Exhibit 99.1
- --FAX BACK--
CLM056 MM-LA 13:56 U. S. Steel Corp. Reports Record 2004 4Q, Full-Year Results
..z..ma
+ PIT FC1 ED1 IRW TNW RWB (UNITED STATES STEEL 929150 PG)
26 19 96 91 32 01 30 31 99.z..m/pitts r f bc-PA-US-Steel-4Q-earns 01-24
P1
17:00 01/24 --FAX BACK--
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[STK] X
[IN] MNG
[SU] ERN ERP CCA MAV
TO BUSINESS EDITOR:
UNITED STATES STEEL CORPORATION REPORTS RECORD 2004 FOURTH QUARTER AND
FULL-YEAR RESULTS
PITTSBURGH, Jan. 24 /PRNewswire-FirstCall/ --
Earnings Highlights
(Dollars in millions except per share data)
4Q 2004 3Q 2004 4Q 2003 2004 2003
-------- -------- -------- -------- --------
Revenues and other income $ 3,932 $ 3,729 $ 2,681 $ 14,108 $ 9,458
Segment income (loss) from
operations
Flat-rolled Products $ 376 $ 362 $ 23 $ 1,186 $ (54)
U. S. Steel Europe 136 146 37 398 203
Tubular Products 113 55 (6) 196 (25)
Real Estate 8 5 10 30 50
Straightline (18) (70)
Other Businesses 19 2 3 28 (35)
Total segment income from
operations $ 652 $ 570 $ 49 $ 1,838 $ 69
Retiree benefit expenses (76) (72) (47) (257) (107)
Other items not allocated
to segments (25) (4) (36) 3 (692)
Income (loss) from
operations $ 551 $ 494 $ (34) $ 1,584 $ (730)
Net income (loss) $ 462 $ 354 $ (22) $ 1,085 $ (463)
- Per basic share $ 4.02 $ 3.08 $ (0.26) $ 9.55 $ (4.64)
- Per diluted share $ 3.55 $ 2.72 $ (0.26) $ 8.44 $ (4.64)
United States Steel Corporation (NYSE: X) reported fourth quarter 2004 net
income of $462 million, or $3.55 per diluted share, compared to third quarter
2004 net income of $354 million, or $2.72 per diluted share, and a fourth
quarter 2003 net loss of $22 million, or 26 cents per diluted share.
For full-year 2004, U. S. Steel reported net income of $1,085 million, or
$8.44 per diluted share, compared to a 2003 net loss of $463 million, or $4.64
per diluted share, which included after-tax workforce reduction charges of
$404 million.
Commenting on results, U. S. Steel President and CEO John P. Surma said,
"Favorable global steel markets coupled with our acquisitions and ongoing cost
reduction efforts resulted in record income for U. S. Steel for both the fourth
quarter and full year. Noteworthy accomplishments during 2004 included
successful integration of the National and Serbian facilities we acquired in
2003, and substantial cash generation, which enabled us to strengthen our
balance sheet and our financial capability to support future growth
initiatives."
The company reported fourth quarter 2004 income from operations of
$551 million, compared with income from operations of $494 million in the third
quarter of 2004 and a loss from operations of $34 million in the fourth quarter
of 2003. For the year 2004, the company reported income from operations of
$1,584 million versus a full-year 2003 loss from operations of $730 million.
Net income in fourth quarter 2004 included previously disclosed tax benefits
totaling $30 million related to prior year research and development credits and
U. S. Steel Kosice debt repayment. These benefits and other items not allocated
to segments increased fourth quarter 2004 net income by $14 million, or 11 cents
per diluted share. Net income in third quarter 2004 included a $24 million
favorable effect related to the settlements of prior years' income tax audits.
These settlements and other items not allocated to segments increased third
quarter 2004 net income by $21 million, or 16 cents per diluted share. Other
items not allocated to segments reduced fourth quarter 2003 net income by
$23 million, or 23 cents per diluted share.
