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United States Steel Corporation Reports Record Results for 2008 Third QuarterPRNewswire-FirstCall PITTSBURGH, Oct. 28 /PRNewswire-FirstCall/ -- --------------------------------------------------------------------------
Earnings Highlights
(Dollars in millions except per share data) 3Q 2008 2Q 2008 3Q 2007
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Net sales $7,312 $6,744 $4,354
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Segment income from operations
Flat-rolled $835 $478 $170
U. S. Steel Europe 173 298 152
Tubular 420 177 74
Other Businesses 33 6 37
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Total segment income from operations $1,461 $959 $433
Retiree benefit expenses (6) 1 (46)
Other items not allocated to segments (128) (6) (27)
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Income from operations $1,327 $954 $360
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Net interest and other financial costs 46 25 22
Income tax provision 339 255 68
Net income $919 $668 $269
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- Per basic share $7.84 $5.69 $2.28
- Per diluted share $7.79 $5.65 $2.27
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United States Steel Corporation (NYSE: X) reported third quarter 2008 net income of $919 million, or $7.79 per diluted share, compared to second quarter 2008 net income of $668 million, or $5.65 per diluted share, and third quarter 2007 net income of $269 million, or $2.27 per diluted share. Commenting on results, U. S. Steel Chairman and CEO John P. Surma said, "U. S. Steel performed extremely well in the third quarter and recorded the most profitable quarter in our history. Our Flat-rolled and Tubular segments again posted record results, and tubular markets especially remained robust throughout the quarter." The company reported third quarter 2008 income from operations of $1,327 million, compared with income from operations of $954 million in the second quarter of 2008 and $360 million in the third quarter of 2007. Other items not allocated to segments in the third quarter of 2008 consisted of a $105 million pre-tax charge for employee signing bonuses paid as provided in the new labor agreements with the United Steelworkers and a $23 million charge related to environmental remediation at a former production site. These items reduced net income by $79 million, or 67 cents per diluted share. Other items not allocated to segments in the second quarter of 2008 consisted of a charge for inventory transition effects related to the acquisition of U. S. Steel Canada (USSC) that reduced net income by $4 million, or 3 cents per diluted share. Discrete charges in the tax provision and an item not allocated to segments related to the Lone Star acquisition reduced third quarter 2007 net income by $28 million, or 23 cents per diluted share. Net interest and other financial costs in the third quarter of 2008 included a foreign currency loss that decreased net income by $39 million, or 33 cents per diluted share, related to the remeasurement of an $840 million U.S. dollar-denominated intercompany loan to a European subsidiary, partially offset by euro-U.S. dollar derivatives activity. This compares to an immaterial effect for these items in the second quarter of 2008. We repurchased 1.13 million shares of common stock for approximately $130 million during the third 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 $1,461 million, or $227 per ton, in the third quarter of 2008, compared with $959 million, or $136 per ton, in the second quarter of 2008 and $433 million, or $78 per ton, in the third quarter of 2007. Income from operations for Flat-rolled improved significantly from the second quarter, primarily reflecting higher average realized prices, partially offset by increased raw materials costs, decreased shipments and higher costs for profit sharing. The decrease in European operating results was due primarily to higher raw materials costs, lower shipments due to market conditions and increased costs resulting from a planned reline of one of our three blast furnaces at U. S. Steel Kosice that began in early August. These were partially offset by higher average realized prices. Production was reduced late in the third quarter to match declining order rates for the Flat-rolled and USSE segments. Raw steel production for the quarter was at 86 percent and 87 percent of capability in North America and Europe, respectively. The substantial increase in Tubular income compared to the second quarter resulted primarily from higher average realized prices, partially offset by increased costs for semi-finished steel. Outlook Commenting on U. S. Steel's outlook, Surma said, "The volatile global economic climate is having significant negative effects on our business and our forward view is limited because of low order backlogs and short leadtimes. We expect a decline in fourth quarter results mainly due to softening demand and prices for flat-rolled products in North America and Europe, and we expect to continue to operate at reduced production levels, corresponding