Exhibit 99.1
UNITED STATES STEEL CORPORATION REPORTS STRONG 2005 FIRST QUARTER RESULTS
PITTSBURGH, April 26 /PRNewswire-FirstCall/ --
Earnings Highlights
(Dollars in millions except per share data)
1Q 2005 4Q 2004 1Q 2004
-------- -------- --------
Net sales $ 3,761 $ 3,890 $ 2,924
Segment income from operations
Flat-rolled Products $ 335 $ 375 $ 113
U. S. Steel Europe 212 132 40
Tubular Products 122 114 3
Other Businesses (17) 27 6
Total segment income from operations $ 652 $ 648 $ 162
Retiree benefit expenses (83) (76) (44)
Other items not allocated to segments 71 (25) 33
Income from operations $ 640 $ 547 $ 151
Net interest and other financial costs (income) 22 (23) 52
Income tax provision 155 88 51
Net income $ 455 $ 468 $ 58
- Per basic share $ 3.95 $ 4.07 $ 0.51
- Per diluted share $ 3.48 $ 3.59 $ 0.47
United States Steel Corporation (NYSE: X) reported first quarter 2005 net
income of $455 million, or $3.48 per diluted share, compared to fourth quarter
2004 net income of $468 million, or $3.59 per diluted share, and first quarter
2004 net income of $58 million, or 47 cents per diluted share.
Commenting on results, U. S. Steel President and CEO John P. Surma said,
"We had another excellent quarter as our plants and our people performed well.
First quarter results reflected a dramatic improvement over the same period last
year as our European and Tubular segments posted record income, and our balanced
North American raw materials position bolstered our domestic performance. We
continued to generate substantial cash and in March we further strengthened our
balance sheet with an additional voluntary contribution of $130 million to our
main domestic defined benefit pension plan."
The company reported first quarter 2005 income from operations of $640
million, compared with income from operations of $547 million in the fourth
quarter of 2004 and $151 million in the first quarter of 2004.
First quarter 2005 results included a pre-tax gain of $95 million from the
previously disclosed settlement agreement relating to property tax disputes in
Gary, Indiana. This favorable effect and other items not allocated to segments
increased first quarter 2005 net income by $58 million, or 45 cents per diluted
share. Certain income tax benefits totaling $30 million and other items not
allocated to segments increased net income in fourth quarter 2004 by $14
million, or 10 cents per diluted share. An income tax charge related to
settlement of a dispute regarding tax benefits for U. S. Steel Kosice (USSK) and
other items not allocated to segments reduced first quarter 2004 net income by
$10 million, or eight cents per diluted share.
Net interest and other financial costs of $22 million in the first quarter
of 2005 included a favorable adjustment of $25 million, which is included in the
previously mentioned $95 million pre-tax gain from the Gary Works property tax
settlement, and a foreign currency translation loss of $27 million. Net interest
and other financial income of $23 million in the fourth quarter of 2004 included
a foreign currency translation gain of $46 million, which exceeded ongoing
interest expense.
Reportable Segments and Other Businesses
Management uses segment income from operations to evaluate company
performance because it believes this to be a key measure of ongoing operating
results. In the first quarter of 2005, U. S. Steel eliminated the Real Estate
segment, the results of which are now included in Other Businesses. U. S.
Steel's reportable segments and Other Businesses reported segment income from
operations of $652 million, or $127 per ton, in the first quarter of 2005,
compared with $648 million, or $120 per ton, in the fourth quarter of 2004 and
$162 million, or $29 per ton, in the first quarter of 2004.
First quarter 2005 segment results were slightly improved from fourth
quarter 2004. The decrease in Flat-rolled income reflected contract price
increases that were more than offset by lower Flat-rolled shipments and higher
coke production costs related to increased coal costs and coal delivery
disruptions. The substantial improvement in European operating results
compared to the fourth quarter was due primarily to increased prices coupled
with improved operating costs, as operating costs in the fourth quarter of
2004 included the negative impact of a refinement of inventory accounting
policies. These favorable items were partially offset by higher costs for raw
materials and lower shipment volumes. Results for Other Businesses declined
mainly due to seasonal and production mix effects at iron ore operations in
Minnesota.
Outlook
Commenting on expectations for 2005, Surma said, "With a strong first
quarter behind us, we anticipate another very profitable year with significant
contributions from all of our business segments."
For Flat-rolled, second quarter 2005 average realized prices are expected
to decline somewhat compared to the first quarter based on recent spot market
price trends, while shipments should remain in line with the first quarter
level. Flat-rolled costs in the second quarter are also expected to remain in
line with the first quarter despite planned outages on three blast furnaces,
preparatory costs related to the third quarter rebuild of our largest blast
furnace at Gary Works, and the impact of an unplanned outage by the third-
party oxygen supplier for the Mon Valley Works, which began in late March.
