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Second Quarter – 2004

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the period ended June 30, 2004

or

For the transition period from              to            

Commission file number 1-9117

I.R.S. Employer Identification Number 36-3425828

RYERSON TULL, INC.

(a Delaware Corporation)

2621 West 15th Place

Chicago, Illinois 60608

Telephone: (773) 762-2121

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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No  ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 24,932,475 shares of the Company’s Common Stock ($1.00 par value per share) were outstanding as of July 31, 2004.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

RYERSON TULL, INC.

AND SUBSIDIARY COMPANIES

Consolidated Statement of Operations (Unaudited)

See notes to consolidated financial statements

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RYERSON TULL, INC.

AND SUBSIDIARY COMPANIES

Consolidated Statement of Operations (Unaudited)

See notes to consolidated financial statements

2

RYERSON TULL, INC.

AND SUBSIDIARY COMPANIES

Consolidated Statement of Cash Flows (Unaudited)

See notes to consolidated financial statements

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RYERSON TULL, INC.

AND SUBSIDIARY COMPANIES

Consolidated Balance Sheet (Unaudited)

See notes to consolidated financial statements

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RYERSON TULL, INC.

AND SUBSIDIARY COMPANIES

Notes to Consolidated Financial Statements (Unaudited)

NOTE 1 / FINANCIAL STATEMENTS

Results of operations for any interim period are not necessarily indicative of results of any other periods or for the year. The financial statements as of June 30, 2004 and for the three-month and six-month periods ended June 30, 2004 and June 30, 2003 are unaudited, but in the opinion of management include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results for such periods. These financial statements should be read in conjunction with the financial statements and related notes contained in the Annual Report on Form 10-K for the year ended December 31, 2003.

NOTE 2 / INVENTORIES

Inventories were classified as follows:

Replacement costs for the LIFO inventories exceeded LIFO values by approximately $191 million and $61 million on June 30, 2004 and December 31, 2003, respectively.

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NOTE 3 / EARNINGS PER SHARE

Options to purchase 1,565,490 shares of common stock at prices ranging from $16.03 per share to $38.35 per share were outstanding during the second quarter and first six months of 2004, but were not included in the computation of diluted EPS because the options’ exercise price was greater than the average market price of the common shares. In the second quarter and the first six months of 2003, options to purchase 4,043,776 shares of common stock at prices ranging from $6.43 per share to $48.44 per share were outstanding, but were not included in the computation of diluted EPS because to do so would be antidilutive.

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NOTE 4 / STOCK OPTION PLANS

The Company has adopted the disclosure-only provisions of FASB Statement No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). Accordingly, no compensation cost has been recognized for the stock option plans. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation for the three month and six month periods ended June 30, 2004 and 2003, respectively (in millions, except per share data):

NOTE 5 / RESTRUCTURING CHARGES

2004

In the second quarter of 2004, the Company recorded a charge of $0.6 million as a result of workforce reductions. The charge consists of employee-related costs, including severance for 3 employees. The restructuring actions associated with the charge will be completed by year-end 2004. The $0.6 million charge will be used for future cash outlays. During the second quarter of 2004, the Company utilized $0.5 million of the $0.6 million reserve.

2003

In the fourth quarter of 2003, the Company recorded a charge of $3.8 million as a result of consolidating plants in the Midwest and South regions of the United States. Included in the charge was severance for 58 employees. Also included was $0.9 million for additional rent at a facility that was closed in the 2000 restructuring. The restructuring actions associated with the $3.8 million charge have been completed. In the third quarter of 2003, the Company recorded a charge of $0.9 million as a result of consolidating plants in the East and Central Mountain regions and consolidating sales and administrative services in the Pacific Northwest. Included in the charge was severance for 53 employees. The restructuring actions associated with the $0.9 million charge have been completed. In the second quarter of 2003, the Company recorded a charge of $1.5 million as a result of workforce reductions. The charge consisted of employee-related costs, including severance for 17 employees. The restructuring actions associated with the $1.5 million charge have been completed.

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Excluding the $0.9 million adjustment to the 2000 restructuring, 2003 restructuring and plant closure costs totaled $5.3 million. This charge consisted of employee-related and tenancy costs and will be used for future cash outlays. During the second quarter and first six months of 2004, the Company utilized $0.4 million and $1.2 million, respectively, of the $5.3 million charge. The June 30, 2004 reserve balance of $0.7 million is related primarily to employee costs and will be paid through 2005.

2002

In the second quarter of 2002, the Company recorded a charge of $2.0 million for costs associated with the closure of a facility in the southern United States. The charge consisted primarily of employee-related cash costs. Included in the charge was severance for 40 employees. The restructuring actions have been completed. During the first quarter of 2003, the Company utilized the remaining year-end 2002 reserve balance of $0.3 million.

