PITTSBURGH, April 29 /PRNewswire-FirstCall/ --
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Earnings Highlights
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(Dollars in millions, except per share amounts) 1Q 2008 4Q 2007 1Q 2007
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Net sales $5,196 $4,535 $3,756
========================================================================
Segment income (loss) from operations
Flat-rolled $120 $53 $75
U. S. Steel Europe 161 85 206
Tubular 51 83 102
Other Businesses (5) 36 2
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Total segment income from operations $327 $257 $385
Retiree benefit income (expenses) 1 (15) (39)
Other items not allocated to segments (62) (126) --
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Income from operations $266 $116 $346
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Net interest and other financial (income) costs (32) 44 5
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Income tax provision 58 31 66
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Net income $235 $35 $273
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- Per basic share $2.00 $0.29 $2.31
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- Per diluted share $1.98 $0.29 $2.30
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United States Steel Corporation (NYSE: X) reported first quarter 2008
net income of $235 million, or $1.98 per diluted share, compared to fourth
quarter 2007 net income of $35 million, or $0.29 per diluted share, and
first quarter 2007 net income of $273 million, or $2.30 per diluted share.
Commenting on results, U. S. Steel Chairman and CEO John P. Surma said,
"Net sales grew to a quarterly record of $5.2 billion and profitability
increased substantially from the fourth quarter, reflecting sharp
improvements in our Flat-rolled and European segments on strong operating
performances and higher shipments and prices. We've made excellent progress
in integrating our Canadian facilities, which operated during the first
quarter at the highest utilization rate in recent years."
The company reported first quarter 2008 income from operations of $266
million, compared with income from operations of $116 million in the fourth
quarter of 2007 and $346 million in the first quarter of 2007.
Other items not allocated to segments in the first quarter of 2008
consisted of a previously disclosed $45 million pre-tax reserve established
as a result of an adverse court ruling involving a power supply contract,
and a $17 million pre-tax charge for inventory transition effects related
to the acquisition of U. S. Steel Canada (USSC). These items reduced net
income by $45 million, or 38 cents per diluted share. Other items not
allocated to segments in the fourth quarter of 2007 decreased net income by
$117 million, or 98 cents per diluted share.
Additionally, net interest and other financial costs in the first
quarter of 2008 included a foreign currency gain that increased net income
by $70 million, or 59 cents per diluted share, related to the remeasurement
of a $1.1 billion U.S. dollar-denominated intercompany loan to a European
affiliate, partially offset by euro-U.S. dollar derivatives activity. Net
interest and other financial costs will continue to include foreign
currency accounting remeasurement effects, partially offset by the use of
euro-U.S. dollar derivatives. At March 31, 2008, U. S. Steel had open
euro-U.S. dollar forward sales contracts with a total notional value of
approximately $571 million.
During the first quarter of 2008, we repurchased 305,000 shares of
common stock for $33 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 $327 million, or $48 per ton, in the first quarter of 2008,
compared with $257 million, or $43 per ton, in the fourth quarter of 2007
and $385 million, or $76 per ton, in the first quarter of 2007.
Segment income for Flat-rolled improved significantly from the fourth
quarter of 2007. Flat-rolled operated at 92 percent of capability in the
first quarter of 2008 compared to 82 percent in the fourth quarter, and
shipments increased to 4.7 million net tons due to the higher operating
rate and the inclusion of full-quarter results for USSC. Prices increased
by $19 per net ton to $646 and reflected the initial effects of rapidly
increasing spot prices and higher shipments of semi-finished and hot-rolled
product, principally from USSC. Raw materials and energy costs also
increased.
Results for U. S. Steel Europe were also substantially improved from
the fourth quarter of 2007. Cost efficiencies from a record operating
performance of 103 percent of capability helped offset the rapid rise in
raw materials costs. Results also reflected a 253,000 net ton increase in
shipments and a $39 per net ton increase in realized prices, including
favorable foreign currency effects.
Tubular results decreased from the fourth quarter mainly due to the
rapid increases in costs for semi-finished steel, which were not recovered
through price increases during the quarter.
Normal seasonal effects at our iron ore operations in Minnesota caused
the decline in results for Other Businesses.
