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United States Steel Corporation Reports 2006 First Quarter ResultsPRNewswire-FirstCall Earnings Highlights
(Dollars in millions, except per share
amounts) 1Q 2006 4Q 2005 1Q 2005
Net sales $3,728 $3,470 $3,787
Segment income (loss) from operations
Flat-rolled Products $127 $36 $335
U. S. Steel Europe 125 112 220
Tubular Products 177 149 122
Other Businesses -- 16 (17)
Total segment income from operations $429 $313 $660
Retiree benefit expenses (55) (59) (83)
Other items not allocated to segments (5) (32) 71
Income from operations $369 $222 $648
Net interest and other financial costs 16 14 25
Income tax provision 90 90 156
Net income $256 $109 $459
- Per basic share $2.31 $0.94 $3.98
- Per diluted share $2.04 $0.85 $3.51
United States Steel Corporation (NYSE: X) reported first quarter 2006 net income of $256 million, or $2.04 per diluted share, compared to fourth quarter 2005 net income of $109 million, or $0.85 per diluted share, and first quarter 2005 net income of $459 million, or $3.51 per diluted share. Commenting on results, U. S. Steel Chairman and CEO John P. Surma said, "We had a strong first quarter with results significantly improved from the previous quarter, reflecting robust demand and continued firm prices across all business units. Tubular reported another outstanding quarter with operating income of $177 million, a record for this segment." The company reported first quarter 2006 income from operations of $369 million, compared with income from operations of $222 million in the fourth quarter of 2005 and $648 million in the first quarter of 2005. Other items not allocated to segments in the first quarter of 2006 consisted of an asset impairment charge, which reduced net income by $5 million or 4 cents per diluted share. Results in fourth quarter 2005 included an income tax charge of $16 million related to the repatriation of foreign earnings. This charge and other items not allocated to segments reduced fourth quarter 2005 net income by $39 million, or 30 cents per diluted share. Other items not allocated to segments increased first quarter 2005 net income by $58 million, or 45 cents per diluted share. No shares of common stock were repurchased during the first quarter of 2006. Reportable Segments and Other Businesses Management believes segment income from operations is a key measure to evaluate ongoing operating results and performance. U. S. Steel's reportable segments and Other Businesses reported segment income from operations of $429 million, or $80 per ton, in the first quarter of 2006, compared with $313 million, or $63 per ton, in the fourth quarter of 2005 and $660 million, or $129 per ton, in the first quarter of 2005. First quarter 2006 segment results improved from fourth quarter 2005 as shipments and prices increased for Flat-rolled and Tubular. Flat-rolled also benefited from lower natural gas costs and reduced outage costs as the Gary No. 14 blast furnace started up successfully during the first quarter and has been running well. U. S. Steel Europe (USSE) also reported increased segment income on higher shipment volumes. Results for Other Businesses declined mainly due to seasonal effects at iron ore operations in Minnesota. Outlook Looking ahead to the second quarter, Surma said, "We are entering the quarter with good momentum and we expect strong results as demand in key markets remains firm and our people and facilities are performing well." We expect second quarter Flat-rolled results to improve from the first quarter as shipment volumes continue to increase and average prices and costs remain comparable to first quarter levels. For USSE, we expect improvements in second quarter shipments to be partially offset by higher costs, while average prices should be comparable to first quarter levels. Prices and shipments for Tubular in second quarter 2006 are expected to be lower than first quarter levels as shipments and product mix will be negatively affected by planned maintenance outages at our tubular operations. Second quarter 2006 results for Other Businesses should improve as a result of normal seasonal effects at iron ore operations in Minnesota. This release