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United States Steel Corporation Reports 2005 Second Quarter ResultsPRNewswire-FirstCall Earnings Highlights
(Dollars in millions
except per share data) 2Q 2005 1Q 2005 2Q 2004
Net sales $3,582 $3,787 $3,448
Segment income from operations
Flat-rolled Products $190 $335 $335
U. S. Steel Europe 141 212 76
Tubular Products 133 122 25
Other Businesses 23 (17) 18
Total segment income from
operations $487 $652 $454
Retiree benefit expenses (70) (83) (65)
Other items not allocated
to segments (4) 71 (1)
Income from operations $413 $640 $388
Interest and other financial
costs (income) 20 (5) 70
Foreign currency losses 43 27 16
Net interest and other financial
costs 63 22 86
Income tax provision 93 155 86
Net income $245 $455 $211
- Per basic share $2.11 $3.95 $1.82
- Per diluted share $1.88 $3.48 $1.62
United States Steel Corporation (NYSE: X) reported second quarter 2005 net income of $245 million, or $1.88 per diluted share, compared to first quarter 2005 net income of $455 million, or $3.48 per diluted share, and second quarter 2004 net income of $211 million, or $1.62 per diluted share. Commenting on results, U. S. Steel President and CEO John P. Surma said, "Considering global steel market conditions, we had a good quarter with strong operating results from our European and Tubular segments and a solid performance by our Flat-rolled segment." The company reported second quarter 2005 income from operations of $413 million, compared with income from operations of $640 million in the first quarter of 2005 and $388 million in the second quarter of 2004. Other items not allocated to segments reduced second quarter 2005 net income by $3 million, or 2 cents per diluted share. First quarter 2005 results included net income of $58 million, or 45 cents per diluted share, primarily from a property tax settlement. Second quarter 2004 net income was reduced by $22 million, or 17 cents per diluted share, primarily resulting from a $33 million charge to net interest and other financial costs for the early redemption of senior debt. Foreign currency losses in the second quarter of 2005 were $43 million, compared to losses of $27 million and $16 million in the first quarter of 2005 and the second quarter of 2004, respectively. The losses primarily reflect accounting remeasurement losses from the appreciation of the U.S. dollar functional currency versus the euro and other local currencies. Reportable Segments and Other Businesses Management uses segment income from operations to evaluate company performance because we believe it to be a key measure of ongoing operating results. U. S. Steel's reportable segments and Other Businesses reported segment income from operations of $487 million, or $100 per ton, in the second quarter of 2005, compared with $652 million, or $127 per ton, in the first quarter of 2005 and $454 million, or $82 per ton, in the second quarter of 2004. The decrease in second quarter 2005 Flat-rolled income from operations compared to the first quarter primarily reflected declining spot market prices, reduced shipments and lower operating levels, with higher outage costs largely offset by lower raw materials costs. The decline in European operating results was due mainly to lower sheet spot market prices and higher raw material costs. Tubular results remained at record levels. Outlook Commenting on U. S. Steel's outlook, Surma said, "Operating results for the third quarter of 2005 are likely to be lower than in the second quarter, reflecting recent spot price trends in domestic and European markets for sheet products. We have been encouraged by recent reports of lower service center sheet inventory levels and improved Flat-rolled order entry rates; however, market conditions will determine if these trends will be sustained throughout the third quarter and the remainder of the year." For Flat-rolled, third quarter 2005 average realized prices are expected to be moderately lower than in the second quarter, reflecting lower spot prices, and shipment levels and costs are expected to be comparable to second quarter levels. The Gary blast furnace project will continue throughout the third quarter and our remaining domestic production facilities will be operated at levels necessary to balance our inventories and our order book. For U. S. Steel Europe (USSE), third quarter average realized prices are expected