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. The foreign currency translation gain
included a $16 million favorable effect, which was offset in cost of revenues.
This reclassification related to a refinement of inventory accounting policies
for European operations.
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. U. S. Steel's reportable segments and Other Businesses reported segment
income from operations of $652 million, or $121 per ton, in the fourth quarter
of 2004, compared with $570 million, or $108 per ton, in the third quarter of
2004 and $49 million, or $9 per ton, in the fourth quarter of 2003.
Segment income from operations for full-year 2004 was $1,838 million, or
$84 per ton, compared with $69 million, or $4 per ton, for 2003.
Compared to the third quarter, segment results for the fourth quarter of
2004 increased by $82 million. Domestic operations benefited from increased
prices for tubular products and lower purchased coke costs, while costs
increased for natural gas, scrap and coal. European operating results reflected
improved prices and volumes, as well as unfavorable effects resulting from a
refinement of inventory accounting policies for these operations.
Outlook
First quarter 2005 average realized prices for the Flat-rolled segment are
expected to remain in line with fourth quarter levels; however, results will be
negatively affected by higher costs for raw materials and natural gas, as well
as slightly lower shipments. For full-year 2005, Flat-rolled shipments are
expected to be about 15.4 million tons, reflecting the planned outage at the
Gary No. 13 blast furnace.
For U. S. Steel Europe (USSE), first quarter average realized prices are
expected to be moderately higher than in the fourth quarter of 2004, with
shipments remaining about the same and costs for raw materials increasing
significantly. USSE shipments for full-year 2005 are projected to increase by
about 15 percent to approximately 5.8 million net tons due mainly to higher
operating levels at the Serbian facilities following the planned mid-year
startup of a second blast furnace.
Shipments for the Tubular segment in the first quarter of 2005 are expected
to be at about the same level as in 2004's fourth quarter, while average
realized prices are expected to continue to increase. Tubular announced price
increases for certain products ranging from $50 to $250 per ton effective in
January 2005. Full-year shipments are expected to increase to 1.2 million tons.
Costs will increase as a result of annual transfer price adjustments for
semi-finished steel, which comprehend raw material cost escalation, and higher
costs for purchased rounds.
First quarter 2005 results for Other Businesses will decline compared to the
fourth quarter of 2004 due to normal seasonal effects at iron ore operations in
Minnesota.
Capital expenditures for 2005 are expected to total approximately
$755 million, reflecting domestic spending of approximately $475 million and
European spending of approximately $280 million. Domestic expenditures include
the rebuild of the Gary No. 13 blast furnace, scheduled for the third quarter.
European expenditures include initial outlays for a new hot-dip galvanizing line
to support U. S. Steel's European automotive strategy.
In accordance with the previously announced settlement agreement with the
City of Gary, Lake County and the state of Indiana regarding past years' Gary
Works personal property taxes, a Lake County appeals board is expected to
consider a motion to resolve the appeals in accordance with the proposed
settlement. If the settlement is approved and becomes final as submitted,
U. S. Steel would pay $44 million and would recognize a favorable income effect
reflecting liabilities accrued in excess of the settlement amount. In the event
the settlement is approved and becomes final as submitted before the 2004
financial statements are filed, the settlement would be recorded as an
adjustment to 2004 results.
Pensions and Benefits
During 2004, U. S. Steel contributed $295 million ($175 million in the
fourth quarter) to its main defined benefit pension plan and $30 million (all in
the fourth quarter) to a Voluntary Employee Benefit Association trust.
At year-end 2004, U. S. Steel's main defined benefit pension plan was
measured and it was determined that an additional minimum liability is no longer
necessary for this plan. The reversal of this liability net of associated tax
effects resulted in a net credit to equity of approximately $1.45 billion and
had no effect on income or cash flow.
Total costs in 2005 for domestic defined benefit pension plans and other
postretirement benefits are expected to be approximately the same as in 2004.
