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United States Steel Corporation Reports 2007 Second Quarter ResultsPRNewswire-FirstCall PITTSBURGH, July 24 /PRNewswire-FirstCall/ -- Earnings Highlights
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(Dollars in millions
except per share data) 2Q 2007 1Q 2007 2Q 2006
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Net sales $4,228 $3,756 $4,107
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Segment income from operations
Flat-rolled $92 $75 $212
U. S. Steel Europe 244 206 188
Tubular 97 102 146
Other Businesses 1 2 33
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Total segment income from
operations $434 $385 $579
Retiree benefit expenses (43) (39) (65)
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Income from operations $391 $346 $514
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Net interest and other
financial costs 34 5 14
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Income tax provision 53 66 91
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Net income $302 $273 $404
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- Per basic share $2.55 $2.31 $3.60
- Per diluted share $2.54 $2.30 $3.22
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United States Steel Corporation (NYSE: X) reported second quarter 2007 net income of $302 million, or $2.54 per diluted share, compared to first quarter 2007 net income of $273 million, or $2.30 per diluted share, and second quarter 2006 net income of $404 million, or $3.22 per diluted share. Commenting on results, U. S. Steel Chairman and CEO John P. Surma said, "We had another good quarter with record results for U. S. Steel Europe (USSE). During the quarter, we completed the $2 billion acquisition of Lone Star Technologies (Lone Star) and we're pleased with the progress we've made to date in integrating our new facilities and employees into U. S. Steel. Also during the quarter, we issued $1.1 billion of senior notes, expanded our credit facilities and retired $378 million of 9.75% senior notes that were due in 2010." The company reported second quarter 2007 income from operations of $391 million, compared with income from operations of $346 million in the first quarter of 2007 and $514 million in the second quarter of 2006. In the second quarter of 2007, net interest and other financial costs included a $23 million pre-tax charge related to the early redemption of our 9.75% Senior Notes due 2010. This charge reduced net income by $14 million or 12 cents per diluted share. In the first quarter of 2007, net interest and other financial costs included a $3 million pre-tax charge related to the early redemption of our 10% Senior Quarterly Income Debt Securities. This charge reduced net income by $2 million or 2 cents per diluted share. The income tax provision in the second quarter of 2006 included a favorable adjustment of $15 million, or 12 cents per diluted share, related to estimated 2005 tax accruals. We repurchased 304,900 shares of common stock for $33 million during the second quarter. Reportable Segments and Other Businesses Management believes segment income from operations is a key measure in evaluating company performance. U. S. Steel's reportable segments and Other Businesses reported segment income from operations of $434 million, or $79 per ton, in the second quarter of 2007, compared with $385 million, or $76 per ton, in the first quarter of 2007 and $579 million, or $99 per ton, in the second quarter of 2006. The increase in second quarter 2007 Flat-rolled income from operations compared to the first quarter mainly resulted from higher shipments and an increased utilization rate, with partial offsets from higher outage and raw material costs. The improvement in European operating results was due primarily to higher prices. Tubular operating results remained strong, but declined as expected from the first quarter due mainly to lower prices. The operating results of Lone Star are included in Tubular effective June 14th, including increased depreciation and amortization as a result of purchase accounting asset valuations. Lone Star added 47,000 tons to second quarter Tubular shipments. Outlook Commenting on U. S. Steel's outlook, Surma said, "We expect continued strong performance by our three reportable segments in the third quarter of 2007, with overall operating results improving from the second quarter, excluding any charges resulting from Lone Star integration activities." For Flat-rolled, third quarter results are expected to improve from the second quarter due primarily to reduced outage and related costs and higher shipments, partially offset by slightly lower average realized prices, reflecting current spot market conditions and higher semi-finished product shipments. Third quarter results are expected to decrease for