United States Steel Corporation
Public Affairs
600 Grant Street
Pittsburgh, PA 15219-2800
News
Contacts: Media
John Armstrong
(412) 433-6792
Investors/Analysts
Nick Harper
(412) 433-1184
FOR IMMEDIATE RELEASE
UNITED STATES STEEL CORPORATION REPORTS
2007 FIRST QUARTER RESULTS
Earnings Highlights
(Dollars in millions, except per share amounts) 1Q 2007 4Q 2006 1Q 2006
- --------------------------------------------------------------------------------
Net sales $ 3,756 $ 3,774 $ 3,728
- --------------------------------------------------------------------------------
Segment income (loss) from operations
Flat-rolled Products $ 75 $ 31 $ 127
U. S. Steel Europe 206 182 125
Tubular Products 102 144 177
Other Businesses 2 57 --
- --------------------------------------------------------------------------------
Total segment income from operations $ 385 $ 414 $ 429
Retiree benefit expenses (39) (53) (55)
Other items not allocated to segments -- (20) (5)
- --------------------------------------------------------------------------------
Income from operations $ 346 $ 341 $ 369
- --------------------------------------------------------------------------------
Net interest and other financial costs 5 25 16
- --------------------------------------------------------------------------------
Income tax provision 66 7 90
- --------------------------------------------------------------------------------
Net income $ 273 $ 297 $ 256
- --------------------------------------------------------------------------------
- Per diluted share $ 2.30 $ 2.50 $ 2.04
- --------------------------------------------------------------------------------
PITTSBURGH, April 24, 2007 - United States Steel Corporation (NYSE: X)
reported first quarter 2007 net income of $273 million, or $2.30 per diluted
share, compared to fourth quarter 2006 net income of $297 million, or $2.50 per
diluted share, and first quarter 2006 net income of $256 million, or $2.04 per
diluted share.
Commenting on results, U. S. Steel Chairman and CEO John P. Surma said,
"Considering market conditions, we had a good quarter with solid results from
Flat-rolled and Tubular and a particularly strong performance by our European
segment. We continued to generate substantial cash, redeemed $49 million of debt
and made a voluntary contribution of $35 million to our main defined benefit
pension plan."
The company reported first quarter 2007 income from operations of $346
million, compared with income from operations of $341 million in the fourth
quarter of 2006 and $369 million in the first quarter of 2006.
In the first quarter of 2007, net interest and other financial costs
included a $3 million pre-tax charge related to the early redemption of our 10%
Senior Quarterly Income Debt Securities. This charge reduced net income by $2
million or 2 cents per diluted share. 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 first quarter of
2006 consisted of an asset impairment charge, which reduced net income by $5
million or 4 cents per diluted share.
During the first quarter of 2007, we repurchased 305,000 shares of common
stock for $25 million.
Reportable Segments and Other Businesses
Management believes segment income from operations is a key measure to
evaluate ongoing operating results and performance. Segment income from
operations was $385 million, or $76 per ton, in the first quarter of 2007,
compared with $414 million, or $85 per ton, in the fourth quarter of 2006 and
$429 million, or $80 per ton, in the first quarter of 2006.
First quarter 2007 segment results decreased from fourth quarter 2006 as
was expected. Flat-rolled income more than doubled from the fourth quarter due
primarily to higher contract prices and improved operating efficiencies,
partially offset by lower spot prices and higher raw material costs. U. S. Steel
Europe (USSE) income increased mainly due to higher shipment volumes. Tubular
results were lower than the fourth quarter on lower shipments and prices,
reflecting continued high imports and customer inventory levels. The decline in
results for Other Businesses was related to normal seasonal effects at our iron
ore operations in Minnesota and the non-recurrence of fourth quarter land sales.
Outlook
Looking ahead to the second quarter, Surma said, "We expect continued
solid operating results for our three reportable segments with overall results
in line with the first quarter."
Second quarter Flat-rolled results are expected to improve from the first
quarter on higher shipment volumes and utilization rates, partially offset by
increased raw material, outage and energy costs. Average realized prices are
expected to be comparable to first quarter levels as spot shipments and prices
are expected to increase.
