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United States Steel Corporation Reports 2001 Fourth Quarter and Full-Year ResultsPRNewswire-FirstCall United States Steel Corporation (NYSE: X) today issued the following: Earnings Highlights
(Dollars in millions except per share data)
4Q 4Q
2001 2000 2001 2000
Revenues and
other income $1,414 $1,413 $6,375 $6,132
Net income (loss)
per diluted share $(1.95) $(1.57) $(2.45) $(0.24)
Net income (loss)
adjusted per
diluted share $(1.36) $(0.64) $(2.89) $0.86
Net income (loss) $(174) $(139) $(218) $(21)
Adjustments for
special items (Pre-tax):
Asset Impairments - Coal - 71 - 71
Asset Impairments -
Receivables 72 34 146 34
Asset Impairments -
Intangible Asset 20 - 20 -
Costs related to separation 16 - 25 -
Costs related to
Fairless shutdown 9 - 38 -
Costs related to
Republic restructuring - - - 10
Environmental and
legal contingencies - 21 - 36
Insurance recoveries
related to USS -
POSCO fire (23) - (46) -
Gain on Transtar
reorganization - - (68) -
Prior year tax
adjustments (9) - (62) -
Tax effect of
special items (32) (44) (92) (53)
Net income (loss)
adjusted for special items $(121) $(57) $(257) $77
United States Steel Corporation (NYSE: X) reported an adjusted fourth quarter 2001 net loss of $121 million, or $1.36 per diluted share, compared with an adjusted net loss of $57 million, or 64 cents per diluted share in fourth quarter 2000. For full-year 2001, the adjusted net loss was $257 million, or $2.89 per diluted share, compared with adjusted net income of $77 million, or 86 cents per diluted share in the prior year. U. S. Steel recorded a fourth quarter 2001 net loss of $174 million, or $1.95 per diluted share, including the net effect of special items, which in total reduced net income by $53 million, or 59 cents per share. In fourth quarter 2000, the net loss of $139 million, or $1.57 per diluted share, included special items having a net unfavorable after-tax effect of $82 million, or 93 cents per diluted share. For the year 2001, U. S. Steel had a net loss of $218 million, or $2.45 per diluted share, which included special items with a net favorable after-tax effect of $39 million or 44 cents per diluted share. A full-year 2000 net loss of $21 million, or 24 cents per diluted share, included special items having a net unfavorable after-tax effect of $98 million, or $1.10 per share. "While our results are disappointing, they largely reflect the devastating impact that global excess steel capacity and several years of surging imports have had on domestic steel prices, which are at the lowest levels in decades, and on shipments and utilization rates, which are the lowest since the early 1990's," said Thomas J. Usher, chairman, CEO and president. In fourth quarter 2001, U. S. Steel recorded a loss from reportable segments of $175 million, or $57 per ton, on steel shipments of 3.1 million tons. U. S. Steel's Domestic Steel segment recorded a loss from operations of $177 million for the fourth quarter 2001, or $80 per ton. Domestic Steel shipments in fourth quarter 2001 were 2.2 million net tons, down 5 percent from fourth quarter 2000 and the lowest quarterly level since the third quarter of 1992. The average realized domestic steel price was $419 per ton in fourth quarter 2001 compared with $459 per ton in the fourth quarter 2000 and $420 per ton in the third quarter 2001. Domestic raw steel capability utilization in fourth quarter 2001 dropped to 67 percent, down from 75 percent in fourth quarter 2000 and 83 percent in third quarter 2001. As a result, fourth quarter production costs rose due to lower, less efficient operating rates at steel and raw material facilities. Tubular markets, which had been strong earlier in the year, also weakened markedly. U. S. Steel Kosice, s.r.o. (USSK) reported fourth quarter 2001 segment income from operations of $2 million, or $2 per ton. USSK's segment income in 2000 was $2 million, or $6 per ton, for the period following acquisition. For full-year 2001, USSK had segment income of $123 million, or $33 per ton. USSK shipments in fourth quarter 2001 were 0.9 million net tons, and raw steel capability utilization was 66 percent. Full-year 2001 shipments totaled 3.7 million net tons, with a utilization rate of 81 percent. Commenting on USSK's segment results, Usher said, "A difficult European economic environment contributed to lower fourth quarter shipments, but average realized prices remained about flat with the third quarter. USSK completed several planned outages during the quarter, which increased repair and maintenance expenses, and temporarily idled most operations for about two weeks at year-end due to low order levels and seasonal curtailments by customers. "We are extremely pleased with the performance of USSK in the first full year of operation as a U. S. Steel facility. USSK results should be enhanced by the completion of the tin mill expansion and vacuum degasser projects." Commenting on U. S. Steel's domestic outlook, Usher said, "We are encouraged that spot sheet