This release contains forward-looking statements with respect to market
conditions, operating costs, shipments, prices, tax settlements 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; the timing and completion of facility projects;
natural gas prices and usage; raw materials availability and prices; changes in
environmental, tax and other laws; employee strikes; power outages; legal
proceedings regarding the proposed tax settlement; 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. Factors that may affect the
amount of net periodic benefit costs include, among others, 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, 2003, 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 fourth quarter earnings on
Tuesday, January 25, at 2 p.m. EST. 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 Year Ended
-------------------------------- December 31
Dec. 31 Sept. 30 Dec. 31 --------------------
(Dollars in millions) 2004 2004 2003 2004 2003
- ------------------------------ -------- -------- -------- -------- --------
REVENUES AND OTHER INCOME:
Revenues $ 3,890 $ 3,707 $ 2,613 $ 13,969 $ 9,328
Income (loss) from
investees 20 18 (1) 57 (11)
Net gains on disposal
of assets 11 2 58 57 85
Other income 11 2 11 25 56
-------- -------- -------- -------- --------
Total revenues
and other income 3,932 3,729 2,681 14,108 9,458
-------- -------- -------- -------- --------
COSTS AND EXPENSES:
Cost of revenues
(excludes items
shown below) 3,069 2,967 2,352 11,404 8,469
Selling, general and
administrative expenses 217 172 252 738 673
Depreciation, depletion
and amortization 95 96 92 382 363
Restructuring charges -- -- 19 -- 683
-------- -------- -------- -------- --------
Total costs and
expenses 3,381 3,235 2,715 12,524 10,188
-------- -------- -------- -------- --------
INCOME (LOSS) FROM
OPERATIONS 551 494 (34) 1,584 (730)
Net interest and other
financial (income) costs (23) 4 24 119 130
-------- -------- -------- -------- --------
INCOME (LOSS) BEFORE
INCOME TAXES, MINORITY
INTERESTS, EXTRAORDINARY
LOSS AND CUMULATIVE EFFECTS
OF CHANGES IN ACCOUNTING
PRINCIPLES 574 490 (58) 1,465 (860)
Income tax provision
(benefit) 98 126 (36) 361 (454)
Minority interests 14 10 -- 33 --
-------- -------- -------- -------- --------
INCOME (LOSS) BEFORE
EXTRAORDINARY LOSS AND
CUMULATIVE EFFECTS OF
CHANGES IN ACCOUNTING
PRINCIPLES 462 354 (22) 1,071 (406)
Extraordinary loss,
net of tax -- -- -- -- (52)
Cumulative effects of
changes in accounting
principles, net of tax -- -- -- 14 (5)
-------- -------- -------- -------- --------
NET INCOME (LOSS) 462 354 (22) 1,085 (463)
Dividends on preferred stock (5) (4) (5) (18) (16)
-------- -------- -------- -------- --------
NET INCOME (LOSS)
APPLICABLE TO COMMON
STOCK $ 457 $ 350 $ (27) $ 1,067 $ (479)
======== ======== ======== ======== ========
UNITED STATES STEEL CORPORATION
STATEMENT OF OPERATIONS (Unaudited)
(Continued)
Quarter Ended Year Ended
-------------------------------- December 31
Dec. 31 Sept. 30 Dec. 31 --------------------
COMMON STOCK DATA: 2004 2004 2003 2004 2003
- ------------------------------ -------- -------- -------- -------- --------
Per share:
Income (loss) before
extraordinary loss and
cumulative effects of
changes in accounting
principles:
-Basic $ 4.02 $ 3.08 $ (.26) $ 9.42 $ (4.09)
-Diluted $ 3.55 $ 2.72 $ (.26) $ 8.33 $ (4.09)
Extraordinary loss, net
of tax:
-Basic $ -- $ -- $ -- $ -- $ (.50)
-Diluted $ -- $ -- $ -- $ -- $ (.50)
Cumulative effects of
changes in accounting
principles, net of tax:
-Basic $ -- $ -- $ -- $ .13 $ (.05)
-Diluted $ -- $ -- $ -- $ .11 $ (.05)
Net income (loss):
-Basic $ 4.02 $ 3.08 $ (.26) $ 9.55 $ (4.64)
-Diluted $ 3.55 $ 2.72 $ (.26) $ 8.44 $ (4.64)
Weighted average shares,
in thousands
- Basic 113,853 113,523 103,423 111,838 103,179
- Diluted 130,322 130,021 103,423 128,643 103,179
