* Copy of Inland 1975 Executive Stock Option Plan, as amended. (Filed as
Exhibit 10-A to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987, and incorporated by reference herein.)
10.D* Copy of Inland 1984 Incentive Stock Plan, as amended.
10.E* Copy of Inland 1988 Incentive Stock Plan, as amended.
10.F* Copy of Inland 1992 Incentive Stock Plan, as amended.
10.G* Copy of Inland Steel Industries Non-Qualified Thrift Plan, as amended.
(Filed as Exhibit 10-H to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1989, and incorporated by reference
herein.)
10.H* Copy of Inland 1992 Stock Plan for Non-Employee Directors. (Filed as
Exhibit B to the Company's definitive Proxy Statement dated March 16,
1992 that was furnished to stockholders in connection with the annual
meeting held April 22, 1992, and incorporated by reference herein.)
10.I* Copy of Inland Steel Industries Supplemental Retirement Benefit Plan for
Covered Employees, as amended.
- ---------------
* Management contract or compensatory plan or arrangement required to be
filed as an exhibit to the Company's Annual Report on Form 10-K.
22
24
10.J* Copy of Inland Steel Industries Special Retirement Benefit Plan for
Covered Employees, as amended.
10.K* Copy of the Inland Steel Industries Deferred Compensation Plan for
Certain Employees. (Filed as Exhibit 10-K to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1989, and
incorporated by reference herein.)
10.L* Copy of Inland Steel Industries Deferred Compensation Plan for Directors,
as amended. (Filed as Exhibit 10-L to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1992, and incorporated by
reference herein.)
10.M* Copy of Inland Steel Industries Director Retirement Plan.
10.N* Copy of Outside Directors Accident Insurance Policy. (Filed as Exhibit
10-F to Inland Steel Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1983, and incorporated by reference herein.)
10.O.(1)* Copy of form of Severance Agreement dated June 28, 1989 between the
Company and each of the seven executive officers of the Company
identified on the exhibit relating to terms and conditions of termination
of employment following a change in control of the Company. (Filed as
Exhibit 10-O-(1) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989, and incorporated by reference
herein.)
10.O.(2)* Amended listing of executive officers of the Company who are parties to
the form of Severance Agreement dated June 28, 1989 in Exhibit 10.O.(1)
hereof.
10.O.(3)* Copy of Severance Agreement dated June 28, 1989 between the Company and
Judd R. Cool. (Filed as Exhibit 10-O-(2) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1989, and
incorporated by reference herein.)
10.O.(4)* Copy of Severance Agreement dated September 4, 1990 between the Company
and H. William Howard. (Filed as Exhibit 10-M-(5) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1990, and
incorporated by reference herein.)
10.O.(5)* Copy of Severance Agreement dated June 26, 1991 between the Company and
Earl L. Mason. (Filed as Exhibit 10-X to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1991, and incorporated by
reference herein.)
10.O.(6)* Copy of Severance Agreement dated November 27, 1991 between the Company
and Maurice S. Nelson, Jr. (Filed as Exhibit 10-O-(6) to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1992,
and incorporated by reference herein.)
10.O.(7)* Copy of Severance Agreement dated August 17, 1992 between the Company and
Olivia M. Thompson. (Filed as Exhibit 10-O-(7) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1992, and
incorporated by reference herein.)
10.O.(8)* Copy of Severance Agreement dated March 23, 1994 between the Company and
Vicki L. Avril.
10.P.(1)* Copy of letter to Judd R. Cool dated September 2, 1987 relating to terms
and conditions of employment. (Filed as Exhibit 10-K to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1987,
and incorporated by reference herein.)
10.P.(2)* Copy of letter agreement dated November 23, 1987 between the Company and
Judd R. Cool. (Filed as Exhibit 10-L to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1987, and incorporated
by reference herein.)
- ---------------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to the Company's Annual Report on Form 10-K.
23
25
10.P.(3)* Copy of letter agreement dated December 10, 1993 between the Company and
Judd R. Cool restating certain provisions of the September 2, 1987 and
November 23, 1987 letters in Exhibits 10.P.(1) and (2).
10.Q* Copy of letter to H. William Howard dated July 17, 1990 relating to terms
and conditions of employment. (Filed as Exhibit 10-P to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1990,
and incorporated by reference herein.)
10.R* Copy of letter to Earl L. Mason dated May 17, 1991 relating to terms and
conditions of employment. (Filed as Exhibit 10-W to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1991, and
incorporated by reference
herein.)
10.S* Copy of letter to Maurice S. Nelson, Jr. dated March 26, 1993 relating to
supplemental pension arrangement. (Filed as Exhibit 10-S to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1992,
and incorporated by reference herein.)
10.T* Copy of Letter of Credit with respect to the Supplemental and Special
Retirement Benefit Plan obligations of the Company to W. Gordon Kay.
10.U* Copy of letter to Olivia M. Thompson dated June 24, 1992 relating to
terms and conditions of employment. (Filed as Exhibit 10-T to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1992, and incorporated by reference herein.)
10.V Copy of Stock Purchase Agreement, dated as of July 7, 1989, between the
Company and Harris Trust and Savings Bank, as ESOP Trustee. (Filed as
Exhibit 4-G to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1989, and incorporated by reference herein.)
10.W.(1) Copy of Letter Agreement dated December 18, 1989 among the Company,
Nippon Steel Corporation and NS Finance III, Inc. (an indirectly wholly
owned subsidiary of Nippon Steel Corporation) relating to sale to NS
Finance III, Inc. of 185,000 shares of Series F Exchangeable Preferred
Stock of the Company. (Filed as Exhibit 4(b) to the Company's Current
Report on Form 8-K filed on December 18, 1989, and incorporated by
reference herein.)
10.W.(2) Copy of Steel Technology Agreement dated as of July 14, 1989 between
Inland Steel Company and Nippon Steel Corporation relating to technology
sharing between the signatories. (Filed as Exhibit 10-S-(2) to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1989, and incorporated by reference herein.)
10.W.(3) Copy of Basic Agreement dated as of July 21, 1987 between the Company and
Nippon Steel Corporation relating to the I/N Tek joint venture. (Filed as
Exhibit 10-S-(3) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989, and incorporated by reference
herein.)
10.W.(4) Copy of Partnership Agreement dated as of July 21, 1987 between ISC Tek,
Inc. (an indirectly wholly owned subsidiary of the Company) and NS Tek,
Inc. (an indirectly wholly owned subsidiary of Nippon Steel Corporation)
relating to the I/N Tek joint venture. (Filed as Exhibit 10-S-(4) to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1989, and incorporated by reference herein.)
10.W.(5) Copy of Basic Agreement dated as of September 12, 1989 between the
Company and Nippon Steel Corporation relating to the I/N Kote joint
venture. (Filed as Exhibit 10-S-(5) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1989, and incorporated
by reference herein.)
- ---------------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to the Company's Annual Report on Form 10-K.
24
26
10.W.(6) Copy of Partnership Agreement dated as of September 12, 1989 between ISC
Kote, Inc. (an indirectly wholly owned subsidiary of the Company) and NS
Tek, Inc. (an indirectly wholly owned subsidiary of Nippon Steel
Corporation) relating to the I/N Kote joint venture. (Filed as Exhibit
10-S-(6) to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1989, and incorporated by reference herein.)
10.W.(7) Copy of Substrate Supply Agreement dated as of September 12, 1989 between
Inland Steel Company and I/N Kote, an Indiana general partnership. (Filed
as Exhibit 10-S-(7) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989, and incorporated by reference
herein.)
10.W.(8) First Amendment to Substrate Supply Agreement dated as of May 1, 1990
between Inland Steel Company and I/N Kote relating to the I/N Kote joint
venture. (Filed as Exhibit 10-R-(8) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1990, and incorporated
by reference herein.)
10.W.(9) Letter Agreement dated as of May 1, 1990 among I/N Kote, the Company and
Nippon Steel Corporation relating to partner loans. (Filed as Exhibit
10-R-(9) to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, and incorporated by reference herein.)
10.W.(10) First Amendment to I/N Kote Basic Agreement dated as of May 1, 1990
between the Company and Nippon Steel Corporation relating to the I/N Kote
joint venture. (Filed as Exhibit 10-R-(10) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1990, and
incorporated by reference herein.)
10.W.(11) Letter Agreement dated as of April 19, 1990 between the Company and
Nippon Steel Corporation relating to capital contributions to I/N Tek.
(Filed as Exhibit 10-R-(11) to Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1990, and incorporated by reference
herein.)
10.W.(12) Letter Agreement dated April 20, 1990 between ISC Tek, Inc. (an
indirectly wholly owned subsidiary of the Company) and NS Tek, Inc. (an
indirectly wholly owned subsidiary of Nippon Steel Corporation) relating
to amendment of the partnership agreement of I/N Tek. (Filed as Exhibit
10-R-(12) to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, and incorporated by reference herein.)
10.W.(13) CCM Override Amendment dated as of April 20, 1990 among the Company;
Nippon Steel Corporation; Inland Steel Company; ISC Tek, Inc.; I/N Tek;
NS Sales, Inc.; and NS Tek, Inc. relating to I/N Tek. (Filed as Exhibit
10-R-(13) to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, and incorporated by reference herein.)