prices are climbing from the extremely depressed levels of late 2001 and our order book has been improving. In the first quarter 2002, domestic shipments are expected to improve and average realized prices are expected to be slightly lower, largely due to product mix, when compared to fourth quarter 2001. For full-year 2002, domestic shipments are expected to be approximately 11 million net tons." USSK first quarter shipments and average realized prices are expected to be lower than fourth quarter 2001. USSK shipments are expected to be approximately 3.8 million net tons in 2002. This release contains forward-looking statements with respect to market conditions, costs, shipments and prices. Some factors, among others, that could affect full-year 2002 market conditions, costs, shipments and prices include import levels, future product demand, prices and mix, production, plant operating performance, domestic natural gas prices and usage, and U.S. and European economic performance and political developments. Steel shipments and prices can be affected by imports and actions of the U.S. Government and its agencies. Factors that may affect USSK results are similar to domestic factors, including excess world supply, plus foreign currency fluctuations, matters peculiar to international marketing such as tariffs and completion of facility projects at USSK. 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 USX Corporation for the year ended December 31, 2000, as amended in Forms 10-K/A, and in subsequent filings for USX Corporation and U. S. Steel. A Statement of Operations and Preliminary Supplemental Statistics for United States Steel Corporation are attached. The company will conduct a conference call on fourth quarter and full-year 2001 earnings on Tuesday, January 29 at 2 p.m. EST. To listen to the webcast of the conference call, visit the U. S. Steel website, http://www.ussteel.com/, and click on the "Investors" button. Replays of the webcast will be available through February 6. For more information on U. S. Steel, visit our website at www.ussteel.com.
UNITED STATES STEEL CORPORATION
STATEMENT OF OPERATIONS (Unaudited)
Fourth Quarter Twelve Months
Ended Ended
December 31 December 31
(Dollars in millions,
except per share amounts) 2001 2000 2001 2000
REVENUES AND OTHER INCOME:
Revenues $1,398 $1,417 $6,286 $6,090
Income (loss) from investees 13 (21) 64 (8)
Net gains on disposal of assets 2 12 22 46
Other income 1 5 3 4
------ ------ ------ ------
Total revenues and
other income 1,414 1,413 6,375 6,132
------ ------ ------ ------
COSTS AND EXPENSES:
Cost of revenues (excludes
items shown below) 1,433 1,422 6,091 5,656
Selling, general and
administrative expenses
(credits) 73 (47) 92 (223)
Depreciation, depletion and
amortization 98 138 344 360
Taxes other than income taxes 62 59 253 235
------ ------ ------ ------
Total costs and expenses 1,666 1,572 6,780 6,028
------ ------ ------ ------
INCOME (LOSS) FROM OPERATIONS (252) (159) (405) 104
Net interest and other
financial costs 67 30 141 105
------ ------ ------ ------
LOSS BEFORE INCOME TAXES (319) (189) (546) (1)
Provision (credit) for
income taxes (145) (50) (328) 20
------ ------ ------ ------
NET LOSS $(174) $(139) $(218) $(21)
====== ====== ====== ======
COMMON STOCK DATA:
Per share - basic $(1.95) $(1.56) $(2.45) $(.24)
- diluted (1.95) (1.57) (2.45) (.24)
Dividends paid per share .10 .25 .55 1.00
Shares outstanding at
December 31, 2001 -
(in thousands) 89,223 89,223 89,223 89,223
Note: Loss per common share for all periods presented is based on outstanding common shares at December 31, 2001, following the Separation, as required by generally accepted accounting principles. As a result, amounts for prior periods differ from those previously reported. The following notes are an integral part of this financial statement.
UNITED STATES STEEL CORPORATION
SELECTED NOTES TO FINANCIAL STATEMENT
--------------------------------------
1. United States Steel Corporation (United States Steel), through its
Domestic Steel segment, is engaged in the production, sale and
transportation of steel mill products, coke, taconite pellets and coal;
the management of mineral resources; real estate development; and
engineering and consulting services and, through the U. S. Steel Kosice
(USSK) segment, in the production and sale of steel mill products and
coke primarily for the central European market. Prior to December 31,
2001, United States Steel was a wholly owned subsidiary of USX
Corporation, now named Marathon Oil Corporation (Marathon). Marathon
had two outstanding classes of common stock: USX-Marathon Group common
stock, which was intended to reflect the performance of Marathon's
energy business, and USX-U. S. Steel Group common stock (Steel Stock),
which was intended to reflect the performance of Marathon's steel
business. On December 31, 2001, Marathon distributed the common stock
of United States Steel to holders of Steel Stock in exchange for all
outstanding shares of Steel Stock on a one-for-one basis (the
Separation).