Dividends paid per
common share $ .05 $ .05 $ .05 $ .20 $ .20
UNITED STATES STEEL CORPORATION
OTHER FINANCIAL DATA (Unaudited)
Year Ended
December 31
--------------------
Cash Flow Data (In millions) 2004 2003
- ---------------------------------------------------- -------- --------
Cash provided from (used in) operating activities:
Net income (loss) $ 1,085 $ (463)
Depreciation, depletion and amortization 382 363
Pensions and other postretirement benefits (215) 184
Deferred income taxes 365 (445)
Restructuring charges -- 594
Working capital changes (60) 433
Other operating activities (89) (89)
-------- --------
Total 1,468 577
-------- --------
Cash used in investing activities:
Capital expenditures (581) (316)
Acquisitions -- (905)
Other investing activities 103 91
-------- --------
Total (478) (1,130)
-------- --------
Cash (used in) provided from financing activities:
Issuance of long-term debt, net of financing costs (3) 427
Repayment of long-term debt (569) (30)
Preferred stock issued -- 242
Common stock issued 361 23
Dividends paid (39) (35)
Other financing activities (19) (1)
-------- --------
Total (269) 626
-------- --------
Total net cash flow 721 73
Cash at beginning of the year 316 243
-------- --------
Cash at end of the period $ 1,037 $ 316
======== ========
Dec. 31 Dec. 31
Balance Sheet Data (In millions) 2004 2003
- ---------------------------------------------------- -------- --------
Cash and cash equivalents $ 1,037 $ 316
Other current assets 3,199 2,790
Property, plant and equipment - net 3,635 3,414
Pension Asset 2,538 8
Other assets 541 1,309
-------- --------
Total assets $ 10,950 $ 7,837
======== ========
Current liabilities $ 2,525 $ 2,127
Long-term debt 1,363 1,890
Employee benefits 2,125 2,382
Other long-term liabilities 941 343
Minority interests 28 2
Stockholders' equity 3,968 1,093
-------- --------
Total liabilities and stockholders' equity $ 10,950 $ 7,837
======== ========
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
Quarter Ended Year Ended
-------------------------------- December 31
Dec. 31 Sept. 30 Dec. 31 --------------------
(Dollars in millions) 2004 2004 2003 2004 2003
- ------------------------------ -------- -------- -------- -------- --------
INCOME (LOSS) FROM OPERATIONS
Flat-rolled Products (a) $ 376 $ 362 $ 23 $ 1,186 $ (54)
U. S. Steel Europe (b) 136 146 37 398 203
Tubular Products 113 55 (6) 196 (25)
Real Estate 8 5 10 30 50
Straightline (a) (18) (70)
Other Businesses (c) 19 2 3 28 (35)
-------- -------- -------- -------- --------
Segment Income
(Loss) from Operations 652 570 49 1,838 69
Retiree benefit
expenses (d) (76) (72) (47) (257) (107)
Other items not allocated to
segments:
Stock appreciation rights (8) (4) (72) (23) (75)
Costs related to
Straightline shutdown -- -- (16) -- (16)
Workforce reduction
charges (including pension
settlements) (17) -- (3) (17) (621)
Asset impairments -- -- -- -- (57)
Litigation items -- -- -- -- (25)
Timber contribution
to pension plan -- -- 55 -- 55
Income from sale of
certain assets -- -- -- 43 47
-------- -------- -------- -------- --------
Total Income (Loss)
from Operations $ 551 $ 494 $ (34) $ 1,584 $ (730)
CAPITAL EXPENDITURES
Flat-rolled Products $ 88 $ 109 $ 44 $ 255 $ 101
U. S. Steel Europe 87 57 49 223 121
Tubular Products -- 3 6 8 50
Real Estate 7 -- -- 7 1
Straightline -- 2
Other Businesses 32 33 12 88 41
-------- -------- -------- -------- --------
Total $ 214 $ 202 $ 111 $ 581 $ 316
- ----------
(a) The Flat-rolled segment includes the results of National flat-rolled
facilities from May 20, 2003, the date of acquisition; the residual effects
of Straightline from January 1, 2004; and the consolidated results of the
Clairton 1314B partnership, which was accounted for under the equity method
prior to January 1, 2004.