2001

In the fourth quarter of 2001, the Company recorded a restructuring charge of $19.4 million as a result of workforce reductions and plant consolidation. In the third quarter of 2002, the Company recorded a charge of $0.7 million as an adjustment to the $19.4 million recorded in 2001 resulting in a total restructuring charge of $20.1 million. The $20.1 million charge consisted of $10.3 million of non-cash asset write-offs and $9.8 million of future cash outlays for employee-related costs and tenancy costs. The additional $0.7 million charge recorded in 2002 was due to a reduction in the market value of assets in a multi-employer pension plan from the initial estimate in 2001 to the final calculation of the withdrawal liability in 2002. The remaining multi-employer pension plan withdrawal liability of $0.9 million will be funded through 2005. As part of the restructuring, certain facilities in Michigan were closed and the Company consolidated two facilities into one location in Chicago. Included in the charge was severance for 178 employees. The 2001 restructuring actions were completed by year-end 2002. During the second quarter and first six months of 2004, the Company utilized $0.2 million and $0.4 million, respectively, of the 2001 restructuring reserve. The June 30, 2004 reserve balance of $1.1 million is related to employee and tenancy costs.

In preparation for the Company’s planned disposition of one of the properties in Chicago, the Company retained an environmental consultant to conduct Phase I and Phase II environmental studies. Based on the consultant’s reports on environmental contaminants at the site, the Company believes that the $2 million reserve established in the fourth quarter of 2001 is adequate to cover potential remediation costs for environmental issues identified in the consultant’s reports.

2000

During 2000, the Company recorded a restructuring charge of $23.3 million, consisting of $10.7 million of asset write-offs and $12.6 million of future cash outlays for employee-related costs and tenancy costs. The charge was the result of realigning geographic divisions to improve responsiveness to local markets, exiting non-core businesses and centralizing administrative services to achieve economies of scale. Included in the charge was severance for 319 employees. The restructuring actions were completed by December 31, 2000. Based on court rulings in the fourth quarter of 2003, the Company recorded an additional $0.9 million reserve for future lease payments for a facility closed in the 2000 restructuring. During the second quarter and first six months of 2004, the Company utilized $0.2 million and $0.9 million, respectively, of the restructuring reserve. The June 30, 2004 reserve balance of $2.5 million is related to tenancy and other costs that will be paid through 2008.

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NOTE 6 / COMMITMENTS AND CONTINGENCIES

ISC/Ispat Transaction

In 1998, Ryerson Tull, Inc. (together with its subsidiaries, the “Company”) sold its steel manufacturing segment (“ISC”) to Ispat International N.V. and certain of its affiliates (“Ispat”) pursuant to an agreement of sale and merger (the “ISC/Ispat Merger Agreement”). Pursuant to that agreement, the Company agreed to indemnify Ispat up to $90 million for losses incurred in connection with breaches of representations and warranties contained in the agreement and for expenditures and losses incurred relating to certain environmental liabilities. Ispat was required to make all such indemnification claims prior to March 31, 2000, other than claims related to tax matters, certain organizational matters and environmental matters. On May 29, 2001, the Company entered into a settlement agreement with Ispat that settled certain of such claims, other than those related to environmental liabilities and certain property tax matters, for approximately $15 million, which applied against the $90 million indemnification cap. Ispat also notified the Company of certain environmental matters of which Ispat was aware, of certain environmental expenses that it had incurred or might incur, of certain property tax matters and other matters arising under ISC/Ispat Merger Agreement for which Ispat believed it was entitled to indemnification under that agreement.

In an agreement signed on September 15, 2003 (the “Settlement Agreement”), the Company and Ispat settled all environmental and other indemnification claims between them related to the Company’s indemnification obligations under the ISC/Ispat Merger Agreement and certain matters related to the Ispat Pension Plan. The Settlement Agreement has the following key components:

On September 15, 2003, the Company contributed $21 million to the Ispat Pension Plan and Ispat released the Company from any remaining environmental and other indemnification obligations arising out of the ISC/Ispat transaction. The Company had previously established an accrual to cover this $21 million payment.

Ispat agreed to make specified monthly contributions to the Ispat Pension Plan totaling $29 million over the twelve-month period beginning January 2004, which will reduce and discharge the Company’s Letter of Credit to the PBGC on a dollar-for-dollar basis. As of June 30, 2004, Ispat has made the required monthly pension contributions reducing the Letter of Credit to $16.7 million.

Ispat agreed to reimburse the Company for all fees or expenses (including interest expenses) payable to the provider or other person participating in the Letter of Credit (or any extension or replacement thereof) incurred by the Company in connection with (i) the Letter of Credit, (ii) any extension or replacement of the Letter of Credit, or (iii) any PBGC draw on the Letter of Credit or on any extension or replacement of the Letter of Credit.

If Ispat or any of its affiliates or subsidiaries receives any environmental insurance proceeds as a result of a claim related to the Company’s environmental indemnification obligations under the ISC/Ispat Merger Agreement, Ispat has agreed to pay the Company one-third of such proceeds (minus reimbursement of Ispat’s attorneys’ or other fees and expenses incurred in connection with pursuing such claims), up to a maximum amount of $21 million.