The accompanying Statement of Operations represents a carve-out
presentation of the businesses comprising United States Steel and is
not intended to be a complete presentation of the results of operations
of United States Steel on a stand-alone basis. The Statement of
Operations is presented as if United States Steel existed as an entity
separate from the remaining businesses of Marathon during the periods
presented. Certain transactions related to interest and other
financial costs were attributed to United States Steel based on its
cash flows for the periods presented and the initial capital structure
attributable to Steel Stock. Corporate general and administrative
costs were allocated based upon utilization or other methods that
management believed to be reasonable and which considered certain
measures of business activities, such as employment, investments and
revenues. Income taxes were allocated in accordance with Marathon's tax
allocation policy. In general, such policy provided that the
consolidated provision and related tax payments or refunds were
allocated based principally upon the financial income, taxable income,
credits, preferences and other amounts directly related to United
States Steel.
2. On March 1, 2001, United States Steel completed the purchase of the tin
mill products business of LTV Corporation (LTV), which is now operated
as East Chicago Tin. In this noncash transaction, United States Steel
assumed approximately $66 million of certain employee related
obligations from LTV. The acquisition was accounted for using the
purchase method of accounting. Results of operations for the twelve
months of 2001 include the operations of East Chicago Tin from the date
of acquisition. In the fourth quarter of 2001, United States Steel
recorded an intangible asset impairment of $20 million, related to the
five-year agreement for LTV to supply United States Steel with pickled
hot bands entered into in conjunction with the acquisition of LTV's tin
mill products business.
On March 23, 2001, Transtar, Inc. (Transtar) completed its previously
announced reorganization with its two voting shareholders, United
States Steel and Transtar Holdings, L.P. (Holdings), an affiliate of
Blackstone Capital Partners L.P. As a result of this transaction,
United States Steel became sole owner of Transtar and certain of its
subsidiaries. Holdings became owner of the other subsidiaries of
Transtar. United States Steel accounted for the change in its
ownership interest in Transtar using the purchase method of accounting.
United States Steel recognized in the twelve months of 2001, a pretax
gain of $68 million (included in income (loss) from investees) and a
favorable deferred tax adjustment of $33 million related to this
transaction. United States Steel previously accounted for its
investment in Transtar under the equity method of accounting.
3. United States Steel has a 16% investment in Republic Technologies
International LLC (Republic) which was accounted for under the equity
method of accounting. During the first quarter of 2001, United States
Steel discontinued applying the equity method since investments in and
advances to Republic had been reduced to zero. Also, United States
Steel has recognized certain debt obligations of $14 million previously
assumed by Republic. On April 2, 2001, Republic filed a voluntary
petition with the U.S. Bankruptcy Court to reorganize its operations
under Chapter 11 of the U.S. Bankruptcy Code. In the first quarter of
2001, as a result of Republic's action, United States Steel recorded a
pretax charge of $74 million for potentially uncollectible receivables
from Republic. Due to further financial deterioration of Republic,
United States Steel recorded in the fourth quarter of 2001, a pretax
charge of $68 million related to a portion of the remaining Republic
receivables exposure and additional retiree medical cost reimbursements
owed by Republic.
4. The provision for income taxes in the fourth quarter of 2001 includes
a favorable adjustment of $9 million and the twelve months of 2001
includes an unfavorable adjustment of $6 million related to prior
years' taxes. Net interest and other financial costs in the twelve
months of 2001 includes a favorable adjustment of $67 million also
related to prior years' taxes.
5. On August 14, 2001, United States Steel announced its intention to
permanently close the cold rolling and tin mill operations at United
States Steel's Fairless Works. In 2001, United States Steel recorded a
pretax charge of $38 million relative to the shutdown.
