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United States Steel Corporation Reports 2008 Second Quarter ResultsPRNewswire-FirstCall PITTSBURGH, July 29 /PRNewswire-FirstCall/ -- -----------------------------------------------------------------------
Earnings Highlights
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(Dollars in millions except
per share data) 2Q 2008 1Q 2008 2Q 2007
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Net sales $6,744 $5,196 $4,228
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Segment income from operations
Flat-rolled $478 $120 $92
U. S. Steel Europe 298 161 244
Tubular 177 51 97
Other Businesses 6 (5) 1
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Total segment income from operations $959 $327 $434
Retiree benefit expenses 1 1 (43)
Other items not allocated to segments (6) (62) -
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Income from operations $954 $266 $391
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Net interest and other financial costs 25 (32) 34
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Income tax provision 255 58 53
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Net income $668 $235 $302
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- Per basic share $5.69 $2.00 $2.55
- Per diluted share $5.65 $1.98 $2.54
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United States Steel Corporation (NYSE: X) reported second quarter 2008 net income of $668 million, or $5.65 per diluted share, compared to first quarter 2008 net income of $235 million, or $1.98 per diluted share, and second quarter 2007 net income of $302 million, or $2.54 per diluted share. Commenting on results, U. S. Steel Chairman and CEO John P. Surma said, "We recorded the highest quarterly sales and net income in U. S. Steel's history during the second quarter as all three reportable segments posted record results, reflecting strong operating performance and favorable global pricing dynamics." Second quarter 2008 income from operations of $954 million more than tripled our first quarter 2008 income of $266 million and more than doubled our last year's second quarter income of $391 million. 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. Other items not allocated to segments in the first quarter of 2008 reduced net income by $45 million, or 38 cents per diluted share. 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 debt, which reduced net income by $14 million, or 12 cents per diluted share. Foreign currency effects related to the remeasurement of a U.S. dollar- denominated intercompany loan to a European affiliate were largely offset by euro-U.S. dollar derivatives activity during the second quarter. This compares to a foreign currency gain of $70 million, or 59 cents per diluted share, for these items in the first quarter of 2008. At June 30, 2008, U. S. Steel had open euro-U.S. dollar forward sales contracts with a total notional value of approximately $614 million. In early July, the outstanding balance on the intercompany loan was reduced from $1.1 billion to $836 million. We repurchased 320,000 shares of common stock for $52 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 $959 million, or $136 per ton, in the second quarter of 2008, compared with $327 million, or $48 per ton, in the first quarter of 2008 and $434 million, or $79 per ton, in the second quarter of 2007. The significant increases in results for all three reportable segments resulted primarily from substantial price increases, which outpaced increases in raw materials costs. Shipments for all segments were also at record levels for the quarter as strong operating results were achieved. Raw steel capability utilization, up slightly from the first quarter, was 92.7 percent in North America, including 101.1 percent for our Canadian operations, and 104.3 percent in Europe. Outlook Commenting on U. S. Steel's outlook for the third quarter, Surma said, "We expect another excellent quarter with continued earnings improvement as price increases implemented during the second quarter and early in the third quarter are expected to improve average realized prices for each of our reportable segments." For Flat-rolled, third quarter results are expected to improve substantially from the second quarter, reflecting continued realization of price increases. Raw steel capability utilization and shipments are expected to remain near second quarter levels, and raw materials costs are expected to increase. Third quarter results are expected to decrease for U. S. Steel Europe (USSE). While average realized prices should be higher, raw materials costs are also expected to increase, and shipments and operating costs will be negatively affected by a planned blast furnace reline at U. S. Steel Kosice that is scheduled to begin shortly and continue into the fourth quarter. Third quarter results for Tubular are expected to increase significantly as price increases continue to be realized. Semi-finished steel costs will increase and shipments are expected to be at about the second quarter level. We are currently negotiating with the United Steelworkers for a replacement of the agreement covering most of our domestic operations. We expect to have the new agreement in place before the September 1 expiration of the current agreement. 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 North American 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 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 replacement 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 second quarter earnings on Tuesday, July 29, 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 Six Months Ended
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June 30 Mar. 31 June 30 June 30
(Dollars in millions) 2008 2008 2007 2008 2007
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NET SALES $6,744 $5,196 $4,228 $11,940 $7,984
OPERATING EXPENSES (INCOME):
Cost of sales (excludes
items shown below) 5,497 4,643 3,595 10,140 6,774
Selling, general and
administrative expenses 171 142 138 313 277
Depreciation, depletion
and amortization 159 156 118 315 229
Income from investees (34) (7) (10) (41) (12)
Net gains on disposal
of assets (1) (1) (3) (2) (13)
Other income, net (2) (3) (1) (5) (8)
----- ----- ----- ----- -----
Total operating
expenses 5,790 4,930 3,837 10,720 7,247
----- ----- ----- ----- -----
INCOME FROM OPERATIONS 954 266 391 1,220 737
Net interest and other
financial costs 25 (32) 34 (7) 39
----- ----- ----- ----- -----
INCOME BEFORE INCOME TAXES
AND MINORITY INTERESTS 929 298 357 1,227 698
Income tax provision 255 58 53 313 119
