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United States Steel Corporation Reports 2004 Second Quarter ResultsEarnings Highlights (dollars in millions except per share data)2Q 2004 1Q 2004 2Q 2003 Revenues and other income $3,466 $2,963 $2,362Segment income from operations Flat-rolled Products $335 $113 $(37) U. S. Steel Europe 76 40 67 Tubular Products 25 3 (3) Real Estate 3 14 16 Straightline (20) Other Businesses 15 (8) 4 Total segment income from operations $454 $162 $27 Retiree benefit exIncome before extraordinary loss and cumulative effect of change in accounting principle $211 $44 $3 Net income (loss) $211 $58 $(49) - Per basic share $1.82 $0.51 $(0.51) - Per diluted share $1.62 $0.47 $(0.51)PRNewswire-FirstCall United States Steel Corporation (NYSE: X) reported second quarter 2004 net income of $211 million, or $1.62 per diluted share, compared to net income of $58 million, or 47 cents per diluted share in 2004's first quarter, and a net loss of $49 million, or 51 cents per diluted share (after preferred stock dividends), in the second quarter of 2003. Diluted earnings per share for both 2004 quarters reflect the assumed conversion of the company's convertible preferred shares into approximately 16 million common shares. Second quarter 2004 income from operations was $388 million, or more than double the first quarter amount of $151 million, and a dramatic recovery from the $42 million in last year's second quarter. Commenting on the quarter's results, U. S. Steel Chairman and CEO Thomas J. Usher said, "Results for all major operating segments increased significantly compared to last quarter, reflecting strong demand across steel product lines and significantly better margins, as average prices increased steadily during the quarter. In fact, second quarter net income was the highest recorded since we began reporting steel results separately in 1991, and exceeded the previous best quarter by $59 million. We also continue to benefit from the acquisition of National and our ongoing cost reduction efforts." Net interest and other financial costs in second quarter 2004 included a $33 million charge resulting from the previously reported early redemption of senior debt in April. This charge and a small other item not allocated to segments reduced second quarter 2004 net income by $22 million, or 17 cents per diluted share. Other items not allocated to segments had favorable net income effects of $22 million, or 18 cents per diluted share on first quarter 2004 results and $23 million, or 22 cents per diluted share on second quarter 2003 results. First quarter 2004 results also included an income tax charge of $32 million, or 26 cents per diluted share. Reportable Segments and Other Businesses Management uses segment income from operations to evaluate company performance because it believes this to be a key measure of ongoing operating results. U. S. Steel's reportable segments and Other Businesses generated segment income from operations of $454 million, or $82 per ton, in the second quarter of 2004, compared with $162 million, or $29 per ton, in first quarter 2004 and $27 million, or $6 per ton, in 2003's second quarter. Second quarter 2004 domestic and European results benefited from significantly improved prices and margins, despite increased costs for purchased raw materials. Domestic results also included higher costs related to profit-based payments under the labor agreement with the United Steelworkers of America, which increased in line with improved profitability, and costs related to two blast furnace repair outages at Gary Works. One of these was completed during the second quarter and the other was completed in late July. Outlook Looking ahead, Usher stated, "We expect continued strong profitability through year-end resulting from robust worldwide steel pricing and tight supplies, as the world economy continues to recover and as demand from developing countries, especially China, remains at very high levels." Average prices for the Flat-rolled segment in the third quarter are expected to exceed second quarter levels, and benefits will be realized from a renegotiated coke sales agreement. Costs will continue to be affected by relatively high prices for purchased coke, scrap and natural gas. Flat-rolled segment shipments in the third quarter are expected to decline by approximately 200,000 tons compared to the second quarter mainly due to the blast furnace outages mentioned