10.X Copy of ESOP Stock Purchase Agreement, dated May 30, 1990, between the
Company and Harris Trust and Savings Bank, as ESOP Trustee. (Filed as
Exhibit 10-T to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990, and incorporated by reference herein.)
10.Y Copy of Inland Steel Industries Thrift Plan ESOP Trust, dated July 7,
1989, between the Company and Harris Trust and Savings Bank, as ESOP
Trustee. (Filed as Exhibit 10-P to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1989, and incorporated by reference
herein.)
10.Z Letter Agreement dated March 1, 1991 between Nippon Steel Corporation and
the Company regarding Series F Exchangeable Preferred Stock. (Filed as
Exhibit 10-U to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990, and incorporated by reference herein.)
25
27
10.AA Letter Agreement dated May 10, 1991 by and between Nippon Steel
Corporation and Inland Steel Industries, Inc. relating to Letter
Agreement dated December 18, 1989. (Filed as Exhibit 10-V to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1991, and incorporated by reference herein.)
11 Statement of Earnings per Share of Common Stock.
13 Information incorporated by reference from Annual Report to Stockholders
for the fiscal year ended December 31, 1993.
21 List of certain subsidiaries of the Company.
23 Consent of Independent Accountants, appearing on page 27 of this Annual
Report on Form 10-K.
24 Powers of attorney.
99 Letter to stockholders of common stock of the Company dated December 22,
1987 explaining Stockholder Rights Plan adopted by Board of Directors on
November 25, 1987. (Filed as Exhibit 3 to the Company's Current Report on
Form 8-K filed on December 18, 1987, and incorporated by reference
herein.)
26
28
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
of Inland Steel Industries, Inc.
Our audits of the consolidated financial statements referred to in our
report dated February 23, 1994 appearing on page 26 of the 1993 Annual Report to
Stockholders of Inland Steel Industries, Inc. (which report and consolidated
financial statements are incorporated by reference in this Annual Report on Form
10-K) also included an audit of the Financial Statement Schedules listed in Item
14(a)2 of this Annual Report on Form 10-K. In our opinion, these Financial
Statement Schedules present fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements.
PRICE WATERHOUSE
Chicago, Illinois
February 23, 1994
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statement on Form S-8 (No. 33-48770),
Registration Statement on Form S-8 (No. 33-22902); Registration Statement on
Form S-8 (No. 33-32504); and Post-Effective Amendment No. 2 to Form S-8
Registration Statement (No. 33-6627) of Inland Steel Industries, Inc. of our
report dated February 23, 1994, appearing on page 26 of the 1993 Annual Report
to Stockholders of Inland Steel Industries, Inc. which is incorporated in this
Annual Report on Form 10-K. We also consent to the incorporation by reference of
our report on the Financial Statement Schedules, which appears above.
PRICE WATERHOUSE
Chicago, Illinois
March 30, 1994
27
29
INLAND STEEL INDUSTRIES, INC.
Schedule III--Condensed Financial Information
(Parent Company Only)
STATEMENT OF OPERATIONS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1993 1992 1991
------ ------- -------
Income:
Intercompany interest income.................................. $ 18.5 $ 15.9 $ 31.6
Equity in losses of subsidiaries.............................. (34.4) (868.9) (395.7)
Interest income and other revenue............................. 1.2 2.0 1.6
------ ------- -------
(14.7) (851.0) (362.5)
Expenses:
Interest and other expenses................................... 22.6 10.1 4.2
Intercompany interest expense................................. 2.4 1.6 .9
Restructuring provision....................................... -- -- 10.0
------ ------- -------
25.0 11.7 15.1
Loss before income taxes........................................ (39.7) (862.7) (377.6)
Provision for income taxes...................................... 2.1Cr. 6.5Cr. 102.5Cr.
------ ------- -------
Loss before cumulative effect of changes in accounting
principles.................................................... (37.6) (856.2) (275.1)
Cumulative effect of changes in accounting principles:
Adoption of FASB Statement No. 109 (Accounting for Income
Taxes)..................................................... -- 47.2 --
Adoption of FASB Statement No. 106 (Employers' Accounting for
Postretirement Benefits other than Pensions)............... -- (6.6) --
------ ------- -------
Net loss........................................................ $(37.6) $(815.6) $(275.1)
------ ------- -------
------ ------- -------
- ---------------
Cr. = Credit
See Notes to Consolidated Financial Statements in Item 8.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
28
30
INLAND STEEL INDUSTRIES, INC.
Schedule III--Condensed Financial Information
(Parent Company Only)
STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1993 1992 1991
------- ------- -------
OPERATING ACTIVITIES
Net loss....................................................... $ (37.6) $(815.6) $(275.1)
Adjustments to reconcile net loss to net cash provided from
(used for) operating activities:
Equity in undistributed earnings of subsidiaries.......... 34.4 868.9 395.7
Depreciation.............................................. .6 .7 .6
Deferred income tax....................................... 11.5 (45.2) (93.7)
Deferred employee benefit cost............................ .1 .7 1.5
Stock issued for coverage of employee benefit plan
expense................................................. 19.1 13.4 14.0
Restructuring provision................................... -- -- 7.9
Change in: Intercompany accounts.......................... 183.6 (73.0) 228.2
Notes receivable............................... .2 .4 (.6)
Accounts payable............................... (1.9) .5 (.9)
Accrued liabilities............................ .3 7.2 (2.8)
Other deferred items...................................... (3.0) (.9) (.5)
------- ------- -------
Net adjustments......................................... 244.9 772.7 549.4
------- ------- -------
Net cash provided from (used for) operating
activities........................................... 207.3 (42.9) 274.3
------- ------- -------
INVESTING ACTIVITIES
Net investments in subsidiaries................................ (312.1) (76.0) (350.0)
Dividends received from subsidiaries........................... 25.8 24.4 8.6
------- ------- -------
Net cash used for investing activities.................. (286.3) (51.6) (341.4)
------- ------- -------
FINANCING ACTIVITIES
Sale of common stock........................................... 178.7 97.9 --
Sale of preferred stock........................................ -- -- 72.8
Long-term debt issued.......................................... -- 145.4 --
Long-term debt retired......................................... (7.1) (6.6) (2.0)
Dividends paid................................................. (35.7) (35.8) (37.6)
Acquisition of treasury stock.................................. (9.5) (3.5) (2.3)
------- ------- -------
Net cash provided from financing activities............. 126.4 197.4 30.9
------- ------- -------
Net increase (decrease) in cash and cash equivalents........... 47.4 102.9 (36.2)
Cash and cash equivalents--beginning of year................... 157.4 54.5 90.7
------- ------- -------
Cash and cash equivalents--end of year......................... $ 204.8 $ 157.4 $ 54.5
------- ------- -------
------- ------- -------
See Notes to Consolidated Financial Statements in Item 8.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
29
31
INLAND STEEL INDUSTRIES, INC.
Schedule III--Condensed Financial Information
(Parent Company Only)
BALANCE SHEET
AT DECEMBER 31, 1993 AND 1992
(DOLLARS IN MILLIONS--EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1993 1992
-------- -------
ASSETS
Current Assets:
Cash and cash equivalents.......................................... $ 204.8 $ 157.4
Receivables from subsidiary companies.............................. 99.3 282.9
Deferred income taxes.............................................. .3 --
Notes receivable................................................... -- .2
-------- -------
Total current assets............................................. 304.4 440.5
Investment in subsidiary companies...................................... 614.2 365.3
Investment in Nippon Steel Corporation, net of valuation allowances of
$5.1 and $5.8, respectively........................................... 9.5 8.8
Property, net of accumulated depreciation of $6.1 and $5.5,
respectively.......................................................... 2.8 3.3
Deferred income taxes................................................... 16.3 21.5
Deferred charges and other assets....................................... 7.8 8.2
-------- -------
Total assets..................................................... $ 955.0 $ 847.6
-------- -------
-------- -------
LIABILITIES
Current Liabilities:
Accounts payable................................................... $ 9.0 $ 10.9
Accrued liabilities................................................ 17.8 17.3
Deferred federal income taxes...................................... -- .2
Long-term debt due within one year................................. 7.7 7.1
-------- -------
Total current liabilities........................................ 34.5 35.5
Long-term debt.......................................................... 273.6 281.2
Deferred employee benefits.............................................. 16.3 16.2
Deferred income......................................................... 7.2 8.4
-------- -------
Total liabilities................................................ 331.6 341.3
-------- -------
TEMPORARY EQUITY
Redeemable preferred stock, Series F, $1.00 par value, 185,000 shares
issued and outstanding, redeemable at $1,000 per share................ 185.0 185.0
Common stock repurchase commitment...................................... 40.8 49.9
-------- -------
STOCKHOLDERS' EQUITY
Preferred stock, $1.00 par value, 15,000,000 shares authorized for all
series including Series F, aggregate liquidation value $230.6 in 1993
and $231.6 in 1992.................................................... 4.7 4.7
Common stock, $1.00 par value; authorized--100,000,000 shares;
issued--47,854,208 shares for 1993 and 42,104,208 shares for 1992..... 47.9 42.1
Capital in excess of par value.......................................... 1,106.4 945.0
Accumulated deficit..................................................... (371.9) (302.3)
Unearned compensation--ESOP............................................. (112.2) (122.2)
Common stock repurchase commitment...................................... (40.8) (49.9)
Treasury stock at cost--common stock of 6,767,139 shares in 1993 and
6,857,020 shares in 1992.............................................. (236.5) (246.0)
-------- -------
Total stockholders' equity....................................... 397.6 271.4
-------- -------
Total liabilities, temporary equity, and stockholders' equity.... $ 955.0 $ 847.6
-------- -------
-------- -------
Maturities of Long-Term Debt due within five years are: $7.7 million in 1994,
$8.3 million in 1995, $9.0 million in 1996, $9.7 million in 1997, and $10.5
million in 1998.