Minority interests 6 5 2 11 4
----- ----- ----- ----- -----
NET INCOME $668 $235 $302 $903 $575
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COMMON STOCK DATA:
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Net income per share:
- Basic $5.69 $2.00 $2.55 $7.68 $4.86
- Diluted $5.65 $1.98 $2.54 $7.64 $4.83
Weighted average shares,
in thousands
- Basic 117,507 117,595 118,221 117,551 118,232
- Diluted 118,217 118,405 118,891 118,190 118,920
Dividends paid per
common share $.25 $.25 $.20 $.50 $.40
UNITED STATES STEEL CORPORATION
CASH FLOW STATEMENT (Unaudited)
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Six Months Ended
June 30
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(Dollars in millions) 2008 2007
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Cash provided from operating activities:
Net income $903 $575
Depreciation, depletion and amortization 315 229
Pensions and other postretirement benefits (216) (85)
Deferred income taxes 97 49
Net gains on disposal of assets (2) (13)
Changes in: Current receivables (1,053) (297)
Inventories (292) 108
Current accounts payable and
accrued expenses 798 229
Bank checks outstanding (5) 63
Other operating activities (82) (2)
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Total 463 856
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Cash used in investing activities:
Capital expenditures (340) (250)
Acquisition of Lone Star Technologies, Inc. - (1,990)
Acquisition of Stelco Inc. (1) -
Disposal of assets 7 18
Other investing activities (16) (1)
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Total (350) (2,223)
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Cash (used in) provided from financing activities:
Issuance of long-term debt - 1,583
Repayment of long-term debt (36) (449)
Common stock issued 11 15
Common stock repurchased (85) (58)
Dividends paid (59) (47)
Other financing activities 34 1
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Total (135) 1,045
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Effect of exchange rate changes on cash 12 3
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Net increase (decrease) in cash and cash equivalents (10) (319)
Cash at beginning of the year 401 1,422
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Cash at end of the period $391 $1,103
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UNITED STATES STEEL CORPORATION
CONDENSED BALANCE SHEET (Unaudited)
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June 30 Dec. 31
(Dollars in millions) 2008 2007
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Cash and cash equivalents $391 $401
Receivables, net 3,183 2,077
Inventories 2,593 2,279
Other current assets 202 202
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Total current assets 6,369 4,959
Property, plant and equipment, net 6,890 6,688
Investments and long-term receivables, net 770 694
Pension asset 871 734
Goodwill and intangible assets, net 1,992 2,131
Other assets 415 426
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Total assets $17,307 $15,632
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Accounts payable $2,357 $1,730
Payroll and benefits payable 1,040 995
Short-term debt and current maturities
of long-term debt 110 110
Other current liabilities 366 168
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Total current liabilities 3,873 3,003
Long-term debt, less unamortized discount 3,110 3,147
Employee benefits 3,016 3,187
Other long-term liabilities and
minority interests 899 764
Stockholders' equity 6,409 5,531
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Total liabilities and stockholders' equity $17,307 $15,632
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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) 2008 2008 2007 2008 2007
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INCOME FROM OPERATIONS
Flat-rolled(a) $478 $120 $92 $598 $167
U. S. Steel Europe 298 161 244 459 450
Tubular(b) 177 51 97 228 199
Other Businesses(c) 6 (5) 1 1 3
----- ----- ----- ----- -----
Segment Income from Operations 959 327 434 1,286 819
Retiree benefit expenses(d) 1 1 (43) 2 (82)
Other items not allocated to
segments:
Flat-rolled inventory
transition effects (6) (17) - (23) -
Litigation reserve - (45) - (45) -
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Total Income from
Operations $954 $266 $391 $1,220 $737
CAPITAL EXPENDITURES
Flat-rolled(a) $145 $83 $69 $228 $119
U. S. Steel Europe 49 32 47 81 77
Tubular(b) 5 4 1 9 3
Other Businesses(c) 14 8 25 22 51
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Total $213 $127 $142 $340 $250
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(a) Includes the results of the businesses acquired from Stelco Inc. as
of October 31, 2007, excluding the iron ore and real estate
interests.
(b) Includes the results of the businesses acquired from Lone Star
Technologies, Inc. as of June 14, 2007.
(c) Includes the results of the iron ore and real estate interests
acquired from Stelco Inc. as of October 31, 2007.
(d) The second quarter and first six months of 2007 include certain
profit-based expenses for former National employees pursuant to
provisions of the 2003 labor agreement with the United Steelworkers.
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
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Quarter Ended Six Months Ended
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June 30 Mar. 31 June 30 June 30
(Dollars in millions) 2008 2008 2007 2008 2007
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OPERATING STATISTICS
Average realized price:
($/net ton)(a)
Flat-rolled(b) 777 646 652 713 651
U. S. Steel Europe 986 791 726 890 697
Tubular(c) 1,690 1,297 1,389 1,508 1,410
Steel Shipments:(a)(d)
Flat-rolled(b) 4,849 4,701 3,599 9,550 6,787
U. S. Steel Europe 1,696 1,638 1,616 3,334 3,268
Tubular(c) 500 433 288 933 535
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Total Steel Shipments 7,045 6,772 5,503 13,817 10,590
Intersegment Shipments:(d)
Flat-rolled to Tubular 472 445 164 917 338
Raw Steel-Production:(d)
North American
facilities(b) 5,614 5,558 4,116 11,172 7,829
U. S. Steel Europe 1,925 1,908 1,865 3,833 3,664
Raw Steel-Capability
Utilization:(e)
North American
facilities(b) 92.7% 91.7% 85.1% 92.2% 81.4%
U. S. Steel Europe 104.3% 103.4% 100.8% 103.9% 99.5%
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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.
(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, Web site: http://www.ussteel.com/ Company News On-Call: http://www.prnewswire.com/comp/929150.html |
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