For USSE, we expect second quarter results to be somewhat lower than the
first quarter as increased prices are offset by higher raw material and outage
costs. Shipment levels should be in line with the first quarter.
Prices and shipments for Tubular in second quarter 2007 are expected to be
lower than first quarter levels as imports and customer inventories remain high.
Normal seasonal improvements at Minnesota iron ore operations are expected
to be lower due to production levels that will remain near first quarter, repair
outages and costs for longer-term mine development.
Concerning the March 28, 2007 definitive agreement between U. S. Steel and
Lone Star Technologies, Inc., regulatory filings have been made under the
Hart-Scott-Rodino Act in the United States and in several other nations. U. S.
Steel expects that the transaction, which is subject to the approval of Lone
Star's shareholders and regulatory approvals, will be completed late in the
second quarter or early in the third quarter of 2007.
*****
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; natural gas and electricity prices
and usage; raw materials and transportation 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, pension 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. Consummation of the Lone Star acquisition is subject to
the approval of Lone Star's shareholders, regulatory approvals and other
customary conditions. 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, 2006, 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 24, at 2 p.m. EDT. 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 its web site at
www.ussteel.com.
-oOo-
2007-018
UNITED STATES STEEL CORPORATION
STATEMENT OF OPERATIONS (Unaudited)
------------------------------------
Quarter Ended
----------------------------------
March 31 Dec. 31 March 31
(Dollars in millions) 2007 2006 2006
- --------------------------------------------------------------------------------
NET SALES .................................. $ 3,756 $ 3,774 $ 3,728
OPERATING EXPENSES (INCOME):
Cost of sales (excludes items shown below) . 3,179 3,223 3,098
Selling, general and administrative expenses 139 146 158
Depreciation, depletion and amortization ... 111 102 112
Income from investees ...................... (2) (18) (7)
Net gains on disposal of assets ............ (10) (11) (1)
Other income, net .......................... (7) (9) (1)
--------- --------- ---------
Total operating expenses ................... 3,410 3,433 3,359
--------- --------- ---------
INCOME FROM OPERATIONS ..................... 346 341 369
Net interest and other financial costs ..... 5 25 16
--------- --------- ---------
INCOME BEFORE INCOME TAXES AND MINORITY
INTERESTS .................................. 341 316 353
Income tax provision ....................... 66 7 90
Minority interests ......................... 2 12 7
--------- --------- ---------
NET INCOME ................................. 273 297 256
Dividends on preferred stock ............... -- -- (4)
--------- --------- ---------
NET INCOME APPLICABLE TO COMMON STOCK ...... $ 273 $ 297 $ 252
========= ========= =========
COMMON STOCK DATA:
- --------------------------------------------------------------------------------
Net income per share:
-Basic ........................... $ 2.31 $ 2.51 $ 2.31
-Diluted ......................... $ 2.30 $ 2.50 $ 2.04
Weighted average shares, in thousands
- Basic .......................... 118,244 118,343 108,809
- Diluted ........................ 119,005 119,011 125,559
Dividends paid per common share ............ $ .20 $ .20 $ .10
UNITED STATES STEEL CORPORATION
OTHER FINANCIAL DATA (Unaudited)
------------------------------------
Quarter Ended
March 31
--------------------
Cash Flow Data (In millions) 2007 2006
- --------------------------------------------------------------------------------
Cash provided by operating activities:
Net income ............................................. $ 273 $ 256
Depreciation, depletion and amortization ............... 111 112
Pensions and other postretirement benefits ............. (49) (9)
Working capital changes ................................ (36) (158)
Other operating activities ............................. 20 27
-------- --------
Total .................................................. 319 228
-------- --------
Cash used in investing activities:
Capital expenditures ................................... (108) (127)
Disposal of assets ..................................... 5 4
Other investing activities ............................. (4) 4
-------- --------
Total .................................................. (107) (119)
-------- --------
Cash used in financing activities:
Repayment of debt ...................................... (53) (83)