contains forward-looking statements with respect to market conditions, operating costs, shipments and prices. Some factors, among others, that could affect market conditions, costs, shipments and prices for both domestic operations and USSE include global product demand, prices and mix; global and company steel production levels; plant operating performance; the timing and completion of facility projects; natural gas and electricity prices and usage; raw materials and transportation availability and prices; the impact of fixed prices in energy and raw materials contracts (many of which have terms of one year or longer) as compared to short-term contract and spot prices of steel products; changes in environmental, tax, pension and other laws; employee strikes; power outages; and U.S. and global economic performance and political developments. Domestic steel shipments and prices could be affected by import levels and actions taken by the U.S. Government and its agencies. Economic conditions and political factors in Europe that may affect USSE's results include, but are not limited to, taxation, nationalization, inflation, currency fluctuations, increased regulation, export quotas, tariffs, and other protectionist measures. In accordance with "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, cautionary statements identifying important factors, but not necessarily all factors, that could cause actual results to differ materially from those set forth in the forward-looking statements have been included in the Form 10- K of U. S. Steel for the year ended December 31, 2005, and in subsequent filings for U. S. Steel. A Statement of Operations (Unaudited), Other Financial Data (Unaudited) and Preliminary Supplemental Statistics (Unaudited) for U. S. Steel are attached. The company will conduct a conference call on first quarter earnings on Tuesday, April 25, at 3 p.m. EDT. To listen to the webcast of the conference call, visit the U. S. Steel web site, www.ussteel.com, and click on the "Investors" button. For more information on U. S. Steel, visit its web site at www.ussteel.com. UNITED STATES STEEL CORPORATION
STATEMENT OF OPERATIONS (Unaudited)
-----------------------------------
Quarter Ended
---------------------------
March 31 Dec. 31 March 31
(Dollars in millions) 2006 2005 2005
------------------------------------------------------------------------
NET SALES $ 3,728 $ 3,470 $ 3,787
OPERATING EXPENSES (INCOME):
Cost of sales (excludes items shown below) 3,098 2,983 2,903
Selling, general and administrative expenses 158 183 157
Depreciation, depletion and amortization 112 92 98
Income from investees (7) (2) (13)
Net gains on disposal of assets (1) (4) (4)
Other income, net (1) (4) (2)
----- ----- -----
Total operating expenses 3,359 3,248 3,139
----- ----- -----
INCOME FROM OPERATIONS 369 222 648
Net interest and other financial costs 16 14 25
----- ----- -----
INCOME BEFORE INCOME TAXES AND MINORITY
INTERESTS 353 208 623
Income tax provision 90 90 156
Minority interests 7 9 8
----- ----- -----
NET INCOME 256 109 459
Dividends on preferred stock (4) (5) (4)
----- ----- -----
NET INCOME APPLICABLE TO COMMON STOCK $ 252 $ 104 $ 455
===== ===== =====
COMMON STOCK DATA:
------------------------------------------------------------------------
Net income per share:
- Basic $ 2.31 $ .94 $ 3.98
- Diluted $ 2.04 $ .85 $ 3.51
Weighted average shares, in thousands
- Basic 108,809 111,739 114,169
- Diluted 125,559 128,151 130,830
Dividends paid per common share $ .10 $ .10 $ .08
UNITED STATES STEEL CORPORATION
OTHER FINANCIAL DATA (Unaudited)
--------------------------------
Quarter Ended
March 31
Cash Flow Data (In millions) 2006 2005
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Cash provided by operating activities:
Net income $ 256 $ 459
Depreciation, depletion and amortization 112 98
Pensions and other postretirement benefits (9) (113)
Property tax settlement gain - (95)
Working capital changes (158) (165)
Other operating activities 27 112
------ ------
Total 228 296
------ ------
Cash used in investing activities:
Capital expenditures (127) (122)
Disposal of assets 4 3
Other investing activities 4 (1)
------ ------
Total (119) (120)