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Under the ISC/Ispat Merger Agreement, Ispat and the Company agreed to the sharing of any property tax refunds resulting from the appeal of certain real estate property tax assessments. Under the Settlement Agreement, Ispat agreed to pay to the Ispat Pension Plan an amount equal to the cash received or the face amount of any credit or non-cash refund which Ispat is entitled to and receives related to property tax refunds or credits arising out of the appeals of certain real estate property tax assessments. Any such payments will pro-rata reduce Ispat’s monthly contributions to its pension plan as required by the Settlement Agreement, which contributions will reduce and discharge the Company’s Letter of Credit to the PBGC on a dollar-for-dollar basis.

On September 15, 2003, the Company entered into an agreement with Ispat and the PBGC under which the PBGC agreed that any contributions described above (the “Contributions”) made by Ispat or the Company to the Ispat Pension Plan would reduce and discharge the Letter of Credit and the Company’s guaranty on a dollar-for-dollar basis, until each of the Letter of Credit and the guaranty has been reduced to zero. The Company had a $5.5 million liability recorded related to this guaranty to the PBGC. Except for these claims which could be made under Employee Retirement Income Security Act of 1974, as amended, for the period in which the Company was the sponsor of the Ispat Pension Plan, after these Contributions have been made, the Company will have no further liability with respect to the Ispat Pension Plan. During the second quarter of 2004, based on Ispat making the required monthly pension contributions to date, the Company reduced the liability related to the PBGC guarantee to $3.5 million and recorded a favorable $1.2 million after-tax adjustment to the gain on the sale of the Inland Steel Company.

Other Matters

The Company is currently a defendant in antitrust litigation; the Company believes that this suit is without merit and has answered the complaint denying all claims and allegations. The Company cannot determine at this time whether any potential liability related to this litigation would materially affect its financial position, results of operations, or cash flows. There are various claims and pending actions against the Company other than those related to the ISC/Ispat transaction and the antitrust litigation. The amount of liability, if any, for these claims and actions at June 30, 2004 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, results of operations or cash flows.

NOTE 7 / RESTRICTED CASH

In the first quarter of 2002, the Company recorded a $5.1 million pretax gain for the receipt of shares as a result of the demutualization of one of its insurance carriers, Prudential. This gain represented a portion of the total of $6.3 million of shares received. The remaining shares were attributable to participants of the optional life insurance plan and therefore the liability was recorded as a benefit payable.

In the second quarter of 2002, the Company sold all of the shares received. As a result of the sale, the Company recorded in that quarter income of $0.6 million, its allocable share of the gain on sale. This item was included in “other revenue and expense, net.” The portion of the sale proceeds attributable to optional life insurance plan participants ($1.3 million) is required to be used for the benefit of plan participants and as such, was recorded as “restricted cash” in the balance sheet. The restricted cash balance has earned interest totaling $0.1 million as of June 30, 2004. In the third quarter of 2002, the Company began making payments for the benefit of optional life insurance plan participants. At June 30, 2004, these payments totaled $0.4 million.

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NOTE 8/RETIREMENT BENEFITS

In December 2003, the Financial Accounting Standards Board revised Statement of Financial Accounting Standards No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits” (SFAS 132). Beginning with the quarter ended on March 31, 2004, SFAS 132 requires the disclosure of the following information regarding the Corporation’s pension and postretirement medical benefit plans.

For the quarter ended June 30:

For the six month period ended June 30:

Contributions

The Company has no required ERISA contributions for 2004, but the Company intends to make a voluntary contribution of $21.5 million by September 15, 2004.

NOTE 9/RECENT ACCOUNTING PRONOUNCEMENTS

In December 2003, the Medicare Prescription Drug Improvement and Modernization Act of 2003 (the “Act”) was signed into law. The Act introduces a prescription drug benefit under Medicare and also provides that a nontaxable federal subsidy will be paid to sponsors of postretirement benefit plans that provide retirees with a drug benefit that is at least “actuarially equivalent” to the Medicare benefit. The Company sponsors certain postretirement medical benefit plans which provide prescription drugs and the receipt of the federal subsidy defined by the Act would reduce the liability for such plans and the annual cost.

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In January 2004, the Financial Accounting Standards Board (FASB) issued a Staff Position document which acknowledged issues associated with measuring and recognizing the effect of the Act and allowed companies to elect to defer accounting for such effects until authoritative guidance on the accounting for the federal subsidy was issued. In May 2004, the FASB issued Staff Position SFAS No.106-2 (“FSP 106-2”), “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003.” FSP 106-2 provides guidance on the accounting, disclosure, effective date and transition rules related to the Act. FSP 106-2 requires companies to account for the effect of the subsidy on benefits attributed to past service as an actuarial experience gain and as a reduction of the service cost component of net periodic health care costs for amounts attributable to current service, if the benefit provided is at least actuarially equivalent to the Medicare benefit. The Company is currently evaluating the impact of the Act and will adopt FSP 106-2 in the third quarter of 2004. Based on the proposed rules for implementation, the Company does not believe that the Act will have a material impact on the Company’s financial position, results of operation or cash flows.

