Exhibit 99.1
United States Steel Corporation
Public Affairs
600 Grant Street
Pittsburgh, PA 15219-2800
412 433 6870
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NEWS
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Contacts: Media
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John Armstrong
(412) 433-6792
Investors/Analysts
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Nick Harper
(412) 433-1184
FOR IMMEDIATE RELEASE
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UNITED STATES STEEL CORPORATION REPORTS
2006 FOURTH QUARTER AND FULL-YEAR RESULTS
EARNINGS HIGHLIGHTS
(Dollars in millions except per share data) 4Q 2006 3Q 2006 4Q 2005 2006 2005
- --------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net sales $ 3,774 $ 4,106 $ 3,470 $ 15,715 $ 14,039
========== ========== ========== ========== ==========
Segment income from operations
Flat-rolled Products $ 31 $ 230 $ 36 $ 600 $ 602
U. S. Steel Europe 182 219 112 714 502
Tubular Products 144 164 149 631 528
Other Businesses 57 39 16 129 43
---------- ---------- ---------- ---------- ----------
Total segment income from operations $ 414 $ 652 $ 313 $ 2,074 $ 1,675
Retiree benefit expenses (53) (70) (59) (243) (267)
Other items not allocated to segments (20) (21) (32) (46) 31
---------- ---------- ---------- ---------- ----------
Income from operations $ 341 $ 561 $ 222 $ 1,785 $ 1,439
========== ========== ========== ========== ==========
Net interest and other financial costs 25* 7 14 62* 127
========== ========== ========== ========== ==========
Income tax provision 7 136 90 324 365
========== ========== ========== ========== ==========
Net income $ 297 $ 417 $ 109 $ 1,374 $ 910
---------- ---------- ---------- ---------- ----------
- Per basic share $ 2.51 $ 3.44 $ 0.94 $ 11.88 $ 7.87
- Per diluted share $ 2.50 $ 3.42 $ 0.85 $ 11.18 $ 7.00
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* Includes a $32 million pre-tax charge related to the early retirement of debt
PITTSBURGH, January 29, 2007 - United States Steel Corporation (NYSE: X)
reported fourth quarter 2006 net income of $297 million, or $2.50 per diluted
share, compared to third quarter 2006 net income of $417 million, or $3.42 per
diluted share, and fourth quarter 2005 net income of $109 million, or $0.85 per
diluted share.
For full-year 2006, U. S. Steel reported net income of $1,374 million or
$11.18 per diluted share, compared to 2005 net income of $910 million, or $7.00
per diluted share.
Commenting on results, U. S. Steel Chairman and CEO John P. Surma said,
"Our performance in 2006 resulted in another outstanding year, with record
sales, operating income and net earnings. During the year, our strong cash flow
generation enabled us to reduce our debt by almost $600 million, to repurchase
common shares for $442 million, to make voluntary cash contributions of $190
million to our domestic benefit plans, to make significant capital investments
and to double our common dividend rate to 20 cents per share. Our safety
performance also improved substantially from last year thanks to the continuing
efforts of our employees. All in all, 2006 will go down as one of the best years
in our long history."
The company reported fourth quarter 2006 income from operations of $341
million, compared with income from operations of $561 million in the third
quarter of 2006 and $222 million in the fourth quarter of 2005. For the year
2006, income from operations was $1,785 million versus income from operations of
$1,439 million for the year 2005.
In the fourth quarter of 2006, net interest and other financial costs
included a $32 million pre-tax charge related to the early redemption of most of
our 10-3/4% Senior Notes. This item and other items not allocated to segments
decreased net income by $33 million or 28 cents per diluted share. Other items
not allocated to segments in the third quarter of 2006 reduced net income by $21
million, or 17 cents per diluted share. An income tax charge and other items not
allocated to segments reduced fourth quarter 2005 net income by $39 million, or
30 cents per diluted share.
The annual effective tax rate for 2006 was lower than previously
expected and we reduced our fourth quarter income tax provision by $58 million
in order to adjust tax expense previously recorded. This adjustment primarily
reflected a higher than anticipated percentage of total pre-tax earnings
generated by our European operations and the impact of accounting rules on
remeasuring the status of our main defined benefit pension plan at year end.