above and a planned third quarter blast furnace outage at Granite City Works. These outages will increase third quarter costs by approximately $20 million versus the second quarter. For full-year 2004, Flat-rolled segment shipments are expected to be 15.8 million tons. For U. S. Steel Europe (USSE), third quarter 2004 profit margins are expected to increase from the second quarter with realized prices improving due to the announced July 1 price increase. Higher raw material costs and planned outages on a number of key units will partially offset the price increase. Shipments for the quarter are expected to about equal second quarter levels and full-year 2004 shipments are currently estimated at 5.1 million net tons. For the Tubular segment, prices are expected to continue to increase, reflecting full-quarter realization of price increases implemented during the second quarter, as well as additional price increases. The Tubular segment expects annual shipments of about 1.0 million tons. 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; availability and prices of raw materials; plant operating performance; the timing and completion of outages and other projects; natural gas prices and usage; changes in environmental, tax and other laws; the resumption of operations at steel facilities sold under the bankruptcy 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. 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, 2003, and in subsequent filings by 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 second quarter earnings on Tuesday, July 27, at 2 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 about U. S. Steel, visit its web site at www.ussteel.com . UNITED STATES STEEL CORPORATION
STATEMENT OF OPERATIONS (Unaudited)
------------------------------------
Second Quarter Six Months
Ended Ended
June 30, June 30,
(Dollars in millions) 2004 2003 2004 2003
-------------------------------------------------------------------------
REVENUES AND OTHER INCOME:
Revenues $3,448 $2,311 $6,372 $4,209
Income (loss) from
investees 13 (9) 19 (8)
Net gains on disposal of
assets 2 21 44 23
Other income 3 39 12 45
----- ----- ----- -----
Total revenues and
other income 3,466 2,362 6,447 4,269
----- ----- ----- -----
COSTS AND EXPENSES:
Cost of revenues
(excludes items shown
below) 2,816 2,091 5,368 3,823
Selling, general and
administrative expenses 169 142 349 271
Depreciation, depletion
and amortization 93 87 191 177
----- ----- ----- -----
Total costs and
expenses 3,078 2,320 5,908 4,271
----- ----- ----- -----
INCOME (LOSS) FROM
OPERATIONS 388 42 539 (2)
Net interest and other
financial costs 86 42 138 80
----- ----- ----- -----
INCOME (LOSS) BEFORE
INCOME TAXES, MINORITY
INTERESTS, EXTRAORDINARY
LOSS AND CUMULATIVE EFFECTS
OF CHANGES IN ACCOUNTING
PRINCIPLES 302 -- 401 (82)
Income tax provision
(benefit) 86 (3) 137 (52)
Minority interests 5 -- 9 --
----- ----- ----- -----
INCOME (LOSS) BEFORE
EXTRAORDINARY LOSS
AND CUMULATIVE EFFECTS
OF CHANGES IN ACCOUNTING
PRINCIPLES 211 3 255 (30)
Extraordinary loss, net
of tax -- (52) -- (52)
Cumulative effects of
changes in accounting
principles, net of tax -- -- 14 (5)
----- ----- ----- -----
NET INCOME (LOSS) 211 (49) 269 (87)
Dividends on preferred stock (5) (5) (9) (7)
----- ----- ----- -----
NET INCOME (LOSS) APPLICABLE
TO COMMON STOCK $206 $(54) $260 $(94)
===== ===== ===== =====
UNITED STATES STEEL CORPORATION
STATEMENT OF OPERATIONS (Unaudited)
(Continued)
------------------------------------
Second Quarter Six Months
Ended Ended
June 30, June 30,
COMMON STOCK DATA: 2004 2003 2004 2003
-------------------------------------------------------------------------
Per share:
Income (loss) before
extraordinary loss and
cumulative effects of
changes in accounting
principles:
-Basic $1.82 $(.01) $2.24 $(.36)
-Diluted $1.62 $(.01) $2.01 $(.36)
Extraordinary loss, net
of tax:
-Basic $-- $(.50) $-- $(.50)
-Diluted $-- $(.50) $-- $(.50)
Cumulative effects of changes
in accounting principles,
net of tax:
-Basic $-- $-- $.13 $(.05)
-Diluted $-- $-- $.11 $(.05)
Net income (loss):
-Basic $1.82 $(.51) $2.37 $(.91)
-Diluted $1.62 $(.51) $2.12 $(.91)
Weighted average shares,
in thousands
- Basic 113,332 103,228 110,029 102,981
- Diluted 129,874 103,228 126,788 102,981
Dividends paid per common
share $.05 $.05 $.10 $.10
UNITED STATES STEEL CORPORATION
OTHER FINANCIAL DATA (Unaudited)
------------------------------------
Six Months Ended
June 30,
Cash Flow Data (In millions) 2004 2003