In January 2003, the FASB issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities.” FIN 46 clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or in which equity investors do not bear the residual economic risks. The interpretation was immediately applicable to variable interest entities (“VIEs”) created after January 31, 2003, and to VIEs in which an enterprise obtains an interest after that date. As originally issued, it applied in the fiscal year or interim period beginning after June 15, 2003, to VIEs in which an enterprise holds a variable interest that was acquired before February 1, 2003. In October 2003, the FASB issued FASB Staff Position No. 46-6, which defers the effective date for FIN 46 to the first interim or annual period ending after March 15, 2004 for non-special-purpose entity VIEs created before February 1, 2003. The adoption of FIN 46 did not have a material effect on the Company’s financial statements.

NOTE 10/SUBSEQUENT EVENTS

As of August 4, 2004, Ispat is in compliance with the terms of the Settlement Agreement and has made the required monthly pension contributions. As a result, the Letter of Credit has been reduced to $13.9 million and Company-incurred fees have been reimbursed by Ispat.

On July 30, 2004, the Company completed its acquisition of J & F Steel, LLC (“J & F”) for $55.3 million in cash, subject to a post-closing adjustment. The Company funded the transaction by drawing on its revolving credit facility.

The Company amended the revolving credit agreement effective on July 30, 2004 simultaneous with the close of the J & F transaction. The amendment included an increase in the size of the facility from $450 million to $525 million and an extension of the final maturity date from December 19, 2006 to July 30, 2008. The availability blocks increased from $45 million to $50 million, of which $30 million remains available only upon the consent of lenders holding 85 percent of facility commitments. The remaining $20 million of blocks becomes available if the Company meets certain financial ratios. The Company has met the required financial ratio as of the date of this filing and expects to have the $20 million block lifted in the third quarter of 2004. The increase in the availability blocks from April 2005 through the maturity of the outstanding $100 million Notes in July 2006 remain as described in the Liquidity and Capital Resources section of Item 2. All other terms and conditions of the revolving credit agreement remain materially the same as previously disclosed. The Company expects to pay approximately $1.5 million in the third quarter of 2004 for fees associated with the amended revolving credit facility, which will be amortized over the term of the amended facility.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations - Comparison of Second Quarter 2004 to Second Quarter 2003

For the second quarter of 2004, the Company reported consolidated net income of $21.2 million, or $0.83 per diluted share, as compared with a net loss of $4.1 million, or $0.17 per diluted share, in the year-ago quarter.

Included in the second quarter 2004 results are a pretax charge of $0.6 million, $0.4 million after-tax or $0.01 per share, for future cash outlays associated with a workforce reduction. The Company expects to realize future annual cost and cash flow savings of $0.2 million from this restructuring action. The second quarter of 2004 also includes a $2.3 million pretax, $1.4 million after-tax or $0.06 per share, gain on the sale of property in California and a $1.2 million, or $0.05 per share, favorable after-tax adjustment to the gain on sale of the Inland Steel Company. Included in the second quarter 2003 results is a pretax charge of $1.5 million, $0.9 million after-tax or $0.04 per share, for costs associated with a workforce reduction.

Sales for the second quarter of 2004 increased 47 percent to $794.7 million from the same period a year ago. The Company benefited from higher metals prices due to tight metals supplies and from increased demand from the metals-consuming sector of the economy. Average selling price increased 33 percent, while volume increased 10 percent, from the second quarter of 2003. Tons shipped in the second quarter of 2004 increased to 687,900 from 625,800 in the year-ago period.

Gross profit per ton of $216 in the second quarter of 2004 increased from $166 per ton in the year-ago quarter as a result of the higher average selling prices. Gross profit as a percent of sales in the second quarter of 2004 declined to 18.7 percent from 19.1 percent a year ago, primarily as a result of increased material cost surcharges, which are passed-through without mark-up to contractual customers.

Total operating expenses increased 5 percent to $111.5 million in the second quarter of 2004 from $105.7 million a year ago. On a per ton basis, second quarter 2004 total operating expenses decreased to $162 per ton from $169 per ton in the year-ago period. Warehousing and delivery expenses increased 7 percent to $61.0 million in the second quarter of 2004 from $56.9 million a year ago. The increase was due to the impact of the higher volume on variable expenses, primarily delivery expenses, and to higher operating supplies and group insurance costs. Selling, general and administrative expenses increased 11 percent to $52.2 million in the second quarter of 2004 from $47.3 million a year ago. The increase was primarily due to higher bonus accruals and higher pension and group insurance costs. Second quarter 2004 operating expenses also include the $0.6 million restructuring charge and $2.3 million gain on the sale of assets discussed above. Second quarter 2003 operating expenses also include the $1.5 million restructuring charge discussed above.

For the quarter, the Company reported an operating profit of $36.9 million, or $54 per ton, compared to an operating loss of $2.0 million, or $3 per ton, in the year-ago period.

Results of Operations - Comparison of First Six Months 2004 to First Six Months 2003

For the first six months of 2004, the Company reported consolidated net income of $33.2 million, or $1.30 per diluted share, as compared with a net loss of $3.4 million, or $0.14 per diluted share, in the year-ago period.

Included in the 2004 results are a pretax charge of $0.6 million, $0.4 million after-tax or $0.01 per share,

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for future cash outlays associated with a workforce reduction. 2004 results also include a $2.3 million pretax, $1.4 million after-tax or $0.06 per share, gain on the sale of property in California and a $1.2 million, or $0.05 per share, favorable after-tax adjustment to the gain on sale of the Inland Steel Company.