See Notes to Consolidated Financial Statements in Item 8.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
30
32
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER
BALANCE CHANGES BALANCE
AT ---------- AT
BEGINNING ADDITIONS RETIREMENTS INCREASE END
CLASSIFICATION OF YEAR AT COST OR SALES (DECREASE) OF YEAR
- ---------------------------------------- --------- --------- ----------- ---------- --------
YEAR ENDED DECEMBER 31, 1993
------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT:
Land, land improvements and mineral
properties......................... $ 155.9 $ 1.2 $ .8 $ .2(A) $ 156.5
Buildings, machinery and equipment.... 3,786.0 104.0 140.6 1.2(A) 3,749.0
(1.6)(B)
Transportation equipment.............. 136.7 .4 2.0 -- 135.1
Property under capital
leases--primarily machinery and
equipment.......................... 44.2 -- -- (1.1)(A) 43.1
--------- --------- ----------- ---------- --------
Total............................ $ 4,122.8 $ 105.6 $ 143.4 $ (1.3) $4,083.7
--------- --------- ----------- ---------- --------
--------- --------- ----------- ---------- --------
YEAR ENDED DECEMBER 31, 1992
------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT:
Land, land improvements and mineral
properties......................... $ 154.6 $ 1.4 $ .1 $-- $ 155.9
Buildings, machinery and equipment.... 3,797.7 62.5 66.8 (4.8)(A) 3,786.0
(2.6)(B)
Transportation equipment.............. 144.2 .5 8.0 -- 136.7
Property under capital
leases--primarily machinery and
equipment.......................... 44.2 -- -- -- 44.2
--------- --------- ----------- ---------- --------
Total............................ $ 4,140.7 $ 64.4 $ 74.9 $ (7.4) $4,122.8
--------- --------- ----------- ---------- --------
--------- --------- ----------- ---------- --------
YEAR ENDED DECEMBER 31, 1991
------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT:
Land, land improvements and mineral
properties......................... $ 149.1 $ 6.0 $ .5 $-- $ 154.6
Buildings, machinery and equipment.... 3,754.8 131.7 87.5 (1.3)(B) 3,797.7
Transportation equipment.............. 149.1 2.4 7.3 -- 144.2
Property under capital
leases--primarily machinery and
equipment.......................... 43.4 .1 -- .7(A) 44.2
--------- --------- ----------- ---------- --------
Total............................ $ 4,096.4 $ 140.2 $ 95.3 $ (.6) $4,140.7
--------- --------- ----------- ---------- --------
--------- --------- ----------- ---------- --------
- ---------------
NOTES:
(A) Transfer between property, plant and equipment and other assets and other
miscellaneous adjustments.
(B) Reflects the change in book value of rolls, annealing covers and convector
plates.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
31
33
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
SCHEDULE VI--RESERVE FOR DEPRECIATION, AMORTIZATION AND DEPLETION OF
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER
CHANGES
BALANCE AT ---------- BALANCE AT
BEGINNING ADDITIONS RETIREMENTS INCREASE END OF
CLASSIFICATION OF YEAR AT COST OR SALES (DECREASE) YEAR
- --------------------------------------- ----------- --------- ----------- ---------- ----------
YEAR ENDED DECEMBER 31, 1993
---------------------------------------------------------------------
DEPRECIATION, AMORTIZATION, DEPLETION:
Land improvements and mineral
properties........................ $ 68.7 $ 2.7 $ .3 $-- $ 71.1
Buildings, machinery and equipment... 2,242.3 122.5 128.9 (.7)(A) 2,235.2
Transportation equipment............. 122.3 5.0 1.5 -- 125.8
Property under capital
leases--primarily machinery and
equipment......................... 34.5 1.6 -- (.6)(A) 35.5
----------- --------- ----------- ---------- ----------
2,467.8 131.8 130.7 (1.3) 2,467.6
Allowance for terminated facilities
costs............................. 106.2 7.7 6.8 1.3(A) 108.4
----------- --------- ----------- ---------- ----------
Total........................... $ 2,574.0 $ 139.5 $ 137.5 $-- $2,576.0
----------- --------- ----------- ---------- ----------
----------- --------- ----------- ---------- ----------
YEAR ENDED DECEMBER 31, 1992
---------------------------------------------------------------------
DEPRECIATION, AMORTIZATION, DEPLETION:
Land improvements and mineral
properties........................ $ 66.0 $ 2.7 $-- $-- $ 68.7
Buildings, machinery and equipment... 2,186.1 118.8 62.7 .1(A) 2,242.3
Transportation equipment............. 123.8 6.0 7.3 (.2)(A) 122.3
Property under capital
leases--primarily machinery and
equipment......................... 32.5 2.1 -- (.1)(A) 34.5
----------- --------- ----------- ---------- ----------
2,408.4 129.6 70.0 (.2) 2,467.8
Allowance for terminated facilities
costs............................. 97.3 11.6 2.7 -- 106.2
----------- --------- ----------- ---------- ----------
Total........................... $ 2,505.7 $ 141.2 $ 72.7 $ (.2) $2,574.0
----------- --------- ----------- ---------- ----------
----------- --------- ----------- ---------- ----------
YEAR ENDED DECEMBER 31, 1991
---------------------------------------------------------------------
DEPRECIATION, AMORTIZATION, DEPLETION:
Land improvements and mineral
properties........................ $ 63.5 $ 2.5 $-- $-- $ 66.0
Buildings, machinery and equipment... 2,159.0 105.2 75.5 (2.6)(A) 2,186.1
Transportation equipment............. 122.5 6.4 5.3 .2(A) 123.8
Property under capital
leases--primarily machinery and
equipment......................... 28.1 4.0 -- .4(A) 32.5
----------- --------- ----------- ---------- ----------
2,373.1 118.1 80.8 (2.0) 2,408.4
Allowance for terminated facilities
costs............................. 15.0 85.0 2.7 -- 97.3
----------- --------- ----------- ---------- ----------
Total........................... $ 2,388.1 $ 203.1 $ 83.5 $ (2.0) $2,505.7
----------- --------- ----------- ---------- ----------
----------- --------- ----------- ---------- ----------
- ---------------
NOTE:
(A) Reclassification among indicated reserve accounts and other miscellaneous
adjustments.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
32
34
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
SCHEDULE VIII--RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROVISIONS FOR ALLOWANCES
CLAIMS AND DOUBTFUL ACCOUNTS
------------------------------------------------------
YEARS BALANCE AT ADDITIONS DEDUCTIONS BALANCE AT
ENDED BEGINNING CHARGED FROM END OF
DECEMBER 31 OF YEAR TO INCOME RESERVES YEAR
- ----------- ---------- --------- ---------- ----------
1993 $ 23.2 $14.4 $ (3.7)(A) $ 28.2
(5.7)(B)
1992 $ 30.2 $ 6.9 $ (7.6)(A) $ 23.2
(6.3)(B)
1991 $ 29.9 $13.7 $ (5.2)(A) $ 30.2
(8.2)(B)
- ---------------
NOTES:
(A) Bad debts written off during year.
(B) Allowances granted during year.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
33
35
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
SCHEDULE IX--SHORT-TERM BORROWINGS
FOR YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
AMOUNT AMOUNT AVERAGE
YEARS CATEGORY OF BALANCE OUTSTANDING OUTSTANDING INTEREST RATE
ENDED SHORT-TERM AT END DURING THE DURING THE DURING THE
DECEMBER 31 BORROWINGS OF YEAR YEAR YEAR(A) YEAR(B)
- ----------- ----------- ------- ----------- ----------- -------------
1993 -- -- -- --
1992 Bank -- $ 40.0 $13.4 4.9%
1991 Bank -- $ 140.0 $85.0 6.6%
- ---------------
NOTES:
(A) The average outstanding amount was computed by aggregating the daily
balances of short-term debt outstanding and dividing the aggregate by the
number of days in the year.