Outlook
Looking ahead to the second quarter, Surma said, "We expect that
segment income from operations will increase substantially compared to the
first quarter of 2008 as realized price increases are expected to surpass
continuing increases in scrap and other raw materials costs."
Second quarter Flat-rolled results are expected to improve
significantly from the first quarter as higher spot prices are realized
throughout the quarter. Operating levels and shipments are expected to be
comparable to the first quarter, while raw materials and energy costs are
expected to increase.
For USSE, we expect second quarter results to be higher than the first
quarter on increased prices and comparable operating and shipping levels,
despite higher raw materials costs.
We expect second quarter Tubular results to improve over the first
quarter as higher prices and shipments are partially offset by further
increases in costs, principally for semi-finished steel.
Results for Other Businesses are expected to increase primarily due to
normal seasonal improvements at our iron ore operations in Minnesota.
We expect the annual effective tax rate to be approximately 25 percent
although some discrete items lowered the rate in the first quarter.
This release contains forward-looking statements with respect to market
conditions, operating costs, shipments, prices, income taxes and foreign
currency impacts. Some factors, among others, that could affect market
conditions, costs, shipments and prices for both North American 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 prices and availability; 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 and
Canada that may affect USSE's and USSC's results include, but are not
limited to, taxation, nationalization, inflation, currency fluctuations,
government instability, political unrest, regulatory changes, export
quotas, tariffs, and other protectionist measures. The annual effective tax
rate will depend upon our financial performance, which is affected by all
of the factors discussed above. Future foreign currency impacts will depend
upon changes in currencies, the extent to which we engage in derivatives
transactions and repayments of the $1.1 billion intercompany loan. The
amount and timing of such repayments will depend upon profits and cash
flows of our international operations, future international investments and
financing activities, all of which will be impacted by the many factors
discussed above. 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, 2007, 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 29, 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 our 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) 2008 2007 2007
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NET SALES $ 5,196 $ 4,535 $ 3,756
OPERATING EXPENSES (INCOME):
Cost of sales (excludes items shown
below) 4,643 4,110 3,179
Selling, general and administrative
expenses 142 178 139
Depreciation, depletion and amortization 156 153 111
Income from investees (7) (7) (2)
Net gains on disposal of assets (1) (3) (10)
Other income, net (3) (12) (7)
--------- ---------- ---------
Total operating expenses 4,930 4,419 3,410
--------- ---------- ---------
INCOME FROM OPERATIONS 266 116 346
Net interest and other financial
(income) costs (32) 44 5
--------- ---------- ---------
INCOME BEFORE INCOME TAXES AND MINORITY
INTERESTS 298 72 341
Income tax provision 58 31 66
Minority interests 5 6 2
--------- ---------- ---------
NET INCOME $ 235 $ 35 $ 273
========= ========== =========
COMMON STOCK DATA:
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Net income per share:
- Basic $ 2.00 $ 0.29 $ 2.31
- Diluted $ 1.98 $ 0.29 $ 2.30
Weighted average shares, in thousands
- Basic 117,595 117,813 118,244
- Diluted 118,405 118,581 119,005
Dividends paid per common share $ .25 $ .20 $ .20
UNITED STATES STEEL CORPORATION
OTHER FINANCIAL DATA (Unaudited)
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Quarter Ended
March 31
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Cash Flow Data (In millions) 2008 2007
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Cash provided by operating activities:
Net income $ 235 $ 273
Depreciation, depletion and amortization 156 111
Pensions and other postretirement benefits (110) (49)
Working capital changes 30 (36)
Other operating activities (74) 22
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Total 237 334
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Cash used in investing activities:
Capital expenditures (127) (108)
Disposal of assets 4 5
Other investing activities (24) (4)
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Total (147) (107)
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Cash used in financing activities:
Repayment of debt (3) (53)
Common stock issued 4 5
Common stock repurchased (33) (25)
Dividends paid (29) (24)
Other financing activities 10 (2)
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Total (51) (99)
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Effect of exchange rate changes on cash 14 2
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Net increase in cash and cash equivalents 53 130
Cash and cash equivalents at beginning of the year 401 1,422
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Cash and cash equivalents at end of the period $ 454 $ 1,552
====== ======
March 31 Dec. 31
Balance Sheet Data (In millions) 2008 2007
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Cash and cash equivalents $ 454 $ 401
Receivables, net 2,398 2,077
Inventories 2,339 2,279
Other current assets 204 202
Property, plant and equipment, net 6,832 6,688
Investments and long-term receivables, net 763 694
Pension asset 799 734
Goodwill and intangible assets, net 1,987 2,131
Other assets 401 426
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Total assets $ 16,177 $ 15,632
====== ======
Accounts payable $ 1,973 $ 1,730
Payroll and benefits payable 955 995
Short-term debt and current maturities of
long-term debt 110 110
Other current liabilities 357 168
Long-term debt, less unamortized discount 3,142 3,147
Employee benefits 3,078 3,187
Other long-term liabilities and minority interests 784 764
Stockholders' equity 5,778 5,531
------ ------
Total liabilities and stockholders' equity $ 16,177 $ 15,632
====== ======
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
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Quarter Ended
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March 31 Dec. 31 March 31
(Dollars in millions) 2008 2007 2007
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INCOME FROM OPERATIONS
Flat-rolled (a) $120 $53 $75
U. S. Steel Europe 161 85 206
Tubular (b) 51 83 102
Other Businesses (c) (5) 36 2
----- ----- -----
Segment Income from Operations 327 257 385
Retiree benefit expenses(d) 1 (15) (39)
Other items not allocated to segments:
Litigation reserve (45) -- --
Flat-rolled inventory transition effects (17) (58) --
Tubular inventory transition effects -- (11) --
Workforce reduction charges -- (57) --
----- ----- -----
Total Income from Operations $266 $116 $346
CAPITAL EXPENDITURES
Flat-rolled (a) $83 $79 $50
U. S. Steel Europe 32 86 30
Tubular (b) 4 10 2
Other Businesses (c) 8 40 26
----- ----- -----
Total $127 $215 $108
(a) Includes the results of the businesses acquired from Stelco Inc. as
of October 31, 2007, excluding the iron ore and real estate
interests.
(b) Includes the results of the businesses acquired from Lone Star
Technologies, Inc. as of June 14, 2007.
(c) Includes the results of the iron ore and real estate interests
acquired from Stelco Inc. as of October 31, 2007.
(d) The first quarter of 2007 includes certain profit-based expenses for
former National employees pursuant to provisions of the 2003 labor
agreement with the United Steelworkers.
UNITED STATES STEEL CORPORATION
PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
-----------------------------------------------
Quarter Ended
-----------------------------
March 31 Dec. 31 March 31
(Dollars in millions) 2008 2007 2007
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OPERATING STATISTICS
Average realized price: ($/net ton)(a)
Flat-rolled(b) $646 $627 $650
U. S. Steel Europe 791 752 669
Tubular(c) 1,297 1,299 1,435
Steel Shipments:(a)(d)
Flat-rolled Products 4,701 4,146 3,188
U. S. Steel Europe 1,638 1,385 1,652
Tubular Products 433 427 247
----- ----- -----
Total Steel Shipments 6,772 5,958 5,087
Intersegment Shipments:(d)
Flat-rolled to Tubular 445 314 174
Raw Steel Production:(d)
North American facilities 5,558 4,681 3,713
U. S. Steel Europe 1,908 1,467 1,799
Raw Steel Capability Utilization:(e)
North American facilities 91.7% 82.0% 77.6%
U. S. Steel Europe 103.4% 78.6% 98.2%
(a) Excludes intersegment shipments.
(b) Includes the results of the businesses acquired from Stelco Inc. as
of October 31, 2007, excluding the iron ore and real estate
interests.
(c) Includes the results of the businesses acquired from Lone Star
Technologies, Inc. as of June 14, 2007.
(d) Thousands of net tons.
(e) Based on annual raw steel production capability of 19.4 million net
tons for North American facilities prior to October 31, 2007 and
24.3 million net tons thereafter, and 7.4 million net tons for U. S.
Steel Europe.
SOURCE United States Steel Corporation
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Investors - Analysts, Nick Harper, +1-412-433-1184, both of
United States Steel Corporation
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