For full-year 2005, Flat-rolled shipments are expected to be about 14.5
million tons.
For U.S. Steel Europe (USSE), second quarter average realized prices are
expected to be generally in line with the first quarter of 2005. Shipments
should be moderately improved, but segment results are expected to decline
primarily due to higher costs for raw materials. USSE shipments for full-year
2005 are projected to be approximately 5.8 million net tons, reflecting expected
higher operating and shipment levels in Serbia following the planned mid-year
startup of the second blast furnace.
Shipments for the Tubular segment in second quarter 2005 are expected to
be lower than first quarter levels due mainly to a planned outage at Lorain
Pipe Mills. Average realized prices should improve moderately and tube round
costs will increase. During the first quarter of 2005, prices of metallic
additions used to produce tube rounds increased dramatically. Accordingly,
the transfer price for tube rounds supplied by Flat-rolled, which was
established at the beginning of 2005 based on projected costs, was increased
by $53 per ton effective April 1, 2005. Full-year shipments for Tubular are
expected to be approximately 1.2 million tons.
Second quarter 2005 results for Other Businesses will improve compared to
the first quarter of 2005, which was negatively affected by normal seasonal
effects at iron ore operations in Minnesota.
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 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 including blast furnace
outages; the timing of resumption of normal operations by the Mon Valley
Works' oxygen supplier; natural gas and electricity prices and usage; raw
materials 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 short-term contract and spot prices of steel products; changes in
environmental, tax and other laws; employee strikes; 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 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, 2004,
and in subsequent filings for U. S. Steel.
A Statement of Operations (Unaudited), Other Financial Data (Unaudited)
and Preliminary Supplemental Statistics (Unaudited) for U. S. Steel are
attached.
The company will conduct a conference call on first quarter earnings on
Tuesday, April 26, 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)
Quarter Ended
--------------------------------
March 31 Dec. 31 March 31
(Dollars in millions) 2005 2004 2004
- -------------------------------------------------- -------- -------- --------
NET SALES(a): $ 3,761 $ 3,890 $ 2,924
OPERATING EXPENSES (INCOME)(a):
Cost of sales (excludes
items shown below) 2,873 3,072 2,552
Selling, general and
administrative expenses 169 218 180
Depreciation, depletion and
amortization 98 95 98
Income from investees (13) (20) (6)
Net gains on disposal of assets (4) (11) (42)
Other income, net (2) (11) (9)
-------- -------- --------
Total operating expenses 3,121 3,343 2,773
-------- -------- --------
INCOME FROM OPERATIONS 640 547 151
Net interest and other
financial costs (income) 22 (23) 52
-------- -------- --------
INCOME BEFORE INCOME TAXES,
MINORITY INTERESTS AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE 618 570 99
Income tax provision 155 88 51
Minority interests 8 14 4
-------- -------- --------
INCOME BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 455 468 44
Cumulative effect of
change in accounting
principle, net of tax - - 14
-------- -------- --------
NET INCOME 455 468 58
Dividends on preferred stock (4) (5) (4)
-------- -------- --------
NET INCOME APPLICABLE TO
COMMON STOCK $ 451 $ 463 $ 54
======== ======== ========
(a) This presentation reflects income from investees, net gains on
disposal of assets and other income as part of operating expenses
rather than as part of revenue and other income (now referred to as
net sales). This change from prior reports was made so that U. S.
Steel's Statement of Operations is more comparable to those of
competitors and other manufacturing companies.