(B) The weighted average interest rate during the year was computed by dividing
interest expense on short-term debt by the average short-term debt
outstanding during the year.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
34
36
INLAND STEEL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES
SCHEDULE X--SUPPLEMENTARY PROFIT AND LOSS INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1993 1992 1991
------ ------ ------
Maintenance and repairs.................................. $178.4 $182.4 $179.7
------ ------ ------
------ ------ ------
Taxes, other than payroll and income taxes:
Real estate and personal property...................... $ 48.8 $ 50.3 $ 46.2
Excise, sales and use, and other....................... 11.5 11.3 12.4
------ ------ ------
$ 60.3 $ 61.6 $ 58.6
------ ------ ------
------ ------ ------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
35
37
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: /s/ ROBERT J. DARNALL
Robert J. Darnall
Chairman, President and
Chief Executive Officer
Date: March 30, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
----------- ----------- -----------
/s/ ROBERT J. DARNALL Chairman, President and March 30, 1994
Robert J. Darnall Chief Executive Officer
and Director
/s/ EARL L. MASON Vice President and March 30, 1994
Earl L. Mason Chief Financial Officer
(Principal Financial
Officer)
/s/ OLIVIA M. THOMPSON Controller and Principal March 30, 1994
Olivia M. Thompson Accounting Officer
A. Robert Abboud Director
James W. Cozad Director
James A. Henderson Director
Emerson Kampen Director
Robert B. McKersie Director By: /s/ EARL L. MASON
Earl L. Mason
Attorney in-fact
March 30, 1994
Donald S. Perkins Director
Joshua I. Smith Director
Nancy H. Teeters Director
Raymond C. Tower Director
Arnold R. Weber Director
36
38
APPENDIX A
INDEX
TO
CONSOLIDATED FINANCIAL STATEMENTS
OF
INLAND MATERIALS DISTRIBUTION GROUP, INC. AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
ITEM PAGE
- -------------------------------------------------------------------------------------- -----
Report of Independent Accountants..................................................... A-2
Consolidated Statements of Operations and Reinvested Earnings for the three years
ended December 31, 1993............................................................. A-3
Consolidated Statement of Cash Flows for the three years ended December 31, 1993...... A-4
Consolidated Balance Sheet at December 31, 1993 and 1992.............................. A-5
Statement of Accounting and Financial Policies........................................ A-6
Notes to Consolidated Financial Statements............................................ A-7
A-1
39
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDER OF
INLAND MATERIALS DISTRIBUTION GROUP, INC.
In our opinion, the consolidated financial statements listed in the index
appearing on page A-1 present fairly, in all material respects, the financial
position of Inland Materials Distribution Group, Inc. (a wholly owned subsidiary
of Inland Steel Industries, Inc.) and Subsidiary Companies at December 31, 1993
and 1992, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1993, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Notes 4 and 5 to the consolidated financial statements, in 1992
the Company changed its method of accounting for postretirement benefits other
than pensions and for income taxes.
PRICE WATERHOUSE
Chicago, Illinois
February 23, 1994
A-2
40
INLAND MATERIALS DISTRIBUTION GROUP, INC. AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS AND REINVESTED EARNINGS
DOLLARS IN MILLIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31
--------------------------------
1993 1992 1991
-------- -------- --------
CONSOLIDATED STATEMENT OF OPERATIONS
NET SALES.................................................... $1,893.3 $1,716.6 $1,655.9
-------- -------- --------
OPERATING COSTS AND EXPENSES:
Cost of goods sold (excluding depreciation)............... 1,663.8 1,516.1 1,465.9
Selling, general and administrative expenses.............. 144.4 145.5 145.4
Depreciation and amortization............................. 20.6 20.1 19.7
State, local and miscellaneous taxes...................... 8.1 7.8 8.7
-------- -------- --------
Total................................................... 1,836.9 1,689.5 1,639.7
-------- -------- --------
OPERATING PROFIT............................................. 56.4 27.1 16.2
OTHER EXPENSE:
General corporate expense................................. 7.4 8.4 10.6
Interest expense, net of interest income.................. 10.9 12.8 17.1
-------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES............................ 38.1 5.9 (11.5)
PROVISION FOR INCOME TAXES (NOTE 5).......................... 11.4 2.6 2.3Cr.
-------- -------- --------
Income (loss) before cumulative effect of changes in
accounting principles..................................... 26.7 3.3 (9.2)
Cumulative effect of changes in accounting principles (Notes
4 and 5).................................................. -- (84.1) --
-------- -------- --------
NET INCOME (LOSS)............................................ $ 26.7 $ (80.8) $ (9.2)
-------- -------- --------
-------- -------- --------
CONSOLIDATED STATEMENT OF REINVESTED EARNINGS
Balance at beginning of year................................. $ 5.4 $ 86.2 $ 95.4
Net income (loss) for the year............................... 26.7 (80.8) (9.2)
-------- -------- --------
Reinvested earnings at end of year........................... $ 32.1 $ 5.4 $ 86.2
-------- -------- --------
-------- -------- --------
The accompanying notes are an integral part of these statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A-3
41
INLAND MATERIALS DISTRIBUTION GROUP, INC. AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
CONSOLIDATED STATEMENT OF CASH FLOWS
DOLLARS IN MILLIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN
CASH
YEARS ENDED DECEMBER 31
--------------------------
1993 1992 1991
------ ------ ------
OPERATING ACTIVITIES
Net income (loss)................................................. $ 26.7 $(80.8) $ (9.2)
------ ------ ------
Adjustments to reconcile net income (loss) to net cash provided
from (used for) operating activities:
Depreciation and amortization.................................. 20.6 20.1 19.7
Net loss (gain) on sales of assets............................. (.1) .5 .1
Deferred employee benefit cost, including cumulative effect of
change in accounting principle................................. 3.9 121.5 (.4)
Deferred income taxes, including cumulative effect of change in
accounting principle........................................... (8.3) (31.9) --
Change in:
Receivables.................................................. (22.8) 2.7 24.2
Inventories.................................................. (18.2) (.1) 29.8
Accounts payable............................................. (31.5) 10.0 (15.3)
Payable to related companies................................. 1.7 2.4 (5.7)
Accrued liabilities.......................................... 2.7 1.7 (2.8)
------ ------ ------
Net adjustments.............................................. (52.0) 126.9 49.6
------ ------ ------
Net cash provided from (used for) operating activities....... (25.3) 46.1 40.4
------ ------ ------
INVESTING ACTIVITIES
Capital expenditures.............................................. (19.3) (9.3) (9.8)
Proceeds from the sales of assets................................. .9 .5 .3
------ ------ ------
Net cash used for investing activities....................... (18.4) (8.8) (9.5)
------ ------ ------
FINANCING ACTIVITIES
Long-term debt issued............................................. 7.5 -- --
Long-term debt retired............................................ (5.3) (6.2) (6.3)
Capital contribution from Inland Steel Industries................. 150.0 -- --
Decrease in notes payable to related companies.................... (79.0) (31.1) (24.6)
------ ------ ------
Net cash provided from (used for) financing activities....... 73.2 (37.3) (30.9)
------ ------ ------
Net increase in cash and cash equivalents......................... 29.5 -- --
Cash and equivalents -- beginning of year......................... -- -- --
------ ------ ------
Cash and equivalents -- end of year............................... $ 29.5 $ -- $ --
------ ------ ------
------ ------ ------
SUPPLEMENTAL DISCLOSURES
Cash paid (received) during the year for:
Interest, net of amount capitalized............................ $ 11.3 $ 13.5 $ 15.2
Income taxes, net.............................................. 22.6 (4.6) (2.2)
The accompanying notes are an integral part of these statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A-4
42
INLAND MATERIALS DISTRIBUTION GROUP, INC. AND SUBSIDIARY COMPANIES
(A WHOLLY OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
CONSOLIDATED BALANCE SHEET
DOLLARS IN MILLIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AT DECEMBER 31
----------------
1993 1992
------ ------
ASSETS
Current assets:
Cash and cash equivalents................................................. $ 29.5 $ --
Receivables less provision for allowances, claims and doubtful accounts of
$5.5 and $5.4, respectively............................................ 196.0 173.2
Inventories (Note 1)...................................................... 278.9 260.7
Deferred income taxes (Note 5)............................................ 11.8 9.3
------ ------
Total current assets................................................. 516.2 443.2
------ ------
Property, plant and equipment, at cost:
Buildings, machinery and equipment........................................ 427.4 412.1
Land and land improvements................................................ 27.8 26.9
------ ------
455.2 439.0
Less accumulated depreciation............................................. 198.0 181.2
------ ------
257.2 257.8
------ ------
Excess of cost over net assets acquired..................................... 26.4 27.7
Deferred income taxes (Note 5).............................................. 28.5 22.7
------ ------
Total assets......................................................... $828.3 $751.4
------ ------
------ ------
LIABILITIES
Current liabilities:
Accounts payable, including outstanding checks in excess of funds on
deposit................................................................ $ 77.2 $108.7
Payables to related companies:
Notes.................................................................. 29.6 108.5
Other.................................................................. 9.0 7.3
Accrued Liabilities:
Salaries and wages..................................................... 17.1 15.2
Taxes other than Federal income tax.................................... 7.5 7.2
Other.................................................................. 4.0 3.4
Long-term debt due within one year........................................ 5.0 5.2
------ ------
Total current liabilities............................................ 149.4 255.5
Long-term debt (Note 3)................................................... 28.2 25.7
Deferred employee benefits and other liabilities (Note 4)................. 124.0 120.2
------ ------
Total liabilities.................................................... 301.6 401.4
------ ------
STOCKHOLDER'S EQUITY
Common stock, par value $1.00; 3,000 shares authorized; one share
issued................................................................. -- --
Additional paid-in capital (Note 6)....................................... 494.6 344.6
Earnings reinvested in the business....................................... 32.1 5.4
------ ------
Total stockholder's equity........................................... 526.7 350.0
------ ------
Total liabilities and stockholder's equity........................... $828.3 $751.4
------ ------
------ ------
The accompanying notes are an integral part of these statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A-5
43
INLAND MATERIALS DISTRIBUTION GROUP, INC. AND SUBSIDIARY COMPANIES
(A Wholly Owned Subsidiary of Inland Steel Industries, Inc.)