------ ------
Cash used in financing activities:
Repayment of debt (83) --
Common stock issued 3 --
Dividends paid (15) (13)
Change in bank checks outstanding (16) (51)
Other financing activities (7) --
------ ------
Total (118) (64)
------ ------
Effect of exchange rate changes on cash 1 (2)
------ ------
Net increase (decrease) in cash and cash equivalents (8) 110
Cash and cash equivalents at beginning of the year 1,479 1,037
------ ------
Cash and cash equivalents at end of the period $ 1,471 $ 1,147
====== ======
March 31 Dec. 31
Balance Sheet Data (In millions) 2006 2005
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Cash and cash equivalents $ 1,471 $ 1,479
Inventories 1,483 1,466
Other current assets 2,092 1,897
Property, plant and equipment - net 4,159 4,015
Intangible pension asset 251 251
Other assets 714 714
------ ------
Total assets $ 10,170 $ 9,822
====== ======
Short-term debt and current maturities of
long-term debt $ 175 $ 249
Other current liabilities 2,562 2,500
Long-term debt, less unamortized discount 1,359 1,363
Employee benefits 1,989 2,008
Other long-term liabilities 349 346
Minority interests 31 32
Stockholders' equity 3,705 3,324
------ ------
Total liabilities and stockholders' equity $ 10,170 $ 9,822
====== ======
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
-----------------------------------------------
Quarter Ended
---------------------------
March 31 Dec. 31 March 31
(Dollars in millions) 2006 2005 2005
------------------------------------------------------------------------
INCOME FROM OPERATIONS
Flat-rolled Products $127 $36 $335
U. S. Steel Europe 125 112 220
Tubular Products 177 149 122
Other Businesses -- 16 (17)
----- ----- -----
Segment Income from Operations 429 313 660
Retiree benefit expenses(a) (55) (59) (83)
Other items not allocated to segments:
Asset impairment charge(b) (5) -- --
Stock appreciation rights -- (1) 1
Workforce reduction charges -- (11) --
Environmental remediation charge -- (20) --
Property tax settlement gain(c) -- -- 70
----- ----- -----
Total Income from Operations $369 $222 $648
CAPITAL EXPENDITURES
Flat-rolled Products $69 $157 $59
U. S. Steel Europe 44 74 49
Tubular Products -- 1 3
Other Businesses 14 36 11
----- ----- -----
Total $127 $268 $122
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(a) Includes certain profit-based expenses for U. S. Steel retirees and
National retirees pursuant to provisions of the 2003 labor agreement
with the United Steelworkers of America.
(b) Relates to the potential sale of a small wholly owned subsidiary in
Germany.
(c) Reflects the portion of the Gary property tax settlement gain that is
included in cost of sales, and excludes $25 million that is included
in net interest and other financial costs.
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
-----------------------------------------------
Quarter Ended
---------------------------
March 31 Dec. 31 March 31
(Dollars in millions) 2006 2005 2005
------------------------------------------------------------------------
OPERATING STATISTICS
Average realized price: ($/net ton)(a)
Flat-rolled Products $616 $597 $650
U. S. Steel Europe 544 550 684
Tubular Products 1,506 1,456 1,165
Steel Shipments:(a)(b)
Flat-rolled Products 3,529 3,346 3,535
U. S. Steel Europe 1,508 1,359 1,290
Tubular Products 319 292 303
Raw Steel Production:(b)
Domestic Facilities 4,141 3,929 4,303
U. S. Steel Europe 1,753 1,649 1,548
Raw Steel Capability Utilization:(c)
Domestic Facilities 86.6% 80.3% 90.0%
U. S. Steel Europe 95.7% 88.2% 84.6%
Domestic iron ore production(b) 5,473 5,352 5,382
Domestic coke production(b)(d) 1,490 1,485 1,420
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(a) Excludes intersegment transfers.
(b) Thousands of net tons.
(c) Based on annual raw steel production capability of 19.4 million net
tons for domestic facilities and 7.4 million net tons for U. S. Steel
Europe.
(d) Includes the Clairton 1314B Partnership.
SOURCE: United States Steel Corporation CONTACT: Media, John Armstrong, +1-412-433-6792, or Investors-Analysts, Web site: http://www.ussteel.com/ Company News On-Call: http://www.prnewswire.com/comp/929150.html |
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