to be significantly lower than in the second quarter, primarily reflecting the recent decline in hot-rolled spot prices. The price decline should be partially offset by a significant decrease in raw material costs. The planned partial reline of the No. 2 blast furnace at U. S. Steel Kosice is expected to be completed during the third quarter and this furnace will be restarted when market conditions warrant. Third quarter 2005 shipments for USSE are expected to be about the same as in the second quarter. Shipments and average realized prices for the Tubular segment in the third quarter of 2005 are expected to be in line with second quarter levels. Tube round costs will reflect a July 1 increase of $20 per ton to the transfer price for tube rounds supplied by Flat-rolled because of higher metallic addition costs. ***** 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 the rebuild of the No. 13 blast furnace at Gary Works and other facility projects; natural gas and electricity prices and usage; raw materials 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 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, 2004, 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 second quarter earnings on Tuesday, July 26, 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 Six Months Ended
--------------------------- -----------------
June 30 Mar. 31 June 30 June 30
(Dollars in millions) 2005 2005 2004 2005 2004
--------------------------------------------------------------------------
NET SALES $3,582 $3,787 $3,448 $7,369 $6,378
OPERATING EXPENSES (INCOME):
Cost of sales (excludes items
shown below) 2,925 2,899 2,816 5,824 5,374
Selling, general and
administrative expenses 176 169 169 345 349
Depreciation, depletion and
amortization 88 98 93 186 191
Income from investees (13) (13) (13) (26) (19)
Net gains on disposal of
assets (6) (4) (2) (10) (44)
Other income, net (1) (2) (3) (3) (12)
----- ----- ----- ----- -----
Total operating expenses 3,169 3,147 3,060 6,316 5,839
----- ----- ----- ----- -----
INCOME FROM OPERATIONS 413 640 388 1,053 539
Net interest and other
financial costs 63 22 86 85 138
----- ----- ----- ----- -----
INCOME BEFORE INCOME TAXES,
MINORITY INTERESTS AND
CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
PRINCIPLE 350 618 302 968 401
Income tax provision 93 155 86 248 137
Minority interests 12 8 5 20 9
----- ----- ----- ----- -----
INCOME BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 245 455 211 700 255
Cumulative effect of change in
accounting principle, net of
tax - - - - 14
----- ----- ----- ----- -----
NET INCOME 245 455 211 700 269
Dividends on preferred stock (5) (4) (5) (9) (9)
----- ----- ----- ----- -----
NET INCOME APPLICABLE TO
COMMON STOCK $240 $451 $206 $691 $260
===== ===== ===== ===== =====
UNITED STATES STEEL CORPORATION
STATEMENT OF OPERATIONS (Unaudited)
(Continued)
------------------------------------
Quarter Ended Six Months Ended
--------------------------- -----------------
June 30 Mar. 31 June 30 June 30
COMMON STOCK DATA: 2005 2005 2004 2005 2004
--------------------------------------------------------------------------
Per share:
Income before cumulative
effect of change in
accounting principle:
- Basic $2.11 $3.95 $1.82 $6.06 $2.24
- Diluted $1.88 $3.48 $1.62 $5.36 $2.01
Cumulative effect of change in
accounting principle,
net of tax:
- Basic $- $- $- $- $.13
- Diluted $- $- $- $- $.11
Net income:
- Basic $2.11 $3.95 $1.82 $6.06 $2.37
- Diluted $1.88 $3.48 $1.62 $5.36 $2.12
Weighted average shares, in
thousands
- Basic 114,222 114,169 113,332 114,196 110,029
- Diluted 130,646 130,830 129,874 130,757 126,778
Dividends paid per
common share $.10 $.08 $.05 $.18 $.10
UNITED STATES STEEL CORPORATION
OTHER FINANCIAL DATA (Unaudited)
------------------------------------
Six Months Ended
----------------
June 30
Cash Flow Data (In millions) 2005 2004
-------------------------------------------------------------------------
Cash provided from operating activities:
Net income $ 700 $ 269
Depreciation, depletion and amortization 186 191
Pensions and other postretirement benefits (81) 30
Property tax settlement gain (95) -
Deferred income taxes 158 90
Net gains on disposal of assets (10) (44)
Changes in: Current receivables 58 (337)
Inventories (231) (48)
Current accounts payable and accrued
expenses (193) 215
Other operating activities 11 (41)
------ ------
Total 503 325
------ ------