STATEMENT OF ACCOUNTING AND FINANCIAL POLICIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The following briefly describes the Company's principal accounting and
financial policies.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Joseph T. Ryerson & Son, Inc., and J. M. Tull Metals Company, Inc., which are
wholly owned subsidiaries of the Company. The accounts of J. M. Tull Metals
Company, Inc. are consolidated with its wholly owned subsidiary, AFCO Metals,
Inc.
Inventory valuation
Inventories are valued at cost which is not in excess of market. Cost is
determined principally by the last-in, first-out (LIFO) method.
Property, plant and equipment
Property, plant and equipment is depreciated, for financial reporting
purposes, on the straight-line method over the estimated useful lives of the
assets. Expenditures for normal repair and maintenance are charged against
income in the period incurred.
Excess of cost over net assets acquired
The excess of cost over fair value of net assets of businesses acquired
(goodwill) is amortized on the straight-line method over a 25-year period.
Accumulated amortization of goodwill totaled $7.5 million at December 31, 1993
and $6.1 million at December 31, 1992.
Benefits for retired employees
Pension benefits are provided by the Company to substantially all employees
under a trusteed noncontributory plan of Inland Steel Industries, Inc.
("Industries"). Life insurance and certain medical benefits are provided for
substantially all retired employees.
The estimated costs of pension, medical, and life insurance benefits are
determined annually by consulting actuaries. With the adoption of Financial
Accounting Standards Board ("FASB") Statement No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions," effective January 1, 1992, the
cost of health care benefits for retirees, previously recognized as incurred, is
now being accrued during their term of employment (see Note 4). Pensions are
funded in accordance with ERISA requirements in a trust established under the
plan. Costs for retired employee medical benefits and life insurance are funded
when claims are submitted.
Cash and cash equivalents
Cash management activities are performed by the Company's parent, Inland
Steel Industries, Inc., to which cash is periodically transferred. Cash
equivalents are highly liquid, short-term investments with maturities of three
months or less. The carrying amount of cash equivalents approximates fair value
because of the short maturity of those instruments.
Income taxes
Effective January 1, 1992, the Company adopted FASB Statement No. 109,
"Accounting for Income Taxes" (see Note 5).
- --------------------------------------------------------------------------------
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A-6
44
INLAND MATERIALS DISTRIBUTION GROUP, INC. AND SUBSIDIARY COMPANIES
(A Wholly Owned Subsidiary of Inland Steel Industries, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE 1/INVENTORIES:
The Company's inventories consist principally of finished steel, nonferrous
and industrial plastic products for sale at service center locations.
The difference between LIFO values and approximate replacement costs for
the LIFO inventories was $106.0 million at December 31, 1993 and $103.3 million
at December 31, 1992.
NOTE 2/BORROWING ARRANGEMENTS:
At December 31, 1993 and 1992, the Company's subsidiaries had available two
unused credit facilities totaling $125 million. Each facility requires
compliance with various financial covenants including minimum net worth and
leverage ratio tests. The covenants also limit the amount of cash that the
Company can transfer to Industries in the form of dividends and other advances.
A $100 million unsecured credit agreement between Joseph T. Ryerson and
Son, Inc. and a group of banks provides a revolving credit facility to March 31,
1995.
J. M. Tull Metals Company, Inc. has a $25 million unsecured revolving
credit agreement with other banks, which extends to December 15, 1994.
NOTE 3/LONG-TERM DEBT:
The Company's long-term debt is as follows:
DECEMBER 31
----------------
1993 1992
----- -----
DOLLARS IN
MILLIONS
JOSEPH T. RYERSON & SON, INC.
Obligation for Industrial Revenue Bond with floating rate,
set weekly based on 13-week Treasury bills, due November
1, 2007................................................. $ 7.0 $ 7.0
Other long-term debt 10-1/4% due through November 30,
1997.................................................... 1.9 2.0
J. M. TULL METALS COMPANY, INC.
Senior Notes, 9.43% due through July 29, 1997.............. 14.3 17.8
Term note--LIBOR plus 62.5 basis points per annum; due
August 17, 1998......................................... 7.4 --
Industrial Revenue Bonds with interest rates ranging from
4.8% to 6.5% through January 1, 1997.................... 2.1 2.8
Other...................................................... .5 1.3
----- -----
33.2 30.9
Less maturities due within one year........................ 5.0 5.2
----- -----
Long-term debt.......................................... $28.2 $25.7
----- -----
----- -----
Maturities of long-term debt are: $5.0 million in 1994, $4.7 million in
1995, $4.7 million in 1996, $5.6 million in 1997, $6.2 million in 1998 and $7.0
million thereafter.
The Company has entered into an interest rate swap agreement to reduce the
impact of changes in LIBOR on the term note. At December 31, 1993 the Company
had outstanding an interest rate swap
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A-7
45
INLAND MATERIALS DISTRIBUTION GROUP, INC. AND SUBSIDIARY COMPANIES
(A Wholly Owned Subsidiary of Inland Steel Industries, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agreement with the bank having a notional principal amount equal to the
outstanding principal of the related term note. This agreement effectively
changes the Company's interest rate exposure on its term note to a fixed rate of
5.925%. The interest rate swap matures August 17, 1998. The Company is exposed
to potential credit loss in the event of nonperformance by the bank; however,
the Company does not anticipate such nonperformance.
Under the provisions of certain loan agreements, the Company is required to
maintain specified amounts of working capital and net worth, as outlined in the
agreements, and is restricted as to dividends that may be paid to Industries.
The estimated fair value of the Company's long-term debt (including current
portions thereof) using quoted market prices of Company debt securities recently
traded and market-based prices of similar securities for those securities not
recently traded was $.7 million greater than the carrying value of $33.2 million
included in the balance sheet at year-end 1993.
NOTE 4/RETIREMENT BENEFITS:
Pensions
The Inland Steel Industries Pension Plan and Pension Trust (the "Plan"),
covers certain employees, retirees and their beneficiaries of Industries and its
subsidiaries, including the Company. The Plan is a noncontributory defined
benefit plan that provides benefits based on final pay and years of service for
all salaried employees and certain wage employees, and years of service and a
fixed rate (in most instances based on frozen pay level or on job class) for all
other wage employees, including employees under collective bargaining
agreements. Because the fair value of pension plan assets pertains to all
participants in the Plan, no separate determination is made solely with respect
to the Company. At year-end 1993 and 1992, the actuarial present value of
benefits for service rendered to date and the fair value of plan assets
available for benefits for the Industries consolidated group were as follows:
DECEMBER 31
----------------
1993 1992
------ ------
DOLLARS IN
MILLIONS
Fair value of plan assets.................................... $1,794 $1,686
------ ------
Actuarial present value of benefits for service rendered to
date:
Accumulated Benefit Obligation based on compensation to
date.................................................... 1,960 1,534
Additional benefits based on estimated future compensation
levels.................................................. 117 82
------ ------
Projected Benefit Obligation............................... 2,077 1,616
------ ------
Plan assets in excess (shortfall) of Projected Benefit
Obligation................................................. $ (283) $ 70
------ ------
------ ------
In 1993, Industries recorded an additional minimum pension liability of
$122.1 million representing the excess of the unfunded Accumulated Benefit
Obligation over previously accrued pension costs. A corresponding intangible
asset was recorded as an offset to this additional liability as prescribed.
A weighted average discount (settlement) rate of 7.25% in 1993 and 8.6% in
1992 was used in the determination of the actuarial present value of benefits.
The Company recorded a net pension charge of $.1 million in 1993 and
credits of $.4 million in 1992 and $.6 million in 1991.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A-8
46
INLAND MATERIALS DISTRIBUTION GROUP, INC. AND SUBSIDIARY COMPANIES
(A Wholly Owned Subsidiary of Inland Steel Industries, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The cost of other industry welfare and retirement funds, for bargaining
unit employees, was $2.9 million in 1993, $2.5 million in 1992, and $2.7 million
in 1991.
Benefits Other Than Pensions
Substantially all of the Company's employees are covered under
postretirement life insurance and medical benefit plans that involve deductible
and co-insurance requirements. The postretirement life insurance benefit formula
used in the determination of postretirement benefit cost is primarily based on
applicable annual earnings at retirement for salaried employees and specific
amounts for hourly employees. The Company did not prefund any of these
postretirement benefits in 1993.
The Company has adopted FASB Statement No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," effective January 1, 1992. FASB
Statement No. 106 requires accrual accounting for all postretirement benefits
other than pensions. The Company must be fully accrued for these postretirement
benefits by the date each employee attains full eligibility for such benefits.
In conjunction with the adoption of FASB Statement No. 106, the Company elected
to immediately recognize the accumulated postretirement benefit obligation for
current and future retirees (the "transition obligation").