Included in the first six months of 2003 results is a pretax charge of $1.5 million, $0.9 million after-tax or $0.04 per share, for costs associated with a workforce reduction.

Sales for the first six months of 2004 increased 38 percent to $1,499.5 million from the same period a year ago as average selling price increased 23 percent and volume increased 12 percent.

Gross profit per ton of $202 in the first six months of 2004 increased from $168 per ton in the year-ago period due to the 23 percent increase in average selling price. The gross profit as a percent of sales declined to 19.0 percent from 19.5 percent in the year-ago period, primarily as a result of increased material cost surcharges, which are passed-through without mark-up to contractual customers.

Total operating expenses increased 7 percent to $223.6 million in the first six months of 2004 from $209.2 million a year ago. On a per ton basis, 2004 total operating expenses decreased to $158 per ton from $165 per ton in the year-ago period. Warehousing and delivery expenses increased 7 percent to $120.3 million in the first six months of 2004 from $112.7 million a year ago. The increase was due to the impact of the higher volume on variable expenses, primarily delivery expenses, and to higher operating supplies and group insurance costs. Selling, general and administrative expenses increased 11 percent to $105.0 million in the first six months of 2004 from $95.0 million a year ago. The increase was primarily due to higher bonus accruals and higher pension and group insurance costs. Operating expenses for the first six months of 2004 also include the $0.6 million restructuring charge and $2.3 million gain on the sale of assets discussed above. Operating expenses in the first six months of 2003 also include the $1.5 million restructuring charge discussed above.

For the first six months of 2004, the Company reported an operating profit of $61.8 million, or $44 per ton, compared to an operating profit of $4.0 million, or $3 per ton, in the year-ago period.

Liquidity and Capital Resources

The Company had cash and cash equivalents at June 30, 2004 of $18.0 million, compared to $13.7 million at December 31, 2003. Net cash used for operating activities was $28.2 million in the first six months of 2004, including a $141.6 million increase in accounts receivable due to increased sales in the first six months of 2004 compared to 2003 and a $74.2 million increase in accounts payable due to increases in the cost of materials. Net cash used for investing activities was $11.9 million, which included capital expenditures of $13.9 million, a $2.0 million investment in a joint venture in Mexico, $2.7 million proceeds from the sale of a facility in Guadalajara, Mexico, and $2.4 million proceeds from the sale of property in California.

At June 30, 2004, the Company had $213 million outstanding funded borrowing under its revolving credit agreement, $34 million of letters of credit issued under the credit facility and $158 million available under the $450 million revolving credit agreement, compared to $151 million available on December 31, 2003. Total credit availability is limited by the amount of eligible account receivables and inventory pledged as collateral under the agreement, up to a maximum of $450 million. At June 30, 2004, availability was further reduced by $45 million of availability blocks. Fifteen million dollars of the availability blocks becomes available if the Company meets certain financial ratios. The remaining $30 million will become available only upon the consent of lenders holding 85 percent of facility

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commitments. In addition, the availability blocks will increase each quarter beginning in April 2005 through the maturity of the Company’s 9 ¹/8% Notes in July 2006. (See discussion of Notes below). These additional blocked amounts will be used to repay the Notes at maturity. The total increase in the availability block over the six quarters (second quarter of 2005 through July of 2006) will equal the outstanding principal value of the Notes, which is currently $100 million. Letters of credit issued under the facility also reduce the amount available for borrowing. Interest rates under the credit facility are at market levels and are variable. At June 30, 2004, the weighted average interest rate on borrowings under the credit facility was 3.6 percent. The Company amended the revolving credit agreement effective on July 30, 2004 simultaneously with the close of the J&F Steel transaction. The amendment is outlined in the subsequent events section below.

Proceeds from credit facility borrowings and repayments of credit facility borrowings in the Consolidated Statement of Cash Flows represent borrowings under the Company’s revolving credit agreement with original maturities greater than three months. Net short-term proceeds/(repayments) under the credit facility represent borrowings under the Company’s revolving credit facility with original maturities less than three months. The combined effect of all of the above resulted in an increase in borrowings under the revolving credit facility of $47 million in the first six months of 2004. As a result, long-term debt in the Consolidated Balance Sheet increased from $266.3 million at December 31, 2003 to $313.3 million at June 30, 2004. The increase in borrowings was attributable to higher working capital requirements.

The following table presents contractual obligations at June 30, 2004:

The Company’s credit agreement permits stock repurchases, the payment of dividends and repurchase of the Company’s 9 ¹/8% Notes due in 2006. Stock repurchases, dividends and repurchase of the 2006 Notes are subject to annual and aggregate limits and restricted by specific liquidity tests. In the most restrictive case the Company would be prohibited from repurchasing the 2006 Notes until the maturity date and would be limited to a maximum payment of $7.5 million in dividends in any calendar year and $3 million in stock repurchases in any twelve-month period. As of June 30, 2004, the Company was not subject to the most restrictive limitations.

