Exhibit 99.1
International Steel Group Reports Strong Third-Quarter
and Nine Months Results
* Third-quarter net income rises to $ 256.4 million or $2.51 per diluted
share
* Net income improves 172% over second quarter 2004 as average sales
per ton shipped continues to improve on strong market conditions
* ISG separately announces merger agreement with Ispat International
N.V. to form world's largest steel company, Mittal Steel.
RICHFIELD, Ohio, Oct. 25 /PRNewswire-FirstCall/ --
Results Summary
(dollars in millions, except per share and ton data)
Second Nine Months Ended
Quarter Third Quarter September
2004 2004 2003 2004 2003
Shipments (000 tons) 3,814 4,039 2,916 11,715 6,905
Net sales $2,083.8 $2,608.3 $1,184.9 $6,462.4 $2,651.7
Average net sales per
ton shipped $546 $646 $406 $552 $384
Operating income (loss) 129.5 340.4 (15.6) 556.4 (49.7)
Operating income (loss)
per ton shipped 34 84 (5) 47 (7)
Net income (loss) 94.1 256.4 (18.6) 421.4 (48.4)
Diluted EPS $0.92 $2.51 $(0.24) $4.15 $(0.67)
Average diluted shares
outstanding (000) 102,266 102,217 69,687 101,761 69,671
International Steel Group Inc. (NYSE: ISG) today reported third quarter
2004 net income of $256.4 million, or $2.51 per diluted share, and net income
of $421.4 million, or $4.15 per diluted share, for the nine months ended
September 30, 2004. Separately, this morning, ISG announced it has entered
into a merger agreement with Ispat International N.V., a transaction that will
create the largest steel company in the world. ISG's and [Mittal Steel's]
joint conference call on this transaction, the dial in and web cast details
are listed at the end of the news release, to be held at 9:00 AM Eastern time
today, Monday, October 25, 2004.
Comparisons to 2003 are not meaningful because the acquisition of
Bethlehem Steel Corporation's assets in May 2003 more than doubled the size of
ISG and significantly improved its product and customer mix.
Third quarter 2004 net income of $256.4 million was 172% higher than the
$94.1 million in the second quarter 2004. Net sales were $2,608.3 million in
the third quarter, an increase of $524.5 million, or 25%, from the second
quarter 2004. Shipments increased to 4,039,000 tons in the third quarter from
3,814,000 tons shipped in the second quarter as a result of our recent
acquisitions. The average sales per ton shipped increased to $646 in the
third quarter 2004 from $546 in the second quarter.
Operating income improved by about 163% from $129.5 million, $34 per ton
shipped, in the second quarter 2004 to $340.4 million, $84 per ton shipped, in
the third quarter 2004.
The tables below show shipments by product and certain other data for the
periods shown.
Actual
Second Nine Months Ended
Quarter Third Quarter September
2004 2004 2003 2004 2003
Shipments
Hot Rolled 41% 42% 41% 42% 48%
Cold Rolled 19 18 18 19 19
Coated 22 21 22 21 19
Plate 10 9 11 10 8
Tin Plate 5 6 4 5 3
Rail and other 3 4 4 3 3
100% 100% 100% 100% 100%
Net sales
(dollars in
millions) $ 2,083.8 $2,608.3 $ 1,184.9 $ 6,462.4 $ 2,651.7
Average net
sales per
ton shipped $546 $ 646 $406 $552 $384
Shipments
(tons in
thousands) 3,814 4,039 2,916 11,715 6,905
Raw steel
production
(tons in
thousands) 4,333 4,718 3,189 13,099 7,131
Net income (loss)
(dollars in
millions) $94.1 $256.4 $(18.6) $421.4 $(48.4)
Diluted income
(loss) per
common share $0.92 $2.51 $(0.24) $4.15 $(0.67)
Pro forma*
Second Nine Months Ended
Quarter Third Quarter September
2004 2004 2003 2004 2003
Shipments
Hot Rolled 43% 42% 40% 42% 41%
Cold Rolled 18 18 16 18 17
Coated 21 21 22 21 21
Plate 9 9 9 9 8
Tin Plate 6 6 10 7 9
Rail and other 3 4 3 3 4
100% 100% 100% 100% 100%
Net sales
(dollars in
millions) $2,243.9 $2,608.3 $ 1,456.2 $ 6,919.1 $4,664.7
Average net
sales per
ton shipped $ 551 $ 646 $411 $551 $ 413
Shipments
(tons in
thousands) 4,071 4,039 3,542 12,568 11,283
Raw steel
production
(tons in
thousands) 4,557 4,718 3,861 13,809 12,023
Net income
(loss)
(dollars in
millions) $119.4 $256.4 $(9.5) $436.3 $44.9
Diluted income
(loss) per
common share $1.17 $2.51 $(0.09) $4.29 $0.46
* Pro forma information reflects the acquisitions of the Bethlehem and
Weirton assets as if they had occurred on January 1, 2003.