Prior to the adoption of FASB Statement No. 106, the cost of medical
benefits for retired employees was expensed as incurred. For 1993, the accrued
expense for benefits other than pensions recorded in accordance with FASB
Statement No. 106 exceeded the expense that would have been recorded under the
prior accounting methods by $4.9 million or $3.2 million after tax. For 1992,
the incremental expense was $10.9 million or $7.1 million after tax.
The amount of net periodic postretirement benefit cost for 1993 and 1992 is
composed of the following:
1993 1992
---- -----
DOLLARS IN
MILLIONS
Service cost................................................. $3.2 $ 3.2
Interest cost................................................ 8.0 11.1
Net amortization and deferral................................ (1.9) --
---- -----
Total net periodic postretirement benefit cost........ $9.3 $14.3
---- -----
---- -----
The following table sets forth components of the accumulated postretirement
benefit obligation:
DECEMBER 31
----------------
1993 1992
------ ------
DOLLARS IN
MILLIONS
Accumulated postretirement benefit obligation attributable
to:
Retirees................................................... $ 51.0 $ 54.1
Fully eligible plan participants........................... 19.5 22.8
Other active plan participants............................. 25.8 31.5
------ ------
Accumulated postretirement benefit obligation.............. 96.3 108.4
Unrecognized net gain........................................ 18.4 --
Unrecognized prior service credit............................ 22.2 24.0
------ ------
Accrued postretirement benefit obligation.................... $136.9 $132.4
------ ------
------ ------
- --------------------------------------------------------------------------------
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A-9
47
INLAND MATERIALS DISTRIBUTION GROUP, INC. AND SUBSIDIARY COMPANIES
(A Wholly Owned Subsidiary of Inland Steel Industries, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Any net gain or loss in excess of 10 percent of the accumulated
postretirement benefit obligations will be amortized over the remaining service
period of active plan participants.
The assumptions used to determine the data on the preceding tables are as
follows:
DECEMBER 31
---------------
1993 1992
------ ------
Discount Rate................................................ 7.25% 9.0%
Rate of compensation increase................................ 5.0% 5.0%
Medical cost trend rate...................................... 7%-5% 9%-5%
Year ultimate rate reached................................... 1996 1997
A one percentage point increase in the assumed health care cost trend rates
for each future year increases annual periodic postretirement benefit cost and
the accumulated postretirement benefit obligation as of December 31, 1993 by
$1.5 million and $12.0 million, respectively.
Postemployment Benefits
In November 1992, the FASB issued Statement No. 112, "Employer's Accounting
for Postemployment Benefits." Adoption of the new Standard, which is required by
the first quarter of 1994, is not anticipated to have a material impact on
results of operations or the financial position of the Company.
NOTE 5/TAXES ON INCOME:
The Company adopted FASB Statement No. 109, "Accounting for Income Taxes,"
effective January 1, 1992. As a result of adopting Statement No. 109, the
Company recorded a $11.8 million charge reflecting the cumulative effect of the
change on prior years. The Company is now required to record deferred tax assets
and liabilities on its balance sheet as compared with the Company's past
practice under APB Opinion No. 11 and Industries' former tax-sharing agreement
under which no such recording was required. To comply with the provisions of
FASB Statement No. 109, a new tax-sharing agreement was adopted under which
current and deferred income tax provisions are determined for each company in
the Industries group on a stand-alone basis. Companies with taxable losses
record current income tax credits not to exceed current income tax charges
recorded by profitable companies. NOL and tax credit carryforwards are allocated
to each company in accordance with applicable tax regulations as if a company
were to leave the consolidated group.
The elements of the provision for income taxes for three years indicated
below are as follows:
1993 1992 1991
----- ---- ----
DOLLARS IN MILLIONS
Current income taxes:
Federal............................................. $17.3 $5.5 $1.6Cr.
State and local..................................... 2.6 .9 .7Cr.
----- ---- ----
19.9 6.4 2.3Cr.
Deferred income taxes................................. 8.5Cr. 3.8Cr. --
----- ---- ----
Total provision for income taxes.................... $11.4 $2.6 $2.3Cr.
----- ---- ----
----- ---- ----
In accordance with FASB No. 109, the Company adjusted its deferred tax
assets and liabilities for the effect of the change in the corporate federal
income tax rate from 34 to 35 percent, effective January 1, 1993.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A-10
48
INLAND MATERIALS DISTRIBUTION GROUP, INC. AND SUBSIDIARY COMPANIES
(A Wholly Owned Subsidiary of Inland Steel Industries, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A credit to income of $.6 million, which includes the effect of the rate change
on deferred tax asset and liability balances as of January 1, 1993 as well as
the effect on 1993 tax benefits recorded by the Company prior to the enactment
date of August 10, 1993, was recorded in the third quarter of 1993.
The components of the deferred income tax assets and liabilities arising
under FASB Statement No. 109 were as follows:
DECEMBER 31
-----------------
1993 1992
------ ------
DOLLARS IN
MILLIONS
Deferred tax assets (excluding postretirement benefits other
than pensions):
Net operating loss carryforwards....................... $17.8 $15.3
Other deductible temporary differences................. 23.6 20.6
------ ------
41.4 35.9
------ ------
Deferred tax liabilities:
Fixed asset basis difference........................... 40.2 39.8
Other taxable temporary differences.................... 11.2 11.1
------ ------
51.4 50.9
------ ------
Net deferred tax liability (excluding postretirement
benefits other
than pensions)............................................ (10.0) (15.0)
FASB Statement No. 106 impact............................... 50.3 47.0
------ ------
Net deferred tax asset...................................... $40.3 $32.0
------ ------
------ ------
At December 31, 1993, the Company had approximately $50.7 million of net
operating loss carryforwards available for regular Federal income tax purposes,
expiring as follows: $16.3 million in the year 2005, $20.9 million in the year
2006, $7.8 million in the year 2007, and $5.7 million in the year 2008.
The Company believes that it is more likely than not that the $50.7 million
of NOL carryforwards will be utilized prior to their expiration. This belief is
based upon the factors discussed below.
The NOL carryforwards and existing deductible temporary differences
(excluding those relating to FASB Statement No. 106) are offset by existing
taxable temporary differences reversing within the carryforward period.
Furthermore, any such recorded tax benefits which would not be so offset are
expected to be realized by continuing to achieve future profitable operations.
Subsequent to the adoption of FASB Statement No. 109, the Company adopted
FASB Statement No. 106 and recognized the entire transition obligation at
January 1, 1992, as a cumulative effect charge in 1992 (Note 4). This adoption
resulted in a $47.0 million deferred tax asset at December 31, 1992, and future
annual charges under FASB Statement No. 106 are expected to continue to exceed
deductible amounts for many years. Thereafter, even if the Company should have a
tax loss in any year in which the deductible amount would exceed the financial
statement expense, the tax law provides for a 15-year carryforward period
of that loss. Because of the extremely long period that is available to realize
these future tax benefits, a valuation allowance for this deferred tax asset is
not necessary.
- --------------------------------------------------------------------------------
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A-11
49
INLAND MATERIALS DISTRIBUTION GROUP, INC. AND SUBSIDIARY COMPANIES
(A Wholly Owned Subsidiary of Inland Steel Industries, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total income taxes reflected in the Consolidated Statement of Operations
differ from the amounts computed by applying the Federal tax rate as follows:
YEARS ENDED
DECEMBER 31
----------------
1993 1992
----- ----
DOLLARS IN
MILLIONS
Federal income tax provision computed at statutory tax rate
of 35% in 1993 and 34% in 1992........................... $13.4 $2.0
Additional taxes or credits from:
State and local income taxes, net of Federal income tax
effect................................................ 1.7 .6
Change in Federal statutory rate......................... .6Cr. --
All other, net........................................... 3.1Cr. --
----- ----
Total income tax provision.......................... $11.4 $2.6
----- ----
----- ----
- ---------------
Cr. = Credit
Due to the existence of the former tax-sharing agreement, such
reconciliation does not provide meaningful information for 1991 and has
therefore been omitted.
A state tax sharing agreement, similar to the Federal agreement, also
exists with Industries for those states in which the consolidated group is
charged state taxes on a unitary or combined basis.
NOTE 6/RELATED PARTY TRANSACTIONS:
The Company sells products to and purchases products from related companies
primarily at prevailing market prices. These transactions were as follows:
YEARS ENDED DECEMBER 31
--------------------------
1993 1992 1991
------ ------ ------
DOLLARS IN MILLIONS
Net product sales..................................... $ 10.7 $ 9.4 $ 10.2
Net product purchases................................. 187.1 132.5 147.1
Administrative expenses covering management, financial and legal services
provided to the Company were charged to the Company by Industries. Such charges
totaled $7.4 million in 1993, $8.4 million in 1992 and $10.6 million in 1991.
Additionally, interest, at prevailing prime market rates, is charged on all
intercompany loans within the Industries consolidated group. Net intercompany
interest expense amounted to $7.7 million in 1993, $8.9 million in 1992 and $8.2
million in 1991.
In December 1993, Industries made a capital contribution of $150 million to
the Company. The capital contribution has been recorded as "additional paid in
capital" at December 31, 1993.