The revolving credit agreement also contains covenants that, among other things, restrict the creation of certain kinds of secured indebtedness and of certain kinds of subsidiary debt, take or pay contracts,

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transactions with affiliates, mergers and consolidations, and sales of assets. There is also a covenant that no event, circumstance or development has occurred that would have a material adverse effect on the Company. The revolving credit agreement also includes cross-default provisions to other financing arrangements. The Company was in compliance with the revolving credit facility covenants at June 30, 2004.

The Company believes that cash flow from operations and proceeds from the revolving credit facility will provide sufficient funds to meet the Company’s contractual obligations and operating requirements for the next year. The current $450 million credit facility terminates effective December 19, 2006, however, the termination has been extended to July 30, 2008 as explained in “Subsequent Events” below. The Company believes that on termination of its current facility it will be able to obtain a replacement credit facility secured by the Company’s inventory and accounts receivable. Additionally, the Company believes that new public or private debt financing is a potential future source of funding. In the event the Company were to seek such debt financing, the ability to complete any future financing and the amount, terms and cost of any such future financing would be subject to debt market conditions at that time.

As part of the ISC/Ispat transaction, the Inland Steel Industries Pension Plan (the “Ispat Pension Plan”) was transferred to Ispat. As a condition to completing the ISC/Ispat transaction, Ispat and the Company entered into an agreement with the Pension Benefit Guaranty Corporation (“PBGC”) to provide certain financial commitments to reduce the underfunding of the Ispat Pension Plan and to secure Ispat Pension Plan unfunded benefit liabilities on a termination basis. These commitments included a Company guaranty of $50 million of the obligations of Ispat to the PBGC in the event of a distress or involuntary termination of the Ispat Pension Plan. In August 2001, the Company established a $50 million letter of credit in favor of the PBGC as security for the guaranty. Under the agreement among the PBGC, Ispat and the Company, by July 16, 2003, Ispat was required to take all necessary action to provide adequate replacement security to the PBGC, which would permit the Company to terminate the guaranty and the related letter of credit. Ispat did not provide the replacement security by such date, and the Company, in accordance with the aforementioned agreement, renewed its letter of credit on July 16, 2003 (the “Letter of Credit”), on a year-to-year basis until December 20, 2006. On September 15, 2003, the Letter of Credit and guaranty were reduced to $29 million pursuant to certain agreements signed on that date and described below under the heading “ISC/Ispat Transaction.” As of June 30, 2004, Ispat is in compliance with all terms of the agreement and has made the required monthly pension contributions. As part of those agreements the Letter of Credit has been reduced to $16.7 million at June 30, 2004 (See also “Subsequent Events” below).

At June 30, 2004, $100 million of the Company’s 9 ¹/8% Notes due July 15, 2006 remain outstanding. The indenture under which the Notes were issued in 1996 contains covenants limiting, among other things, the creation of certain types of secured indebtedness, sale and leaseback transactions, the repurchase of capital stock, transactions with affiliates and mergers, consolidations and certain sales of assets. In addition, the Notes restrict the payment of dividends if the Company’s consolidated net worth does not exceed a minimum level. The Company is in compliance with this net worth test. The Notes also include a cross-default provision in the event of a default in the revolving credit facility. The Company was in compliance with the indenture covenants at June 30, 2004.

At year-end 2003, pension liabilities exceeded trust assets by $102 million. The Company does not have any ERISA-required pension plan contributions for 2004 but the Company intends to make a voluntary contribution of $21.5 million in the third quarter of 2004 to improve the plan’s funded status. The Company does not expect to have any ERISA-required pension contribution funding in 2005, but could have future sizable pension contribution requirements. Future contribution requirements depend on the

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investment returns on plan assets and the impact on pension liabilities due to discount rates. The Company is unable to determine the amount or timing of any such contributions required by ERISA or whether any such contributions would have a material adverse effect on the Company’s financial condition, results of operations or cash flows. The Company believes that cash flow from operations and its credit facility described above will provide sufficient funds if the Company elects to make a contribution in 2005.

Mexican Joint Venture

In the first quarter of 2004, the Company contributed $2.0 million to increase its equity investment in Collado Ryerson, a joint venture in Mexico with G. Collado S.A. de C.V. After equal contributions from both joint venture partners, the Company’s ownership interest remained at 49.99%. The Company also loaned $0.7 million to the joint venture in the first quarter of 2004, with repayment due in 2006, and loaned an additional $1.5 million in the second quarter of 2004, with repayment expected in 2004.

ISC/Ispat Transaction

In 1998, Ryerson Tull, Inc. (together with its subsidiaries, the “Company”) sold its steel manufacturing segment (“ISC”) to Ispat International N.V. and certain of its affiliates (“Ispat”) pursuant to an agreement of sale and merger (the “ISC/Ispat Merger Agreement”). Pursuant to that agreement, the Company agreed to indemnify Ispat up to $90 million for losses incurred in connection with breaches of representations and warranties contained in the agreement and for expenditures and losses incurred relating to certain environmental liabilities. Ispat was required to make all such indemnification claims prior to March 31, 2000, other than claims related to tax matters, certain organizational matters and environmental matters. On May 29, 2001, the Company entered into a settlement agreement with Ispat that settled certain of such claims, other than those related to environmental liabilities and certain property tax matters, for approximately $15 million, which applied against the $90 million indemnification cap. Ispat also notified the Company of certain environmental matters of which Ispat was aware, of certain environmental expenses that it had incurred or might incur, of certain property tax matters and other matters arising under ISC/Ispat Merger Agreement for which Ispat believed it was entitled to indemnification under that agreement.