Cost of Sales
Cost of sales for the third quarter improved to 83% of sales compared to
89% in the second quarter. Variable compensation, including profit sharing
for all employees, production bonuses and contributions to the United
Steelworkers of America (USWA) VEBA trust based on profits, totaled about
$42 per ton shipped in the third quarter compared to about $15 per ton shipped
in the second quarter. Raw material costs for iron ore, scrap and alloys were
also higher in the third quarter while coke costs declined. Our LIFO
provision was $24 million for the third quarter principally as total costs for
all items in our single pool increased slightly. Costs per ton also increased
during the third quarter due to a higher cost product mix as a result of the
Weirton acquisition and the start up of the Georgetown operation. Weirton was
acquired in May 2004 while Georgetown was acquired in June 2004.
Estimated Effective Tax Rate
Because we have previously recorded a full valuation allowance for our net
deferred tax asset, our provision for income taxes will typically reflect the
amounts that we expect to pay or recover for the year until we reduce the
valuation allowance. Our strong results in the third quarter and expected
performance in the fourth quarter caused the effective tax rate for the third
quarter 2004 to approximate 21.5% in order to bring the nine months ended
September 30, 2004 effective tax rate to the 17% estimated full year rate
compared to the 9% rate in the first half of 2004.
Liquidity and Cash Flow from Operations
We define liquidity as our cash position and remaining availability under
our revolving credit facility. At September 30, 2004, we had liquidity of
$828.4 million consisting of cash of $603.7 million and available borrowing
capacity of $224.7 million under our revolving credit facility. As of
December 31, 2003, we had liquidity of $432.7 million.
Cash provided by operating activities for the third quarter 2004 was
$358.8 and nine months ended 2004 was $568.7 million.
Capital Expenditures
We made capital expenditures and other investments of $150.7 million
during 2004 and anticipate making total capital expenditures for the year 2004
of about $250 to $275 million as we improve the caster at Burns Harbor during
the fourth quarter 2004. Proceeds from asset sales were $16.1 million in the
nine months ended September 2004 and we expect an additional $11 million in
the fourth quarter of 2004.
Outlook for the Fourth Quarter 2004
During the fourth quarter, at Burns Harbor, we plan a fourteen-day blast
furnace and a 45-day caster outage to improve quality and productivity. At
Weirton, there is a planned nine-day blast furnace/caster outage as well as a
fifteen-day maintenance outage at the hot strip mill. We expect, however,
shipments and prices to remain about the same in the fourth quarter as in the
third quarter.
Conference Call
A webcast presentation will be accessible live at 9:00 AM Eastern
Time/2:00 PM London Time. You may access the live presentation at
http://www.mittalco.com or http://www.intlsteel.com. The conference call can
be accessed by dialing (800) 599-9829 in the United States, or
+011 (617) 847-8703 internationally. Please ask to be connected to the
Ispat/LNM/ISG conference call.