(b) Includes U. S. Steel's Serbian operations from September 12, 2003, the date
of acquisition. Prior to September 12, 2003, included effects of activities
under certain agreements with the former owner of the Serbian operations.
(c) Includes the coal mining business prior to June 30, 2003, the date of sale.
Includes the results of the taconite pellet operations in Keewatin from
May 20, 2003, the date of acquisition.
(d) 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.
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
Quarter Ended Year Ended
-------------------------------- December 31
Dec. 31 Sept. 30 Dec. 31 --------------------
(Dollars in millions) 2004 2004 2003 2004 2003
- ------------------------------ -------- -------- -------- -------- --------
OPERATING STATISTICS
Average realized price:
($/net ton) (c)
Flat-rolled Products (a) $ 623 $ 627 $ 423 $ 574 $ 422
Tubular Products 1,083 907 617 863 630
U. S. Steel Europe (b) 619 573 372 529 358
Steel Shipments: (c)(d)
Flat-rolled Products (a) 3,747 3,745 3,970 15,635 13,517
Tubular Products 285 266 234 1,092 882
U. S. Steel Europe (b) 1,347 1,257 1,241 5,040 4,849
Raw Steel-Production: (d)
Domestic Facilities 4,264 4,293 4,285 17,266 14,914
U. S. Steel Europe (b) 1,474 1,400 1,275 5,685 4,836
Raw Steel-Capability
Utilization: (g)
Domestic Facilities 87.2% 87.8% 87.6% 88.8% 88.3%
U. S. Steel Europe (b) 79.0% 75.0% 68.2% 76.6% 84.3%
Domestic iron ore
production (d) 5,714 5,546 5,280 22,884 18,608
Domestic iron ore
shipments (d)(f) 6,600 6,930 5,342 24,289 18,238
Domestic coke
production (d)(h) 1,670 1,659 1,714 6,644 6,835
Domestic coke
shipments (d)(g)(h) 700 686 832 2,699 3,370
- -----------
(a) The Flat-rolled segment includes the results of National flat-rolled
facilities from May 20, 2003, the date of acquisition; the residual effects
of Straightline from January 1, 2004; and the consolidated results of the
Clairton 1314B Partnership, which was accounted for under the equity method
prior to January 1, 2004.
(b) Includes U. S. Steel's Serbian operations from September 12, 2003, the date
of acquisition. Prior to September 12, 2003, included effects of activities
under certain agreements with the former owner of the Serbian operations.
(c) Excludes intersegment transfers.
(d) Thousands of net tons.
(e) Based on annual raw steel production capability for domestic facilities of
12.8 million net tons prior to May 20, 2003, and 19.4 million net tons
thereafter; and annual raw steel production capability for U. S. Steel
Europe of 5.0 million net tons prior to September 12, 2003, and 7.4 million
net tons thereafter.
(f) Includes trade shipments and intersegment transfers.
(g) Includes trade shipments only.
(h) Includes the Clairton 1314B Partnership.
SOURCE United States Steel Corporation
-0- 01/24/2005
/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: /
/FCMN Contact: /
/Company News On-Call: http://www.prnewswire.com/comp/929150.html /
/Web site: http://www.ussteel.com /
(X)
CO: United States Steel Corporation
ST: Pennsylvania
IN: MNG
SU: ERN ERP CCA MAV