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
Fourth Quarter Year
Ended Ended
December 31 December 31
(Dollars in millions) 2001 2000 2001 2000
INCOME (LOSS) FROM OPERATIONS
Domestic Steel(a) $(177) $(67) $(461) $103
U. S. Steel Kosice(b) 2 2 123 2
----- ----- ----- -----
Income (loss) from
Reportable Segments $(175) $(65) $(338) $105
Items not allocated to
segments:
Net Pension Credits(c) 36 67 146 266
Administrative Expenses (2) (7) (22) (25)
Costs related to former
business activities(d) (17) (28) (76) (91)
Special Items:
Asset Impairments - Coal(e) - (71) - (71)
Asset Impairments -
Receivables(f) (72) (34) (146) (34)
Asset Impairments -
Intangible Asset(g) (20) - (20) -
Costs related to
separation(h) (16) - (25) -
Costs related to
Fairless shutdown(i) (9) - (38) -
Costs related to Republic
restructuring(j) - - - (10)
Environmental and legal
contingencies(k) - (21) - (36)
Insurance recoveries
related to USS-POSCO
fire(l) 23 - 46 -
Gain on Transtar
reorganization(m) - - 68 -
----- ----- ----- -----
Total U. S. Steel $(252) $(159) $(405) $104
CAPITAL EXPENDITURES
Domestic Steel $60 $106 $226 $239
U. S. Steel Kosice 30 5 61 5
----- ----- ----- -----
Total U. S. Steel $90 $111 $287 $244
OPERATING STATISTICS
Average steel price: ($/net ton)
Domestic Steel $419 $459 $427 $450
U. S. Steel Kosice 251 269 260 269
Steel Shipments:(n)
Domestic Steel 2,204 2,315 9,801 10,756
U. S. Steel Kosice:(o) 873 317 3,714 317
----- ----- ----- -----
Total Steel Shipments 3,077 2,632 13,515 11,073
Raw Steel-Production:(n)
Domestic Steel 2,160 2,424 10,093 11,362
U. S. Steel Kosice 837 382 4,051 382
----- ----- ----- -----
Total Raw
Steel-Production 2,997 2,806 14,144 11,744
Raw Steel-Capability
Utilization:(p)
Domestic Steel 67.0% 75.3% 78.9% 88.8%
U. S. Steel Kosice 66.4% 79.9% 81.0% 79.9%
Iron ore shipments - Domestic
Steel(n) 3,319 4,215 14,913 15,020
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
(a) Includes the sale, domestic production and transportation of steel
products, coke, taconite pellets and coal; the management of mineral
resources; real estate development; engineering and consulting
services; and equity income from joint ventures and partially owned
companies.
(b) Includes the production and sale of steel products and coke from
facilities primarily located in the Slovak Republic.
(c) Excludes termination costs of $3 million and $14 million for fourth
quarter and year 2001, respectively, related to Fairless facilities
shutdown. Also, excludes $9 million for fourth quarter and year
2001 related to the Voluntary Early Retirement Program.
(d) Includes other postretirement benefit costs and certain other
expenses principally attributable to former business units of U. S.
Steel.
(e) Includes asset impairments at two coal mines.
(f) Fourth quarter and year 2001 include charges related to receivables
exposure from financially distressed steel companies, including
amounts related to a portion of the remaining Republic receivables
exposure and additional retiree medical cost reimbursements owed by
Republic as reported in a recent press release dated January 18,
2002. Year 2001 also includes an earlier $74 million charge for
Republic receivables. Fourth quarter and year 2000 include
$34 million to establish reserves against notes and receivables from
financially distressed steel companies.
(g) Impairment of an intangible asset related to the five-year agreement
for LTV to supply U. S. Steel with pickled hot bands entered into in
conjunction with the acquisition of LTV's tin mill products business
as reported in a recent press release dated January 18, 2002.
(h) For fourth quarter and year 2001, includes $5 million of
professional fees and expenses and certain other costs related to
the separation of U. S. Steel from Marathon, and $11 million related
to the Voluntary Early Retirement Program. Year 2001 also includes
$9 million of professional fees and expenses and certain other costs
related to the separation of U. S. Steel from Marathon.
(i) Includes costs related to the shutdown of the cold rolling and tin
mill facilities at Fairless Works.
(j) U. S. Steel's share of Republic special charges due to
restructuring.
(k) Fourth quarter and year 2000 include $21 million for environmental
accruals. Year 2000 also includes $15 million for certain other
environmental and legal accruals.
(l) U. S. Steel's share of insurance recoveries in excess of facility
repair costs for the cold mill fire at USS-POSCO.
(m) U. S. Steel's share of the gain on the Transtar reorganization.
(n) Thousands of net tons.
(o) U. S. Steel Kosice's prior quarter shipments have been revised for
2001 as follows: First Quarter - 753; Second Quarter - 1,071; and
Third Quarter - 1,017. All shipments are in thousands of net tons.
(p) Based on annual raw steel production capability of 12.8 million tons
for Domestic Steel and 5.0 million tons for U. S. Steel Kosice.
SOURCE: United States Steel Corporation Contact: Mike Dixon or John Armstrong, +1-412-433-6870, both of United Website: http://www.ussteel.com/ Company News On-Call: http://www.prnewswire.com/gh/cnoc/comp/929150.html |
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