A replay of the webcast and the conference call will be available from
12:00 PM Eastern Time/5:00 PM London Time on October 25, 2004 through Noon
Eastern Time/5:00 PM London Time on November 8, 2004. You may access the
webcast replay at http://www.mittalco.com or http://www.intlsteel.com. A
replay of the conference can be accessed by dialing (888) 286-8010 in the U.S.
and + 011 (617) 801-6888 from other countries. The replay passcode is
42562223.
If you have any questions regarding the webcast or conference call, please
contact Paula Chirhart of The Abernathy MacGregor Group at 212-371-5999.
Because of the above scheduled conference call, ISG is canceling its
conference call that had been scheduled for 11:00 AM Eastern time Wednesday,
October 27, 2004.
About International Steel Group Inc.
International Steel Group Inc. is one of the largest steel producers in
North America. It produces a variety of steel products including hot-rolled,
cold-rolled and coated sheets, tin mill products, carbon and alloy plates,
wire rod and rail products and semi-finished shapes to serve the automotive,
construction, pipe and tube, appliance, container and machinery markets. For
additional information on ISG, visit http://www.intlsteel.com.
Forward-Looking Statements
Statements in this release that are not historical facts, including
statements accompanied by words such as "will," "believe," "expect,"
"estimate," or similar terms, are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve risks and uncertainties that may cause
actual results or events to differ materially from those expressed or implied
in such statements. These statements contain time-sensitive information that
reflects management's best analysis only as of the date of this release. ISG
does not undertake any ongoing obligation, other than that imposed by law, to
publicly update or revise any forward-looking statements to reflect future
events, information or circumstances that arise after the date of this
release. Factors that may cause actual results and performance to differ
materially from those in the forward-looking statements include, but are not
limited to, negative overall economic conditions or conditions in the markets
served; competition within the steel industry; changes in U.S. or foreign
trade policy affecting steel imports or exports; changes in foreign currencies
affecting the strength of the U.S. dollar; actions by domestic and foreign
competitors; the inability to achieve the Company's anticipated growth
objectives; changes in availability or cost of raw materials, energy or other
supplies; labor issues affecting the Company's workforce or the steel industry
generally; and the inability to implement the Company's operating culture and
philosophy at acquired facilities. Further information concerning issues that
could materially affect financial performance related to forward-looking
statements can be found in ISG's filings with the Securities and Exchange
Commission.
International Steel Group Inc.
Consolidated Statements of Operations (unaudited)
(dollars in millions, except per share and per ton data)
Second Nine Months Ended
Quarter Third Quarter September
2004 2004 2003 2004 2003
Net sales $2,083.8 $2,608.3 $1,184.9 $6,462.4 $2,651.7
Costs and expenses:
Cost of sales 1,862.4 2,171.0 1,125.3 5,633.2 2,559.2
Marketing,
administrative and
other expenses 59.4 59.9 52.9 174.5 96.7
Depreciation and
amortization 32.5 37.0 22.3 98.3 45.5
Total costs and expenses 1,954.3 2,267.9 1,200.5 5,906.0 2,701.4
Operating income (loss) 129.5 340.4 (15.6) 556.4 (49.7)
Interest and other financing
expense, net 24.5 13.2 15.2 48.1 30.7
Income before taxes on
income 105.0 327.2 (30.8) 508.3 (80.4)
Provision (benefit) for
income taxes 10.9 70.8 (12.2) 86.9 (32.0)
Net income (loss) $94.1 $256.4 $(18.6) $421.4 $(48.4)
Income (loss) per share
Basic $0.96 $2.59 $(0.24) $4.29 $(0.67)
Diluted $0.92 $2.51 $(0.24) $4.15 $(0.67)
Other information:
Shipments (tons in
thousands) 3,814 4,039 2,916 11,715 6,905
Raw steel production
(tons in thousands) 4,333 4,718 3,189 13,099 7,131
Operating income
(loss) per ton shipped $34 $84 $(5) $47 $(7)
Average sales per ton
shipped $546 $646 $406 $552 $384
International Steel Group Inc.