Cash used in investing activities:
Capital expenditures (279) (165)
Disposal of assets 10 78
Other investing activities (5) (1)
------ ------
Total (274) (88)
------ ------
Cash (used in) provided from financing activities:
Repayment of long-term debt (6) (289)
Common stock issued 7 341
Dividends paid (29) (19)
Change in bank checks outstanding 27 (4)
Other financing activities (23) 8
------ ------
Total (24) 37
------ ------
Total net cash flow 205 274
Cash at beginning of the year 1,037 316
------ ------
Cash at end of the period $ 1,242 $ 590
====== ======
June 30 Dec. 31
Balance Sheet Data (In millions) 2005 2004
-------------------------------------------------------------------------
Cash and cash equivalents $ 1,242 $ 1,037
Other current assets 3,295 3,206
Property, plant and equipment - net 3,723 3,627
Pension Asset 2,430 2,538
Other assets 548 548
------ ------
Total assets $ 11,238 $ 10,956
====== ======
Current liabilities $ 2,116 $ 2,531
Long-term debt 1,355 1,363
Employee benefits 2,076 2,125
Other long-term liabilities 1,012 939
Minority interests 30 28
Stockholders' equity 4,649 3,970
------ ------
Total liabilities and stockholders' equity $ 11,238 $ 10,956
====== ======
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
-----------------------------------------------
Quarter Ended Six Months Ended
--------------------------- -----------------
June 30 Mar. 31 June 30 June 30
(Dollars in millions) 2005 2005 2004 2005 2004
--------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Flat-rolled Products $190 $335 $335 $525 $448
U. S. Steel Europe 141 212 76 353 116
Tubular Products 133 122 25 255 28
Other Businesses(a) 23 (17) 18 6 24
----- ----- ----- ----- -----
Segment Income from
Operations 487 652 454 1,139 616
Retiree benefit expenses(b) (70) (83) (65) (153) (109)
Other items not allocated to
segments:
Property tax settlement
gain(c) - 70 - 70 -
Stock appreciation rights 2 1 (1) 3 (11)
Workforce reduction
charges(d) (6) - - (6) -
Income from sale of real
estate interests - - - - 43
----- ----- ----- ----- -----
Total Income from
Operations $413 $640 $388 $1,053 $539
CAPITAL EXPENDITURES
Flat-rolled Products $78 $59 $37 $137 $58
U. S. Steel Europe 59 49 40 108 79
Tubular Products - 3 2 3 5
Other Businesses 20 11 16 31 23
----- ----- ----- ----- -----
Total $157 $122 $95 $279 $165
-----------
(a) Includes the results of the former Real Estate segment.
(b) 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.
(c) Reflects the portion of the Gary property tax settlement gain that is
included in cost of sales, and excludes $25 million that is included
in net interest and other financial costs.
(d) Reflects special termination benefits for a USSK voluntary early
retirement program.
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
-----------------------------------------------
Quarter Ended Six Months Ended
--------------------------- -----------------
June 30 Mar. 31 June 30 June 30
(Dollars in millions) 2005 2005 2004 2005 2004
--------------------------------------------------------------------------
OPERATING STATISTICS
Average realized price:
($/net ton)
Flat-rolled Products(a) $633 $650 $583 $642 $528
U. S. Steel Europe 643 684 491 663 457
Tubular Products 1,302 1,165 779 1,233 725
Steel Shipments:(a)(b)
Flat-rolled Products 3,224 3,535 3,982 6,759 8,143
U. S. Steel Europe 1,332 1,290 1,263 2,622 2,436
Tubular Products 297 303 269 600 541
Raw Steel-Production:(b)
Domestic Facilities 3,597 4,303 4,230 7,900 8,709
U. S. Steel Europe 1,486 1,548 1,467 3,034 2,811
Raw Steel-Capability
Utilization:(c)
Domestic Facilities 74.4% 90.0% 87.5% 82.1% 90.0%
U. S. Steel Europe 80.2% 84.6% 79.5% 82.4% 76.1%
Domestic iron ore
production(b) 5,670 5,382 6,011 11,052 11,623
Domestic iron ore
shipments(b)(d) 6,232 3,389 6,722 9,621 10,758
Domestic coke
production(b)(f) 1,585 1,420 1,666 3,005 3,315
Domestic coke
shipments(b)(e)(f) 241 245 642 486 1,314
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(a) Excludes intersegment transfers.
(b) Thousands of net tons.
(c) Based on annual raw steel production capability for domestic
facilities of 19.4 million net tons and annual raw steel production
capability for U. S. Steel Europe of 7.4 million net tons.
(d) Includes trade shipments and intersegment transfers.
(e) Includes trade shipments only.
(f) 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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