UNITED STATES STEEL CORPORATION
STATEMENT OF OPERATIONS (Unaudited)
(Continued)
Quarter Ended
--------------------------------
March 31 Dec. 31 March 31
COMMON STOCK DATA: 2005 2004 2004
- -------------------------------------------------- -------- -------- --------
Per share:
Income before cumulative
effect of change in
accounting principle:
-Basic $ 3.95 $ 4.07 $ .38
-Diluted $ 3.48 $ 3.59 $ .36
Cumulative effect of
change in accounting
Principle, net of tax:
-Basic $ - $ - $ .13
-Diluted $ - $ - $ .11
Net income:
-Basic $ 3.95 $ 4.07 $ .51
-Diluted $ 3.48 $ 3.59 $ .47
Weighted average shares,
in thousands
-Basic 114,169 113,853 106,653
-Diluted 130,830 130,322 123,254
Dividends paid per common share $ .08 $ .05 $ .05
UNITED STATES STEEL CORPORATION
OTHER FINANCIAL DATA (Unaudited)
Quarter Ended
March 31
--------------------
Cash Flow Data (In millions) 2005 2004
- -------------------------------------------------------- -------- --------
Cash provided by operating activities:
Net income (loss) $ 455 $ 58
Depreciation, depletion and amortization 98 98
Pensions and other postretirement benefits (113) 58
Property tax settlement gain (95) --
Working capital changes (160) (24)
Other operating activities 111 (84)
-------- --------
Total 296 106
-------- --------
Cash (used in) provided by investing activities:
Capital expenditures (122) (70)
Disposal of assets 3 73
Other investing activities (1) 4
-------- --------
Total (120) 7
-------- --------
Cash (used in) provided by financing activities:
Repayment of long-term debt -- (2)
Common stock issued 6 339
Dividends paid (13) (9)
Change in bank checks outstanding (51) (2)
Other financing activities (8) 9
-------- --------
Total (66) 335
-------- --------
Total net cash flow 110 448
Cash and cash equivalents at
beginning of the year 1,037 316
-------- --------
Cash and cash equivalents at end of the period $ 1,147 $ 764
======== ========
March 31 Dec. 31
Balance Sheet Data (In millions) 2005 2004
- -------------------------------------------------------- -------- --------
Cash and cash equivalents $ 1,147 $ 1,037
Other current assets 3,405 3,206
Property, plant and equipment - net 3,651 3,627
Prepaid pensions 2,483 2,538
Other assets 543 548
-------- --------
Total assets $ 11,229 $ 10,956
======== ========
Current liabilities $ 2,324 $ 2,531
Long-term debt 1,362 1,363
Employee benefits 2,106 2,125
Other long-term liabilities 987 939
Minority interests 30 28
Stockholders' equity 4,420 3,970
-------- --------
Total liabilities and stockholders' equity $ 11,229 $ 10,956
======== ========
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
Quarter Ended
--------------------------------
March 31 Dec. 31 March 31
(Dollars in millions) 2005 2004 2004
- -------------------------------------------------- -------- -------- --------
INCOME FROM OPERATIONS
Flat-rolled Products $ 335 $ 375 $ 113
U. S. Steel Europe 212 132 40
Tubular Products 122 114 3
Other Businesses(a) (17) 27 6
-------- -------- --------
Segment Income from Operations 652 648 162
Retiree benefit expenses(b) (83) (76) (44)
Other items not
allocated to segments:
Property tax settlement
gain(c) 70 -- --
Stock appreciation rights 1 (8) (10)
Workforce reduction charges
(including pension
settlements) -- (17) --
Income from sale of real
estate interests -- -- 43
-------- -------- --------
Total Income from Operations $ 640 $ 547 $ 151
CAPITAL EXPENDITURES
Flat-rolled Products $ 59 $ 86 $ 21
U. S. Steel Europe 49 87 39
Tubular Products 3 -- 3
Other Businesses 11 39 7
-------- -------- --------
Total $ 122 $ 212 $ 70
-----------
(a) Includes the results of the former Real Estate segment.
(b) 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 of America.
(c) Reflects the portion of the Gary property tax settlement gain that is
included in cost of sales, and excludes $25 million that is included
in net interest and other financial costs.
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
Quarter Ended
--------------------------------
March 31 Dec. 31 March 31
(Dollars in millions) 2005 2004 2004
- -------------------------------------------------- -------- -------- --------
OPERATING STATISTICS
Average realized price:
($/net ton)(a)
Flat-rolled Products $ 650 $ 623 $ 475
U. S. Steel Europe 684 619 420
Tubular Products 1,165 1,083 672
Steel Shipments:(a)(b)
Flat-rolled Products 3,535 3,747 4,161
U. S. Steel Europe 1,290 1,347 1,173
Tubular Products 303 285 272
Raw Steel-Production:(b)
Domestic Facilities 4,303 4,264 4,479
U. S. Steel Europe 1,548 1,474 1,344
Raw Steel-Capability
Utilization:(c)
Domestic Facilities 90.0% 87.2% 92.6%
U. S. Steel Europe 84.6% 79.0% 72.8%
Domestic iron ore production(b) 5,382 5,714 5,612
Domestic iron ore shipments(b)(d) 3,389 6,600 4,036
Domestic coke production(b)(f) 1,420 1,670 1,649
Domestic coke shipments(b)(e)(f) 245 700 672
-----------
(a) Excludes intersegment transfers.
(b) Thousands of net tons.
(c) Based on annual raw steel production capability for domestic
facilities of 19.4 million net tons and annual raw steel production
capability for U. S. Steel Europe of 7.4 million net tons.
(d) Includes trade shipments and intersegment transfers.
(e) Includes trade shipments only.
(f) Includes the Clairton 1314B Partnership.
SOURCE United States Steel Corporation
-0- 04/26/2005
/CONTACT: Media, John Armstrong, +1-412-433-6792, or Investors-Analysts,
Nick Harper, +1-412-433-1184, both of United States Steel Corporation/
/First Call Analyst: Nick Harper /
/FCMN Contact: /
/Company News On-Call: http://www.prnewswire.com/comp/929150.html /
/Web site: http://www.ussteel.com /