Consolidated Balance Sheets
(dollars in millions)
September 30, December 31,
Assets 2004 2003
Current assets: (unaudited)
Cash and cash equivalents $603.7 $193.6
Receivables 913.5 553.9
Inventories 1,126.2 866.8
Assets held for sale 48.3 68.6
Prepaid and other current assets 75.5 24.5
Total current assets 2,767.2 1,707.4
Property, plant and equipment, at cost 1,206.5 948.3
Less: accumulated depreciation and amortization (184.0) (86.4)
Property, plant and equipment, net 1,022.5 861.9
Investments in joint ventures 35.1 27.0
Other assets 96.3 38.7
Total assets $3,921.1 $2,635.0
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of debt and capital leases $55.5 $46.8
Accounts payable 712.0 427.9
Accrued compensation and benefits 337.4 212.9
Other current liabilities 299.0 143.9
Total current liabilities 1,403.9 831.5
Long term liabilities:
Debt 637.6 362.8
Capital leases 174.8 212.7
Accrued environmental 174.7 161.2
Pensions and other retiree benefits 120.9 101.0
Other obligations 11.7 16.6
Total liabilities 2,523.6 1,685.8
Stockholders' equity:
Preferred stock -- --
Common stock 1.0 1.0
Additional paid-in-capital 1,014.3 972.2
Retained earnings (deficit) 392.4 (29.0)
Accumulated other comprehensive income 9.4 5.0
Treasury stock, at cost (19.6) --
Total stockholders' equity 1,397.5 949.2
Total liabilities and stockholders'
equity $3,921.1 $2,635.0
International Steel Group Inc.
Consolidated Statements of Cash Flows (unaudited)
(dollars in millions)
Nine months ended September
2004 2003
Cash flows from operating activities:
Net income (loss) $421.4 $(48.4)
Adjustments for items not affecting
cash from operating activities
Depreciation and amortization 98.3 45.5
Deferred income taxes (36.6) --
Other 10.5 55.3
Changes in working capital and
other items:
Receivables (271.7) (8.5)
Inventories (173.1) 136.7
Prepaids and other current assets (32.0) (21.1)
Accounts payable 243.8 19.2
Income taxes 164.3 (32.0)
Accrued compensation and benefits 103.4 39.6
Other 40.4 38.2
Net cash provided by operating
activities 568.7 224.5
Cash flows from investing activities:
Capital expenditures and investments (150.7) (59.0)
Acquisitions, net of cash received (222.1) (850.9)
Proceeds from asset sales 16.1 23.1
Net cash used in investing activities (356.7) (886.8)
Cash flows from financing activities:
Borrowings under revolving credit facility -- 881.6
Payments under revolving credit facility -- (937.3)
Proceeds from debt 594.6 710.0
Payments on debt (347.8) (88.6)
Payments on capital leases (27.0) (2.9)
Issuance of common stock, net 9.6 156.9
Purchase of treasury stock (19.6) --
Deferred financing fees (11.7) (18.9)
Net cash provided by financing
activities 198.1 700.8
Increase in cash and cash equivalents 410.1 38.5
Cash and cash equivalents - beginning of period 193.6 9.8
Cash and cash equivalents - end of period $603.7 $48.3
Other information:
Interest paid $16.9 $13.0
Interest capitalized 0.6 0.4
Income taxes (received) paid (40.7) 29.3
Capital lease obligation incurred 3.9 --
SOURCE International Steel Group Inc.
-0- 10/25/2004
/CONTACT: Blaise Derrico, Manager, Investor Relations of International
Steel Group Inc., +1-330-659-9100/
/Web site: http://www.intlsteel.com /
(ISG)
CO: International Steel Group Inc.; Ispat International N.V.; Mittal Steel
ST: Ohio
IN: MNG
SU: ERN CCA TNM