-------------------------------------------------------------------------
Cash provided from (used in) operating activities:
Net income (loss) $269 $(87)
Depreciation, depletion and amortization 191 177
Working capital changes (174) 44
Other operating activities 28 34
------ ------
Total 314 168
------ ------
Cash used in investing activities:
Capital expenditures (165) (132)
Acquisition of National Steel Corporation assets -- (872)
Other investing activities 84 76
------ ------
Total (81) (928)
------ ------
Cash provided from financing activities:
Issuance of long-term debt -- 428
Repayment of long-term debt (289) (2)
Preferred stock issued -- 242
Common stock issued 341 11
Dividends paid (19) (16)
Other financing activities 8 (1)
------ ------
Total 41 662
------ ------
Total net cash flow 274 (98)
Cash at beginning of the year 316 243
------ ------
Cash at end of the period $590 $145
====== ======
June 30, Dec. 31,
Balance Sheet Data (In millions) 2004 2003
-------------------------------------------------------------------------
Cash and cash equivalents $590 $316
Other current assets 3,184 2,790
Property, plant and equipment - net 3,403 3,414
Other assets 1,223 1,317
------ ------
Total assets $8,400 $7,837
====== ======
Current liabilities $2,327 $2,127
Long-term debt 1,599 1,890
Employee benefits 2,447 2,382
Other long-term liabilities 317 343
Minority interests 28 2
Stockholders' equity 1,682 1,093
------ ------
Total liabilities and stockholders' equity $8,400 $7,837
====== ======
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
-----------------------------------------------
Quarter Ended
June 30, March 31, June 30,
(Dollars in millions) 2004 2004 2003
-------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Flat-rolled Products(a) $335 $113 $(37)
U. S. Steel Europe(b) 76 40 67
Tubular Products 25 3 (3)
Real Estate 3 14 16
Straightline(a) (20)
Other Businesses(c) 15 (8) 4
----- ----- -----
Segment Income (Loss) from Operations 454 162 27
Retiree benefit expenses(d) (65) (44) (20)
Other items not allocated to segments:
Income from sale of certain assets -- 43 47
Stock appreciation rights (1) (10) (1)
Asset impairments -- -- (11)
----- ----- -----
Total Income (Loss) from
Operations $388 $151 $42
CAPITAL EXPENDITURES
Flat-rolled Products(a) $37 $21 $23
U. S. Steel Europe(b) 40 39 22
Tubular Products 2 3 16
Real Estate -- -- --
Straightline --
Other Businesses(c) 16 7 8
----- ----- -----
Total $95 $70 $69
OPERATING STATISTICS
Average realized steel price:
($/net ton)(e)
Flat-rolled Products(a) $583 $475 $420
Tubular Products 779 672 644
U. S. Steel Europe(b) 491 420 369
Steel Shipments:(e) (f)
Flat-rolled Products(a) 3,982 4,161 3,202
Tubular Products 269 272 211
U. S. Steel Europe(b) 1,263 1,173 1,234
Raw Steel-Production:(f)
Domestic Facilities 4,230 4,479 3,338
U. S. Steel Europe(b) 1,467 1,344 1,203
Raw Steel-Capability Utilization:(g)
Domestic Facilities 87.5% 92.6% 84.5%
U. S. Steel Europe(b) 79.5% 72.8% 96.5%
Domestic iron ore production(f) 6,011 5,612 4,935
Domestic iron ore shipments(f)(h) 6,722 4,036 5,249
Domestic coke production(f)(j) 1,666 1,649 1,696
Domestic coke shipments(f)(i)(j) 642 672 860
-----------
(a)The Flat-rolled segment includes the residual effects of Straightline
from January 1, 2004, and includes the results of National flat-rolled
facilities from May 20, 2003.
(b)Includes U. S. Steel's Serbian operations from September 12, 2003.
Prior to September 12, 2003, included effects of activities under
certain agreements with the former owner of the Serbian operations.
(c)Excludes the coal mining business from June 30, 2003. Includes the
results of the taconite pellet operations in Keewatin from May 20,
2003.
(d)Includes certain profit-based expenses for U. S. Steel retirees and
National retirees pursuant to provisions of the 2003 labor agreement
with the USWA.
(e)Excludes intersegment transfers.
(f)Thousands of net tons.
(g)Based on annual raw steel production capability for domestic facilities
of 12.8 million net tons prior to May 20, 2003, and 19.4 million net
tons thereafter; and annual raw steel production capability for U. S.
Steel Europe of 5.0 million net tons prior to September 12, 2003, and
7.4 million net tons thereafter.
(h)Includes trade shipments and intersegment transfers.
(i)Includes trade shipments only.
(j)Includes 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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