NOTE 7/COMMITMENTS AND CONTINGENCIES:
The Company has noncancellable operating leases for which future minimum
rental commitments are estimated to total $31.9 million, including approximately
$9.2 million in 1994, $6.8 million in 1995, $4.5 million in 1996, $3.8 million
in 1997, $3.8 million in 1998, and $3.8 million thereafter.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A-12
50
INLAND MATERIALS DISTRIBUTION GROUP, INC. AND SUBSIDIARY COMPANIES
(A Wholly Owned Subsidiary of Inland Steel Industries, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Rental expense under operating leases totaled $16.8 million in 1993, $18.6
million in 1992, and $17.4 million in 1991.
Ryerson is the guarantor of $131 million of the Inland Steel Industries
Thrift Plan ESOP notes. The notes are payable in installments through July,
2004.
There are various claims and pending actions against the Company. The
amount of liability, if any, for these claims and actions at December 31, 1993
is not determinable but, in the opinion of management, such liability, if any,
will not have a material adverse effect on the Company's financial position or
results of operations.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A-13
51
INDEX TO EXHIBITS
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- --------- ----------------------------------------------------------------------- ----------
3.(i) Copy of Certificate of Incorporation, as amended, of the Company.
(Filed as Exhibit 4-A to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1991, and incorporated by reference
herein.) --
3.(ii) Copy of By-laws, as amended, of the Company. (Filed as Exhibit 3-B to
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, and incorporated by reference herein.) --
4.A Copy of Certificate of Designations, Preferences and Rights of Series A
$2.40 Cumulative Convertible Preferred Stock of the Company. (Filed as
part of Exhibit B to the definitive Proxy Statement of Inland Steel
Company dated March 21, 1986 that was furnished to stockholders in
connection with the annual meeting held April 23, 1986, and
incorporated by reference herein.) --
4.B Copy of Certificate of Designation, Preferences and Rights of Series D
Junior Participating Preferred Stock of the Company. (Filed as Exhibit
4-D to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1987, and incorporated by reference herein.) --
4.C Copy of Rights Agreement, dated as of November 25, 1987, as amended and
restated as of May 24, 1989, between the Company and The First National
Bank of Chicago, as Rights Agent (Harris Trust and Savings Bank, as
successor Rights Agent). (Filed as Exhibit 1 to the Company's Current
Report on Form 8-K filed on May 24, 1989, and incorporated by reference
herein.) --
4.D Copy of Certificate of Designations, Preferences and Rights of Series E
ESOP Convertible Preferred Stock of the Company. (Filed as Exhibit 4-F
to the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1989, and incorporated by reference herein.) --
4.E Copy of Certificate of Designations, Preferences and Rights of Series F
Exchangeable Preferred Stock of the Company. (Filed as Exhibit 4(b) to
the Company's Current Report on Form 8-K filed on December 18, 1989,
and incorporated by reference herein.)
4.F Copy of Certificate of Designations of Series G $4.625 Cumulative
Convertible Exchangeable Preferred Stock of the Company. (Filed as
Exhibit 2.8 to the Company's Registration Statement on Form 8-A filed
on March 25, 1991, and incorporated by reference herein.) --
4.G Copy of Indenture dated as of December 15, 1992, between the Company
and Harris Trust and Savings Bank, as Trustee, respecting the Company's
$150,000,000 12 3/4% Notes due December 15, 2002. (Filed as Exhibit 4-G
to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, and incorporated by reference herein.) --
4.H Copy of First Mortgage Indenture, dated April 1, 1928, between Inland
Steel Company (The "Steel Company") and First Trust and Savings Bank
and Melvin A. Traylor, as Trustees, and of supplemental indentures
thereto, to and including the Thirty-Second Supplemental Indenture,
incorporated by reference from the following Exhibits: (i) Exhibits
B-1(a), B-1(b), B-1(c), B-1(d) and B-1(e), filed with Steel Company's
Registration Statement on Form A-2 (No. 2-1855); (ii) Exhibits D-1(f)
and D-1(g), filed with Steel Company's Registration Statement on Form
E-1 (No. 2-2182); (iii) Exhibit B-1(h), filed with Steel Company's
Current Report on Form 8-K dated January 18, 1937; (iv) Exhibit B-1(i),
filed with Steel
(i)
52
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- --------- ----------------------------------------------------------------------- ----------
Company's Current Report on Form 8-K, dated February 8, 1937; (v)
Exhibits B-1(j) and B-1(k), filed with Steel Company's Current Report
on Form 8-K for the month of April, 1940; (vi) Exhibit B-2, filed with
Steel Company's Registration Statement on Form A-2 (No. 2-4357); (vii)
Exhibit B-1(l), filed with Steel Company's Current Report on Form 8-K
for the month of January, 1945; (viii) Exhibit 1, filed with Steel
Company's Current Report on Form 8-K for the month of November, 1946;
(ix) Exhibit 1, filed with Steel Company's Current Report on Form 8-K
for the months of July and August, 1948; (x) Exhibits B and C, filed
with Steel Company's Current Report on Form 8-K for the month of March,
1952; (xi) Exhibit A, filed with Steel Company's Current Report on Form
8-K for the month of July, 1956; (xii) Exhibit A, filed with Steel
Company's Current Report on Form 8-K for the month of July, 1957;
(xiii) Exhibit B, filed with Steel Company's Current Report on Form 8-K
for the month of January, 1959; (xiv) the Exhibit filed with Steel
Company's Current Report on Form 8-K for the month of December, 1967;
(xv) the Exhibit filed with Steel Company's Current Report on Form 8-K
for the month of April, 1969; (xvi) the Exhibit filed with Steel
Company's Current Report on Form 8-K for the month of July, 1970;
(xvii) the Exhibit filed with the amendment on Form 8 to Steel
Company's Current Report on Form 8-K for the month of April, 1974;
(xviii) Exhibit B, filed with Steel Company's Current Report on Form
8-K for the month of September, 1975; (xix) Exhibit B, filed with Steel
Company's Current Report on Form 8-K for the month of January, 1977;
(xx) Exhibit C, filed with Steel Company's Current Report on Form 8-K
for the month of February, 1977; (xxi) Exhibit B, filed with Steel
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1978; (xxii) Exhibit B, filed with Steel Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1980; (xxiii) Exhibit 4-D,
filed with Steel Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1980; (xxiv) Exhibit 4-D, filed with Steel
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1982; (xxv) Exhibit 4-E, filed with Steel Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1983; (xxvi)
Exhibit 4(i) filed with the Steel Company's Registration Statement on
Form S-2 (No. 33-43393); and (xxvii) Exhibit 4 filed with Steel
Company's Current Report on form 8-K dated June 23, 1993 --
4.I Copy of consolidated reprint of First Mortgage Indenture, dated April
1, 1928, between Inland Steel Company and First Trust and Savings Bank
and Melvin A. Traylor, as Trustees, as amended and supplemented by all
supplemental indentures thereto, to and including the Thirteenth
Supplemental Indenture. (Filed as Exhibit 4-E to Form S-1 Registration
Statement No. 2-9443, and incorporated by reference herein.) --
[The registrant hereby agrees to provide a copy of any other agreement
relating to long-term debt at the request of the Commission.]
10A* Copy of Inland Steel Industries, Inc. Annual Incentive Plan, as
amended................................................................
10.B* Copy of Inland Steel Industries, Inc. Special Achievement Award Plan.
(Filed as Exhibit 10-I to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1987, and incorporated by reference
herein.) --
- ---------------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to the Company's Annual Report on Form 10-K
(ii)
53
EXHIBIT SEQUENTIAL
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- --------- ----------------------------------------------------------------------- ----------
10.C* Copy of Inland 1975 Executive Stock Option Plan, as amended. (Filed as
Exhibit 10-A to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987, and incorporated by reference herein.) --
10.D* Copy of Inland 1984 Incentive Stock Plan, as amended...................
10.E* Copy of Inland 1988 Incentive Stock Plan, as amended...................
10.F* Copy of Inland 1992 Incentive Stock Plan, as amended...................
10.G* Copy of Inland Steel Industries Non-Qualified Thrift Plan, as amended.
(Filed as Exhibit 10-H to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1989, and incorporated by reference
herein.) --
10.H* Copy of Inland 1992 Stock Plan for Non-Employee Directors. (Filed as
Exhibit B to the Company's definitive Proxy Statement dated March 16,
1992 that was furnished to stockholders in connection with the annual
meeting held April 22, 1992, and incorporated by reference herein.) --
10.I* Copy of Inland Steel Industries Supplemental Retirement Benefit Plan
for Covered Employees, as amended......................................
10.J* Copy of Inland Steel Industries Special Retirement Benefit Plan for
Covered Employees, as amended..........................................
10.K* Copy of the Inland Steel Industries Deferred Compensation Plan for
Certain Employees. (Filed as Exhibit 10-K to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1989, and
incorporated by reference herein.) --
10.L* Copy of Inland Steel Industries Deferred Compensation Plan for
Directors, as amended. (Filed as Exhibit 10-L to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1992, and
incorporated by reference herein.) --
10M* Copy of Inland Steel Industries Director Retirement Plan...............
10.N* Copy of Outside Directors Accident Insurance Policy. (Filed as Exhibit
10-F to Inland Steel Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1983, and incorporated by reference
herein.) --
10.O.(1)* Copy of form of Severance Agreement dated June 28, 1989 between the
Company and each of the seven executive officers of the Company
identified on the exhibit relating to terms and conditions of
termination of employment following a change in control of the Company.