In an agreement signed on September 15, 2003 (the “Settlement Agreement”), the Company and Ispat settled all environmental and other indemnification claims between them related to the Company’s indemnification obligations under the ISC/Ispat Merger Agreement and certain matters related to the Ispat Pension Plan. The Settlement Agreement has the following key components:

On September 15, 2003, the Company contributed $21 million to the Ispat Pension Plan and Ispat released the Company from any remaining environmental and other indemnification obligations arising out of the ISC/Ispat transaction. The Company had previously established an accrual to cover this $21 million payment. This $21 million payment reduced the Company’s PBGC Letter of Credit described below.

Ispat agreed to make specified monthly contributions to the Ispat Pension Plan totaling $29 million over the twelve-month period beginning January 2004, which will reduce and discharge the Company’s Letter of Credit to the PBGC on a dollar-for-dollar basis. Ispat agreed to reimburse the Company for fees or expenses (including interest expenses) payable to the provider or other person participating in the Letter of Credit (or any extension or replacement thereof) incurred by the Company in connection with (i) the Letter of Credit, (ii) any extension or replacement of the Letter of Credit, or (iii) any PBGC draw

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on the Letter of Credit or on any extension or replacement of the Letter of Credit. As of June 30, 2004, Ispat is in compliance with the terms of the agreement and has made the required monthly pension contributions. As a result, the Letter of Credit has been reduced to $16.7 million at June 30, 2004 and Company incurred fees have been reimbursed by Ispat.

If Ispat or any of its affiliates or subsidiaries receives any environmental insurance proceeds as a result of a claim related to the Company’s environmental indemnification obligations under the ISC/Ispat Merger Agreement, Ispat has agreed to pay the Company one-third of such proceeds (minus reimbursement of Ispat’s attorneys’ or other fees and expenses incurred in connection with pursuing such claims), up to a maximum amount of $21 million.

Under the ISC/Ispat Merger Agreement, Ispat and the Company agreed to the sharing of any property tax refunds resulting from the appeal of certain real estate property tax assessments. Under the Settlement Agreement, Ispat agreed to pay to the Ispat Pension Plan an amount equal to the cash received or the face amount of any credit or non-cash refund which Ispat is entitled to and receives related to property tax refunds or credits arising out of the appeals of certain real estate property tax assessments. Any such payments will pro-rata reduce Ispat’s monthly contributions to its pension plan as required by the Settlement Agreement, which contributions will reduce and discharge the Company’s Letter of Credit to the PBGC on a dollar-for-dollar basis.

On September 15, 2003, the Company entered into an agreement with Ispat and the PBGC under which the PBGC agreed that any contributions described above (the “Contributions”) made by Ispat or the Company to the Ispat Pension Plan would reduce and discharge the Letter of Credit and the Company’s guaranty on a dollar-for-dollar basis, until each of the Letter of Credit and the guaranty has been reduced to zero. The Company had a $5.5 million liability recorded related to this guaranty to the PBGC. Except for claims which could be made under Employee Retirement Income Security Act of 1974, as amended, for the period in which the Company was the sponsor of the Ispat Pension Plan, after these Contributions have been made, the Company will have no further liability with respect to the Ispat Pension Plan. As of June 30, 2004, Ispat has made the first six scheduled monthly Contributions and the Letter of Credit has been reduced to $16.7 million. During the second quarter of 2004, based on Ispat making the required monthly pension contributions to date, the Company reduced the liability related to the PBGC guarantee to $3.5 million and recorded a favorable $1.2 million after-tax adjustment to the gain on the sale of the Inland Steel Company.

Subsequent Events

As of August 4, 2004, Ispat is in compliance with the terms of the agreement and has made the required monthly pension contributions. As a result, the Letter of Credit has been reduced to $13.9 million and Company-incurred fees have been reimbursed by Ispat.

On July 30, 2004, the Company completed its acquisition of J & F for approximately $55.3 million in cash, subject to a post-closing adjustment. The Company funded the transaction by drawing on its revolving credit facility.

The Company amended the revolving credit agreement effective on July 30, 2004 simultaneous with the close of the J & F transaction. The amendment included an increase in the size of the facility from $450 million to $525 million and an extension of the final maturity date from December 19, 2006 to July 30, 2008. The availability blocks increased from $45 million to $50 million, of which $30

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million remains available only upon the consent of lenders holding 85 percent of facility commitments. The remaining $20 million of blocks becomes available if the Company meets certain financial ratios. The Company has met the required financial ratios as of the date of this filing and expects to have the $20 million block lifted in the third quarter of 2004. The increase in the availability blocks from April 2005 through the maturity of the $100 million Notes in July 2006 remain as described above. All other terms and conditions of the revolving credit agreement remain materially the same as previously disclosed. The Company expects to pay approximately $1.5 million in the third quarter of 2004 for fees associated with the amended revolving credit facility, which will be amortized over the term of the amended facility.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value. The Company has limited involvement with derivative financial instruments and does not use them for speculative or trading purposes. Cash equivalents are highly liquid, short-term investments with maturities of three months or less that are an integral part of the Company’s cash management portfolio. The carrying amount of cash equivalents approximates fair value because of the short maturity of those instruments. The estimated fair value of the Company’s long-term debt and the 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 $319 million at June 30, 2004 and $273 million at December 31, 2003, as compared with the carrying value of $313 million and $266 million at June 30, 2004 and December 31, 2003, respectively.