REPORTABLE SEGMENTS AND OTHER BUSINESSES
Management believes segment income from operations is a key measure to
evaluate ongoing operating results and performance. U. S. Steel's reportable
segments and Other Businesses reported segment income from operations of $414
million, or $85 per ton, in the fourth quarter of 2006, compared with $652
million, or $117 per ton, in the third quarter of 2006 and $313 million, or $63
per ton, in the fourth quarter of 2005. Our fourth quarter was significantly
better than the fourth quarter last year, but weaker than the earlier 2006
quarters as inventory rebalancing and high import levels reduced domestic demand
for steel.
Segment income from operations for full-year 2006 was $2,074 million, or
$96 per ton, compared with $1,675 million, or $85 per ton for 2005.
Flat-rolled's fourth quarter results were significantly lower than the
third quarter as shipment volumes and average realized prices decreased, and
production costs increased as operating rates were curtailed to 67 percent of
capability. The decrease in fourth quarter 2006 European income from operations
compared to the third quarter was mainly due to higher costs, partially offset
by higher average realized prices. Fourth quarter Tubular results decreased from
the third quarter due mainly to lower shipments resulting from high levels of
imports and customer inventories. Results for Other Businesses in the fourth
quarter included approximately $25 million related to land sales by our real
estate unit.
OUTLOOK
Commenting on U. S. Steel's outlook, Surma said, "We expect first
quarter results to decline from the fourth quarter, but flat-rolled demand is
firming and we have restarted several domestic blast furnaces to bring our
production in line with improving order rates."
For Flat-rolled, first quarter 2007 shipments are expected to improve
compared to the fourth quarter of 2006, and average realized prices should
remain at about the fourth quarter level as contract price improvements offset
lower spot prices.
For U. S. Steel Europe (USSE), first quarter shipments are expected to
increase from the fourth quarter, and average realized prices are expected to be
slightly lower as the result of increased import product availability on the
European market.
Shipments and average realized prices for the Tubular segment in the
first quarter of 2007 are expected to decrease from the fourth quarter as import
levels and customer inventories remain high.
First quarter costs for all of our reportable segments are expected to
be in line with the fourth quarter.
First quarter 2007 results for Other Businesses are expected to be
consistent with historical first quarter results, but will decline substantially
from the fourth quarter due primarily to normal seasonal effects at our iron ore
operations in Minnesota and the non-recurrence of the fourth quarter land sales.
Capital expenditures for 2007 are expected to total approximately $750
million, reflecting domestic spending of approximately $545 million and European
spending of approximately $205 million.
PENSIONS AND OTHER BENEFITS
At year-end 2006, our defined benefit pension plans were overfunded by
$210 million on a projected benefit obligation basis. The combined effects of
reversing previously recorded additional minimum liabilities and the adoption of
Statement of Financial Accounting Standards No. 158 for pensions and other
benefits resulted in a net charge to equity of $186 million in the fourth
quarter.
Total costs for pension plans and other postretirement benefits are
expected to be approximately $237 million in 2007, compared to $312 million in
2006.
COMMON STOCK REPURCHASE PROGRAM
We repurchased over 700,000 shares of U. S. Steel common stock for $46
million during the fourth quarter, bringing total repurchases to 13.1 million
shares for $696 million since the repurchase program was originally authorized
in July 2005. As of December 31, 2006, 7.7 million shares remained authorized
for repurchase under our stock repurchase program.
*****
This release contains forward-looking statements with respect to market
conditions, operating costs, shipments, prices, capital spending and employee
benefit costs. 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, including the start up of several blast furnaces;
the timing and completion of facility projects; natural gas prices, usage and
supply disruptions; raw materials availability and prices; 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. Economic conditions and political factors in Europe that may affect
USSE's results include, but are not limited to, taxation, environmental
permitting, nationalization, inflation, currency fluctuations, increased
regulation, export quotas, tariffs, and other protectionist measures. Factors
that may affect the amount of net periodic benefit costs include, among others,
changes to laws affecting benefits, pension fund investment performance,
liability changes and interest rates. 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, 2005, 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 fourth quarter earnings on
Tuesday, January 30, at 2 p.m. EST. To listen to the webcast of the conference
call, visit the U. S. Steel web site, www.ussteel.com, and click on the
"Investors" button.
For more information on U. S. Steel, visit our web site at
www.ussteel.com.