(Filed as Exhibit 10-O-(1) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1989, and incorporated by
reference herein.) --
10.O.(2)* Amended listing of executive officers of the Company who are parties to
the form of Severance Agreement dated June 28, 1989 in Exhibit 10.O.(1)
hereof.................................................................
10.O.(3)* Copy of Severance Agreement dated June 28, 1989 between the Company and
Judd R. Cool. (Filed as Exhibit 10-O-(2) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1989, and
incorporated by reference herein.) --
10.O.(4)* Copy of Severance Agreement dated September 4, 1990 between the Company
and H. William Howard. (Filed as Exhibit 10-M-(5) to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1990,
and incorporated by reference herein.) --
- ---------------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to the Company's Annual Report on Form 10-K
(iii)
54
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- --------- ----------------------------------------------------------------------- ----------
10.O.(5)* Copy of Severance Agreement dated June 26, 1991 between the Company and
Earl L. Mason. (Filed as Exhibit 10-X to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1991, and incorporated by
reference herein.) --
10.O.(6)* Copy of Severance Agreement dated November 27, 1991 between the Company
and Maurice S. Nelson, Jr. (Filed as Exhibit 10-O-(6) to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1992,
and incorporated by reference herein.) --
10.O.(7)* Copy of Severance Agreement dated August 17, 1992 between the Company
and Olivia M. Thompson. (Filed as Exhibit 10-O-(7) to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1992,
and incorporated by reference herein.) --
10.O.(8)* Copy of Severance Agreement dated March 23, 1994 between the Company
and Vicki L. Avril.....................................................
10.P.(1)* Copy of letter to Judd R. Cool dated September 2, 1987 relating to
terms and conditions of employment. (Filed as Exhibit 10-K to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1987, and incorporated by reference herein.) --
10.P.(2)* Copy of letter agreement dated November 23, 1987 between the Company
and Judd R. Cool. (Filed as Exhibit 10-L to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1987, and
incorporated by reference herein.) --
10.P.(3)* Copy of letter agreement dated December 10, 1993 between the Company
and Judd R. Cool restating certain provisions of the September 2, 1987
and November 23, 1987 letters in Exhibits 10.P.(1) and (2).............
10.Q* Copy of letter to H. William Howard dated July 17, 1990 relating to
terms and conditions of employment. (Filed as Exhibit 10-P to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1990, and incorporated by reference herein.) --
10.R* Copy of letter to Earl L. Mason dated May 17, 1991 relating to terms
and conditions of employment. (Filed as Exhibit 10-W to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1991, and
incorporated by reference herein.) --
10S* Copy of letter to Maurice S. Nelson, Jr. dated March 26, 1993 relating
to supplemental pension arrangement. (Filed as Exhibit 10-S to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1992, and incorporated by reference herein.) --
10.T* Copy of Letter of Credit with respect to the Supplemental and Special
Retirement Benefit Plan obligations of the Company to W. Gordon Kay....
10.U* Copy of letter to Olivia M. Thompson dated June 24, 1992 relating to
terms and conditions of employment. (Filed as Exhibit 10-T to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1992, and incorporated by reference herein.) --
- ---------------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to the Company's Annual Report on Form 10-K
(iv)
55
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- --------- ----------------------------------------------------------------------- ----------
10.V Copy of Stock Purchase Agreement, dated as of July 7, 1989, between the
Company and Harris Trust and Savings Bank, as ESOP Trustee. (Filed as
Exhibit 4-G to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1989, and incorporated by reference herein.) --
10.W.(1) Copy of Letter Agreement dated December 18, 1989 among the Company,
Nippon Steel Corporation and NS Finance III, Inc. (an indirectly wholly
owned subsidiary of Nippon Steel Corporation) relating to sale to NS
Finance III, Inc. of 185,000 shares of Series F Exchangeable Preferred
Stock of the Company. (Filed as Exhibit 4(b) to the Company's Current
Report on Form 8-K filed on December 18, 1989, and incorporated by
reference herein.) --
10.W.(2) Copy of Steel Technology Agreement dated as of July 14, 1989 between
Inland Steel Company and Nippon Steel Corporation relating to
technology sharing between the signatories. (Filed as Exhibit 10-S-(2)
to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989, and incorporated by reference herein.) --
10.W.(3) Copy of Basic Agreement dated as of July 21, 1987 between the Company
and Nippon Steel Corporation relating to the I/N Tek joint venture.
(Filed as Exhibit 10-S-(3) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1989, and incorporated by
reference herein.) --
10.W.(4) Copy of Partnership Agreement dated as of July 21, 1987 between ISC
Tek, Inc. (an indirectly wholly owned subsidiary of the Company) and NS
Tek, Inc. (an indirectly wholly owned subsidiary of Nippon Steel
Corporation) relating to the I/N Tek joint venture. (Filed as Exhibit
10-S-(4) to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1989, and incorporated by reference herein.) --
10.W.(5) Copy of Basic Agreement dated as of September 12, 1989 between the
Company and Nippon Steel Corporation relating to the I/N Kote joint
venture. (Filed as Exhibit 10-S-(5) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1989, and incorporated
by reference herein.) --
10.W.(6) Copy of Partnership Agreement dated as of September 12, 1989 between
ISC Kote, Inc. (an indirectly wholly owned subsidiary of the Company)
and NS Tek, Inc. (an indirectly wholly owned subsidiary of Nippon Steel
Corporation) relating to the I/N Kote joint venture. (Filed as Exhibit
10-S-(6) to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1989, and incorporated by reference herein.) --
10.W.(7) Copy of Substrate Supply Agreement dated as of September 12, 1989
between Inland Steel Company and I/N Kote, an Indiana general
partnership. (Filed as Exhibit 10-S-(7) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1989, and
incorporated by reference herein.) --
10.W.(8) First Amendment to Substrate Supply Agreement dated as of May 1, 1990
between Inland Steel Company and I/N Kote relating to the I/N Kote
joint venture. (Filed as Exhibit 10-R-(8) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1990, and
incorporated by reference herein.) --
10.W.(9) Letter Agreement dated as of May 1, 1990 among I/N Kote, the Company
and Nippon Steel Corporation relating to partner loans. (Filed as
Exhibit 10-R-(9) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990, and incorporated by reference
herein.) --
10.W.(10) First Amendment to I/N Kote Basic Agreement dated as of May 1, 1990
between the Company and Nippon Steel Corporation relating to the I/N
Kote joint venture. (Filed as Exhibit 10-R-(10) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1990, and
incorporated by reference herein.) --
(v)
56
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- --------- ----------------------------------------------------------------------- ----------
10.W.(11) Letter Agreement dated as of April 19, 1990 between the Company and
Nippon Steel Corporation relating to capital contributions to I/N Tek.
(Filed as Exhibit 10-R-(11) to Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1990, and incorporated by reference
herein.) --
10.W.(12) Letter Agreement dated April 20, 1990 between ISC Tek, Inc. (an
indirectly wholly owned subsidiary of the Company) and NS Tek, Inc. (an
indirectly wholly owned subsidiary of Nippon Steel Corporation)
relating to amendment of the partnership agreement of I/N Tek. (Filed
as Exhibit 10-R-(12) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1990, and incorporated by reference
herein.) --
10.W.(13) CCM Override Amendment dated as of April 20, 1990 among the Company;
Nippon Steel Corporation; Inland Steel Company; ISC Tek, Inc.; I/N Tek;
NS Sales, Inc.; and NS Tek, Inc. relating to I/N Tek. (Filed as Exhibit
10-R-(13) to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990, and incorporated by reference herein.) --
10.X Copy of ESOP Stock Purchase Agreement, dated May 30, 1990, between the
Company and Harris Trust and Savings Bank, as ESOP Trustee. (Filed as
Exhibit 10-T to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990, and incorporated by reference
herein.) --
10.Y Copy of Inland Steel Industries Thrift Plan ESOP Trust, dated July 7,
1989, between the Company and Harris Trust and Savings Bank, as ESOP
Trustee. (Filed as Exhibit 10-P to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1989, and incorporated by
reference herein.) --
10.Z Letter Agreement dated March 1, 1991 between Nippon Steel Corporation
and the Company regarding Series F Exchangeable Preferred Stock. (Filed
as Exhibit 10-U to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990, and incorporated by reference
herein.) --
10.AA Letter Agreement dated May 10, 1991 by and between Nippon Steel
Corporation and Inland Steel Industries, Inc. relating to Letter
Agreement dated December 18, 1989. (Filed as Exhibit 10-V to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1991, and incorporated by reference herein.) --
11 Statement of Earnings per Share of Common Stock........................
13 Information incorporated by reference from Annual Report to
Stockholders for the fiscal year ended December 31, 1993...............
21 List of certain subsidiaries of the Company............................
23 Consent of Independent Accountants, appearing on page 27 of this Annual
Report on Form 10-K. --
24 Powers of attorney.....................................................
99 Letter to stockholders of common stock of the Company dated December
22, 1987 explaining Stockholder Rights Plan adopted by Board of
Directors on November 25, 1987 (Filed as Exhibit 3 to the Company's
Current Report on Form 8-K filed on December 18, 1987, and incorporated
by reference herein.) --
(vi)