with customer order rates." For Flat-rolled, fourth quarter results are expected to decrease from the third quarter due primarily to substantially lower shipments and lower average realized prices, partially offset by lower raw materials costs. Based on very weak market conditions, we expect results to decline substantially for U. S. Steel Europe (USSE) in the fourth quarter. Fourth quarter results for Tubular are currently expected to be comparable to the third quarter. This release contains forward-looking statements with respect to market conditions, operating costs, shipments and prices. U. S. Steel has been, and we expect will continue to be, negatively impacted by the current global credit and economic problems. Other more normal factors that could affect market conditions, costs, shipments and prices for both North American operations and USSE include, among others, 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 prices and availability; 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; the terms of collective bargaining agreements; employee strikes or other labor issues; 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 and Canada that may affect USSE's and USSC's results include, but are not limited to, taxation, nationalization, inflation, currency fluctuations, government instability, political unrest, regulatory changes, 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, 2007, 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 third quarter earnings on Tuesday, October 28, 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/. UNITED STATES STEEL CORPORATION
STATEMENT OF OPERATIONS (Unaudited)
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Quarter Ended Nine Months Ended
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Sept. 30 June 30 Sept. 30 Sept. 30
(Dollars in millions) 2008 2008 2007 2008 2007
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NET SALES $7,312 $6,744 $4,354 $19,252 $12,338
OPERATING EXPENSES
(INCOME):
Cost of sales (excludes
items shown below) 5,752 5,497 3,749 15,892 10,523
Selling, general and
administrative
expenses 151 171 134 464 411
Depreciation, depletion
and amortization 149 159 124 464 353
Income from investees (51) (34) (7) (92) (19)
Net gains on disposal
of assets (6) (1) (7) (8) (20)
Other income, net (10) (2) 1 (15) (7)
----- ----- ----- ------ ------
Total operating
expenses 5,985 5,790 3,994 16,705 11,241
----- ----- ----- ------ ------
INCOME FROM OPERATIONS 1,327 954 360 2,547 1,097
Net interest and other
financial costs 46 25 22 39 61
----- ----- ----- ------ ------
INCOME BEFORE INCOME TAXES
AND MINORITY INTERESTS 1,281 929 338 2,508 1,036
Income tax provision 339 255 68 652 187
Minority interests 23 6 1 34 5
----- ----- ----- ------ ------
NET INCOME $919 $668 $269 $1,822 $844
===== ===== ===== ====== ======
COMMON STOCK DATA:
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Net income per share:
- Basic $7.84 $5.69 $2.28 $15.51 $7.15
- Diluted $7.79 $5.65 $2.27 $15.43 $7.10
Weighted average shares,
in thousands
- Basic 117,169 117,507 118,086 117,423 118,183
- Diluted 117,826 118,217 118,755 118,051 118,896
Dividends paid per
common share $.30 $.25 $.20 $.80 $.60
UNITED STATES STEEL CORPORATION
CASH FLOW STATEMENT (Unaudited)
--------------------------------
Nine Months Ended
September 30
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(Dollars in millions) 2008 2007
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Cash provided from operating activities:
Net income $1,822 $844
Depreciation, depletion and amortization 464 353
Pensions and other postretirement benefits (388) (182)
Deferred income taxes 262 113
Net gains on disposal of assets (8) (20)
Changes in: Current receivables (1,264) (300)
Inventories (478) 243
Current accounts payable and accrued expenses 931 216
Bank checks outstanding (9) 61
Other operating activities (1) 82
----- ------
Total 1,331 1,410
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Cash used in investing activities:
Capital expenditures (633) (460)
Acquisition of pickle lines (36) -
Acquisition of Lone Star Technologies, Inc. - (1,990)
Acquisition of Stelco Inc. (1) -
Disposal of assets 19 27
Other investing activities (14) 2
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Total (665) (2,421)
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Cash provided from (used in) financing activities:
Issuance of long-term debt - 1,583
Repayment of long-term debt (359) (458)
Revolving credit facilities - borrowings 359 -
- repayments (44) -
Common stock issued 11 15
Common stock repurchased (214) (87)
Dividends paid (94) (71)
Other financing activities 68 (1)
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Total (273) 981
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Effect of exchange rate changes on cash (1) 11
----- ------
Net increase (decrease) in cash and cash
equivalents 392 (19)
Cash at beginning of the year 401 1,422
----- ------
Cash at end of the period $793 $1,403
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UNITED STATES STEEL CORPORATION
CONDENSED BALANCE SHEET (Unaudited)
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Sept. 30 Dec. 31