U. S. Steel Europe mainly as a result of higher costs resulting from outage spending and related effects, including a blast furnace reline in Serbia, which will begin in September. Shipments are expected to decrease while average realized prices should increase slightly from second quarter levels. Third quarter average realized prices for Tubular are expected to decrease from second quarter levels, including the effects of product mix. Results will reflect the inclusion of Lone Star for the entire quarter. Third quarter Tubular results may be negatively impacted as we address inventory issues in conjunction with the integration. This release contains forward-looking statements with respect to expected synergies from the Lone Star acquisition, market conditions, operating costs, shipments and prices. Factors that may affect expected synergies from the Lone Star acquisition include management's ability to successfully integrate Lone Star's operations; reactions of customers and joint venture and alliance partners; operating levels in the Tubular segment; and expansions or acquisitions by major tubular competitors. 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 shorter-term contracts and spot prices of steel products; changes in environmental, tax and other laws; employee strikes; power outages or curtailments; 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, 2006, and in subsequent filings for U. S. Steel. A Statement of Operations (Unaudited), Cash Flow Statement (Unaudited), Condensed Balance Sheet (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 24, at 2 p.m. EDT. To listen to the webcast of the conference call, visit the U. S. Steel web site, http://www.ussteel.com/, and click on the "Investors" button. For more information on U. S. Steel, visit its web site at http://www.ussteel.com/. 2007-036
UNITED STATES STEEL CORPORATION
STATEMENT OF OPERATIONS (Unaudited)
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Quarter Ended Six Months Ended
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June 30 Mar. 31 June 30 June 30
(Dollars in millions) 2007 2007 2006 2007 2006
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NET SALES $4,228 $3,756 $4,107 $7,984 $7,835
OPERATING EXPENSES (INCOME):
Cost of sales (excludes
items shown below) 3,595 3,179 3,339 6,774 6,437
Selling, general and
administrative expenses 138 139 156 277 314
Depreciation, depletion
and amortization 118 111 114 229 226
Income from investees (10) (2) (13) (12) (20)
Net gains on disposal of
assets (3) (10) (1) (13) (2)
Other income, net (1) (7) (2) (8) (3)
----- ----- ----- ----- -----
Total operating expenses 3,837 3,410 3,593 7,247 6,952
----- ----- ----- ----- -----
INCOME FROM OPERATIONS 391 346 514 737 883
Net interest and other
financial costs 34 5 14 39 30
----- ----- ----- ----- -----
INCOME BEFORE INCOME TAXES
AND MINORITY INTERESTS 357 341 500 698 853
Income tax provision 53 66 91 119 181
Minority interests 2 2 5 4 12
----- ----- ----- ----- -----
NET INCOME 302 273 404 575 660
Dividends on preferred stock -- -- (4) -- (8)
----- ----- ----- ----- -----
NET INCOME APPLICABLE TO
COMMON STOCK $ 302 $ 273 $ 400 $ 575 $ 652
===== ===== ===== ===== =====
COMMON STOCK DATA:
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Net income per share:
- Basic $ 2.55 $ 2.31 $ 3.60 $ 4.86 $ 5.93
- Diluted $ 2.54 $ 2.30 $ 3.22 $ 4.83 $ 5.26
Weighted average shares,
in thousands
- Basic 118,221 118,244 111,129 118,232 109,949
- Diluted 118,891 119,005 125,242 118,920 125,371
Dividends paid per common
share $ .20 $ .20 $ .15 $ .40 $ .25
UNITED STATES STEEL CORPORATION
CASH FLOW STATEMENT (Unaudited)
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Six Months Ended
June 30
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(Dollars in millions) 2007 2006
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Cash provided from operating activities:
Net income $ 575 $ 660
Depreciation, depletion and amortization 229 226
Pensions and other postretirement benefits (105) (50)
Deferred income taxes 49 43
Net gains on disposal of assets (13) (2)
Changes in: Current receivables (297) (367)
Inventories 108 (30)
Current accounts payable and
accrued expenses 229 115
Other operating activities 15 (27)
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Total 790 568
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Cash used in investing activities:
Capital expenditures (250) (251)
Acquisition of Lone Star Technologies, Inc. (1,990) --
Disposal of assets 18 6
Other investing activities (1) --
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Total (2,223) (245)
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Cash (used in) provided from financing
activities:
Issuance of long-term debt 1,583 --
Repayment of long-term debt (449) (156)
Common stock issued 15 10
Common stock repurchased (58) (117)