-oOo-
2007-006
UNITED STATES STEEL CORPORATION
STATEMENT OF OPERATIONS (Unaudited)
-----------------------------------
Year Ended
Quarter Ended December 31
--------------------------------------- -------------------------
Dec. 31 Sept. 30 Dec. 31
(Dollars in millions) 2006 2006 2005 2006 2005
- ------------------------------------------------------- ----------- ----------- ----------- ----------- -----------
NET SALES ............................................. $ 3,774 $ 4,106 $ 3,470 $ 15,715 $ 14,039
OPERATING EXPENSES (INCOME):
Cost of sales (excludes items shown below) .......... 3,223 3,308 2,983 12,968 11,643
Selling, general and administrative expenses ........ 146 144 183 604 656
Depreciation, depletion and amortization ............ 102 113 92 441 366
Income from investees ............................... (18) (19) (2) (57) (30)
Net gains on disposal of assets ..................... (11) - (4) (13) (21)
Other income, net ................................... (9) (1) (4) (13) (14)
----------- ----------- ----------- ----------- -----------
Total operating expenses .......................... 3,433 3,545 3,248 13,930 12,600
----------- ----------- ----------- ----------- -----------
INCOME FROM OPERATIONS ................................ 341 561 222 1,785 1,439
Net interest and other financial costs ................ 25 7 14 62 127
----------- ----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS ..... 316 554 208 1,723 1,312
Income tax provision .................................. 7 136 90 324 365
Minority interests .................................... 12 1 9 25 37
----------- ----------- ----------- ----------- -----------
NET INCOME ............................................ 297 417 109 1,374 910
Dividends on preferred stock .......................... - - (5) (8) (18)
----------- ----------- ----------- ----------- -----------
NET INCOME APPLICABLE TO COMMON STOCK ................. $ 297 $ 417 $ 104 $ 1,366 $ 892
=========== =========== =========== =========== ===========
COMMON STOCK DATA:
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Net income per share:
- Basic ......................................... $ 2.51 $ 3.44 $ .94 $ 11.88 $ 7.87
- Diluted ....................................... $ 2.50 $ 3.42 $ .85 $ 11.18 $ 7.00
Weighted average shares, in thousands:
- Basic ......................................... 118,343 121,270 111,739 114,918 113,470
- Diluted ....................................... 119,011 121,964 128,151 122,918 129,970
Dividends paid per common share ....................... $ .20 $ .15 $ .10 $ .60 $ .38
UNITED STATES STEEL CORPORATION
CASH FLOW STATEMENT (Unaudited)
-------------------------------
Year Ended
December 31
-------------------------
(Dollars in millions) 2006 2005
- ------------------------------------------------------- ----------- -----------
Cash provided from operating activities:
Net income .......................................... $ 1,374 $ 910
Depreciation, depletion and amortization ............ 441 366
Pensions and other postretirement benefits .......... (208) (86)
Property tax settlement gain ........................ - (95)
Deferred income taxes ............................... 57 43
Net gains on disposal of assets ..................... (13) (21)
Changes in: Current receivables ..................... (90) 165
Inventories ............................. (109) (161)
Current accounts payable and accrued
expenses ............................... 274 50
Other operating activities .......................... (37) 47
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Total ............................................. 1,689 1,218
----------- -----------
Cash used in investing activities:
Capital expenditures ................................ (612) (741)
Disposal of assets .................................. 23 31
Other investing activities .......................... (4) 2
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Total ............................................. (593) (708)
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Cash used in financing activities:
Borrowings and repayments of debt, net .............. (607) 221
Common stock issued ................................. 34 28
Common stock repurchased ............................ (442) (254)
Dividends paid ...................................... (78) (60)
Change in bank checks outstanding ................... (49) 37
Other financing activities .......................... (13) (33)
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Total ............................................. (1,155) (61)
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Effect of exchange rate changes on cash ............... 2 (7)
----------- -----------
Total net cash flow ................................... (57) 442
Cash at beginning of the year ......................... 1,479 1,037
----------- -----------
Cash at end of the period ............................. $ 1,422 $ 1,479
=========== ===========
UNITED STATES STEEL CORPORATION
CONDENSED BALANCE SHEET (Unaudited)
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Dec. 31 Dec. 31
(Dollars in millions) 2006 2005