(Dollars in millions) 2008 2007
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Cash and cash equivalents $793 $401
Receivables, net 3,287 2,077
Inventories 2,669 2,279
Other current assets 232 202
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Total current assets 6,981 4,959
Property, plant and equipment, net 6,732 6,688
Investments and long-term receivables, net 728 694
Prepaid pensions 252 734
Goodwill and intangible assets, net 2,023 2,131
Other assets 552 426
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Total assets $17,268 $15,632
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Accounts payable $2,246 $1,730
Payroll and benefits payable 950 995
Short-term debt and current maturities of
long-term debt 61 110
Other current liabilities 437 168
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Total current liabilities 3,694 3,003
Long-term debt, less unamortized discount 3,120 3,147
Employee benefits 3,542 3,187
Other long-term liabilities and minority
interests 733 764
Stockholders' equity 6,179 5,531
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Total liabilities and stockholders' equity $17,268 $15,632
====== ======
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
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Quarter Ended Nine Months Ended
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Sept. 30 June 30 Sept. 30 September 30
(Dollars in millions) 2008 2008 2007 2008 2007
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INCOME FROM OPERATIONS
Flat-rolled(a) $835 $478 $170 $1,433 $337
U. S. Steel Europe 173 298 152 632 602
Tubular(b) 420 177 74 648 273
Other Businesses( c ) 33 6 37 34 40
----- ----- ----- ----- -----
Segment Income from
Operations 1,461 959 433 2,747 1,252
Retiree benefit expenses(d) (6) 1 (46) (4) (128)
Other items not allocated
to segments:
Labor agreement signing
bonuses (105) - - (105) -
Environmental remediation (23) - - (23) -
Flat-rolled inventory
transition effects - (6) - (23) -
Litigation reserve - - - (45) -
Tubular inventory
transition effects - - (27) - (27)
----- ----- ----- ----- -----
Total Income from
Operations $1,327 $954 $360 $2,547 $1,097
CAPITAL EXPENDITURES
Flat-rolled(a) $192 $145 $121 $420 $240
U. S. Steel Europe 62 49 52 143 129
Tubular(b) 9 5 10 18 13
Other Businesses( c ) 30 14 27 52 78
----- ----- ----- ----- -----
Total $293 $213 $210 $633 $460
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(a) Includes the results of the businesses acquired from Stelco Inc. as
of October 31, 2007, excluding the iron ore and real estate
interests, and includes the results of the pickle lines acquired
from Nelson Steel as of August 29, 2008.
(b) Includes the results of the businesses acquired from Lone Star
Technologies, Inc. as of June 14, 2007.
( c ) Includes the results of the iron ore and real estate interests
acquired from Stelco Inc. as of October 31, 2007.
(d) The third quarter and first nine months of 2007 include certain
profit-based expenses for former National employees pursuant to
provisions of the 2003 labor agreement with the United Steelworkers.
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
-----------------------------------------------
Quarter Ended Nine Months Ended
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Sept. 30 June 30 Sept. 30 September 30
(Dollars in millions) 2008 2008 2007 2008 2007
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OPERATING STATISTICS
Average realized price:
($/net ton)(a)
Flat-rolled(b) 907 777 643 775 648
U. S. Steel Europe 1,086 986 738 948 710
Tubular( c ) 2,390 1,690 1,292 1,823 1,355
Steel Shipments:(a)(d)
Flat-rolled(b) 4,505 4,849 3,601 14,055 10,388
U. S. Steel Europe 1,409 1,696 1,486 4,743 4,754
Tubular( c ) 519 500 466 1,452 1,001
----- ----- ----- ----- -----
Total Steel Shipments 6,433 7,045 5,553 20,250 16,143
Intersegment Shipments:(d)
Flat-rolled to Tubular 540 472 260 1,457 599
Raw Steel-Production:(d)
North American
facilities(b) 5,282 5,614 4,328 16,454 12,157
U. S. Steel Europe 1,623 1,925 1,661 5,456 5,325
Raw Steel-Capability
Utilization:(e)
North American
facilities(b) 86.2% 92.7% 88.5% 90.2% 83.8%
U. S. Steel Europe 87.0% 104.3% 88.7% 98.2% 95.9%
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(a) Excludes intersegment shipments.
(b) Includes the results of the businesses acquired from Stelco Inc. as
of October 31, 2007, excluding the iron ore and real estate
interests, and includes the results of the pickle lines acquired
from Nelson Steel as of August 29, 2008.
( c ) Includes the results of the businesses acquired from Lone Star
Technologies, Inc. as of June 14, 2007.
(d) Thousands of net tons.
(e) Based on annual raw steel production capability of 19.4 million net
tons for North American facilities prior to October 31, 2007 and
24.3 million net tons thereafter, and 7.4 million net tons for U. S.
Steel Europe.
SOURCE: United States Steel Corporation CONTACT: Media, John Armstrong, +1-412-433-6792; Investors-Analysts, Dan Web site: http://www.ussteel.com/ Company News On-Call: http://www.prnewswire.com/comp/929150.html |
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