Dividends paid (47) (36)
Change in bank checks outstanding 63 (13)
Other financing activities 1 (12)
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Total 1,108 (324)
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Effect of exchange rate changes on cash 6 (1)
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Net increase (decrease) in cash and cash
equivalents (319) (2)
Cash at beginning of the year 1,422 1,479
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Cash at end of the period $ 1,103 $ 1,477
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UNITED STATES STEEL CORPORATION
CONDENSED BALANCE SHEET (Unaudited)
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June 30 Dec. 31
(Dollars in millions) 2007 2006
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Cash and cash equivalents $ 1,103 $ 1,422
Receivables, net 2,260 1,799
Inventories 2,055 1,604
Other current assets 338 371
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Total current assets 5,756 5,196
Property, plant and equipment, net 4,932 4,429
Investments and long-term receivables, net 333 336
Pension asset 441 330
Intangible assets 267 --
Goodwill 972 --
Other assets 212 295
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Total assets $ 12,913 $ 10,586
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Accounts payable $ 1,626 $ 1,313
Payroll and benefits payable 1,049 1,028
Short-term debt and current maturities
of long-term debt 49 82
Other current liabilities 373 279
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Total current liabilities 3,097 2,702
Long-term debt 2,125 943
Employee benefits 2,152 2,174
Other long-term liabilities and minority
interests 579 402
Stockholders' equity 4,960 4,365
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Total liabilities and stockholders' equity $ 12,913 $ 10,586
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UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
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Quarter Ended Six Months Ended
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June 30 Mar. 31 June 30 June 30
(Dollars in millions) 2007 2007 2006 2007 2006
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INCOME FROM OPERATIONS
Flat-rolled $ 92 $ 75 $ 212 $ 167 $ 339
U. S. Steel Europe 244 206 188 450 313
Tubular 97 102 146 199 323
Other Businesses 1 2 33 3 33
----- ----- ----- ----- -----
Segment Income from Operations 434 385 579 819 1,008
Retiree benefit expenses(a) (43) (39) (65) (82) (120)
Other items not allocated
to segments:
Asset impairment charge -- -- -- -- (5)
----- ----- ----- ----- -----
Total Income from
Operations $391 $346 $514 $737 $883
CAPITAL EXPENDITURES
Flat-rolled $69 $50 $32 $119 $101
U. S. Steel Europe 47 30 51 77 95
Tubular 1 2 1 3 1
Other Businesses 25 26 40 51 54
----- ----- ----- ----- -----
Total $142 $108 $124 $250 $251
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(a) Includes certain profit-based expenses for U. S. Steel retirees and
National retirees pursuant to provisions of the 2003 labor agreement
with the United Steelworkers.
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
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Quarter Ended Six Months Ended
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June 30 Mar. 31 June 30 June 30
(Dollars in millions) 2007 2007 2006 2007 2006
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OPERATING STATISTICS
Average realized price:
($/net ton)(a)
Flat-rolled $652 $650 $624 $651 $620
U. S. Steel Europe 726 669 581 697 563
Tubular(b) 1,389 1,435 1,479 1,410 1,493
Steel Shipments:(a)(c)
Flat-rolled 3,599 3,188 3,878 6,787 7,407
U. S. Steel Europe 1,616 1,652 1,652 3,268 3,160
Tubular(b) 288 247 298 535 617
----- ----- ----- ----- -----
Total Steel
Shipments 5,503 5,087 5,828 10,590 11,184
Raw Steel-Production:(c)
Flat-rolled 4,116 3,713 4,585 7,829 8,726
U. S. Steel Europe 1,865 1,799 1,803 3,664 3,556
Tubular(b) 16 -- -- 16 --
Raw Steel-Capability
Utilization:(d)
Flat-rolled 85.1% 77.6% 94.8% 81.4% 90.7%
U. S. Steel Europe 100.8% 98.2% 97.4% 99.5% 96.6%
Domestic iron ore
production(c) 4,949 4,895 5,493 9,844 10,966
Domestic coke
production(c)(e) 1,299 1,366 1,485 2,665 2,975
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(a) Excludes intersegment transfers.
(b) Includes Lone Star as of June 14, 2007.
(c) Thousands of net tons.
(d) Based on annual raw steel production capability for Flat-rolled of
19.4 million net tons and annual raw steel production capability for
U. S. Steel Europe of 7.4 million net tons.
(e) Includes the Clairton 1314B Partnership.
SOURCE: United States Steel Corporation CONTACT: Media, John Armstrong, +1-412-433-6792, or Investors & Web site: http://www.ussteel.com/ Company News On-Call: http://www.prnewswire.com/comp/929150.html |
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