Item 4. Controls and Procedures

Evaluations required by Rule 13a-15 of the Securities Exchange Act of 1934 of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Report have been carried out under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer. Based upon such evaluations, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective. There have been no changes in the Company’s internal controls over financial reporting during the period covered by this Report that were identified in connection with the evaluation referred to above that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company is named as a defendant in legal actions incidental to our ordinary course of business. We do not believe that the resolution of these claims will have a material adverse effect on the Company’s financial condition, results of operations or cash flows. We maintain liability insurance coverage to assist in protecting our assets from losses arising from or related to activities associated with business operations.

On April 22, 2002, Champagne Metals, an Oklahoma metals service center that processes and sells aluminum products, sued the Company and six other metals service centers in the United States District Court for the Western District of Oklahoma. The other defendants are Ken Mac Metals, Inc.; Samuel, Son & Co., Limited; Samuel Specialty Metals, Inc.; Metal West, L.L.C.; Integris Metals, Inc. and Earle M. Jorgensen Company. Champagne Metals alleges a conspiracy among the defendants to induce or coerce aluminum suppliers to refuse to designate it as a distributor in violation of federal and state antitrust laws and tortious interference with business and contractual relations. The complaint seeks damages with the exact amount to be proved at trial. Champagne Metals seeks treble damages on its antitrust claims and seeks punitive damages in addition to actual damages on its other claim. The Company believes that the suit is without merit, has answered the complaint denying all claims and allegations, and has filed a Motion for Summary Judgment. The trial court entered judgment on June 15, 2004 sustaining our summary judgment motion and those of the other defendants on all claims. Champagne filed a notice of appeal on July 13, 2004. The Company cannot determine at this time whether any potential liability related to this litigation would materially affect its results of operations, financial condition, or cash flows.

On January 14, 2003, the United States Environmental Protection Agency (“USEPA”) advised Ryerson and various other unrelated parties that they are potentially responsible parties under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) in connection with the cleanup of a waste disposal facility formerly operated by Liquid Dynamics in Chicago, Illinois. The estimated total amount of the proposed corrective measures is approximately $800,000. The notice alleged that Ryerson may have generated or transported hazardous substances to that facility. Ryerson has entered into an Administrative Order with approximately 40 potentially responsible parties and the USEPA to perform cleanup at the site and reimburse certain response costs. Ryerson does not expect its potential liability to materially affect its or the Company’s results of operations, financial condition or cash flows.

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

During the quarter ended June 30, 2004, the Company had no issuer repurchases to be reported pursuant to Regulation S-K Item 703 of the Securities Exchange Act of 1934.

Item 6. Exhibits and Report on Form 8-K.

On June 16, 2004, the Company filed a Current Report on Form 8-K announcing the

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signing of a definitive agreement under which Ryerson Tull would purchase all the equity interest in J & F from Arbed Americas, LLC (a subsidiary of Arcelor) for approximately U.S. $55 million in cash subject to adjustments.

On June 24, 2004, the Company filed a Current Report on Form 8-K announcing the declaration of cash dividends of 5 cents per share on the company’s common stock and 60 cents per share on its Series A $2.40 Cumulative Convertible Preferred Stock. The dividends were payable August 1, 2004, to stockholders of record at the close of business on July 9, 2004.

On July 23, 2004, the Company filed a Current Report on Form 8-K announcing its results of operations for the second quarter of 2004.

On August 2, 2004, the Company filed a Current Report on Form 8-K announcing the July 30, 2004 closing on the Company’s purchase and acquisition of all the equity interest in J & F from Arbed Americas, LLC (a subsidiary of Arcelor) for approximately $55.3 million in cash, subject to a post-closing adjustment.

On August 4, 2004, the Company filed a Current Report on Form 8-K announcing the acquisition of 100% of the equity interest of J & F from Arbed Americas, LLC. The agreement to purchase equity interest of J & F was announced by press release dated June 15, 2004. The originally announced purchase price of $55 million was increased to approximately $55.3 million, subject to a post-closing adjustment, in accordance with provisions of the Purchase Agreement, dated June 14, 2004, by and among the Company, J & F, Arbed Americas, LLC, Arcelor USA Holding, Inc. and Arcelor, S.A., as amended by Amendment Number One to Purchase Agreement dated July 29, 2004.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 5, 2004

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Part I — Schedule A

RYERSON TULL, INC.

AND SUBSIDIARY COMPANIES

SUMMARY OF STOCKHOLDERS’ EQUITY (UNAUDITED)