- ------------------------------------------------------------ -------- --------
Cash and cash equivalents .................................. $ 1,422 $ 1,479
Receivables, net ........................................... 1,799 1,609
Inventory .................................................. 1,604 1,466
Other current assets ....................................... 371 288
Property, plant and equipment - net ........................ 4,413 4,015
Investments and long-term receivables, net ................. 336 292
Pension asset .............................................. 330 -
Intangible pension asset ................................... - 251
Other assets ............................................... 311 422
-------- --------
Total assets ............................................... $ 10,586 $ 9,822
======== ========
Accounts payable ........................................... 1,314 1,256
Payroll and benefits payable ............................... 1,028 912
Short-term debt and current maturities of long-term debt ... 82 249
Other current liabilities .................................. 280 332
Long-term debt ............................................. 943 1,363
Employee benefits .......................................... 2,174 2,008
Other long-term liabilities ................................ 362 346
Minority interests ......................................... 38 32
Stockholders' equity ....................................... 4,365 3,324
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Total liabilities and stockholders' equity ................. $ 10,586 $ 9,822
======== ========
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
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Year Ended
Quarter Ended December 31
-------------------------------- --------------------
Dec. 31 Sept. 30 Dec. 31
(Dollars in millions) 2006 2006 2005 2006 2005
- ---------------------------------------- -------- -------- -------- -------- --------
INCOME (LOSS) FROM OPERATIONS
Flat-rolled Products ................... $ 31 $ 230 $ 36 $ 600 $ 602
U. S. Steel Europe ..................... 182 219 112 714 502
Tubular Products ....................... 144 164 149 631 528
Other Businesses ....................... 57 39 16 129 43
-------- -------- -------- -------- --------
Segment Income from Operations ......... 414 652 313 2,074 1,675
Retiree benefit expenses(a) ............ (53) (70) (59) (243) (267)
Other items not allocated to segments:
Out of period adjustments(b) ....... (15) - - (15) -
Workforce reduction charges ........ - (21) (11) (21) (20)
Loss from sale of certain assets ... (5) - - (5) -
Asset impairment loss .............. - - - (5) -
Environmental remediation charge ... - - (20) - (20)
Stock appreciation rights .......... - - (1) - 1
Property tax settlement gain ....... - - - - 70
-------- -------- -------- -------- --------
Total Income from Operations .... $ 341 $ 561 $ 222 $ 1,785 $ 1,439
CAPITAL EXPENDITURES
Flat-rolled Products ................... $ 127 $ 46 $ 157 $ 274 $ 377
U. S. Steel Europe ..................... 49 67 74 211 249
Tubular Products ....................... 2 1 1 4 5
Other Businesses ....................... 37 32 36 123 110
-------- -------- -------- -------- --------
Total .............................. $ 215 $ 146 $ 268 $ 612 $ 741
(a) 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.
(b) In the process of evaluating the potential effects of adopting SEC Staff
Accounting Bulletin No. 108 (SAB 108), we identified items from prior years
that required an adjustment. These were not material and we did not use the
cumulative adjustment alternative.
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
-----------------------------------------------
Year Ended
Quarter Ended December 31
-------------------------------- --------------------
Dec. 31 Sept. 30 Dec. 31
(Dollars in millions) 2006 2006 2005 2006 2005
- ---------------------------------------- -------- -------- -------- -------- --------
OPERATING STATISTICS
Average realized price: ($/net ton)
Flat-rolled Products(a) ......... $ 648 $ 651 $ 597 $ 634 $ 617
U. S. Steel Europe .............. 665 640 550 608 610
Tubular Products ................ 1,523 1,491 1,456 1,499 1,326
Steel Shipments:(a)(b)
Flat-rolled Products ............ 3,078 3,695 3,346 14,180 13,296
U. S. Steel Europe .............. 1,549 1,552 1,359 6,261 5,211
Tubular Products ................ 271 303 292 1,191 1,156
-------- -------- -------- -------- --------
Total Steel Shipments ....... 4,898 5,550 4,997 21,632 19,663
Raw Steel-Production:(b)
Domestic Facilities ............. 3,270 4,359 3,929 16,355 15,343
U. S. Steel Europe .............. 1,772 1,734 1,649 7,062 5,883
Raw Steel-Capability Utilization:(c)
Domestic Facilities ............. 66.9% 89.1% 80.3% 84.3% 79.1%
U. S. Steel Europe .............. 94.7% 92.7% 88.2% 95.4% 79.5%
Domestic iron ore production(b) ..... 5,144 5,953 5,352 22,063 22,282
Domestic coke production(b) ......... 1,393 1,446 1,485 5,814 6,092
(a) Excludes intersegment transfers.
(b) Thousands of net tons.
(c) Based on annual raw steel production capability of 19.4 million net tons
for domestic facilities and 7.4 million net tons for U. S. Steel Europe.