Common stock issued .................................... 5 3
Common stock repurchased ............................... (25) --
Dividends paid ......................................... (24) (15)
Change in bank checks outstanding ...................... 13 (16)
Other financing activities ............................. (2) (7)
-------- --------
Total .................................................. (86) (118)
-------- --------
Effect of exchange rate changes on cash ................ 4 1
-------- --------
Net increase (decrease) in cash and cash equivalents ... 130 (8)
Cash and cash equivalents at beginning of the year ..... 1,422 1,479
-------- --------
Cash and cash equivalents at end of the period ......... $ 1,552 $ 1,471
======== ========
March 31 Dec. 31
Balance Sheet Data (In millions) 2007 2006
- --------------------------------------------------------------------------------
Cash and cash equivalents .............................. $ 1,552 $ 1,422
Receivables, net ....................................... 1,954 1,799
Inventories ............................................ 1,618 1,604
Other current assets ................................... 376 371
Property, plant and equipment, net ..................... 4,439 4,429
Investments and long-term receivables, net ............. 320 336
Pension asset .......................................... 385 330
Other assets ........................................... 270 295
-------- --------
Total assets ........................................... $ 10,914 $ 10,586
======== ========
Accounts payable ....................................... $ 1,433 $ 1,313
Payroll and benefits payable ........................... 991 1,028
Short-term debt and current maturities of long-term debt 32 82
Other current liabilities .............................. 291 279
Long-term debt, less unamortized discount .............. 940 943
Employee benefits ...................................... 2,136 2,174
Other long-term liabilities and minority interests ..... 435 402
Stockholders' equity ................................... 4,656 4,365
-------- --------
Total liabilities and stockholders' equity ............. $ 10,914 $ 10,586
======== ========
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
-----------------------------------------------
Quarter Ended
---------------------------------
March 31 Dec. 31 March 31
(Dollars in millions) 2007 2006 2006
- --------------------------------------------------------------------------------
INCOME FROM OPERATIONS
Flat-rolled Products .................... $ 75 $ 31 $ 127
U. S. Steel Europe ...................... 206 182 125
Tubular Products ........................ 102 144 177
Other Businesses ........................ 2 57 --
----- ----- -----
Segment Income from Operations .......... 385 414 429
Retiree benefit expenses(a) .......... (39) (53) (55)
Other items not allocated to segments:
Asset impairment charge ........... -- -- (5)
Out of period adjustments ......... -- (15) --
Loss on sale of certain assets .... -- (5) --
----- ----- -----
Total Income from Operations ..... $ 346 $ 341 $ 369
CAPITAL EXPENDITURES
Flat-rolled Products ................. $ 50 $ 127 $ 69
U. S. Steel Europe ................... 30 49 44
Tubular Products ..................... 2 2 --
Other Businesses ..................... 26 37 14
----- ----- -----
Total ............................ $ 108 $ 215 $ 127
- ----------
(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.
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
-----------------------------------------------
Quarter Ended
-----------------------------------
March 31 Dec. 31 March 31
(Dollars in millions) 2007 2006 2006
- --------------------------------------------------------------------------------
OPERATING STATISTICS
Average realized price: ($/net ton)(a)
Flat-rolled Products ............. $ 650 $ 648 $ 616
U. S. Steel Europe ............... 669 665 544
Tubular Products ................. 1,435 1,523 1,506
Steel Shipments:(a)(b)
Flat-rolled Products ............. 3,188 3,078 3,529
U. S. Steel Europe ............... 1,652 1,549 1,508
Tubular Products ................. 247 271 319
------ ------ ------
Total Steel Shipments ...... 5,087 4,898 5,356
Raw Steel Production:(b)
Domestic Facilities .............. 3,713 3,270 4,141
U. S. Steel Europe ............... 1,799 1,772 1,753
Raw Steel Capability Utilization:(c)
Domestic Facilities .............. 77.6% 66.9% 86.6%
U. S. Steel Europe ............... 98.2% 94.7% 95.7%
Domestic iron ore production(b) ...... 4,895 5,144 5,473
Domestic coke production(b)(d) ....... 1,366 1,393 1,490
- --------------------------------------------------------------------------------
(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.
(d) Includes the Clairton 1314B Partnership.